As filed with the U.S. Securities and Exchange Commission on February 28, 2003

                                              1940 Act Registration No. 811-4062
                                                       1933 Act File No. 2-92136

                                    FORM N-1A

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933                      /X/

Pre-Effective Amendment No.
                                                          --------           /_/

Post-Effective Amendment No.                                 38              /X/
                                                          --------

                                     and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940              /X/

Amendment No.                                                41
                                                          --------

                        (Check appropriate box or boxes)



                                 GAM Funds, Inc.
                                 ---------------
               (Exact Name of Registrant as Specified in Charter)

                    135 East 57th Street, New York, NY 10022
                    ----------------------------------------
               (Address of Principal Executive Offices) (Zip Code)

                                 (212) 407-4600
                                 --------------
              (Registrant's Telephone Number, including Area Code)

            GAM Funds, Inc., 135 East 57th Street, New York, NY 10022
            ---------------------------------------------------------
               (Name and Address of Agent for Service of Process)

Approximate Date of Public  Offering:  As soon as practical  after the effective
     date of this amendment to the registration statement.

It is proposed that this filing will become effective (check appropriate box):

/_/     immediately upon filing pursuant to paragraph (b) of Rule 485

/_/     on (date) pursuant to paragraph (b) of Rule 485

/_/     60 days after filing pursuant to paragraph (a)(1) of Rule 485

/X/     on April 30, 2003 pursuant to paragraph (a)(1) of Rule 485

/_/     75 days after filing pursuant to paragraph (a)(2) of Rule 485

/_/     on (date) 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.




          GAM GLOBAL FUND                   GAM(R)FUNDS, INC.


         GAM INTERNATIONAL             PROSPECTUS o April 30, 2003
                FUND


         GAM PACIFIC BASIN
                FUND

         GAM JAPAN CAPITAL
                FUND

          GAM EUROPE FUND

            GAM AMERICAN
             FOCUS FUND

          GAMERICA CAPITAL
                FUND


       GAM GABELLI LONG/SHORT
                FUND




GAM Funds, Inc. (the "Company") is a diversified,  open-end  investment company.
The  Company  offers  investors  the  opportunity  to invest in eight  different
portfolios (the "Funds") which invest primarily in equity securities.  Shares of
one  portfolio  may be  exchanged  for  shares  of the  same  class  of  another
portfolio.


The Funds described in this  Prospectus,  other than GAM American Focus Fund and
GAM Gabelli Long/Short Fund, are managed by GAM International Management Limited
("GIML").  Global  Asset  Management  (USA)  Inc.  ("GAM  USA")  serves  as  the
Investment  Advisor to the GAM American  Focus Fund.  GIML and GAMCO  Investors,
Inc.  ("GAMCO") serve as  Co-Investment  Advisors to the GAM Gabelli  Long/Short
Fund  (each,  a  "Co-Investment   Advisor,"  and  together,  the  "Co-Investment
Advisors").  GIML,  GAM  USA  and  GAMCO  are  collectively  referred  to as the
"Investment Advisors." GAM Services, Inc. ("GAM Services"),  an affiliate of GAM
USA and GIML, serves as the principal underwriter for the Funds' securities.


Neither the Securities and Exchange  Commission ("SEC") nor any state securities
commission has approved the Funds' shares as an investment.  Neither the SEC nor
any state security  commission has determined if this  Prospectus is accurate or
complete. Any representation to the contrary is a criminal offense.

Investments  in the Funds are not deposits or  obligations  of, or guaranteed or
endorsed  by, any bank,  and are not  federally  insured by the Federal  Deposit
Insurance  Corporation,   the  Federal  Reserve  Board,  or  any  other  agency.
Investments in the Funds involve investment risk, including the possible loss of
principal.




                                        GAM
                             GLOBAL ASSET MANAGEMENT


                    IMPORTANT INFORMATION ABOUT YOUR PRIVACY

GAM(R)CUSTOMER PRIVACY NOTICE

This notice  describes the privacy  policy of GAM* regarding how GAM handles and
protects  personal  information  that  it  collects  about  individuals  who are
prospective,  current or former  investment  advisory clients or shareholders of
GAM funds.

GAM  collects  personal  information  about you for business  purposes,  such as
evaluating  your financial  needs and  background,  processing your requests and
transactions, providing customer service and communicating information about our
products  and  services.  Personal  information  you  provide is  obtained  from
application forms,  subscription documents, and other transaction related forms,
as  well  as  from  information  you  provide  on  GAM.com  or  to  GAM  service
representatives  and may include your name,  address,  e-mail  address,  date of
birth, occupation, citizenship, assets, income, social security number or tax ID
number,  tax  information,  bank  account  information,   financial  information
including net worth information and information regarding your transactions with
us or our affiliates ("Personal Information").

GAM limits access to Personal  Information to those individuals who need to know
that information in order to process  transactions and service  accounts.  These
individuals are required to maintain and protect the confidentiality of Personal
Information.  GAM maintains  physical,  electronic and procedural  safeguards to
protect Personal Information.

GAM may share  Personal  Information  described  above with its  affiliates  for
business  purposes,  such as to  facilitate  the  servicing  of accounts  and to
provide information about new products and services. GAM may also share Personal
Information  with its  affiliates  for marketing  purposes.  GAM  affiliates are
companies  that  are  wholly  owned by GAM or that are  otherwise  under  common
control with GAM.

GAM may share Personal Information  described above for business purposes with a
non-affiliated   third  party  if  the  entity  is  under  contract  to  perform
transaction  processing or servicing on behalf of GAM and otherwise as permitted
by law. Any such  contract  entered by GAM will include  provisions  designed to
ensure that the third  party will uphold and  maintain  privacy  standards  when
handling Personal  Information.  GAM may also disclose  Personal  Information to
regulatory authorities as required by applicable law.

Except  as  described  in  this  privacy  policy,  GAM  will  not  use  Personal
Information  for  any  other  purpose  unless  we  describe  how  such  Personal
Information will be used, and your prior consent is obtained.

If you have any questions or concerns  about your Personal  Information  or this
privacy notice, please contact GAM at 1 (800) 426-4685, Option 3.

*    GAM,  for the purposes of this  notice,  refers to Global Asset  Management
     (USA) Inc. and its wholly owned subsidiaries,  including GAM Services, Inc.
     and  GAM  Investments,  Inc.,  as  well  as the  GAM  Funds,  Inc.  and GAM
     affiliated private investment companies.

          THIS NOTICE IS FOR YOUR INFORMATION. NO RESPONSE IS REQUIRED.
                                  GAM-PRIV-NATC




Table of Contents

I.       RISK AND RETURN SUMMARY

              GAM Global Fund

              GAM International Fund

              GAM Pacific Basin Fund

              GAM Japan Capital Fund

              GAM Europe Fund

              GAM American Focus Fund

              GAMerica Capital Fund

              GAM Gabelli Long/Short Fund

II.      MANAGEMENT OF THE FUNDS

III.     SHAREHOLDER INFORMATION

              Choosing the appropriate share class

              How to buy shares

              How to sell shares

              How to exchange shares

              Account services

              Dividends and tax matters

IV.      FINANCIAL HIGHLIGHTS



GAM Global Fund

INVESTMENT OBJECTIVE
The  Fund  seeks  long-term  capital   appreciation.   Upon  written  notice  to
shareholders,  the Fund's investment  objective may be changed without a vote of
shareholders.

PRINCIPAL INVESTMENT STRATEGY
The Fund invests  primarily in common  stocks of companies in any country of the
world,  including the United States, Canada, Europe and the Pacific Basin. Under
normal  market  conditions,  the Fund will  invest in stocks  issued in at least
three different countries.

If the investment advisor determines that the long-term capital  appreciation of
bonds  may equal or  exceed  the  return  on  stocks,  then the Fund may  invest
substantially  in bonds issued either by governments  or government  agencies or
corporations  without  regard to the maturity of such bonds.  To  determine  the
relative  attractiveness of stocks versus bonds, the investment advisor compares
the  stock's  earnings  yield to  short-  and  long-term  interest  rates.  Debt
securities in which the Fund may invest are not required to have any rating. The
Fund may not  invest  more  than 5% of its  assets  in bonds  rated  lower  than
investment grade.

In selecting  either a stock or bond, the  investment  advisor uses a "top down"
three-step  approach  screening  potential  investments  by country,  sector and
security.  Countries and sectors are avoided when the investment advisor regards
them as too risky  based on an  economic  analysis  that  examines,  among other
factors, interest rates, growth rates, the inflation outlook and the strength of
the currency.  The investment  advisor seeks growth stocks at reasonable prices.
Generally, the investment advisor prefers companies with:

o    Good industry  fundamentals  (sound balance sheet;  solid earnings  record;
     strong forecasted earnings growth)

o    "Pricing  power"  (the  ability  to raise  prices  at or above  the rate of
     inflation)

o    High market share

o    Some  degree  of  "organic"  growth  not tied to the  overall  state of the
     economy  (strength of the ongoing  business  itself  absent  growth tied to
     mergers and acquisitions)

Sales are triggered by an assessment that the security is no longer a good value
or that fundamental prospects have deteriorated. A deterioration of fundamentals
occurs when news on the company  indicates a change in the company's  prospects.
For example, a loss of market share or  less-than-expected  or negative earnings
growth would indicate a deterioration of fundamentals.  Sales are also triggered
when a company  reaches a high price per  earnings  ratio  relative  to earnings
growth and interest rates.

The investment advisor does not screen potential  companies based on size of the
company.  Rather,  the  investment  advisor  takes into  account  its ability to
purchase  or sell the  company's  stock with  relative  ease within a short time
frame.

The Fund, for temporary  defensive  purposes,  may invest in short-term bonds of
foreign and United States companies,  foreign  governments,  the U.S. government
and its agencies  and  instrumentalities,  as well as money  market  instruments
denominated  in U.S.  dollars  or a  foreign  currency.  Should  the Fund take a
temporary defensive position, it may not achieve its investment  objectives.  At
no point  will more  than 35% of the  Fund's  portfolio  be held in cash or cash
equivalents, except when the Fund is taking temporary defensive measures.

PRINCIPAL RISKS
You could lose all or a portion of your  investment in the Fund.  Stock and bond
prices fluctuate in response to many factors including  interest rates,  general
economic  conditions,  investor  perceptions and market liquidity.  Investing in
foreign  securities  generally  involves  greater  risk than  investing  in U.S.
securities.  Foreign  securities  prices may vary more widely than those of U.S.
securities  because  of  economic,   financial,   political  or  social  factors
including:

o    Political conditions  Government  regulation or action may adversely affect
     foreign   markets   through  the  imposition  of  capital   controls,   the
     nationalization  of companies or industries,  excessive  taxes,  or similar
     items.

o    Information There is likely to be less available  information about foreign
     securities than is available about U.S.  companies.  Foreign  companies may
     not be subject to the same accounting standards as U.S. companies.  Foreign
     issuers  may  be  subject  to  less  stringent  government  supervision  or
     regulation of financial markets and business practices than U.S. issuers.

o    Liquidity  Non-U.S.  securities  may  trade on small  exchanges  less  well
     regulated  than U.S.  exchanges,  may be more difficult to buy or sell on a
     particular day and may be more volatile than U.S. securities.

o    Commissions and fees Brokerage fees and  commissions  are generally  higher
     abroad than in the U.S.

o    Emerging markets Countries in emerging markets may have relatively unstable
     governments,  economies  based  on only a few  industries,  and  securities
     markets that trade a small number of issues.

o    Currency Fluctuations in currencies,  local withholding and other taxes may
     adversely impact the price of the Fund's investment.

o    Credit and rating risk Credit risk  relates to the ability of the issuer to
     meet interest or principal payments or both as they become due. In general,
     lower-grade,  higher-yield  bonds are  subject to credit  risk to a greater
     extent than  lower-yield,  higher-quality  bonds. The lower the rating of a
     debt  instrument the more  speculative its  characteristics  and changes in
     economic or other  circumstances are more likely to lead to an inability of
     the issuer to make  principal and interest  payments than issuers of higher
     grade securities.

o    Interest rate risk Interest rate risk refers to the  fluctuations  in value
     of fixed-income  securities resulting from the inverse relationship between
     price and yield.  For example,  an increase in general  interest rates will
     tend to reduce the market value of already-issued fixed-income investments,
     and a decline in general  interest rates will tend to increase their value.
     In addition,  debt  securities with longer  maturities,  which tend to have
     higher yields,  are subject to potentially  greater  fluctuations  in value
     from changes in interest rates than obligations with shorter maturities.

o    Company risk Investing in the Fund involves the risk common to investing in
     any  security,  that is that the value of the  securities  held by the Fund
     will  fluctuate  in response to changes in  economic  conditions  or public
     expectations  about  those  securities.  The net asset  value of the Fund's
     shares will change accordingly.

o    Market risk The market value of a security may move up and down,  sometimes
     rapidly and unpredictably.  These fluctuations, which are often referred to
     as "volatility," may cause a security to be worth less than it was worth at
     an earlier time. Market risk may affect a single issuer,  industry,  sector
     of the  economy,  or the market as a whole.  Market  risk is common to most
     investments--including  stocks and bonds,  and the mutual funds that invest
     in them.

An  investment  in the Fund is not a  deposit  of a bank and is not  insured  or
guaranteed by the Federal Deposit Insurance  Corporation or any other government
agency.

WHO MAY WANT TO INVEST?
The Fund may best suit those investors who want long-term capital  appreciation,
and who can tolerate the risks involved with stock and foreign investing.



                                 GAM GLOBAL FUND

PAST PERFORMANCE AND EXPENSES

A bar  displays  the  annual  return of the Fund for each of the last ten years.
This  illustrates  the  variability  of the  performance  from  year to year and
provides some indication of the risks of investing in the Fund. Fund performance
shown does not reflect Class A sales charges,  but includes the  reinvestment of
dividends and capital  gains.  Performance  would be lower if sales charges were
included. Past performance does not guarantee or predict future results.

[The table below represents a bar chart in the printed piece.]


                        GAM Global Fund
                        Class A Share
                        Annual Total Returns
                        As of December 31

          93                   75.3
          94                  -16.15
          95                   36.25
          96                   12.74
          97                   34.95
          98                    2.57
          99                   14.23
          00                  -16.34
          01                  -13.35
          02                  ___.__


Highest and Lowest Returns

Highest Performing Quarter:           27.26% in 4th quarter of 1993
Lowest Performing Quarter:           -13.89% in 2nd quarter of 2000

The table shows how the average annual returns for 1, 5 and 10 years (or life of
class) for each class of the Fund before taxes compare to those of a broad-based
securities market index. In addition,  after-tax returns are presented for Class
A Shares of the Fund. The after-tax  returns are calculated using the historical
highest  individual  federal  marginal  income tax rates and do not  reflect the
impact of state or local taxes. Actual after-tax returns depend on an investor's
tax  situation  and may differ from those shown in the table.  In addition,  the
after-tax  returns  shown are not relevant to  investors  who hold shares of the
Fund  through  tax-deferred  arrangements,  such as 401(k)  plans or  individual
retirement accounts. After-tax returns for the other classes of shares will vary
from the Class A after-tax  returns shown.  Past  performance  (before and after
taxes) is not an indication of future results.

The MSCI World Index is a broad market index used for comparative purposes.


GAM Global Fund
1-, 5-, and 10-Year  (or  Life-of-Class)  Average  Annual  Total  Return for all
Relevant Share Classes Plus a Comparison to the MSCI World Index
As of December 31, 2002

                                                                  10 Year
Class                                                        (or Life-of-Class
   (inception date)                    1 Year    5 Year   if less than 10 Years)

A Shares (May 28, 1986)
   (after maximum sales charge of
   5.50%)
Return Before Taxes                     __.__%    __.__%          __.__%
Return After Taxes on Distributions     __.__%    __.__%          __.__%
Return After Taxes on Distributions
   and Sale of Fund Shares              __.__%    __.__%          __.__%

B Shares (May 26, 1998)
   (with deferred sales charge)
   Return Before Taxes                  __.__%     N/A            __.__%

C Shares (May 19, 1998)
   (with sales charge of 1% and
   deferred sales charge)
   Return Before Taxes                  __.__%     N/A            __.__%

D Shares (October 6, 1995)
   (after maximum sales charge of
   3.5%)
   Return Before Taxes                  __.__%    __.__%          __.__%

MSCI World Index**                      __.__%    __.__%          __.__%

*    Returns of MSCI World Index were for the Life-of-Class B: __.__%, C: __.__%
     and D: __.__%.
**   The MSCI World  Index is an  unmanaged,  broad-based  index of foreign  and
     domestic securities and includes  reinvestment of dividends.  Investors may
     not purchase indices directly.


Fees and Expenses of the Fund

Fund investors pay various  expenses either  directly or indirectly.  This table
shows the expenses  for the past year,  adjusted to reflect any charges that you
may pay if you buy and hold shares of the Fund. Actual or future expenses may be
different.

GAM Global Fund Investor Expenses
Shareholder Transaction Expenses

                                    CLASS A    CLASS B   CLASS C      CLASS D

Sales charges (fees paid directly
from your investment)
--------------------------------- ---------- ---------- ----------- -----------

Maximum Sales Charge
(as a percentage of the
offering price)                      5.50%      5.00%     2.00%        3.50%

Maximum Front-End Sales Charge
(as a percentage of the
offering price)                      5.50%      0.00%     1.00%        3.50%

Maximum Deferred Sales Charge
(as a percentage of the original
purchase price or the amount
redeemed, whichever is less)         0.00%*     5.00%     1.00%        0.00%

Redemption Fee (paid directly
from your investment upon
redemption)**                        1.00%      0.00%     0.00%        1.00%


Annual Fund  operating  expenses (% of net assets)  (expenses  that are deducted
from Fund assets)
--------------------------------- ---------- ---------- ----------- -----------

Management Fees                       1.00%      1.00%     1.00%        1.00%
Distribution (12b-1) Fees             0.30%      1.00%     1.00%        0.50%
Other Expenses                       __.__%     __.__%    __.__%       __.__%
Total Fund Operating Expenses        __.__%     __.__%    __.__%       __.__%

*    Except  for  investments  of $1  million or more.  See  "Information  about
     contingent deferred sales charge."
**   For shares redeemed or exchanged within 90 days of the date of purchase.


Examples

These  examples  can help you compare the cost of investing in the Fund with the
cost of investing in other mutual  funds.  The examples  assume a 5% return each
year, with operating expenses staying the same. Your actual returns and expenses
may be different.

Example #1 assumes you invest  $10,000 in the Fund for the periods  shown,  then
redeem all your shares at the end of those periods.

Example #2 assumes you invest $10,000 in the Fund for the periods shown, but you
do not redeem your shares at the end of those periods.

Expenses of Hypothetical $10,000 Investment
in GAM Global Fund


                                    CLASS A*   CLASS B** CLASS C      CLASS D*

EXAMPLE #1

---------------------------       ---------- ---------- ----------- -----------
For one year                         _____      _____     _____        _____
For three years                      _____      _____     _____        _____
For five years                       _____      _____     _____        _____
For ten years                        _____      _____     _____        _____

EXAMPLE #2

---------------------------       ---------- ---------- ----------- -----------
For one year                         _____      _____     _____        _____
For three years                      _____      _____     _____        _____
For five years                       _____      _____     _____        _____
For ten years                        _____      _____     _____        _____


*    Due to the redemption fee, the cost of investing for one year would be $100
     higher  for  shares  redeemed  or  exchanged  within 90 days of the date of
     purchase.

**   The Class B example  reflects  Class A expenses  for years nine through ten
     because Class B shares  convert to Class A shares after a maximum period of
     eight years.  Class B shares may convert sooner  depending on the amount of
     Class B shares  purchased  and  when.  See  "Information  about  contingent
     deferred sales charge."



ADDITIONAL INFORMATION ABOUT NON-PRINCIPAL STRATEGIES AND RISKS

STRATEGIES

In  addition  to the  principal  strategies  stated  above,  the  following  are
non-principal strategies you should consider.

The Fund will not acquire more than 10% of the outstanding  voting securities of
any one issuer.  No more than 25% of the Fund's total assets will be invested in
any one industry.

The Fund may from time to time  engage in short  selling  of  securities.  Short
selling is an investment technique wherein the Fund sells a security it does not
own  anticipating  a decline in the market  value of the  security.  Losses from
short sales  differ  from  losses  that could be  incurred  from a purchase of a
security, because losses from short sales may be unlimited,  whereas losses from
purchases can equal only the total amount invested.

The  frequency of short sales will vary  substantially  under  different  market
conditions, and no specified portion of Fund assets as a matter of practice will
be committed to short sales. However, no securities will be sold short if, after
effect is given to any such short sale, the total market value of all securities
sold short would exceed 20% of the value of the Fund's net assets.

The  Fund  may  from  time  to time  utilize  certain  sophisticated  investment
techniques,  including derivatives.  Derivatives are financial instruments which
derive  their  value  from  the  performance  of  an  underlying  asset--another
security, a commodity, or an index. Examples of these include:

o    Forward foreign exchange  contracts When the Fund buys a foreign  security,
     it generally does so in a foreign currency.  That currency has a price, and
     that price fluctuates. In order to reduce the risk of currency price swings
     or for other purposes,  the Fund may buy forward foreign exchange contracts
     on foreign  currencies.  These contracts "lock in" a price for the currency
     at a certain  future  date.  The Fund may also use put and call  options on
     foreign currencies.

o    Options and warrants An option is a contract  giving the owner the right to
     buy ("call option") or sell ("put option") a security at a designated price
     ("strike  price") on a certain date. A warrant is the  equivalent of a call
     option written by the issuer of the underlying security.

o    Futures contracts  Futures contracts  obligate one party to deliver and the
     other party to purchase a specific  quantity of a commodity  or a financial
     instrument at a designated future date, time and place. Stock index futures
     contracts  call for a cash payment based on the increase or decrease in the
     value of an index.

The  Fund  may  enter  into  foreign  currency  forward  contracts,   repurchase
agreements,  and certain other types of futures,  options and  derivatives  with
banks,  brokerage firms and other  investors in  over-the-counter  markets,  not
through any exchange. The Fund may experience losses or delays if a counterparty
to any such contract defaults or goes into bankruptcy.

RISKS

In addition to the principal risks stated above, the following are non-principal
risks you should consider.

o    Derivative  instruments  Derivatives  involve  substantial risk,  because a
     relatively  small change in the  security or index  underlying a derivative
     can produce a  disproportionately  large loss.  The Fund may lose more than
     its  initial  investment.  If the Fund has a  derivative  investment  which
     begins to  deteriorate,  there  may be no way to sell it and avoid  further
     losses,  because no buyer may be  available.  In addition,  the  securities
     underlying some derivatives may be illiquid. The Fund may be forced to hold
     a position  until  exercise or  expiration,  which could  result in losses.
     Hedging, by its nature, involves predicting the probable direction of price
     movements; if the Fund predicts incorrectly, it could lose money--more than
     if it had not hedged at all. Hedging cannot  eliminate  fluctuations in the
     prices of foreign  securities,  and there is no assurance that such hedging
     attempts will be successful.

o    Management  risk The Fund is subject to  management  risk  because it is an
     actively managed  investment  portfolio.  The investment advisor will apply
     its investment  techniques and risk analyses in making investment decisions
     for the Fund, but there is no guarantee that its decisions will produce the
     intended result.

o    Small and mid-cap risk Investing in companies with small and mid-cap market
     capitalizations  involves greater risk than investing in larger  companies.
     Their stock prices can rise very quickly and drop  dramatically  in a short
     period of time. This volatility results from a number of factors, including
     reliance by these companies on limited product lines, markets and financial
     and  management  resources.  These and  other  factors  may make  small and
     mid-cap  companies  more  susceptible  to  setbacks  or  downturns.   These
     companies may experience  higher rates of bankruptcy or other failures than
     larger  companies.  They may be more  likely to be  negatively  affected by
     changes in management. In addition, the stock of a small or mid-cap company
     may be thinly traded.

PORTFOLIO TURNOVER

The Fund's  portfolio  turnover rate will  fluctuate  from year to year, and the
Fund may have a portfolio  turnover rate of more than 100% annually.  "Portfolio
turnover"  describes the rate at which the Fund traded its portfolio  securities
during its last fiscal year. For example, if the Fund sold all of its securities
during the year,  its portfolio  turnover  rate would have been 100%.  Increased
portfolio  turnover creates higher brokerage and transaction costs for the Fund,
which may reduce its  overall  performance.  Additionally,  the  realization  of
capital gains from selling  portfolio  securities may result in distributions of
taxable capital gains to shareholders,  since the Fund will normally  distribute
all of its capital  gains  realized to  shareholders  each year to avoid  excise
taxes under the Internal Revenue Code.



                  FOR MORE INFORMATION PLEASE CALL 800-426-4685


GAM International Fund

INVESTMENT OBJECTIVE
The  Fund  seeks  long-term  capital   appreciation.   Upon  written  notice  to
shareholders,  the Fund's investment  objective may be changed without a vote of
shareholders.

PRINCIPAL INVESTMENT STRATEGY
The Fund invests  primarily in common  stocks of companies in any country of the
world,  other than the United  States--normally  Canada,  Europe and the Pacific
Basin. Under normal market conditions,  the Fund will invest in stocks issued in
at least three different countries.

In addition,  if the investment  advisor  determines that the long-term  capital
appreciation  of bonds may equal or exceed the  return on stocks,  then the Fund
may invest  substantially  in bonds issued either by  governments  or government
agencies or  corporations  without  regard to the  maturity  of such  bonds.  To
determine the relative  attractiveness  of stocks versus bonds,  the  investment
advisor  compares the stock's  earnings  yield to short- and long-term  interest
rates. Debt securities in which the Fund may invest are not required to have any
rating.  The Fund may not invest more than 5% of its assets in bonds rated lower
than investment grade.

In selecting  either a stock or bond, the  investment  advisor uses a "top down"
three-step  approach  screening  potential  investments  by country,  sector and
security.  Countries and sectors are avoided when the investment advisor regards
them as too risky  based on an  economic  analysis  that  examines,  among other
factors, interest rates, growth rates, the inflation outlook and the strength of
the currency.  The investment  advisor seeks growth stocks at reasonable prices.
Generally, the investment advisor prefers companies with:

o    Good industry  fundamentals  (sound balance sheet;  solid earnings  record;
     strong forecasted earnings growth)

o    "Pricing  power"  (the  ability  to raise  prices  at or above  the rate of
     inflation) o High market share

o    Some  degree  of  "organic"  growth  not tied to the  overall  state of the
     economy  (strength of the ongoing  business  itself  absent  growth tied to
     mergers and acquisitions)

Sales are triggered by an assessment that the security is no longer a good value
or that fundamental prospects have deteriorated. A deterioration of fundamentals
occurs when news on the company  indicates a change in the company's  prospects.
For example, a loss of market share or  less-than-expected  or negative earnings
growth would indicate a deterioration of fundamentals.  Sales are also triggered
when a company  reaches a high price per  earnings  ratio  relative  to earnings
growth and interest rates.

The investment advisor does not screen potential  companies based on size of the
company.  Rather,  the  investment  advisor  takes into  account  its ability to
purchase  or sell the  company's  stock with  relative  ease within a short time
frame.

The Fund, for temporary  defensive  purposes,  may invest in short-term bonds of
foreign and United States companies,  foreign  governments,  the U.S. government
and its agencies  and  instrumentalities,  as well as money  market  instruments
denominated  in U.S.  dollars  or a  foreign  currency.  Should  the Fund take a
temporary defensive position, it may not achieve its investment  objectives.  At
no point  will more  than 35% of the  Fund's  portfolio  be held in cash or cash
equivalents, except when the Fund is taking temporary defensive measures.

PRINCIPAL RISKS
You could lose all or a portion of your  investment in the Fund.  Stock and bond
prices fluctuate in response to many factors including  interest rates,  general
economic  conditions,  investor  perceptions and market liquidity.  Investing in
foreign  securities  generally  involves  greater  risk than  investing  in U.S.
securities.  Foreign  securities  prices may vary more widely than those of U.S.
securities  because  of  economic,   financial,   political  or  social  factors
including:

o    Political conditions  Government  regulation or action may adversely affect
     foreign   markets   through  the  imposition  of  capital   controls,   the
     nationalization  of companies or industries,  excessive  taxes,  or similar
     items.

o    Information There is likely to be less available  information about foreign
     securities than is available about U.S.  companies.  Foreign  companies may
     not be subject to the same accounting standards as U.S. companies.  Foreign
     issuers  may  be  subject  to  less  stringent  government  supervision  or
     regulation of financial markets and business practices than U.S. issuers.

o    Liquidity  Non-U.S.  securities  may  trade on small  exchanges  less  well
     regulated  than U.S.  exchanges,  may be more difficult to buy or sell on a
     particular day and may be more volatile than U.S. securities.

o    Commissions and fees Brokerage fees and  commissions  are generally  higher
     abroad than in the U.S.

o    Emerging markets Countries in emerging markets may have relatively unstable
     governments,  economies  based  on only a few  industries,  and  securities
     markets that trade a small number of issues.

o    Currency Fluctuations in currencies,  local withholding and other taxes may
     adversely impact the price of the Fund's investment.

o    Credit and rating risk Credit risk  relates to the ability of the issuer to
     meet interest or principal payments or both as they become due. In general,
     lower-grade,  higher-yield  bonds are  subject to credit  risk to a greater
     extent than  lower-yield,  higher-quality  bonds. The lower the rating of a
     debt  instrument the more  speculative its  characteristics  and changes in
     economic or other  circumstances are more likely to lead to an inability of
     the issuer to make  principal and interest  payments than issuers of higher
     grade securities.

o    Interest rate risk Interest rate risk refers to the  fluctuations  in value
     of fixed-income  securities resulting from the inverse relationship between
     price and yield.  For example,  an increase in general  interest rates will
     tend to reduce the market value of already-issued fixed-income investments,
     and a decline in general  interest rates will tend to increase their value.
     In addition,  debt  securities with longer  maturities,  which tend to have
     higher yields,  are subject to potentially  greater  fluctuations  in value
     from changes in interest rates than obligations with shorter maturities.

o    Company risk Investing in the Fund involves the risk common to investing in
     any  security,  that is that the value of the  securities  held by the Fund
     will  fluctuate  in response to changes in  economic  conditions  or public
     expectations  about  those  securities.  The net asset  value of the Fund's
     shares will change accordingly.

o    Market risk The market value of a security may move up and down,  sometimes
     rapidly and unpredictably.  These fluctuations, which are often referred to
     as "volatility," may cause a security to be worth less than it was worth at
     an earlier time. Market risk may affect a single issuer,  industry,  sector
     of the  economy,  or the market as a whole.  Market  risk is common to most
     investments--including  stocks and bonds,  and the mutual funds that invest
     in them.

An  investment  in the Fund is not a  deposit  of a bank and is not  insured  or
guaranteed by the Federal Deposit Insurance  Corporation or any other government
agency.

WHO MAY WANT TO INVEST?
The Fund may best suit those investors who want long-term capital  appreciation,
and who can tolerate the risks involved with stock and foreign investing.



                  FOR MORE INFORMATION PLEASE CALL 800-426-4685



GAM INTERNATIONAL FUND

PAST PERFORMANCE AND EXPENSES

A bar  displays  the  annual  return of the Fund for each of the last ten years.
This  illustrates  the  variability  of the  performance  from  year to year and
provides some indication of the risks of investing in the Fund. Fund performance
shown does not reflect Class A sales charges,  but includes the  reinvestment of
dividends and capital  gains.  Performance  would be lower if sales charges were
included. Past performance does not guarantee or predict future results.

[The table below represents a bar chart in the printed piece.]


                      GAM International Fund
                      Class A Share
                      Annual Total Returns
                      As of December 31

         93                  79.96
         94                 -10.23
         95                  30.09
         96                   8.98
         97                  28.93
         98                   7.22
         99                   6.99
         00                 -22.74
         01                 -24.53
         02                  __.__


Highest and Lowest Returns

Highest Performing Quarter:       31.00% in 4th quarter of 1999
Lowest Performing Quarter:       -17.74% in 2nd quarter of 2000

The table shows how the average annual returns for 1, 5 and 10 years (or life of
class) for each class of the Fund before taxes compare to those of a broad-based
securities market index. In addition,  after-tax returns are presented for Class
A Shares of the Fund. The after-tax  returns are calculated using the historical
highest  individual  federal  marginal  income tax rates and do not  reflect the
impact of state or local taxes. Actual after-tax returns depend on an investor's
tax  situation  and may differ from those shown in the table.  In addition,  the
after-tax  returns  shown are not relevant to  investors  who hold shares of the
Fund  through  tax-deferred  arrangements,  such as 401(k)  plans or  individual
retirement accounts. After-tax returns for the other classes of shares will vary
from the Class A after-tax  returns shown.  Past  performance  (before and after
taxes) is not an indication of future results.


The MSCI EAFE Index is a broad market index used for comparative purposes.

GAM International Fund
1-, 5-, and 10-Year  (or  Life-of-Class)  Average  Annual  Total  Return for all
Relevant Share Classes Plus a Comparison to the MSCI EAFE Index
As of December 31, 2002

                                                                  10 Year
Class                                                        (or Life-of-Class
   (inception date)                    1 Year    5 Year   if less than 10 Years)

A Shares (January 2, 1985)
   (after maximum sales charge
    of 5.50%)
Return Before Taxes                     __.__%    __.__%          __.__%
Return After Taxes on Distributions     __.__%    __.__%          __.__%
Return After Taxes on Distributions
    and Sale of Fund Shares             __.__%    __.__%          __.__%

B Shares (May 26, 1998)
   (with deferred sales charge)
   Return Before Taxes                  __.__%     N/A            __.__%

C Shares (May 19, 1998)
   (with sales charge of 1% and
    deferred sales charge)
   Return Before Taxes                  __.__%     N/A            __.__%

D Shares (September 18, 1995)
   (after maximum sales charge of
   3.5%)
   Return Before Taxes                  __.__%    __.__%          __.__%

MSCI World Index**                      __.__%    __.__%          __.__%

*    Returns of MSCI EAFE Index were for the  Life-of-Class B: __.__%, C: __.__%
     and D: __.__.
**   The MSCI EAFE (Europe,  Australia, Far East) Index is an unmanaged index of
     foreign stocks in Austria,  Australia,  Belgium,  Denmark, Finland, France,
     Germany,  Hong Kong,  Ireland,  Italy,  Japan,  Netherlands,  New  Zealand,
     Norway,  Portugal,  Singapore,  Spain,  Sweden,  Switzerland and the UK and
     includes  reinvestment  of dividends.  Investors  may not purchase  indices
     directly.


Fees and Expenses of the Fund

Fund investors pay various  expenses either  directly or indirectly.  This table
shows the expenses  for the past year,  adjusted to reflect any charges that you
may pay if you buy and hold shares of the Fund. Actual or future expenses may be
different.

GAM International Fund Investor Expenses
Shareholder Transaction Expenses

                                    CLASS A    CLASS B   CLASS C      CLASS D

Sales charges (fees paid directly
from your investment)
--------------------------------- ---------- ---------- ----------- -----------

Maximum Sales Charge
(as a percentage of the offering
price)                               5.50%      5.00%     2.00%        3.50%

Maximum Front-End Sales Charge
(as a percentage of the offering
price)                               5.50%      0.00%     1.00%        3.50%

Maximum Deferred Sales Charge
(as a percentage of the original
purchase price or the amount
redeemed, whichever is less)         0.00%*     5.00%     1.00%        0.00%

Redemption Fee (paid directly
from your investment upon
redemption)**                        1.00%      0.00%     0.00%        1.00%


Annual Fund  operating  expenses (% of net assets)  (expenses  that are deducted
from Fund assets)
--------------------------------- ---------- ---------- ----------- -----------

Management Fees                       1.00%      1.00%     1.00%        1.00%
Distribution (12b-1) Fees             0.30%      1.00%     1.00%        0.50%
Other Expenses                       __.__%     __.__%    __.__%       __.__%
Total Fund Operating Expenses        __.__%     __.__%    __.__%       __.__%

*    Except  for  investments  of $1  million or more.  See  "Information  about
     contingent deferred sales charge."
**   For shares redeemed or exchanged within 90 days of the date of purchase.


Examples

These  examples  can help you compare the cost of investing in the Fund with the
cost of investing in other mutual  funds.  The examples  assume a 5% return each
year, with operating expenses staying the same. Your actual returns and expenses
may be different.


Example #1 assumes you invest  $10,000 in the Fund for the periods  shown,  then
redeem all your shares at the end of those periods.

Example #2 assumes you invest $10,000 in the Fund for the periods shown, but you
do not redeem your shares at the end of those periods.

Expenses of Hypothetical $10,000 Investment
in GAM International Fund

                                    CLASS A*   CLASS B**  CLASS C     CLASS D*

EXAMPLE #1

---------------------------       ---------- ---------- ----------- -----------
For one year                         _____      _____     _____        _____
For three years                      _____      _____     _____        _____
For five years                       _____      _____     _____        _____
For ten years                        _____      _____     _____        _____

EXAMPLE #2

---------------------------       ---------- ---------- ----------- -----------
For one year                         _____      _____     _____        _____
For three years                      _____      _____     _____        _____
For five years                       _____      _____     _____        _____
For ten years                        _____      _____     _____        _____


*    Due to the redemption fee, the cost of investing for one year would be $100
     higher  for  shares  redeemed  or  exchanged  within 90 days of the date of
     purchase.

**   The Class B example  reflects  Class A expenses  for years nine through ten
     because Class B shares  convert to Class A shares after a maximum period of
     eight years.  Class B shares may convert sooner  depending on the amount of
     Class B shares  purchased  and  when.  See  "Information  about  contingent
     deferred sales charge."



                  FOR MORE INFORMATION PLEASE CALL 800-426-4685



ADDITIONAL INFORMATION ABOUT NON-PRINCIPAL STRATEGIES AND RISKS

STRATEGIES

In  addition  to the  principal  strategies  stated  above,  the  following  are
non-principal strategies you should consider.

The Fund will not acquire more than 10% of the outstanding  voting securities of
any one issuer.  No more than 25% of the Fund's total assets will be invested in
any one industry.

The Fund may from time to time  engage in short  selling  of  securities.  Short
selling is an investment technique wherein the Fund sells a security it does not
own  anticipating  a decline in the market  value of the  security.  Losses from
short sales  differ  from  losses  that could be  incurred  from a purchase of a
security, because losses from short sales may be unlimited,  whereas losses from
purchases can equal only the total amount invested.

The  frequency of short sales will vary  substantially  under  different  market
conditions, and no specified portion of Fund assets as a matter of practice will
be committed to short sales. However, no securities will be sold short if, after
effect is given to any such short sale, the total market value of all securities
sold short would exceed 20% of the value of the Fund's net assets.

The  Fund  may  from  time  to time  utilize  certain  sophisticated  investment
techniques,  including derivatives.  Derivatives are financial instruments which
derive  their  value  from  the  performance  of  an  underlying  asset--another
security, a commodity, or an index. Examples of these include:

o    Forward foreign exchange  contracts When the Fund buys a foreign  security,
     it generally does so in a foreign currency.  That currency has a price, and
     that price fluctuates. In order to reduce the risk of currency price swings
     or for other purposes,  the Fund may buy forward foreign exchange contracts
     on foreign  currencies.  These contracts "lock in" a price for the currency
     at a certain  future  date.  The Fund may also use put and call  options on
     foreign currencies.

o    Options and warrants An option is a contract  giving the owner the right to
     buy ("call option") or sell ("put option") a security at a designated price
     ("strike  price") on a certain date. A warrant is the  equivalent of a call
     option written by the issuer of the underlying security.

o    Futures contracts  Futures contracts  obligate one party to deliver and the
     other party to purchase a specific  quantity of a commodity  or a financial
     instrument at a designated future date, time and place. Stock index futures
     contracts  call for a cash payment based on the increase or decrease in the
     value of an index.


o    Contracts for Difference A Contract for Difference is an agreement  between
     two parties to settle at the close of the contract the  difference  between
     the  opening  price  and  closing  price of a  security  identified  in the
     contract,  multiplied  by the number of shares  specified in the  contract.
     When entering into a Contract for Difference,  the Fund attempts to predict
     either that the price of the security  will fall (taking a short  position)
     or that the price of the security will rise (taking a long position).


The  Fund  may  enter  into  foreign  currency  forward  contracts,   repurchase
agreements,  and certain other types of futures,  options and  derivatives  with
banks,  brokerage firms and other  investors in  over-the-counter  markets,  not
through any exchange. The Fund may experience losses or delays if a counterparty
to any such contract defaults or goes into bankruptcy.


In addition,  the Fund may invest in other  financial  instruments  that provide
exposure  to an  underlying  position  or  other  instrument.  The  gain or loss
experienced  by the Fund will  depend  on  whether  the price of the  underlying
instrument rises or falls.


RISKS

In addition to the principal risks stated above, the following are non-principal
risks you should consider.

o    Derivative  instruments  Derivatives  involve  substantial risk,  because a
     relatively  small change in the  security or index  underlying a derivative
     can produce a  disproportionately  large loss.  The Fund may lose more than
     its  initial  investment.  If the Fund has a  derivative  investment  which
     begins to  deteriorate,  there  may be no way to sell it and avoid  further
     losses,  because no buyer may be  available.  In addition,  the  securities
     underlying some derivatives may be illiquid. The Fund may be forced to hold
     a position  until  exercise or  expiration,  which could  result in losses.
     Hedging, by its nature, involves predicting the probable direction of price
     movements; if the Fund predicts incorrectly, it could lose money--more than
     if it had not hedged at all. Hedging cannot  eliminate  fluctuations in the
     prices of foreign  securities,  and there is no assurance that such hedging
     attempts will be successful.

o    Management  risk The Fund is subject to  management  risk  because it is an
     actively managed  investment  portfolio.  The investment advisor will apply
     its investment  techniques and risk analyses in making investment decisions
     for the Fund, but there is no guarantee that its decisions will produce the
     intended result.

o    Small and mid-cap risk Investing in companies with small and mid-cap market
     capitalizations  involves greater risk than investing in larger  companies.
     Their stock prices can rise very quickly and drop  dramatically  in a short
     period of time. This volatility results from a number of factors, including
     reliance by these companies on limited product lines, markets and financial
     and  management  resources.  These and  other  factors  may make  small and
     mid-cap  companies  more  susceptible  to  setbacks  or  downturns.   These
     companies may experience  higher rates of bankruptcy or other failures than
     larger  companies.  They may be more  likely to be  negatively  affected by
     changes in management. In addition, the stock of a small or mid-cap company
     may be thinly traded.

PORTFOLIO TURNOVER

The Fund's  portfolio  turnover rate will  fluctuate  from year to year, and the
Fund may have a portfolio  turnover rate of more than 100% annually.  "Portfolio
turnover"  describes the rate at which the Fund traded its portfolio  securities
during its last fiscal year. For example, if the Fund sold all of its securities
during the year,  its portfolio  turnover  rate would have been 100%.  Increased
portfolio  turnover creates higher brokerage and transaction costs for the Fund,
which may reduce its  overall  performance.  Additionally,  the  realization  of
capital gains from selling  portfolio  securities may result in distributions of
taxable capital gains to shareholders,  since the Fund will normally  distribute
all of its capital  gains  realized to  shareholders  each year to avoid  excise
taxes under the Internal Revenue Code.



                  FOR MORE INFORMATION PLEASE CALL 800-426-4685



GAM Pacific Basin Fund

INVESTMENT OBJECTIVE
The  Fund  seeks  long-term  capital   appreciation.   Upon  written  notice  to
shareholders,  the Fund's investment  objective may be changed without a vote of
shareholders.

PRINCIPAL INVESTMENT STRATEGY
Under  normal  circumstances,  the Fund  invests  at least 80% of its  assets in
investments that are  economically  tied to the Pacific Basin. A company will be
considered  economically  tied to the  Pacific  Basin if a) at least  50% of the
company's  assets are located in the Pacific  Basin or at least 50% of its total
revenues  are derived  from goods or services  produced in the Pacific  Basin or
sales  made in the  Pacific  Basin;  b) the  principal  trading  market  for the
company's  securities is in the Pacific Basin; or c) the company is incorporated
under the laws of a country in the Pacific  Basin.  The Pacific  Basin  includes
Japan,  Hong  Kong,  Singapore,  Malaysia,  Thailand,  Vietnam,  Indonesia,  the
Philippines,  Korea, China, Taiwan,  India,  Australia and New Zealand. The Fund
invests primarily in common stock, and under normal market conditions,  the Fund
will invest in stocks issued in at least three different countries. The Fund has
a  fundamental  policy  of  concentrating  at  least  25% of its  assets  in the
financial services sector.  Thus, more than 25% of the value of the total assets
of the Fund will ordinarily be invested in the financial services sector,  which
sector  includes  banking,  financial  services,  insurance and real estate.  In
addition,  if the  investment  advisor  determines  that the  long-term  capital
appreciation  of bonds may equal or exceed the  return on stocks,  then the Fund
may invest  substantially  in bonds issued either by  governments  or government
agencies or  corporations  without  regard to the  maturity of such bonds.  Debt
securities in which the Fund may invest are not required to have any rating. The
Fund may not  invest  more  than 5% of its  assets  in bonds  rated  lower  than
investment grade.

In selecting investments for the Fund, the investment advisor looks first at the
economic  environment  and attempts to exclude  speculative  and highly illiquid
countries.  Specific sectors and stocks are excluded when viewed as over-valued.
Within those markets identified for investment, the investment advisor employs a
fundamental investment process focusing on factors such as:

o    Experience and shareholder focus of company management
o    Financial  health  including the strength of the balance sheet,  cash flow,
     earnings quality and long-term growth
o    Competitive position within the industry
o    Price of the stock compared to forecasted growth rate
o    Liquidity as measured by market capitalization and daily trading volume
o    Capability of management

Stocks selected tend to have higher return on equity,  higher growth in earnings
per share and  higher  growth in cash flow per share  than the  benchmark  index
(MSCI   Pacific   Index).   Companies   selected   tend  to  have  large  market
capitalizations  with high  liquidity,  although the Fund is not  restricted  in
terms of the size of the  companies in which it invests.  Sales are triggered by
an  assessment  that the  stock is no  longer a good  value or that  fundamental
prospects have  deteriorated.  A deterioration of fundamentals  occurs when, for
example,  management  leaves,  the industry goes into a decline,  or the company
becomes overvalued by the markets.  Sales are also triggered when the investment
advisor determines that there may be better opportunities elsewhere.

The Fund, for temporary  defensive  purposes,  may invest in short-term bonds of
foreign and United States companies,  foreign  governments,  the U.S. government
and its  agencies  and  instrumentalities  as well as money  market  instruments
denominated  in U.S.  dollars  or a  foreign  currency.  Should  the Fund take a
temporary defensive position, it may not achieve its investment  objectives.  At
no point  will more  than 35% of the  Fund's  portfolio  be held in cash or cash
equivalents, except when the Fund is taking temporary defensive measures.

The Fund will  notify  shareholders  at least 60 days prior to any change in its
policy of  investing  at least 80% of its assets in  investments  in the Pacific
Basin.

PRINCIPAL RISKS
You could lose all or a portion of your  investment in the Fund.  Stock and bond
prices fluctuate in response to many factors including  interest rates,  general
economic conditions,  investor perceptions and market liquidity.  Since the Fund
invests principally in the Pacific Basin, it will be impacted by regional events
there to a greater  extent than a more broadly  diversified  fund.  Investing in
foreign  securities  generally  involves  greater  risk than  investing  in U.S.
securities.  Foreign  securities  prices may vary more widely than those of U.S.
securities  because  of  economic,   financial,   political  or  social  factors
including:

o    Political conditions  Government  regulation or action may adversely affect
     foreign   markets   through  the  imposition  of  capital   controls,   the
     nationalization  of companies or industries,  excessive  taxes,  or similar
     items.

o    Information There is likely to be less available  information about foreign
     securities than is available about U.S.  companies.  Foreign  companies may
     not be subject to the same accounting standards as U.S. companies.  Foreign
     issuers  may  be  subject  to  less  stringent  government  supervision  or
     regulation of financial markets and business practices than U.S. issuers.

o    Liquidity  Non-U.S.  securities  may  trade on small  exchanges  less  well
     regulated  than U.S.  exchanges,  may be more difficult to buy or sell on a
     particular day and may be more volatile than U.S. securities.

o    Commissions and fees Brokerage fees and  commissions  are generally  higher
     abroad than in the U.S.

o    Emerging markets Countries in emerging markets may have relatively unstable
     governments,  economies  based  on only a few  industries,  and  securities
     markets that trade a small number of issues.

o    Currency Fluctuations in currencies,  local withholding and other taxes may
     adversely impact the price of the Fund's investment.

o    Credit and rating risk Credit risk  relates to the ability of the issuer to
     meet interest or principal payments or both as they become due. In general,
     lower-grade,  higher-yield  bonds are  subject to credit  risk to a greater
     extent than  lower-yield,  higher-quality  bonds. The lower the rating of a
     debt  instrument the more  speculative its  characteristics  and changes in
     economic or other  circumstances are more likely to lead to an inability of
     the issuer to make  principal and interest  payments than issuers of higher
     grade securities.

o    Interest rate risk Interest rate risk refers to the  fluctuations  in value
     of fixed-income  securities resulting from the inverse relationship between
     price and yield.  For example,  an increase in general  interest rates will
     tend to reduce the market value of already-issued fixed-income investments,
     and a decline in general  interest rates will tend to increase their value.
     In addition,  debt  securities with longer  maturities,  which tend to have
     higher yields,  are subject to potentially  greater  fluctuations  in value
     from changes in interest rates than obligations with shorter maturities.

o    Company risk Investing in the Fund involves the risk common to investing in
     any  security,  that is that the value of the  securities  held by the Fund
     will  fluctuate  in response to changes in  economic  conditions  or public
     expectations  about  those  securities.  The net asset  value of the Fund's
     shares will change accordingly.

o    Market risk The market value of a security may move up and down,  sometimes
     rapidly and unpredictably.  These fluctuations, which are often referred to
     as "volatility," may cause a security to be worth less than it was worth at
     an earlier time. Market risks may affect a single issuer, industry,  sector
     of the  economy,  or the market as a whole.  Market  risk is common to most
     investments--including  stocks and bonds,  and the mutual funds that invest
     in them.

Since  the Fund will  concentrate  its  investments  in the  financial  services
sector,  it  may  be  subject  to  greater  share  price   fluctuations  than  a
non-concentrated  fund and there is the risk that the Fund will  perform  poorly
during a downturn in that  sector.  Also,  changes in  government  policies  and
regulation, interest rates, currency exchange rates, and other factors affecting
the  financial  markets  may  affect  businesses  in  the  finance  sector  more
significantly.  In  addition,  as the Fund's  investments  are  concentrated  in
investments in the financial  services sector in the Pacific Basin, the Fund may
be more volatile than a more diversified Pacific Basin sector fund.

An  investment  in the Fund is not a  deposit  of a bank and is not  insured  or
guaranteed by the Federal Deposit Insurance  Corporation or any other government
agency.

WHO MAY WANT TO INVEST?

The Fund may best suit those investors who want long-term capital  appreciation,
and who can tolerate the risks involved with stock and foreign investing.  Also,
the Fund may only be appropriate if you can tolerate concentrated investments in
a single  market  sector  within the Pacific  Basin  region.  The Fund should be
considered a vehicle for diversification and should not be considered a balanced
investment program by itself.


                  FOR MORE INFORMATION PLEASE CALL 800-426-4685



                  FOR MORE INFORMATION PLEASE CALL 800-426-4685



GAM PACIFIC BASIN FUND

PAST PERFORMANCE AND EXPENSES

A bar  displays  the  annual  return of the Fund for each of the last ten years.
This  illustrates  the  variability  of the  performance  from  year to year and
provides some indication of the risks of investing in the Fund. Fund performance
shown does not reflect Class A sales charges,  but includes the  reinvestment of
dividends and capital  gains.  Performance  would be lower if sales charges were
included. Past performance does not guarantee or predict future results.


[The table below represents a bar chart in the printed piece.]

                      GAM Pacific Basin Fund
                      Class A Share
                      Annual Total Returns
                      As of December 31

         93                  51.52
         94                   7.41
         95                   4.56
         96                  -0.39
         97                 -30.00
         98                  -3.99
         99                  74.91
         00                 -23.21
         01                 -17.45
         02                  __.__

Highest and Lowest Returns

Highest Performing Quarter:       36.64% in 4th quarter of 1999
Lowest Performing Quarter:       -26.11% in 4th quarter of 1997


The table shows how the average annual returns for 1, 5 and 10 years (or life of
class) for each class of the Fund before taxes compare to those of a broad-based
securities market index. In addition,  after-tax returns are presented for Class
A Shares of the Fund. The after-tax  returns are calculated using the historical
highest  individual  federal  marginal  income tax rates and do not  reflect the
impact of state or local taxes. Actual after-tax returns depend on an investor's
tax  situation  and may differ from those shown in the table.  In addition,  the
after-tax  returns  shown are not relevant to  investors  who hold shares of the
Fund  through  tax-deferred  arrangements,  such as 401(k)  plans or  individual
retirement accounts. After-tax returns for the other classes of shares will vary
from the Class A after-tax  returns shown.  Past  performance  (before and after
taxes) is not an indication of future results.

The MSCI Pacific Index is a broad market index used for comparative purposes.


GAM Pacific Basin Fund
1-, 5-, and 10-Year  (or  Life-of-Class)  Average  Annual  Total  Return for all
Relevant Share Classes Plus a Comparison to the MSCI Pacific Index
As of December 31, 2002

                                                                  10 Year
Class                                                        (or Life-of-Class
   (inception date)                    1 Year    5 Year   if less than 10 Years)

A Shares (May 6, 1987)
   (after maximum sales charge
   of 5.50%)
Return Before Taxes                     __.__%    __.__%          __.__%
Return After Taxes on Distributions     __.__%    __.__%          __.__%
Return After Taxes on Distributions
   and Sale of Fund Shares              __.__%    __.__%          __.__%

B Shares (May 26, 1998)
   (with deferred sales charge)
   Return Before Taxes                  __.__%     N/A            __.__%

C Shares (June 1, 1998)
   (with sales charge of 1% and
   deferred sales charge)
   Return Before Taxes                  __.__%     N/A            __.__%

D Shares (October 18, 1995)
   (after maximum sales charge
   of 3.5%)
   Return Before Taxes                  __.__%    __.__%          __.__%

MSCI Pacific Index**                    __.__%    __.__%          __.__%

*    Returns of MSCI Pacific  Index were for the  Life-of-Class  B:  __.__%,  C:
     __.__% and D: __.__%.
**   The MSCI Pacific Index is an unmanaged  index of  securities  listed on the
     stock  exchanges  of  Australia,   Hong  Kong,   Japan,   New  Zealand  and
     Singapore/Malaysia  and includes  reinvestment of dividends.  Investors may
     not purchase indices directly.


Fees and Expenses of the Fund

Fund investors pay various  expenses either  directly or indirectly.  This table
shows the expenses  for the past year,  adjusted to reflect any charges that you
may pay if you buy and hold shares of the Fund. Actual or future expenses may be
different.

GAM Pacific Basin Fund Investor Expenses
Shareholder Transaction Expenses

                                    CLASS A    CLASS B   CLASS C      CLASS D

Sales charges (fees paid directly
from your investment)
--------------------------------- ---------- ---------- ----------- -----------

Maximum Sales Charge
(as a percentage of the offering
price)                               5.50%      5.00%     2.00%        3.50%

Maximum Front-End Sales Charge
(as a percentage of the offering
price)                               5.50%      0.00%     1.00%        3.50%

Maximum Deferred Sales Charge
(as a percentage of the original
purchase price or the amount
redeemed, whichever is less)         0.00%*     5.00%     1.00%        0.00%

Redemption Fee (paid directly
from your investment upon
redemption)**                        1.00%      0.00%     0.00%        1.00%



Annual Fund  operating  expenses (% of net assets)  (expenses  that are deducted
from Fund assets)
--------------------------------- ---------- ---------- ----------- -----------

Management Fees                       1.00%      1.00%     1.00%        1.00%
Distribution (12b-1) Fees             0.30%      1.00%     1.00%        0.50%
Other Expenses                       __.__%     __.__%    __.__%       __.__%
Total Fund Operating Expenses        __.__%     __.__%    __.__%       __.__%

*    Except  for  investments  of $1  million or more.  See  "Information  about
     contingent deferred sales charge."
**   For shares redeemed or exchanged within 90 days of the date of purchase.


Examples

These  examples  can help you compare the cost of investing in the Fund with the
cost of investing in other mutual  funds.  The examples  assume a 5% return each
year, with operating expenses staying the same. Your actual returns and expenses
may be different.

Example #1 assumes you invest  $10,000 in the Fund for the periods  shown,  then
redeem all your shares at the end of those periods.

Example #2 assumes you invest $10,000 in the Fund for the periods shown, but you
do not redeem your shares at the end of those periods.

Expenses of Hypothetical $10,000 Investment
in GAM Pacific Basin Fund


                                    CLASS A*   CLASS B**  CLASS C     CLASS D*

EXAMPLE #1

---------------------------       ---------- ---------- ----------- -----------
For one year                         _____      _____     _____        _____
For three years                      _____      _____     _____        _____
For five years                       _____      _____     _____        _____
For ten years                        _____      _____     _____        _____

EXAMPLE #2

---------------------------       ---------- ---------- ----------- -----------
For one year                         _____      _____     _____        _____
For three years                      _____      _____     _____        _____
For five years                       _____      _____     _____        _____
For ten years                        _____      _____     _____        _____


*    Due to the redemption fee, the cost of investing for one year would be $100
     higher  for  shares  redeemed  or  exchanged  within 90 days of the date of
     purchase.

**   The Class B example  reflects  Class A expenses  for years nine through ten
     because Class B shares  convert to Class A shares after a maximum period of
     eight years.  Class B shares may convert sooner  depending on the amount of
     Class B shares  purchased  and  when.  See  "Information  about  contingent
     deferred sales charge."



                  FOR MORE INFORMATION PLEASE CALL 800-426-4685


ADDITIONAL INFORMATION ABOUT NON-PRINCIPAL STRATEGIES AND RISKS

STRATEGIES

In  addition  to the  principal  strategies  stated  above,  the  following  are
non-principal strategies you should consider.

The Fund will not acquire more than 10% of the outstanding  voting securities of
any one issuer.

The  Fund  may  from  time  to time  utilize  certain  sophisticated  investment
techniques,  including derivatives.  Derivatives are financial instruments which
derive  their  value  from  the  performance  of  an  underlying  asset--another
security, a commodity, or an index. Examples of these include:

o    Forward foreign exchange  contracts When the Fund buys a foreign  security,
     it generally does so in a foreign currency.  That currency has a price, and
     that price fluctuates. In order to reduce the risk of currency price swings
     or for other purposes,  the Fund may buy forward foreign exchange contracts
     on foreign  currencies.  These contracts "lock in" a price for the currency
     at a certain  future  date.  The Fund may also use put and call  options on
     foreign currencies.

o    Options and warrants An option is a contract  giving the owner the right to
     buy ("call option") or sell ("put option") a security at a designated price
     ("strike  price") on a certain date. A warrant is the  equivalent of a call
     option written by the issuer of the underlying security.

o    Futures contracts  Futures contracts  obligate one party to deliver and the
     other party to purchase a specific  quantity of a commodity  or a financial
     instrument at a designated future date, time and place. Stock index futures
     contracts  call for a cash payment based on the increase or decrease in the
     value of an index.

The  Fund  may  enter  into  foreign  currency  forward  contracts,   repurchase
agreements,  and certain other types of futures,  options and  derivatives  with
banks,  brokerage firms and other  investors in  over-the-counter  markets,  not
through any exchange. The Fund may experience losses or delays if a counterparty
to any such contract defaults or goes into bankruptcy.

RISKS

In addition to the principal risks stated above, the following are non-principal
risks you should consider.

o    Derivative  instruments  Derivatives  involve  substantial risk,  because a
     relatively  small change in the  security or index  underlying a derivative
     can produce a  disproportionately  large profit or loss.  The Fund may lose
     more than its initial investment.  If the Fund has a derivative  investment
     which  begins  to  deteriorate,  there  may be no way to sell it and  avoid
     further  losses,  because  no buyer  may be  available.  In  addition,  the
     securities  underlying some  derivatives  may be illiquid.  The Fund may be
     forced to hold a position until exercise or expiration,  which could result
     in  losses.  Hedging,  by its  nature,  involves  predicting  the  probable
     direction of price movements;  if the Fund predicts  incorrectly,  it could
     lose money--more than if it had not hedged at all. Hedging cannot eliminate
     fluctuations in the prices of foreign securities, and there is no assurance
     that such hedging attempts will be successful.

o    Management  risk The Fund is subject to  management  risk  because it is an
     actively managed  investment  portfolio.  The investment advisor will apply
     its investment  techniques and risk analyses in making investment decisions
     for the Fund, but there is no guarantee that its decisions will produce the
     intended result.

o    Small and mid-cap risk Investing in companies with small and mid-cap market
     capitalizations  involves greater risk than investing in larger  companies.
     Their stock prices can rise very quickly and drop  dramatically  in a short
     period of time. This volatility results from a number of factors, including
     reliance by these companies on limited product lines, markets and financial
     and  management  resources.  These and  other  factors  may make  small and
     mid-cap  companies  more  susceptible  to  setbacks  or  downturns.   These
     companies may experience  higher rates of bankruptcy or other failures than
     larger  companies.  They may be more  likely to be  negatively  affected by
     changes in management. In addition, the stock of a small or mid-cap company
     may be thinly traded.

PORTFOLIO TURNOVER

The Fund's  portfolio  turnover rate will  fluctuate  from year to year, and the
Fund may have a portfolio  turnover rate of more than 100% annually.  "Portfolio
turnover"  describes the rate at which the Fund traded its portfolio  securities
during its last fiscal year. For example, if the Fund sold all of its securities
during the year,  its portfolio  turnover  rate would have been 100%.  Increased
portfolio  turnover creates higher brokerage and transaction costs for the Fund,
which may reduce its  overall  performance.  Additionally,  the  realization  of
capital gains from selling  portfolio  securities may result in distributions of
taxable capital gains to shareholders,  since the Fund will normally  distribute
all of its capital  gains  realized to  shareholders  each year to avoid  excise
taxes under the Internal Revenue Code.




                  FOR MORE INFORMATION PLEASE CALL 800-426-4685



GAM Japan Capital Fund

INVESTMENT OBJECTIVE
The  Fund  seeks  long-term  capital   appreciation.   Upon  written  notice  to
shareholders,  the Fund's investment  objective may be changed without a vote of
shareholders.

PRINCIPAL INVESTMENT STRATEGY
Under  normal  circumstances,  the Fund  invests  at least 80% of its  assets in
investments  that are  economically  tied to Japan. A company will be considered
economically  tied to Japan  if a) at  least  50% of the  company's  assets  are
located in Japan or at least 50% of its total revenues are derived from goods or
services  produced  in Japan or sales made in Japan;  b) the  principal  trading
market  for  the  company's  securities  is in  Japan;  or  c)  the  company  is
incorporated under the laws of Japan.

The Fund invests primarily in common stock of Japanese  companies.  In addition,
if the investment advisor determines that the long-term capital  appreciation of
bonds  may equal or  exceed  the  return  on  stocks,  then the Fund may  invest
substantially  in bonds issued either by governments  or government  agencies or
corporations  without regard to the maturity of such bonds.  Debt  securities in
which the Fund may invest are not required to have any rating.  The Fund may not
invest more than 5% of its assets in bonds rated lower than investment grade.

In selecting investments for the Fund, the investment advisor looks first at the
economic  environment  and  attempts  to exclude  sectors  and stocks  viewed as
over-valued.  Within  those areas  identified  for  investment,  the  investment
advisor employs a fundamental investment process focusing on factors such as:

o    Experience and shareholder focus of company management
o    Financial  health  including the strength of the balance sheet,  cash flow,
     earnings quality and long-term growth
o    Competitive position within the industry
o    Price of the stock compared to forecasted growth rate
o    Liquidity as measured by market capitalization and daily trading volume

Stocks selected tend to have higher return on equity,  higher growth in earnings
per share and higher  growth in book value per share  than the  benchmark  index
(Tokyo  Stock  Exchange  Index).  Companies  selected  tend  to  have  a  market
capitalization of over $1 billion,  although the Fund is not restricted in terms
of the size of the  companies  in which it invests.  Sales are  triggered  by an
assessment  that  the  stock  is no  longer  a good  value  or that  fundamental
prospects have deteriorated.  For example,  fundamental prospects are considered
to have  deteriorated  when the company has been discounted in value in terms of
its price per earnings ratio.

The Fund, for temporary  defensive  purposes,  may invest in short-term bonds of
foreign and United States companies,  foreign  governments,  the U.S. government
and its  agencies  and  instrumentalities  as well as money  market  instruments
denominated  in U.S.  dollars  or a  foreign  currency.  Should  the Fund take a
temporary defensive position, it may not achieve its investment  objectives.  At
no point  will more  than 35% of the  Fund's  portfolio  be held in cash or cash
equivalents, except when the Fund is taking temporary defensive measures.

The Fund will  notify  shareholders  at least 60 days prior to any change in its
policy of investing at least 80% of its assets in investments in Japan.

PRINCIPAL RISKS

You could lose all or a portion of your  investment in the Fund.  Stock and bond
prices fluctuate in response to many factors including  interest rates,  general
economic  conditions,  investor  perceptions and market liquidity.  Investing in
foreign  securities  generally  involves  greater  risk than  investing  in U.S.
securities.  Since the Fund invests principally in Japan, it will be impacted by
national events there to a greater extent than a more broadly  diversified fund.
Foreign  securities  prices may vary more widely  than those of U.S.  securities
because of economic, financial, political or social factors including:

o    Political conditions  Government  regulation or action may adversely affect
     foreign   markets   through  the  imposition  of  capital   controls,   the
     nationalization  of companies  or  industries,  excessive  taxes or similar
     items.

o    Information There is likely to be less available  information about foreign
     securities than is available about U.S.  companies.  Foreign  companies may
     not be subject to the same accounting standards as U.S. companies.  Foreign
     issuers  may  be  subject  to  less  stringent  government  supervision  or
     regulation of financial markets and business practices than U.S. issuers.

o    Liquidity  Non-U.S.  securities  may  trade on small  exchanges  less  well
     regulated  than U.S.  exchanges,  may be more difficult to buy or sell on a
     particular day and may be more volatile than U.S. securities.

o    Commissions and fees Brokerage fees and  commissions  are generally  higher
     abroad than in the U.S.

o    Emerging markets Countries in emerging markets may have relatively unstable
     governments,  economies  based  on only a few  industries,  and  securities
     markets that trade a small number of issues.

o    Currency Fluctuations in currencies,  local withholding and other taxes may
     adversely impact the price of the Fund's investment.

o    Credit and rating risk Credit risk  relates to the ability of the issuer to
     meet interest or principal payments or both as they become due. In general,
     lower-grade,  high-yield  bonds are  subject  to  credit  risk to a greater
     extent than  lower-yield,  higher-quality  bonds. The lower the rating of a
     debt  instrument the more  speculative its  characteristics  and changes in
     economic or other  circumstances are more likely to lead to an inability of
     the issuer to make  principal and interest  payments than issuers of higher
     grade securities.

o    Interest rate risk Interest rate risk refers to the  fluctuations  in value
     of fixed-income  securities resulting from the inverse relationship between
     price and yield.  For example,  an increase in general  interest rates will
     tend to reduce the market value of already-issued fixed-income investments,
     and a decline in general  interest rates will tend to increase their value.
     In addition,  debt  securities with longer  maturities,  which tend to have
     higher yields,  are subject to potentially  greater  fluctuations  in value
     from changes in interest rates than obligations with shorter maturities.

o    Company risk Investing in the Fund involves the risk common to investing in
     any  security,  that is that the value of the  securities  held by the Fund
     will  fluctuate  in response to changes in  economic  conditions  or public
     expectations  about  those  securities.  The net asset  value of the Fund's
     shares will change accordingly.

o    Market risk The market value of a security may move up and down,  sometimes
     rapidly and unpredictably.  These fluctuations, which are often referred to
     as "volatility," may cause a security to be worth less than it was worth at
     an earlier time. Market risk may affect a single issuer,  industry,  sector
     of the  economy,  or the market as a whole.  Market  risk is common to most
     investments--including  stocks and bonds,  and the mutual funds that invest
     in them.

An  investment  in the Fund is not a  deposit  of a bank and is not  insured  or
guaranteed by the Federal Deposit Insurance  Corporation or any other government
agency.

WHO MAY WANT TO INVEST?
The Fund may best suit those investors who want long-term capital  appreciation,
and who can tolerate the risks involved with stock and foreign investing.



                  FOR MORE INFORMATION PLEASE CALL 800-426-4685

GAM JAPAN CAPITAL FUND

PAST PERFORMANCE AND EXPENSES

A bar displays the annual return of the Fund for each year since its  inception.
This  illustrates  the  variability  of the  performance  from  year to year and
provides some indication of the risks of investing in the Fund. Fund performance
shown does not reflect Class A sales charges,  but includes the  reinvestment of
dividends and capital  gains.  Performance  would be lower if sales charges were
included. Past performance does not guarantee or predict future results.

[The table below represents a bar chart in the printed piece.]


                     GAM Japan Capital Fund
                     Class A Share
                     Annual Total Returns
                     As of December 31


        95                   6.45
        96                   0.15
        97                  -2.58
        98                  -2.75
        99                  87.05
        00                 -32.30
        01                 -23.25
        02                  __.__

Highest and Lowest Returns

Highest Performing Quarter:       21.68% in 4th quarter of 1999
Lowest Performing Quarter:       -17.34% in 4th quarter of 2000

The table shows how the average  annual returns for 1 year, 5 years and the life
of  class  for  each  class  of the  Fund  before  taxes  compare  to those of a
broad-based  securities  market  index.  In  addition,   after-tax  returns  are
presented for Class A Shares of the Fund.  The after-tax  returns are calculated
using the historical highest individual federal marginal income tax rates and do
not reflect the impact of state or local taxes.  Actual after-tax returns depend
on an investor's tax situation and may differ from those shown in the table.  In
addition,  the  after-tax  returns  shown are not relevant to investors who hold
shares of the Fund through  tax-deferred  arrangements,  such as 401(k) plans or
individual  retirement  accounts.  After-tax  returns  for the other  classes of
shares  will vary from the Class A after-tax  returns  shown.  Past  performance
(before and after taxes) is not an indication of future results.

The Tokyo Stock  Exchange  Index is a broad  market  index used for  comparative
purposes.


GAM Japan Capital Fund
1-, 5-, and  Life-of-Class  Average  Annual Total Return for all Relevant  Share
Classes Plus a Comparison to the Tokyo Stock Exchange Index
As of December 31, 2002

                                                                  10 Year
Class                                                        (or Life-of-Class
   (inception date)                    1 Year    5 Year   if less than 10 Years)

A Shares (July 1, 1994)
   (after maximum sales charge
   of 5.50%)
Return Before Taxes                     __.__%    __.__%          __.__%
Return After Taxes on Distributions     __.__%    __.__%          __.__%
Return After Taxes on Distributions
   and Sale of Fund Shares              __.__%    __.__%          __.__%

B Shares (May 26, 1998)
   (with deferred sales charge)
   Return Before Taxes                  __.__%     N/A            __.__%

C Shares (May 19, 1998)
   (with sales charge of 1% and
   deferred sales charge)
   Return Before Taxes                  __.__%     N/A            __.__%

Tokyo Stock Exchange Index**            __.__%    __.__%          __.__%

*    Returns of Tokyo Stock Exchange Index (TOPIX) were for the Life-of-Class B:
     __.__% and C: __.__%.
**   The TOPIX is an unmanaged  composite index of companies listed on the First
     Section of the Tokyo Stock Exchange and includes reinvestment of dividends.
     Investors may not purchase indices directly.


Fees and Expenses of the Fund

Fund investors pay various  expenses either  directly or indirectly.  This table
shows the expenses  for the past year,  adjusted to reflect any charges that you
may pay if you buy and hold shares of the Fund. Actual or future expenses may be
different.

GAM Japan Capital Fund Investor Expenses
Shareholder Transaction Expenses

                                    CLASS A    CLASS B   CLASS C

Sales charges (fees paid directly
from your investment)
--------------------------------- ---------- ---------- -----------

Maximum Sales Charge
(as a percentage of the offering
price)                               5.50%      5.00%     2.00%

Maximum Front-End Sales Charge
(as a percentage of the offering
price)                               5.50%      0.00%     1.00%

Maximum Deferred Sales Charge
(as a percentage of the original
purchase price or the amount
redeemed, whichever is less)         0.00%*     5.00%     1.00%

Redemption Fee (paid directly
from your investment upon
redemption)**                        1.00%      0.00%     0.00%



Annual Fund  operating  expenses (% of net assets)
(expenses  that are deducted from Fund assets)
--------------------------------- ---------- ---------- -----------

Management Fees                       1.00%      1.00%     1.00%
Distribution (12b-1) Fees             0.30%      1.00%     1.00%
Other Expenses                       __.__%     __.__%    __.__%
Total Fund Operating Expenses        __.__%     __.__%    __.__%

*    Except  for  investments  of $1  million or more.  See  "Information  about
     contingent deferred sales charge."
**   For shares redeemed or exchanged within 90 days of the date of purchase.

Examples

These  examples  can help you compare the cost of investing in the Fund with the
cost of investing in other mutual  funds.  The examples  assume a 5% return each
year, with operating expenses staying the same. Your actual returns and expenses
may be different.

Example #1 assumes you invest  $10,000 in the Fund for the periods  shown,  then
redeem all your shares at the end of those periods.

Example #2 assumes you invest $10,000 in the Fund for the periods shown, but you
do not redeem your shares at the end of those periods.

Expenses of Hypothetical $10,000 Investment
in GAM Japan Capital Fund

                                    CLASS A*   CLASS B**  CLASS C

EXAMPLE #1

---------------------------       ---------- ---------- -----------
For one year                         _____      _____     _____
For three years                      _____      _____     _____
For five years                       _____      _____     _____
For ten years                        _____      _____     _____

EXAMPLE #2

---------------------------       ---------- ---------- -----------
For one year                         _____      _____     _____
For three years                      _____      _____     _____
For five years                       _____      _____     _____
For ten years                        _____      _____     _____

*    Due to the redemption fee, the cost of investing for one year would be $100
     higher  for  shares  redeemed  or  exchanged  within 90 days of the date of
     purchase.
**   The Class B example  reflects  Class A expenses  for years nine through ten
     because Class B shares  convert to Class A shares after a maximum period of
     eight years.  Class B shares may convert sooner  depending on the amount of
     Class B shares  purchased  and  when.  See  "Information  about  contingent
     deferred sales charge."




                  FOR MORE INFORMATION PLEASE CALL 800-426-4685

ADDITIONAL INFORMATION ABOUT NON-PRINCIPAL STRATEGIES AND RISKS

STRATEGIES

In  addition  to the  principal  strategies  stated  above,  the  following  are
non-principal strategies you should consider.

The Fund will not acquire more than 10% of the outstanding  voting securities of
any one issuer.  No more than 25% of the Fund's total assets will be invested in
any one industry.

The  Fund  may  from  time  to time  utilize  certain  sophisticated  investment
techniques,  including derivatives.  Derivatives are financial instruments which
derive  their  value  from  the  performance  of  an  underlying  asset--another
security, a commodity, or an index. Examples of these include:

o    Forward foreign exchange  contracts When the Fund buys a foreign  security,
     it generally does so in a foreign currency.  That currency has a price, and
     that price fluctuates. In order to reduce the risk of currency price swings
     or for other purposes,  the Fund may buy forward foreign exchange contracts
     on foreign  currencies.  These contracts "lock in" a price for the currency
     at a certain  future  date.  The Fund may also use put and call  options on
     foreign currencies.

o    Options and warrants An option is a contract  giving the owner the right to
     buy ("call option") or sell ("put option") a security at a designated price
     ("strike  price") on a certain date. A warrant is the  equivalent of a call
     option written by the issuer of the underlying security.

o    Futures contracts  Futures contracts  obligate one party to deliver and the
     other party to purchase a specific  quantity of a commodity  or a financial
     instrument at a designated future date, time and place. Stock index futures
     contracts  call for a cash payment based on the increase or decrease in the
     value of an index.

The  Fund  may  enter  into  foreign  currency  forward  contracts,   repurchase
agreements,  and certain other types of futures,  options and  derivatives  with
banks,  brokerage firms and other  investors in  over-the-counter  markets,  not
through any exchange. The Fund may experience losses or delays if a counterparty
to any such contract defaults or goes into bankruptcy.

RISKS

In addition to the principal risks stated above, the following are non-principal
risks you should consider.

o    Derivative  instruments  Derivatives  involve  substantial risk,  because a
     relatively  small change in the  security or index  underlying a derivative
     can produce a  disproportionately  large loss.  The Fund may lose more than
     its  initial  investment.  If the Fund has a  derivative  investment  which
     begins to  deteriorate,  there  may be no way to sell it and avoid  further
     losses,  because no buyer may be  available.  In addition,  the  securities
     underlying some derivatives may be illiquid. The Fund may be forced to hold
     a position  until  exercise or  expiration,  which could  result in losses.
     Hedging, by its nature, involves predicting the probable direction of price
     movements; if the Fund predicts incorrectly, it could lose money--more than
     if it had not hedged at all. Hedging cannot  eliminate  fluctuations in the
     prices of foreign  securities,  and there is no assurance that such hedging
     attempts will be successful.

o    Management  risk The Fund is subject to  management  risk  because it is an
     actively managed  investment  portfolio.  The investment advisor will apply
     its investment  techniques and risk analyses in making investment decisions
     for the Fund,  but there is no guarantee that its decision will produce the
     intended result.

o    Small and mid-cap risk Investing in companies with small and mid-cap market
     capitalizations  involves greater risk than investing in larger  companies.
     Their stock prices can rise very quickly and drop  dramatically  in a short
     period of time. This volatility results from a number of factors, including
     reliance by these companies on limited product lines, markets and financial
     and  management  resources.  These and  other  factors  may make  small and
     mid-cap  companies  more  susceptible  to  setbacks  or  downturns.   These
     companies may experience  higher rates of bankruptcy or other failures than
     larger  companies.  They may be more  likely to be  negatively  affected by
     changes in management. In addition, the stock of a small or mid-cap company
     may be thinly traded.

PORTFOLIO TURNOVER

The Fund's  portfolio  turnover rate will  fluctuate  from year to year, and the
Fund may have a portfolio  turnover rate of more than 100% annually.  "Portfolio
turnover"  describes the rate at which the Fund traded its portfolio  securities
during its last fiscal year. For example, if the Fund sold all of its securities
during the year,  its portfolio  turnover  rate would have been 100%.  Increased
portfolio  turnover creates higher brokerage and transaction costs for the Fund,
which may reduce its  overall  performance.  Additionally,  the  realization  of
capital gains from selling  portfolio  securities may result in distributions of
taxable capital gains to shareholders,  since the Fund will normally  distribute
all of its capital gain realized to shareholders each year to avoid excise taxes
under the Internal Revenue Code.



                  FOR MORE INFORMATION PLEASE CALL 800-426-4685
GAM Europe Fund

INVESTMENT OBJECTIVE
The  Fund  seeks  long-term  capital   appreciation.   Upon  written  notice  to
shareholders,  the Fund's investment  objective may be changed without a vote of
shareholders.

PRINCIPAL INVESTMENT STRATEGY
Under  normal  circumstances,  the Fund  invests  at least 80% of its  assets in
investments  that are  economically  tied to the countries of Europe.  A company
will  be  considered  economically  tied to  Europe  if a) at  least  50% of the
company's assets are located in Europe or at least 50% of its total revenues are
derived  from goods or services  produced in Europe or sales made in Europe;  b)
the principal  trading market for the company's  securities is in Europe;  or c)
the company is incorporated  under the laws of a European country.  The European
countries  in which the Fund may invest  include  the United  Kingdom,  Ireland,
France, Germany, the Netherlands,  Denmark,  Norway, Sweden,  Finland,  Iceland,
Switzerland,  Austria, Belgium, Spain, Portugal, Italy, Greece, Hungary, Poland,
the Czech Republic and Slovakia. The Fund invests primarily in common stock, and
under  normal  market  conditions,  the Fund will invest in stocks  issued in at
least  three  different  countries.  In  addition,  if  the  investment  advisor
determines that the long-term capital  appreciation of bonds may equal or exceed
the return on stocks,  then the Fund may invest  substantially  in bonds  issued
either by governments or government  agencies or corporations  without regard to
the maturity of such bonds. Debt securities in which the Fund may invest are not
required to have any rating.  The Fund may not invest more than 5% of its assets
in bonds rated lower than investment grade.

The investment  advisor combines  top-down and bottom-up  analysis.  Country and
sector  allocation are integrated  into the process,  but stock selection is the
primary factor  influencing Fund  composition.  Country selection is a result of
stock and  industry  selection.  Each stock is  evaluated  relative  to its peer
group,  its earnings  history and its growth  potential.  Company  visits are an
important  part of the  selection  process.  Stocks  selected  tend to have  the
following characteristics:

o    Strong business with a leadership position in their field
o    Attractive valuations
o    Good quality management
o    Strong company franchise, strong operating environment and prospects

The investment advisor does not screen based on size of the company. Rather, the
investment  advisor  takes into  account  its  ability to  purchase  or sell the
company's  stock with  relative  ease within a short  period of time.  Sales are
triggered  by an  assessment  that the stock is no  longer a good  value or that
fundamental prospects have deteriorated.  For example,  prospects are considered
to have  deteriorated  when  the  company  becomes  overvalued.  Sales  are also
triggered  when the  investment  advisor  determines  that  there  may be better
opportunities elsewhere.

The Fund, for temporary  defensive  purposes,  may invest in short-term bonds of
foreign and United States companies,  foreign  governments,  the U.S. government
and its  agencies  and  instrumentalities  as well as money  market  instruments
denominated  in U.S.  dollars  or a  foreign  currency.  Should  the Fund take a
temporary defensive position, it may not achieve its investment  objectives.  At
no point  will more  than 35% of the  Fund's  portfolio  be held in cash or cash
equivalents, except when the Fund is taking temporary defensive measures.

The Fund will  notify  shareholders  at least 60 days prior to any change in its
policy of  investing  at least  80% of its  assets in  investments  in  European
countries.

PRINCIPAL RISKS
You could lose all or a portion of your  investment in the Fund.  Stock and bond
prices fluctuate in response to many factors including  interest rates,  general
economic  conditions,  investor  perceptions and market liquidity.  Investing in
foreign  securities  generally  involves  greater  risk than  investing  in U.S.
securities. Since the Fund invests principally in Europe, it will be impacted by
regional events there to a greater extent than a more broadly  diversified fund.
Foreign  securities  prices may vary more widely  than those of U.S.  securities
because of economic, financial, political or social factors including:

o    Political conditions  Government  regulation or action may adversely affect
     foreign   markets   through  the  imposition  of  capital   controls,   the
     nationalization  of companies  or  industries,  excessive  taxes or similar
     items.

o    Information There is likely to be less available  information about foreign
     securities than is available about U.S.  companies.  Foreign  companies may
     not be subject to the same accounting standards as U.S. companies.  Foreign
     issuers  may  be  subject  to  less  stringent  government  supervision  or
     regulation of financial markets and business practices than U.S. issuers.

o    Liquidity  Non-U.S.  securities  may  trade on small  exchanges  less  well
     regulated  than U.S.  exchanges,  may be more difficult to buy or sell on a
     particular day and may be more volatile than U.S. securities.

o    Commissions and fees Brokerage fees and  commissions  are generally  higher
     abroad than in the U.S.

o    Emerging markets Countries in emerging markets may have relatively unstable
     governments,  economies  based  on only a few  industries,  and  securities
     markets that trade a small number of issues.

o    Currency Fluctuations in currencies,  local withholding and other taxes may
     adversely impact the price of the Fund's investment.

o    Credit and rating risk Credit risk  relates to the ability of the issuer to
     meet interest or principal payments or both as they become due. In general,
     lower-grade,  high-yield  bonds are  subject  to  credit  risk to a greater
     extent than  lower-yield,  higher-quality  bonds. The lower the rating of a
     debt  instrument the more  speculative its  characteristics  and changes in
     economic or other  circumstances are more likely to lead to an inability of
     the issuer to make  principal and interest  payments than issuers of higher
     grade securities.

o    Interest rate risk Interest rate risk refers to the  fluctuations  in value
     of fixed-income  securities resulting from the inverse relationship between
     price and yield.  For example,  an increase in general  interest rates will
     tend to reduce the market value of already-issued fixed-income investments,
     and a decline in general  interest rates will tend to increase their value.
     In addition,  debt  securities with longer  maturities,  which tend to have
     higher yields,  are subject to potentially  greater  fluctuations  in value
     from changes in interest rates than obligations with shorter maturities.

o    Company risk Investing in the Fund involves the risk common to investing in
     any  security,  that is that the value of the  securities  held by the Fund
     will  fluctuate  in response to changes in  economic  conditions  or public
     expectations  about  those  securities.  The net asset  value of the Fund's
     shares will change accordingly.

o    Market risk The market value of a security may move up and down,  sometimes
     rapidly and unpredictably.  These fluctuations, which are often referred to
     as "volatility," may cause a security to be worth less than it was worth at
     an earlier time. Market risk may affect a single issuer,  industry,  sector
     of the  economy,  or the market as a whole.  Market  risk is common to most
     investments--including  stocks and bonds,  and the mutual funds that invest
     in them.

An  investment  in the Fund is not a  deposit  of a bank and is not  insured  or
guaranteed by the Federal Deposit Insurance  Corporation or any other government
agency.

WHO MAY WANT TO INVEST?
The Fund may best suit those investors who want long-term capital  appreciation,
and who can tolerate the risks involved with stock and foreign investing.



                  FOR MORE INFORMATION PLEASE CALL 800-426-4685

GAM EUROPE FUND

PAST PERFORMANCE AND EXPENSES

A bar  displays  the  annual  return of the Fund for each of the last ten years.
This  illustrates  the  variability  of the  performance  from  year to year and
provides some indication of the risks of investing in the Fund. Fund performance
shown does not reflect Class A sales charges,  but includes the  reinvestment of
dividends and capital  gains.  Performance  would be lower if sales charges were
included. Past performance does not guarantee or predict future results.


[The table below represents a bar chart in the printed piece.]

                     GAM Europe Fund
                     Class A Share
                     Annual Total Returns
                     As of December 31

        93                  22.68
        94                  -3.11
        95                  16.77
        96                  21.32
        97                  27.55
        98                  10.70
        99                  16.21
        00                   4.61
        01                 -21.29
        02                  __.__

Highest and Lowest Returns

Highest Performing Quarter:       27.94% in 4th quarter of 1999
Lowest Performing Quarter:       -17.45% in 3rd quarter of 1998


The table shows how the average annual returns for 1, 5 and 10 years (or life of
class) for each class of the Fund before taxes compare to those of a broad-based
securities market index. In addition,  after-tax returns are presented for Class
A Shares of the Fund. The after-tax  returns are calculated using the historical
highest  individual  federal  marginal  income tax rates and do not  reflect the
impact of state or local taxes. Actual after-tax returns depend on an investor's
tax  situation  and may differ from those shown in the table.  In addition,  the
after-tax  returns  shown are not relevant to  investors  who hold shares of the
Fund  through  tax-deferred  arrangements,  such as 401(k)  plans or  individual
retirement accounts. After-tax returns for the other classes of shares will vary
from the Class A after-tax  returns shown.  Past  performance  (before and after
taxes) is not an indication of future results.

The MSCI Europe Index is a broad market index used for comparative purposes.


GAM Europe Fund
1-, 5-, and 10-Year  (or  Life-of-Class)  Average  Annual  Total  Return for all
Relevant Share Classes Plus a Comparison to the MSCI Europe Index
As of December 31, 2002

                                                                  10 Year
Class                                                        (or Life-of-Class
   (inception date)                    1 Year    5 Year   if less than 10 Years)

A Shares (January 1, 1990)
   (after maximum sales charge
   of 5.50%)
Return Before Taxes                     __.__%    __.__%          __.__%
Return After Taxes on Distributions     __.__%    __.__%          __.__%
Return After Taxes on Distributions
   and Sale of Fund Shares              __.__%    __.__%          __.__%

B Shares (May 26, 1998)
   (with deferred sales charge)
   Return Before Taxes                  __.__%     N/A            __.__%

C Shares (May 20, 1998)
   (with sales charge of 1% and
   deferred sales charge)
   Return Before Taxes                  __.__%     N/A            __.__%

MSCI Europe Index**                     __.__%    __.__%          __.__%

*    Returns of MSCI Europe  Index were for the  Life-of-Class  B: __.__% and C:
     __.__%.
**   The MSCI Europe Index is an  unmanaged  index of  securities  listed on the
     stock  exchanges  of 15 European  countries  and includes  reinvestment  of
     dividends. Investors may not purchase indices directly.


Fees and Expenses of the Fund

Fund investors pay various  expenses either  directly or indirectly.  This table
shows the expenses  for the past year,  adjusted to reflect any charges that you
may pay if you buy and hold shares of the Fund. Actual or future expenses may be
different.

GAM Europe Fund Investor Expenses
Shareholder Transaction Expenses

                                    CLASS A    CLASS B   CLASS C

Sales charges (fees paid directly
from your investment)
--------------------------------- ---------- ---------- -----------

Maximum Sales Charge
(as a percentage of the offering
 price)                              5.50%      5.00%     2.00%

Maximum Front-End Sales Charge
(as a percentage of the
offering price)                      5.50%      0.00%     1.00%

Maximum Deferred Sales Charge
(as a percentage of the original
purchase price or the amount
redeemed, whichever is less)         0.00%*     5.00%     1.00%

Redemption Fee (paid directly
from your investment upon
redemption)**                        1.00%      0.00%     0.00%



Annual Fund  operating  expenses (% of net assets)
(expenses  that are deducted from Fund assets)
--------------------------------- ---------- ---------- -----------

Management Fees                       1.00%      1.00%     1.00%
Distribution (12b-1) Fees             0.30%      1.00%     1.00%
Other Expenses                       __.__%     __.__%    __.__%
Total Fund Operating Expenses        __.__%     __.__%    __.__%

*    Except  for  investments  of $1  million or more.  See  "Information  about
     contingent deferred sales charge."
**   For shares redeemed or exchanged within 90 days of the date of purchase.

Examples

These  examples  can help you compare the cost of investing in the Fund with the
cost of investing in other mutual  funds.  The examples  assume a 5% return each
year, with operating expenses staying the same. Your actual returns and expenses
may be different.

Example #1 assumes you invest  $10,000 in the Fund for the periods  shown,  then
redeem all your shares at the end of those periods.

Example #2 assumes you invest $10,000 in the Fund for the periods shown, but you
     do not redeem your shares at the end of those periods.

Expenses of Hypothetical $10,000 Investment
in GAM Europe Fund

                                    CLASS A*   CLASS B**  CLASS C

EXAMPLE #1

---------------------------       ---------- ---------- -----------
For one year                         _____      _____     _____
For three years                      _____      _____     _____
For five years                       _____      _____     _____
For ten years                        _____      _____     _____

EXAMPLE #2

---------------------------       ---------- ---------- -----------
For one year                         _____      _____     _____
For three years                      _____      _____     _____
For five years                       _____      _____     _____
For ten years                        _____      _____     _____

*    Due to the redemption fee, the cost of investing for one year would be $100
     higher  for  shares  redeemed  or  exchanged  within 90 days of the date of
     purchase.
**   The Class B example  reflects  Class A expenses  for years nine through ten
     because Class B shares  convert to Class A shares after a maximum period of
     eight years.  Class B shares may convert sooner  depending on the amount of
     Class B shares  purchased  and  when.  See  "Information  about  contingent
     deferred sales charge."






                  FOR MORE INFORMATION PLEASE CALL 800-426-4685


ADDITIONAL INFORMATION ABOUT NON-PRINCIPAL STRATEGIES AND RISKS

STRATEGIES

In  addition  to the  principal  strategies  stated  above,  the  following  are
non-principal strategies you should consider.

The Fund will not acquire more than 10% of the outstanding  voting securities of
any one issuer.  No more than 25% of the Fund's total assets will be invested in
any one industry.


The Fund may from time to time  engage in short  selling  of  securities.  Short
selling is an investment technique wherein the Fund sells a security it does not
own  anticipating  a decline in the market  value of the  security.  Losses from
short sales  differ  from  losses  that could be  incurred  from a purchase of a
security, because losses from short sales may be unlimited,  whereas losses from
purchases can equal only the total amount invested. The frequency of short sales
will vary  substantially  under different  market  conditions,  and no specified
portion of Fund assets as a matter of practice will be committed to short sales.
However,  no securities will be sold short if, after effect is given to any such
short sale, the total market value of all securities sold short would exceed 20%
of the value of the Fund's net assets.


The  Fund  may  from  time  to time  utilize  certain  sophisticated  investment
techniques,  including derivatives.  Derivatives are financial instruments which
derive  their  value  from  the  performance  of  an  underlying  asset--another
security, a commodity, or an index. Examples of these include:

o    Forward foreign exchange  contracts When the Fund buys a foreign  security,
     it generally does so in a foreign currency.  That currency has a price, and
     that price fluctuates. In order to reduce the risk of currency price swings
     or for other purposes,  the Fund may buy forward foreign exchange contracts
     on foreign  currencies.  These contracts "lock in" a price for the currency
     at a certain  future  date.  The Fund may also use put and call  options on
     foreign currencies.

o    Options and warrants An option is a contract  giving the owner the right to
     buy ("call option") or sell ("put option") a security at a designated price
     ("strike  price") on a certain date. A warrant is the  equivalent of a call
     option written by the issuer of the underlying security.

o    Futures contracts  Futures contracts  obligate one party to deliver and the
     other party to purchase a specific  quantity of a commodity  or a financial
     instrument at a designated future date, time and place. Stock index futures
     contracts  call for a cash payment based on the increase or decrease in the
     value of an index.


o    Contracts for Difference A Contract for Difference is an agreement  between
     two parties to settle at the close of the contract the  difference  between
     the  opening  price  and  closing  price of a  security  identified  in the
     contract,  multiplied  by the number of shares  specified in the  contract.
     When entering into a Contract for Difference,  the Fund attempts to predict
     either that the price of the security  will fall (taking a short  position)
     or that the price of the security will rise (taking a long position).


The  Fund  may  enter  into  foreign  currency  forward  contracts,   repurchase
agreements,  and certain other types of futures,  options and  derivatives  with
banks,  brokerage firms and other  investors in  over-the-counter  markets,  not
through any exchange. The Fund may experience losses or delays if a counterparty
to any such contract defaults or goes into bankruptcy.


In addition,  the Fund may invest in other  financial  instruments  that provide
exposure  to an  underlying  position  or  other  instrument.  The  gain or loss
experienced  by the Fund will  depend  on  whether  the price of the  underlying
instrument rises or falls.


RISKS

In addition to the principal risks stated above, the following are non-principal
risks you should consider.

o    Derivative  instruments  Derivatives  involve  substantial risk,  because a
     relatively  small change in the  security or index  underlying a derivative
     can produce a  disproportionately  large loss.  The Fund may lose more than
     its  initial  investment.  If the Fund has a  derivative  investment  which
     begins to  deteriorate,  there  may be no way to sell it and avoid  further
     losses,  because no buyer may be  available.  In addition,  the  securities
     underlying some derivatives may be illiquid. The Fund may be forced to hold
     a position  until  exercise or  expiration,  which could  result in losses.
     Hedging, by its nature, involves predicting the probable direction of price
     movements; if the Fund predicts incorrectly, it could lose money--more than
     if it had not hedged at all. Hedging cannot  eliminate  fluctuations in the
     prices of foreign  securities,  and there is no assurance that such hedging
     attempts will be successful.

o    Management  risk The Fund is subject to  management  risk  because it is an
     actively managed  investment  portfolio.  The investment advisor will apply
     its investment  techniques and risk analyses in making investment decisions
     for the Fund,  but there is no guarantee that its decision will produce the
     intended result.

o    Small and mid-cap risk Investing in companies with small and mid-cap market
     capitalizations  involves greater risk than investing in larger  companies.
     Their stock prices can rise very quickly and drop  dramatically  in a short
     period of time. This volatility results from a number of factors, including
     reliance by these companies on limited product lines, markets and financial
     and  management  resources.  These and  other  factors  may make  small and
     mid-cap  companies  more  susceptible  to  setbacks  or  downturns.   These
     companies may experience  higher rates of bankruptcy or other failures than
     larger  companies.  They may be more  likely to be  negatively  affected by
     changes in management. In addition, the stock of a small or mid-cap company
     may be thinly traded.

PORTFOLIO TURNOVER

The Fund's  portfolio  turnover rate will  fluctuate  from year to year, and the
Fund may have a portfolio  turnover rate of more than 100% annually.  "Portfolio
turnover"  describes the rate at which the Fund traded its portfolio  securities
during its last fiscal year. For example, if the Fund sold all of its securities
during the year,  its portfolio  turnover  rate would have been 100%.  Increased
portfolio  turnover creates higher brokerage and transaction costs for the Fund,
which may reduce its  overall  performance.  Additionally,  the  realization  of
capital gains from selling  portfolio  securities may result in distributions of
taxable capital gains to shareholders,  since the Fund will normally  distribute
all of its capital gain realized to shareholders each year to avoid excise taxes
under the Internal Revenue Code.



                  FOR MORE INFORMATION PLEASE CALL 800-426-4685



GAM American Focus Fund
(previously the GAM North America Fund)

INVESTMENT OBJECTIVE
The  Fund  seeks  long-term  capital   appreciation.   Upon  written  notice  to
shareholders,  the Fund's investment  objective may be changed without a vote of
shareholders.

PRINCIPAL INVESTMENT STRATEGY
The Fund  normally  invests at least 80% of its assets in  investments  that are
economically   tied  to  the  United  States.   A  company  will  be  considered
economically  tied to a country if a) at least 50% of the  company's  assets are
located in the country or at least 50% of its total  revenues  are derived  from
goods or services  produced in the country or sales made in the country;  b) the
principal trading market for the company's  securities is in the country;  or c)
the company is incorporated under the laws of the country.

The  Fund   invests   primarily   in  the   stocks   of   selected   large   and
mid-capitalization   North  American  companies.  The  Fund  may  overweight  or
underweight certain economic sectors relative to the benchmark S&P 500 Composite
Index.  The Fund may purchase  stocks of  small-capitalization  companies in the
United States and Canada if consistent with the fundamentals stated above.

The Fund's investment  advisor uses a four-step  investment  process in order to
determine which stocks to buy for the Fund.

Step 1:  Determining the investable universe

Screening for acceptable  trading  liquidity and minimum  market  capitalization
identifies the investable universe of stocks. The universe consists primarily of
the S&P 500 Composite Index plus other stocks with similar  characteristics  and
totals  approximately  650  large-  and  mid-capitalization  stocks.  The Fund's
investment  advisor  then  applies  its own  proprietary  screening  and ranking
process to this universe.

Step 2:  Stock selection

In  identifying  which stocks to buy, the Fund's  investment  advisor  considers
three elements of true value. These are: the return on capital (an assessment of
each  company's  operating  condition);  the cost of capital (an assessment of a
company's rate of return on its investments  taking into consideration the risks
of such investments);  and market expectations of future performance  (valuation
measures to assess the degree of investment opportunity).

The process is based on "economic profit" measures in determining true value and
uncovering investment opportunities,  as opposed to traditional accounting-based
measures,  such as price/earnings,  earnings growth and reported book value. The
investment advisor believes that such traditional measures are only the starting
point  for  analysis  and  fail to  capture  the  vital  linkage  of the  income
statement, balance sheet, capital investment, risk and valuation.

The process also recognizes that superior investment performance can be achieved
by identifying good companies (improving return on capital, steady or decreasing
risk) that are also good stocks (low market expectations) and selling those that
are neither good  companies  nor good stocks.  In this  regard,  the  investment
advisor  purchases  stock  of a  company  when  it  believes  that  the  stock's
fundamental  value is greater than its current market price and sells stock of a
company  when it believes  that the stock's  fundamental  value is less than its
current market price.

Step 3:  Portfolio construction and risk control

To determine the optimal weighting of each of the stocks identified as purchases
and sales, the Fund's investment advisor takes into account:

o    Expected appreciation potential
o    Possible valuation downside
o    Fundamental risk profile
o    Price volatility
o    Correlations
o    Impact on the overall portfolio

The Fund's investment  advisor seeks to derive performance from the magnitude of
the net exposure to the stock market. The advisor varies the net exposure to the
market in order to maximize capital  appreciation and to preserve capital,  when
deemed necessary.

Step 4:  Portfolio monitoring

The Fund's  investment  advisor  continually  monitors the  contribution  to the
overall  performance of the portfolio from each position and net exposure.  This
is  crucial  to the  control  of risk  and  return.  The  advisor  draws on past
experience by assessing both risk and sources of return and performing real time
detailed  evaluations  of how decisions have paid off.  Results are  illustrated
transparently and provide insights for future decisions.

Typically, the Fund will invest 35 to 50 securities, and mainly equities. If the
investment advisor  determines that the long-term capital  appreciation of bonds
may equal or exceed  the  return on  stocks,  then the Fund may  invest in bonds
issued by governments, government agencies or corporations without regard to the
maturity of such  bonds.  Debt  securities  in which the Fund may invest are not
required to have any rating.  The Fund may not invest more than 5% of its assets
in bonds rated lower than investment grade.

The Fund, for temporary  defensive  purposes,  may invest in short-term bonds of
U.S. or foreign companies,  governments or their agencies and  instrumentalities
as well as money market  instruments  denominated  in U.S.  dollars or a foreign
currency.  Should  the Fund  take a  temporary  defensive  position,  it may not
achieve its investment objectives.  At no point will more than 20% of the Fund's
portfolio  be held in cash or cash  equivalents,  except when the Fund is taking
temporary defensive measures.

The Fund will  notify  shareholders  at least 60 days prior to any change in its
policy of  investing  at least  80% of its  assets in  companies  in the  United
States.

PRINCIPAL RISKS

You could lose all or a portion of your  investment  in the Fund.  Stock  prices
fluctuate  based on such  things as the  business  performance  of the  company,
investors'  perception about the company or general economic  conditions.  Other
factors influencing the price of securities include:

o    Economic  conditions  The  broad  investment  environment  in the  U.S.  or
     international  markets  could impact stock prices based on interest  rates,
     politics, fiscal policy and other current events.

o    Inflation  Rising  prices of goods and services  could  eliminate any gains
     realized from your investment in the Fund.

o    "Focus"  investing  Since the Fund will focus its  investments on typically
     less than 50  securities,  mainly  equities,  it may be  subject to greater
     share price fluctuations than a more broadly diversified fund.

o    Credit and rating risk Credit risk  relates to the ability of the issuer to
     meet interest or principal payments or both as they become due. In general,
     lower-grade,  high-yield  bonds are  subject  to  credit  risk to a greater
     extent than  lower-yield,  higher-quality  bonds. The lower the rating of a
     debt  instrument the more  speculative its  characteristics  and changes in
     economic or other  circumstances are more likely to lead to an inability of
     the issuer to make  principal and interest  payments than issuers of higher
     grade securities.

o    Interest rate risk Interest rate risk refers to the  fluctuations  in value
     of fixed-income  securities resulting from the inverse relationship between
     price and yield.  For example,  an increase in general  interest rates will
     tend to reduce the market value of already-issued fixed-income investments,
     and a decline in general  interest rates will tend to increase their value.
     In addition,  debt  securities with longer  maturities,  which tend to have
     higher yields,  are subject to potentially  greater  fluctuations  in value
     from changes in interest rates than obligations with shorter maturities.

o    Company risk Investing in the Fund involves the risk common to investing in
     any  security,  that is that the value of the  securities  held by the Fund
     will  fluctuate  in response to changes in  economic  conditions  or public
     expectations  about  those  securities.  The net asset  value of the Fund's
     shares will change accordingly.

o    Market risk The market value of a security may move up and down,  sometimes
     rapidly and unpredictably.  These fluctuations, which are often referred to
     as "volatility," may cause a security to be worth less than it was worth at
     an earlier time. Market risk may affect a single issuer,  industry,  sector
     of the  economy,  or the market as a whole.  Market  risk is common to most
     investments--including  stocks and bonds,  and the mutual funds that invest
     in them.

o    Small and mid-cap risk Investing in companies with small and mid-cap market
     capitalization  involves  greater risk than investing in larger  companies.
     Their stock prices can rise very quickly and drop  dramatically  in a short
     period of time. This volatility results from a number of factors, including
     reliance by these companies on limited product lines, markets and financial
     and  management  resources.  These and  other  factors  may make  small and
     mid-cap  companies  more  susceptible  to  setbacks  or  downturns.   These
     companies may experience  higher rates of bankruptcy or other failures than
     larger  companies.  They may be more  likely to be  negatively  affected by
     changes in management. In addition, the stock of a small or mid-cap company
     may be thinly traded.

An  investment  in the Fund is not a  deposit  of a bank and is not  insured  or
guaranteed by the Federal Deposit Insurance  Corporation or any other government
agency.

WHO MAY WANT TO INVEST?
The Fund may best suit those investors who want long-term capital  appreciation,
and who can tolerate the risks involved with stock investing.



                  FOR MORE INFORMATION PLEASE CALL 800-426-4685



GAM AMERICAN FOCUS FUND

PAST PERFORMANCE AND EXPENSES

A bar  displays  the  annual  return of the Fund for each of the last ten years.
This  illustrates  the  variability  of the  performance  from  year to year and
provides some indication of the risks of investing in the Fund. Fund performance
shown does not reflect Class A sales charges,  but includes the  reinvestment of
dividends and capital  gains.  Performance  would be lower if sales charges were
included. Past performance does not guarantee or predict future results.

The Fund changed its  Co-Investment  Advisors on March 26, 2001.  As of June 20,
2001,  the sole  investment  advisor  to the Fund is GAM USA.  Accordingly,  the
Fund's historic  performance may not reflect its current investment  policies or
future performance. (See "Management of the Funds" for more information.)

[The table below represents a bar chart in the printed piece.]


                    GAM American Focus Fund
                    Class A Share
                    Annual Total Returns
                    As of December 31

        93                 -2.09
        94                  2.97
        95                 30.9
        96                 24.1
        97                 29.41
        98                 29.44
        99                  9.32
        00                 -1.46
        01                 -5.94
        02                 __.__

Highest and Lowest Returns

Highest Performing Quarter:       18.07% in 4th quarter of 1998
Lowest Performing Quarter:       -16.49% in 3rd quarter of 2001


The table shows how the average annual returns for 1, 5 and 10 years (or life of
class) for each class of the Fund before taxes compare to those of a broad-based
securities market index. In addition,  after-tax returns are presented for Class
A Shares of the Fund. The after-tax  returns are calculated using the historical
highest  individual  federal  marginal  income tax rates and do not  reflect the
impact of state or local taxes. Actual after-tax returns depend on an investor's
tax  situation  and may differ from those shown in the table.  In addition,  the
after-tax  returns  shown are not relevant to  investors  who hold shares of the
Fund  through  tax-deferred  arrangements,  such as 401(k)  plans or  individual
retirement accounts. After-tax returns for the other classes of shares will vary
from the Class A after-tax  returns shown.  Past  performance  (before and after
taxes) is not an indication of future results.

The S&P 500  Composite  Index  is a broad  market  index  used  for  comparative
purposes.

GAM American Focus Fund
1-, 5-, and 10-Year  (or  Life-of-Class)  Average  Annual  Total  Return for all
Relevant Share Classes Plus a Comparison to the S&P 500 Composite Index
As of December 31, 2002


                                                                  10 Year
Class                                                        (or Life-of-Class
   (inception date)                    1 Year    5 Year   if less than 10 Years)

A Shares (January 1, 1990)
   (after maximum sales charge
   of 5.50%)
Return Before Taxes                     __.__%    __.__%          __.__%
Return After Taxes on Distributions     __.__%    __.__%          __.__%
Return After Taxes on Distributions
   and Sale of Fund Shares              __.__%    __.__%          __.__%

B Shares (May 26, 1998)
   (with deferred sales charge)
   Return Before Taxes                  __.__%     N/A            __.__%

C Shares (July 7, 1998)
   (with sales charge of 1% and
   deferred sales charge)
   Return Before Taxes                  __.__%     N/A            __.__%

S&P 500 Composite Index**
   Return Before Taxes                  __.__%    __.__%          __.__%

*    Returns of S&P 500 Composite  Index were for the  Life-of-Class  B: __.__%,
     and C: __.__%.

**   The S&P 500 Composite Index is an unmanaged index of the stock  performance
     of 500  industrial,  transportation,  utility and  financial  companies and
     includes  reinvestment  of dividends.  Investors  may not purchase  indices
     directly.


Fees and Expenses of the Fund

Fund investors pay various  expenses either  directly or indirectly.  This table
shows the expenses  for the past year,  adjusted to reflect any charges that you
may pay if you buy and hold shares of the Fund. Actual or future expenses may be
different.

GAM American Focus Fund Investor Expenses
Shareholder Transaction Expenses

                                    CLASS A    CLASS B   CLASS C

Sales charges (fees paid directly
from your investment)
--------------------------------- ---------- ---------- -----------

Maximum Sales Charge
(as a percentage of the offering
price)                               5.50%      5.00%     2.00%

Maximum Front-End Sales Charge
(as a percentage of the offering
price)                               5.50%      0.00%     1.00%

Maximum Deferred Sales Charge
(as a percentage of the original
purchase price or the amount
redeemed, whichever is less)         0.00%*     5.00%     1.00%



Annual Fund  operating  expenses (% of net assets)
(expenses  that are deducted from Fund assets)
--------------------------------- ---------- ---------- -----------

Management Fees                       1.00%      1.00%     1.00%
Distribution (12b-1) Fees             0.30%      1.00%     1.00%
Other Expenses                       __.__%     __.__%    __.__%
Total Fund Operating Expenses        __.__%     __.__%    __.__%

*    Except  for  investments  of $1  million or more.  See  "Information  about
     contingent deferred sales charge."


Examples

These  examples  can help you compare the cost of investing in the Fund with the
cost of investing in other mutual  funds.  The examples  assume a 5% return each
year, with operating expenses staying the same. Your actual returns and expenses
may be different.

Example #1 assumes you invest  $10,000 in the Fund for the periods  shown,  then
redeem all your shares at the end of those periods.

Example #2 assumes you invest $10,000 in the Fund for the periods shown, but you
do not redeem your shares at the end of those periods.

Expenses of Hypothetical $10,000 Investment
in GAM American Focus Fund


                                    CLASS A*   CLASS B**  CLASS C

EXAMPLE #1

---------------------------       ---------- ---------- -----------
For one year                         _____      _____     _____
For three years                      _____      _____     _____
For five years                       _____      _____     _____
For ten years                        _____      _____     _____

EXAMPLE #2

---------------------------       ---------- ---------- -----------
For one year                         _____      _____     _____
For three years                      _____      _____     _____
For five years                       _____      _____     _____
For ten years                        _____      _____     _____

*    The Class B example  reflects  Class A expenses  for years nine through ten
     because Class B shares  convert to Class A shares after a maximum period of
     eight years.  Class B shares may convert sooner  depending on the amount of
     Class B shares  purchased  and  when.  See  "Information  about  contingent
     deferred sales charge."




                  FOR MORE INFORMATION PLEASE CALL 800-426-4685




ADDITIONAL INFORMATION ABOUT NON-PRINCIPAL STRATEGIES AND RISKS

STRATEGIES

In  addition  to the  principal  strategies  stated  above,  the  following  are
non-principal strategies you should consider.

The Fund will not acquire more than 10% of the outstanding  voting securities of
any one issuer.  No more than 25% of the Fund's total assets will be invested in
any one industry.

The  Fund  may  from  time  to time  utilize  certain  sophisticated  investment
techniques,  including derivatives.  Derivatives are financial instruments which
derive  their  value  from  the  performance  of  an  underlying  asset--another
security, a commodity, or an index. Examples of these include:

o    Forward foreign exchange  contracts When the Fund buys a foreign  security,
     it generally does so in a foreign currency.  That currency has a price, and
     that price fluctuates. In order to reduce the risk of currency price swings
     or for other purposes,  the Fund may buy forward foreign exchange contracts
     on foreign  currencies.  These contracts "lock in" a price for the currency
     at a certain  future  date.  The Fund may also use put and call  options on
     foreign currencies.

o    Options and warrants An option is a contract  giving the owner the right to
     buy ("call option") or sell ("put option") a security at a designated price
     ("strike  price") on a certain date. A warrant is the  equivalent of a call
     option written by the issuer of the underlying security.

o    Futures contracts  Futures contracts  obligate one party to deliver and the
     other party to purchase a specific  quantity of a commodity  or a financial
     instrument at a designated future date, time and place. Stock index futures
     contracts  call for a cash payment based on the increase or decrease in the
     value of an index.

The  Fund  may  enter  into  foreign  currency  forward  contracts,   repurchase
agreements,  and certain other types of futures,  options and  derivatives  with
banks,  brokerage firms and other  investors in  over-the-counter  markets,  not
through any exchange. The Fund may experience losses or delays if a counterparty
to any such contract defaults or goes into bankruptcy.

RISKS

In addition to the principal risks stated above, the following are non-principal
risks you should consider.

o    Derivative  instruments  Derivatives  involve  substantial risk,  because a
     relatively  small change in the  security or index  underlying a derivative
     can produce a  disproportionately  large loss.  The Fund may lose more than
     its  initial  investment.  If the Fund has a  derivative  investment  which
     begins to  deteriorate,  there  may be no way to sell it and avoid  further
     losses,  because no buyer may be  available.  In addition,  the  securities
     underlying some derivatives may be illiquid. The Fund may be forced to hold
     a position  until  exercise or  expiration,  which could  result in losses.
     Hedging, by its nature, involves predicting the probable direction of price
     movements; if the Fund predicts incorrectly, it could lose money--more than
     if it had not hedged at all. Hedging cannot  eliminate  fluctuations in the
     prices of securities,  and there is no assurance that such hedging attempts
     will be successful.

o    Management  risk The Fund is subject to  management  risk  because it is an
     actively managed  investment  portfolio.  The investment advisor will apply
     its investment  techniques and risk analyses in making investment decisions
     for the Fund,  but there is no guarantee that its decision will produce the
     intended result.

PORTFOLIO TURNOVER

The Fund's  portfolio  turnover rate will  fluctuate  from year to year, and the
Fund may have a portfolio  turnover rate of more than 100% annually.  "Portfolio
turnover"  describes the rate at which the Fund traded its portfolio  securities
during its last fiscal year. For example, if the Fund sold all of its securities
during the year,  its portfolio  turnover  rate would have been 100%.  Increased
portfolio  turnover creates higher brokerage and transaction costs for the Fund,
which may reduce its  overall  performance.  Additionally,  the  realization  of
capital gains from selling  portfolio  securities may result in distributions of
taxable capital gains to shareholders,  since the Fund will normally  distribute
all of its capital gain realized to shareholders each year to avoid excise taxes
under the Internal Revenue Code.




                  FOR MORE INFORMATION PLEASE CALL 800-426-4685


GAMerica Capital Fund

INVESTMENT OBJECTIVE
The  Fund  seeks  long-term  capital   appreciation.   Upon  written  notice  to
shareholders,  the Fund's investment  objective may be changed without a vote of
shareholders.

PRINCIPAL INVESTMENT STRATEGY
Under  normal  circumstances,  the Fund  invests  at least 80% of its  assets in
investments that are  economically  tied to the United States. A company will be
considered  economically  tied to the  United  States  if a) at least 50% of the
company's  assets are located in the United  States or at least 50% of its total
revenues  are derived  from goods or services  produced in the United  States or
sales  made in the  United  States;  b) the  principal  trading  market  for the
company's  securities is in the United States; or c) the company is incorporated
under the laws of the United States.

The Fund invests primarily in common stocks of U.S. companies.  In addition,  if
the investment  advisor  determines that the long-term  capital  appreciation of
bonds  may equal or  exceed  the  return  on  stocks,  then the Fund may  invest
substantially  in bonds issued either by governments  or government  agencies or
corporations  without regard to the maturity of such bonds.  Debt  securities in
which the Fund may invest are not required to have any rating.  The Fund may not
invest more than 5% of its assets in bonds rated lower than investment grade.

The  investment  advisor  uses a  research-intensive  blend of value and  growth
investing approach. Growth stocks are characterized by the investment advisor as
securities with strong revenue growth. Value stocks are typically  characterized
by the following when compared to the market as a whole:

o    Lower price to earnings ratios
o    Lower price to book value ratios
o    Lower price to cash flow ratios
o    Higher dividend yields
o    Catalyst for change (consolidation in an industry;  wrong market perception
     after a large fall; inside ownership by an elderly person)

Although not restricted to mid and small  capitalization  stocks, the investment
advisor tends to find the best value in smaller companies of under $1 billion in
market capitalization.  However, the investment advisor does not have a strategy
with respect to size. The Fund is generally  concentrated in a limited number of
stocks with the top 20 positions in the Fund's portfolio representing 80% of the
total  Fund.  Turnover  tends  to be low as the  investment  advisor  looks  for
companies  with limited  leverage,  strong  balance  sheets and above all, sound
management.  Sales are triggered by an assessment  that the stock is no longer a
good value or that  fundamental  prospects  have  deteriorated;  an  increase in
market  capitalization  alone will not cause the  investment  advisor to sell. A
company's  prospects are considered to have  deteriorated  when, for example,  a
business  area has  become  overly  competitive  or when a  business  model  has
weakened.  Sales  are also  triggered  by gross  overvaluation.  The  investment
advisor makes frequent visits to companies to judge their investment merit.

The Fund, for temporary  defensive  purposes,  may invest in short-term bonds of
foreign and United States companies,  foreign  governments,  the U.S. government
and its agencies  and  instrumentalities,  as well as money  market  instruments
denominated  in U.S.  dollars  or a  foreign  currency.  Should  the Fund take a
temporary defensive position, it may not achieve its investment  objectives.  At
no point  will more  than 35% of the  Fund's  portfolio  be held in cash or cash
equivalents, except when the Fund is taking temporary defensive measures. Due to
the state of the U.S.  economy over the past few years,  the investment  advisor
has taken a protracted defensive position by investing, at times, upwards of 50%
of the Fund's net assets in cash and cash equivalents.  This defensive  position
is a result of the  investment  advisor's  view that equity  securities  of U.S.
companies have been and remain at historic high valuations and,  therefore,  the
investment  advisor has not been able to identify  reasonably priced U.S. equity
securities for purchase by the Fund.

The Fund will  notify  shareholders  at least 60 days prior to any change in its
policy of investing at least 80% of its assets in United States issuers.

PRINCIPAL RISKS
You could lose all or a portion of your  investment  in the Fund.  Stock  prices
fluctuate  based on such  things as the  business  performance  of the  company,
investors'  perception about the company or general economic  conditions.  Small
companies are often new and less well established. They may have limited product
lines, markets or financial  resources,  and they may depend on one or a few key
persons  for  management.  Other  factors  influencing  the price of  securities
include:

o    Economic  conditions  The  broad  investment  environment  in the  U.S.  or
     international  markets  could impact stock prices based on interest  rates,
     politics, fiscal policy and other current events.

o    Inflation  Rising  prices of goods and services  could  eliminate any gains
     realized from your investment in the Fund.

o    "Value"  investing  Value stocks may carry higher risk than other stocks as
     the  determination  that a stock is undervalued is subjective and the stock
     price may not rise to what the investment advisor considers full value.

o    Credit and rating risk Credit risk  relates to the ability of the issuer to
     meet interest or principal payments or both as they become due. In general,
     lower-grade,  high-yield  bonds are  subject  to  credit  risk to a greater
     extent than  lower-yield,  higher-quality  bonds. The lower the rating of a
     debt  instrument the more  speculative its  characteristics  and changes in
     economic or other  circumstances are more likely to lead to an inability of
     the issuer to make  principal and interest  payments than issuers of higher
     grade securities.

o    Interest rate risk Interest rate risk refers to the  fluctuations  in value
     of fixed-income  securities resulting from the inverse relationship between
     price and yield.  For example,  an increase in general  interest rates will
     tend to reduce the market value of already-issued fixed-income investments,
     and a decline in general  interest rates will tend to increase their value.
     In addition,  debt  securities with longer  maturities,  which tend to have
     higher yields,  are subject to potentially  greater  fluctuations  in value
     from changes in interest rates than obligations with shorter maturities.

o    Company risk Investing in the Fund involves the risk common to investing in
     any  security,  that is that the value of the  securities  held by the Fund
     will  fluctuate  in response to changes in  economic  conditions  or public
     expectations  about  those  securities.  The net asset  value of the Fund's
     shares will change accordingly.

o    Market risk The market value of a security may move up and down,  sometimes
     rapidly and unpredictably.  These fluctuations, which are often referred to
     as "volatility," may cause a security to be worth less than it was worth at
     an earlier time. Market risk may affect a single issuer,  industry,  sector
     of the  economy,  or the market as a whole.  Market  risk is common to most
     investments--including  stocks and bonds,  and the mutual funds that invest
     in them.

o    Small and mid-cap risk Investing in companies with small and mid-cap market
     capitalizations  involves greater risk than investing in larger  companies.
     Their stock prices can rise very quickly and drop  dramatically  in a short
     period of time. This volatility results from a number of factors, including
     reliance by these companies on limited product lines, markets and financial
     and  management  resources.  These and  other  factors  may make  small and
     mid-cap  companies  more  susceptible  to  setbacks  or  downturns.   These
     companies may experience  higher rates of bankruptcy or other failures than
     larger  companies.  They may be more  likely to be  negatively  affected by
     changes in management. In addition, the stock of a small or mid-cap company
     may be thinly traded.

An  investment  in the Fund is not a  deposit  of a bank and is not  insured  or
guaranteed by the Federal Deposit Insurance  Corporation or any other government
agency.

WHO MAY WANT TO INVEST?
The Fund may best suit those investors who want long-term capital  appreciation,
and who can tolerate risks involved with stock investing.



                  FOR MORE INFORMATION PLEASE CALL 800-426-4685

GAMERICA CAPITAL FUND

PAST PERFORMANCE AND EXPENSES

A bar  displays  the  annual  return of the Fund for each year  since the Fund's
inception. This illustrates the variability of the performance from year to year
and  provides  some  indication  of the risks of  investing  in the  Fund.  Fund
performance  shown does not reflect  Class A sales  charges,  but  includes  the
reinvestment of dividends and capital gains. Performance would be lower if sales
charges were  included.  Past  performance  does not guarantee or predict future
results.

[The table below represents a bar chart in the printed piece.]


                      GAMerica Capital Fund
                      Class A Share
                      Annual Total Returns
                      As of December 31

         96                  18.31
         97                  37.28
         98                  30.59
         99                  28.97
         00                   6.54
         01                  -2.42
         02                  __.__

Highest and Lowest Returns


Highest Performing Quarter:       24.02% in 3rd quarter of 1997
Lowest Performing Quarter:       -13.28% in 3rd quarter of 1998

The table shows how the average  annual returns for 1 year, 5 years and the life
of  class  for  each  class  of the  Fund  before  taxes  compare  to those of a
broad-based  securities  market  index.  In  addition,   after-tax  returns  are
presented for Class A Shares of the Fund.  The after-tax  returns are calculated
using the historical highest individual federal marginal income tax rates and do
not reflect the impact of state or local taxes.  Actual after-tax returns depend
on an investor's tax situation and may differ from those shown in the table.  In
addition,  the  after-tax  returns  shown are not relevant to investors who hold
shares of the Fund through  tax-deferred  arrangements,  such as 401(k) plans or
individual  retirement  accounts.  After-tax  returns  for the other  classes of
shares  will vary from the Class A after-tax  returns  shown.  Past  performance
(before and after taxes) is not an indication of future results.

The S&P 500  Composite  Index  is a broad  market  index  used  for  comparative
purposes.

GAMerica Capital Fund
1-, 5-, and  Life-of-Class  Average  Annual Total Return for all Relevant  Share
Classes Plus a Comparison to the S&P 500 Composite Index
As of December 31, 2002


                                                                  10 Year
Class                                                        (or Life-of-Class
   (inception date)                    1 Year    5 Year   if less than 10 Years)

A Shares (May 12, 1995)
   (after maximum sales charge
   of 5.50%)
Return Before Taxes                     __.__%    __.__%          __.__%
Return After Taxes on Distributions     __.__%    __.__%          __.__%
Return After Taxes on Distributions
   and Sale of Fund Shares              __.__%    __.__%          __.__%

B Shares (May 26, 1998)
   (with deferred sales charge)
   Return Before Taxes                  __.__%     N/A            __.__%

C Shares (May 26, 1998)
   (with sales charge of 1% and
   deferred sales charge)
   Return Before Taxes                  __.__%     N/A            __.__%

S&P 500 Composite Index**               __.__%    __.__%          __.__%

*    Returns  of S&P 500  Composite  Index were for the  Life-of-Class  B and C:
     __.__%.
**   The S&P 500 Composite Index is an unmanaged index of the stock  performance
     of 500  industrial,  transportation,  utility and  financial  companies and
     includes  reinvestment  of dividends.  Investors  may not purchase  indices
     directly.


Fees and Expenses of the Fund

Fund investors pay various  expenses either  directly or indirectly.  This table
shows the expenses  for the past year,  adjusted to reflect any charges that you
may pay if you buy and hold shares of the Fund. Actual or future expenses may be
different.

GAMerica Capital Fund Investor Expenses
Shareholder Transaction Expenses

                                    CLASS A    CLASS B   CLASS C

Sales charges (fees paid directly
from your investment)
--------------------------------- ---------- ---------- -----------

Maximum Sales Charge
(as a percentage of the offering
price)                               5.50%      5.00%     2.00%

Maximum Front-End Sales Charge
(as a percentage of the offering
price)                               5.50%      0.00%     1.00%

Maximum Deferred Sales Charge
(as a percentage of the original
purchase price or the amount
redeemed, whichever is less)         0.00%*     5.00%     1.00%



Annual Fund  operating  expenses (% of net assets)
(expenses  that are deducted from Fund assets)
--------------------------------- ---------- ---------- -----------

Management Fees                       1.00%      1.00%     1.00%
Distribution (12b-1) Fees             0.30%      1.00%     1.00%
Other Expenses                       __.__%     __.__%    __.__%
Total Fund Operating Expenses        __.__%     __.__%    __.__%

*    Except  for  investments  of $1  million or more.  See  "Information  about
     contingent deferred sales charge."


Examples

These  examples  can help you compare the cost of investing in the Fund with the
cost of investing in other mutual  funds.  The examples  assume a 5% return each
year, with operating expenses staying the same. Your actual returns and expenses
may be different.

Example #1 assumes you invest  $10,000 in the Fund for the periods  shown,  then
redeem all your shares at the end of those periods.

Example #2 assumes you invest $10,000 in the Fund for the periods shown, but you
do not redeem your shares at the end of those periods.

Expenses of Hypothetical $10,000 Investment
in GAMerica Capital Fund


                                    CLASS A*   CLASS B**  CLASS C

EXAMPLE #1

---------------------------       ---------- ---------- -----------
For one year                         _____      _____     _____
For three years                      _____      _____     _____
For five years                       _____      _____     _____
For ten years                        _____      _____     _____

EXAMPLE #2

---------------------------       ---------- ---------- -----------
For one year                         _____      _____     _____
For three years                      _____      _____     _____
For five years                       _____      _____     _____
For ten years                        _____      _____     _____


*    The Class B example  reflects  Class A expenses  for years nine through ten
     because Class B shares  convert to Class A shares after a maximum period of
     eight years.  Class B shares may convert sooner  depending on the amount of
     Class B shares  purchased  and  when.  See  "Information  about  contingent
     deferred sales charge."



ADDITIONAL INFORMATION ABOUT NON-PRINCIPAL STRATEGIES AND RISKS

STRATEGIES

In  addition  to the  principal  strategies  stated  above,  the  following  are
non-principal strategies you should consider.

The Fund will not acquire more than 10% of the outstanding  voting securities of
any one issuer.  No more than 25% of the Fund's total assets will be invested in
any one industry.

RISK

In  addition  to  the  principal   risks  stated  above,   the  following  is  a
non-principal risk you should consider.

o    Management  risk The Fund is subject to  management  risk  because it is an
     actively managed  investment  portfolio.  The investment advisor will apply
     its investment  techniques and risk analyses in making investment decisions
     for the Fund,  but there is no guarantee that its decision will produce the
     intended result.

PORTFOLIO TURNOVER

The Fund's  portfolio  turnover rate will  fluctuate  from year to year, and the
Fund may have a portfolio  turnover rate of more than 100% annually.  "Portfolio
turnover"  describes the rate at which the Fund traded its portfolio  securities
during its last fiscal year. For example, if the Fund sold all of its securities
during the year,  its portfolio  turnover  rate would have been 100%.  Increased
portfolio  turnover creates higher brokerage and transaction costs for the Fund,
which may reduce its  overall  performance.  Additionally,  the  realization  of
capital gains from selling  portfolio  securities may result in distributions of
taxable capital gains to shareholders,  since the Fund will normally  distribute
all of its capital gain realized to shareholders each year to avoid excise taxes
under the Internal Revenue Code.



                  FOR MORE INFORMATION PLEASE CALL 800-426-4685



GAM Gabelli Long/Short Fund
(formerly, GAM American Focus Long/Short Fund)


INVESTMENT OBJECTIVE
The  Fund  seeks  long-term  capital   appreciation.   Upon  written  notice  to
shareholders,  the Fund's investment  objective may be changed without a vote of
shareholders.

PRINCIPAL INVESTMENT STRATEGY
Under normal market conditions, the Fund will have both long and short positions
in equity  securities,  primarily  common stocks.  The Fund normally  invests at
least 80% of its assets in investments that are economically  tied to the United
States.  A company will be  considered  economically  tied to a country if a) at
least 50% of the company's  assets are located in the country or at least 50% of
its total revenues are derived from goods or services produced in the country or
sales made in the country;  b) the  principal  trading  market for the company's
securities is in the country;  or c) the company is incorporated  under the laws
of the country.


The  Fund  invests   primarily  in  the  stocks  of  selected  large,  mid,  and
small-capitalization  North  American  companies.  The  Fund may  overweight  or
underweight certain economic sectors relative to the benchmark S&P 500 Composite
Index.  In order to take  advantage  of  opportunities  to buy more stock and to
attempt to enhance returns,  the Fund may borrow money from banks (be leveraged)
in an amount up to one-third of the value of its total assets.


When the Fund takes a long  position,  it purchases a stock  outright.  When the
Fund  takes a short  position,  it sells a stock it does not own at the  current
market  price  and  delivers  to the  buyer a stock  that  it has  borrowed.  To
complete, or close out, the short sale transaction, the Fund buys the same stock
in the market and returns it to the lender. The Fund makes money when the market
price of the stock goes down after the short sale.  Conversely,  if the price of
the stock goes up after the sale,  the Fund will lose money because it will have
to pay more to replace  the  borrowed  stock than it  received  when it sold the
stock  short.  The  frequency  of short  sales  will  vary  substantially  under
different  market  conditions,  and no  specific  portion of Fund assets will be
committed to short sales.  However,  no securities  will be sold short if, after
effect is given to any such short sale, the total market value of all securities
sold short would exceed 50% of the Fund's net assets.


The Fund's investment  approach is based on long/short  "value  investing." This
method utilizes  fundamental  security analysis to select stocks whose intrinsic
value GAMCO  Investors,  Inc.  ("GAMCO"),  a Co-Investment  Advisor of the Fund,
believes, based on estimates of asset values and the future growth of cash flows
and earnings, is significantly  different from that implied by the public market
price.

GAMCO uses value  investing,  as first  described  by Benjamin  Graham and David
Dodd, and combines it with the concept of Private  Market Value (PMV)  developed
and used by GAMCO (or its affiliates)  for over twenty years.  PMV is defined as
the  estimated  price a  strategic  buyer  would be likely to pay to acquire the
entire company.

The Fund will  generally  take  positions,  both long  and/or  short,  in stocks
selling at significant  discounts or premiums,  respectively,  to the companies'
estimated PMVs. Appraising the companies' present status and selecting companies
trading  at  differences  to their  PMVs,  with a  catalyst  in place to realize
returns, will generally represent the core of the investment process.

To limit the time  horizon  in which the PMV may be  realized,  GAMCO  looks for
situations in which it believes  either hard and/or soft catalysts are currently
working to reduce the premium or discount  between the public  market  price and
the estimated PMV.

Hard  catalysts  (company  specific)  include,  but  are  not  limited  to:  (1)
realization of hidden assets, (2) recognition of  underperforming  subsidiaries,
(3) share buy-backs,  (4) spin-offs,  (5) mergers and acquisitions,  (6) balance
sheet changes, (7) new products, (8) accounting  irregularities,  (9) management
changes, and (10) cross-shareholder unwinding.

Soft  catalysts  (macro  and  industry)  include  but are not  limited  to:  (1)
political  reform,  (2)  pension  reform,  (3)  industrial  reorganization,  (4)
accounting reform, (5) regulatory changes, and (6) technological developments.

Within  this  process,  GAMCO will  allocate  capital in a  long/short  context,
identifying  catalysts while giving consideration to the possible timing for the
catalyst(s) to take effect.

GAMCO may also utilize a top-down  index hedging  program  using futures  and/or
exchange traded funds on various stock indices to manage overall portfolio risk;
and may also  engage  in  arbitrage  related  transactions,  involving  publicly
announced  takeover  and merger  candidates,  in order to  potentially  increase
returns on the Fund's cash  position  above the  prevailing  level of short-term
interest rates.

The Fund will  typically  invest,  by taking  long  positions,  in less than 100
securities,  mainly equities.  The Fund may take short positions in a smaller or
larger  number of  securities  and may take short  positions on  exchange-traded
funds.


The Fund, for temporary  defensive  purposes,  may invest in short-term bonds of
U.S. or foreign companies,  governments or their agencies and  instrumentalities
as well as money market  instruments  denominated  in U.S.  dollars or a foreign
currency.  Should  the Fund  take a  temporary  defensive  position,  it may not
achieve its investment objectives.  At no point will more than 20% of the Fund's
portfolio  be held in cash or cash  equivalents,  except when the Fund is taking
temporary defensive measures.

The Fund will  notify  shareholders  at least 60 days prior to any change in its
policy of  investing  at least  80% of its  assets in  companies  in the  United
States.

PRINCIPAL RISKS
You could lose all or a portion of your  investment  in the Fund.  Stock  prices
fluctuate  based on such  things as the  business  performance  of the  company,
investors'  perception about the company or general economic  conditions.  Other
factors influencing the price of securities include:

o    Economic  conditions  The  broad  investment  environment  in the  U.S.  or
     international  markets  could impact stock prices based on interest  rates,
     politics, fiscal policy and other current events.

o    Inflation  Rising  prices of goods and services  could  eliminate any gains
     realized from your investment in the Fund.


o    "Focus"  investing  Since the Fund will typically  focus its investments on
     less than 100  securities,  mainly  equities,  it may be subject to greater
     share price fluctuations than a more broadly diversified fund.


o    Short Sales Despite the intent to reduce risk by having both long and short
     positions,  it is possible that the Fund's long  positions  will decline in
     value at the same time that the value of the stocks  sold short  increases,
     thereby  increasing the potential for loss. The Fund may not always be able
     to close out a short  position  at a  particular  time or at an  acceptable
     price.  A lender may request the borrowed  securities  be returned to it on
     short  notice,  and the Fund may have to buy the borrowed  securities at an
     unfavorable price. If this occurs at a time when other short sellers of the
     same security also want to close out their positions, a "short squeeze" can
     occur.  A short  squeeze  occurs when demand is greater than supply for the
     stock sold short.  A short  squeeze makes it more likely that the Fund will
     have to cover its short sale at an unfavorable price. If that happens,  the
     Fund will lose some or all of the  potential  profit from,  or even incur a
     loss as a result of, the short sale.

     Depending on the  arrangements  made with a broker or  custodian  regarding
     segregated  accounts in conjunction with short sales (which are required by
     law), the Fund may or may not receive any payments (including  interest) on
     collateral deposited with the broker or custodian.

o    Borrowing/Leverage  The use of  leverage  may make any change in the Fund's
     net asset value even  greater and thus result in  increased  volatility  of
     returns.  The  Fund's  assets  that are used as  collateral  to secure  the
     borrowing may decrease in value while the borrowing is  outstanding,  which
     may force the Fund to use its other  assets  to  increase  the  collateral.
     Leverage also creates interest expense that may lower overall Fund returns.


o    Derivative  instruments  Derivatives  involve  substantial risk,  because a
     relatively  small change in the  security or index  underlying a derivative
     can produce a  disproportionately  large loss.  The Fund may lose more than
     its  initial  investment.  If the Fund has a  derivative  investment  which
     begins to  deteriorate,  there  may be no way to sell it and avoid  further
     losses,  because no buyer may be  available.  In addition,  the  securities
     underlying some derivatives may be illiquid. The Fund may be forced to hold
     a position  until  exercise or  expiration,  which could  result in losses.
     Hedging, by its nature, involves predicting the probable direction of price
     movements; if the Fund predicts incorrectly, it could lose money--more than
     if it had not hedged at all. Hedging cannot  eliminate  fluctuations in the
     prices of securities,  and there is no assurance that such hedging attempts
     will be  successful.  The success of utilizing  derivatives as a hedge to a
     security  or to gain  market  exposure  to a long or  short  position  on a
     security  depends  on  the  Co-Investment   Advisors'  ability  to  predict
     movements in the market.


o    Credit and rating risk Credit risk  relates to the ability of the issuer to
     meet interest or principal payments or both as they become due. In general,
     lower-grade,  high-yield  bonds are  subject  to  credit  risk to a greater
     extent than  lower-yield,  higher-quality  bonds. The lower the rating of a
     debt  instrument the more  speculative its  characteristics  and changes in
     economic or other  circumstances are more likely to lead to an inability of
     the issuer to make  principal and interest  payments than issuers of higher
     grade securities.

o    Interest rate risk Interest rate risk refers to the  fluctuations  in value
     of fixed-income  securities resulting from the inverse relationship between
     price and yield.  For example,  an increase in general  interest rates will
     tend to reduce the market value of already-issued fixed-income investments,
     and a decline in general  interest rates will tend to increase their value.
     In addition,  debt  securities with longer  maturities,  which tend to have
     higher yields,  are subject to potentially  greater  fluctuations  in value
     from changes in interest rates than obligations with shorter maturities.

o    Company risk Investing in the Fund involves the risk common to investing in
     any  security,  that is that the value of the  securities  held by the Fund
     will  fluctuate  in response to changes in  economic  conditions  or public
     expectations  about  those  securities.  The net asset  value of the Fund's
     shares will change accordingly.

o    Market risk The market value of a security may move up and down,  sometimes
     rapidly and unpredictably.  These fluctuations, which are often referred to
     as "volatility," may cause a security to be worth less than it was worth at
     an earlier time. Market risk may affect a single issuer,  industry,  sector
     of the  economy,  or the market as a whole.  Market  risk is common to most
     investments--including  stocks and bonds,  and the mutual funds that invest
     in them.

o    Small and mid-cap risk Investing in companies with small and mid-cap market
     capitalization  involves  greater risk than investing in larger  companies.
     Their stock prices can rise very quickly and drop  dramatically  in a short
     period of time. This volatility results from a number of factors, including
     reliance by these companies on limited product lines, markets and financial
     and  management  resources.  These and  other  factors  may make  small and
     mid-cap  companies  more  susceptible  to  setbacks  or  downturns.   These
     companies may experience  higher rates of bankruptcy or other failures than
     larger  companies.  They may be more  likely to be  negatively  affected by
     changes in management. In addition, the stock of a small or mid-cap company
     may be thinly traded.


o    "Value"  investing Value stocks may carry higher risk than other stocks, as
     the  determination  that a stock is undervalued is subjective and the stock
     price may not rise to what a Co-Investment Advisor considers full value.


     An  investment in the Fund is not a deposit of a bank and is not insured or
     guaranteed  by the  Federal  Deposit  Insurance  Corporation  or any  other
     government agency.

WHO MAY WANT TO INVEST?

     The  Fund  may  best  suit  those  investors  who  want  long-term  capital
     appreciation, and who can tolerate the risks involved with stock investing.



                  FOR MORE INFORMATION PLEASE CALL 800-426-4685



GAM GABELLI LONG/SHORT FUND

PAST PERFORMANCE AND EXPENSES

There is no  performance  information  quoted for Class A, B, or C shares of the
GAM Gabelli  Long/Short Fund, as the Fund has not completed a full calendar year
of investment operations as of the date of this Prospectus.


Fees and Expenses of the Fund

Fund investors pay various  expenses either  directly or indirectly.  This table
shows the  estimated  expenses  for the  current  year,  adjusted to reflect any
charges  that you may pay if you buy and hold  shares  of the  Fund.  Actual  or
future expenses may be different.


GAM Gabelli Long/Short Fund Investor Expenses
Shareholder Transaction Expenses


                                    CLASS A    CLASS B   CLASS C      CLASS D

Sales charges (fees paid directly
from your investment)
--------------------------------- ---------- ---------- ----------- -----------

Maximum Sales Charge
(as a percentage of the offering
price)                               5.50%      5.00%     2.00%

Maximum Front-End Sales Charge
(as a percentage of the offering
price)                               5.50%      0.00%     1.00%

Maximum Deferred Sales Charge
(as a percentage of the original
purchase price or the amount
redeemed, whichever is less)         0.00%*     5.00%     1.00%



Annual Fund  operating  expenses (% of net assets)
(expenses  that are deducted from Fund assets)
--------------------------------- ---------- ---------- -----------

Management Fees                       1.50%      1.50%     1.50%
Distribution (12b-1) Fees             0.30%      1.00%     1.00%
Other Expenses                       __.__%     __.__%    __.__%
Total Fund Operating Expenses        __.__%     __.__%    __.__%

*    Except  for  investments  of $1  million or more.  See  "Information  about
     contingent deferred sales charge."

1    The management fee given above is the Fund's annual base management fee. On
     a monthly basis, the base fee will remain unadjusted or will be adjusted up
     or down depending  upon the investment  performance of the Fund compared to
     the  investment  performance  of the S&P 500  Composite  Index,  the Fund's
     benchmark.  The maximum or minimum adjustment over any 12-month period will
     be 0.50%. As a result, the Fund could pay an annualized management fee that
     ranges from 1.00% to 2.00% of the Fund's  average daily net assets.  During
     the first 12 months of the Fund's operation,  which concludes May 29, 2003,
     the  management  fee will be  charged  at the base  fee of  1.50%,  with no
     performance adjustment made.


Examples

These  examples  can help you compare the cost of investing in the Fund with the
cost of investing in other mutual  funds.  The examples  assume a 5% return each
year, with operating expenses staying the same. Your actual returns and expenses
may be different.


Example #1 assumes you invest  $10,000 in the Fund for the periods  shown,  then
redeem all your shares at the end of those periods.

Example #2 assumes you invest $10,000 in the Fund for the periods shown, but you
do not redeem your shares at the end of those periods.


Expenses of Hypothetical $10,000 Investment
in GAM Gabelli Long/Short Fund


                                    CLASS A*   CLASS B**  CLASS C

EXAMPLE #1

---------------------------       ---------- ---------- -----------
For one year                         _____      _____     _____
For three years                      _____      _____     _____
For five years                       _____      _____     _____
For ten years                        _____      _____     _____

EXAMPLE #2

---------------------------       ---------- ---------- -----------
For one year                         _____      _____     _____
For three years                      _____      _____     _____
For five years                       _____      _____     _____
For ten years                        _____      _____     _____


1    The Fund has not  projected  expenses  beyond the  three-year  period shown
     because the Fund had not commenced investment  operations prior to the date
     of this Prospectus.
*    The above fee table assumes an asset level of $25 million for each class of
     shares and a management fee of 1.5%.



                  FOR MORE INFORMATION PLEASE CALL 800-426-4685


                  FOR MORE INFORMATION PLEASE CALL 800-426-4685

ADDITIONAL INFORMATION ABOUT NON-PRINCIPAL STRATEGIES AND RISKS

STRATEGIES

In  addition  to the  principal  strategies  stated  above,  the  following  are
non-principal strategies you should consider.

The Fund will not acquire more than 10% of the outstanding  voting securities of
any one issuer.  No more than 25% of the Fund's total assets will be invested in
any one industry.

The  Fund  may  from  time  to time  utilize  certain  sophisticated  investment
techniques,  including derivatives.  Derivatives are financial instruments which
derive  their  value  from  the  performance  of  an  underlying  asset--another
security, a commodity, or an index. Examples of these include:

o    Forward foreign exchange  contracts When the Fund buys a foreign  security,
     it generally does so in a foreign currency.  That currency has a price, and
     that price fluctuates. In order to reduce the risk of currency price swings
     or for other purposes,  the Fund may buy forward foreign exchange contracts
     on foreign  currencies.  These contracts "lock in" a price for the currency
     at a certain  future  date.  The Fund may also use put and call  options on
     foreign currencies.

o    Options and warrants An option is a contract  giving the owner the right to
     buy ("call option") or sell ("put option") a security at a designated price
     ("strike  price") on a certain date. A warrant is the  equivalent of a call
     option written by the issuer of the underlying security.

o    Futures contracts  Futures contracts  obligate one party to deliver and the
     other party to purchase a specific  quantity of a commodity  or a financial
     instrument at a designated future date, time and place. Stock index futures
     contracts  call for a cash payment based on the increase or decrease in the
     value of an index.

The  Fund  may  enter  into  foreign  currency  forward  contracts,   repurchase
agreements,  and certain other types of futures,  options and  derivatives  with
banks,  brokerage firms and other  investors in  over-the-counter  markets,  not
through any exchange. The Fund may experience losses or delays if a counterparty
to any such contract defaults or goes into bankruptcy.

RISK

In  addition  to  the  principal   risks  stated  above,   the  following  is  a
non-principal risk you should consider.


o    Management  risk The Fund is subject to  management  risk  because it is an
     actively managed  investment  portfolio.  The  Co-Investment  Advisors will
     apply their  investment  techniques and risk analyses in making  investment
     decisions for the Fund, but there is no guarantee that their decisions will
     produce the intended results.


PORTFOLIO TURNOVER

The Fund's  portfolio  turnover rate will  fluctuate  from year to year, and the
Fund may have a portfolio  turnover rate of more than 100% annually.  "Portfolio
turnover"  describes the rate at which the Fund traded its portfolio  securities
during its last fiscal year. For example, if the Fund sold all of its securities
during the year,  its portfolio  turnover  rate would have been 100%.  Increased
portfolio  turnover  (which  may  result  from  short  selling)  creates  higher
brokerage  and  transaction  costs for the Fund,  which may reduce  its  overall
performance.  Additionally,  the  realization  of  capital  gains  from  selling
portfolio  securities may result in  distributions  of taxable  capital gains to
shareholders,  since the Fund will normally  distribute  all of its capital gain
realized to  shareholders  each year to avoid  excise  taxes under the  Internal
Revenue Code.



--------------------------------------------------------------------------------



                  FOR MORE INFORMATION PLEASE CALL 800-426-4685




II.      Management of the Funds
================================================================================

INVESTMENT ADVISORS


GAM International  Management Limited ("GIML"), a corporation  organized in 1984
under the laws of the United  Kingdom,  12 St.  James's  Place,  London SW1A 1NX
England, serves as Investment Advisor for each Fund, other than the GAM American
Focus Fund.  Global Asset Management (USA) Inc. ("GAM USA") serves as Investment
Advisor to the GAM American  Focus Fund.  GAM USA is a corporation  organized in
1989 under the laws of the State of Delaware,  135 East 57th  Street,  New York,
New York 10022.  GIML co-manages the assets of the GAM Gabelli  Long/Short Fund,
along with the Fund's Co-Investment  Advisor,  GAMCO Investors,  Inc. ("GAMCO").
GAMCO is a  corporation  organized  in 1999  under  the laws of the State of New
York,  One Corporate  Center,  Rye, New York 10580.  GAMCO  provides  investment
advisory  services  to high net worth  individuals,  investment  companies  as a
sub-adviser,  pension and profit  sharing  plans,  pooled  investment  vehicles,
charitable  organizations  and  government  entities.  GAMCO  is a  wholly-owned
subsidiary of Gabelli Asset  Management  Inc., a publicly held company listed on
the New York Stock Exchange,  and is not affiliated with either GIML or GAM USA.
GAMCO and GIML became  Co-Investment  Advisors to GAM  Gabelli  Long/Short  Fund
effective  October 9, 2002,  first,  pursuant  to  separate  Interim  Investment
Advisory   Agreements  and  then,   pursuant  to  separate  Investment  Advisory
Agreements  approved by shareholders  on February 25, 2003.  Prior to October 9,
2002, GAM USA served as Investment Advisor to GAM Gabelli Long/Short Fund.

GAM Holding AG ("GAM AG"), a Swiss holding company,  the ultimate shareholder of
GIML  and  GAM  USA,  is  wholly  owned  by  UBS AG  ("UBS"),  a  Swiss  banking
corporation.  UBS,  with  headquarters  in  Switzerland,  is an  internationally
diversified  organization  with  operations  in many  aspects  of the  financial
services industry. UBS was formed by the merger of Union Bank of Switzerland and
Swiss Bank  Corporation in June 1998. GIML and GAM USA are affiliated  entities,
each indirectly wholly owned by GAM AG.

As compensation for its services,  each Fund, other than GAM Gabelli  Long/Short
Fund,  pays the  equivalent  of 1.0% per annum of the Fund's  average  daily net
assets to GIML or GAM USA (in the case of GAM American  Focus  Fund).  For their
services to GAM Gabelli  Long/Short  Fund,  GAMCO and GIML receive a fee that is
comprised of two components.  The first component of the fee is a base fee equal
to 1.50%  annualized,  of the GAM Gabelli  Long/Short  Fund's  average daily net
assets.  The second component is a performance  adjustment that either increases
or decreases the base fee,  depending on how the Fund has performed  relative to
its benchmark, the S&P 500 Stock Price Composite Index (the "S&P"). The base fee
will be increased (or decreased) by a performance adjustment at the monthly rate
of  1/12th  of 0.125%  for each  percentage  point  that the  Fund's  investment
performance  is 3.00% better (or worse) than the  performance  of the S&P during
the performance period,  which is a rolling twelve month period. The performance
adjustment  will be applied to the average net assets of the Fund  determined as
of the close of each business day during the month and the  performance  period.
The  performance  of the Fund for the  purpose of  calculating  the  performance
adjustment is the cumulative monthly  asset-weighted  performance of all classes
of shares of the Fund during the  performance  period.  The maximum  performance
adjustment upward or downward is 0.50% annualized.  Depending on the performance
of GAM Gabelli  Long/Short Fund, during any twelve month period,  GIML and GAMCO
may  receive  as much as a combined  2.00% or as little as a  combined  1.00% in
management  fees.  Prior to October 9, 2002,  GAM USA received the fee described
above for managing GAM American Focus Long/Short  Fund.  During the first twelve
months of the Fund's operations, which conclude May 29, 2003, the management fee
will be charged at the base fee of 1.50%,  with no  performance  adjustment.  An
expense cap has been  instituted for the GAM Gabelli  Long/Short  Fund such that
total  expenses  will not exceed  1.5% of the Fund's  average  daily net assets,
excluding  dividend and interest  expenses for  securities  sold short,  for the
Fund's first year of operations  ending May 29, 2003. For more information about
the Funds' investment advisory fees, see the Statement of Additional Information
for the Funds.


The Funds' expense ratios may be higher than those of most registered investment
companies.  This reflects,  in part,  the higher costs of investing  outside the
United  States.  The  advisory fee paid by each Fund is higher than that of most
registered  investment  companies.  The  Funds  pay for all  expenses  of  their
operations.

INDIVIDUALS PRIMARILY RESPONSIBLE FOR DAY-TO-DAY MANAGEMENT OF THE FUNDS:

GAM GLOBAL FUND Venkat Chidambaram,  Investment Manager,  joined GAM in February
1994. Before taking over primary  responsibility for the GAM Global Fund, he was
an  Investment  Manager  in GAM's  International/Global  Team  assisting  in the
management  of both the GAM Global  Fund and GAM  International  Fund.  Prior to
joining GAM, Mr. Chidambaram worked for accountants  Pritchard Fellows & Co. Mr.
Chidambaram is based in London.

GAM INTERNATIONAL FUND John Bennett and Michael S. Bunker, Investment Directors,
will  lead  the  International  Team and be  responsible  for the  selection  of
securities based upon the asset allocation process under Graham Wainer, Managing
Director - Portfolio Management. Mr. Wainer joined GAM in 1998 having previously
been Executive  Director of EFG Private Bank since 1991 and Managing Director of
its asset  management  subsidiary.  Mr.  Bennett is  primarily  responsible  for
European  markets and responsible for the management of the GAM Europe Fund. Mr.
Bunker is primarily  responsible for the Asian investment policy and responsible
for the management of the GAM Pacific Basin Fund and the GAM Japan Capital Fund.
Messrs. Bennett, Bunker and Wainer are based in London.

GAM PACIFIC  BASIN AND GAM JAPAN  CAPITAL  FUNDS  Michael S. Bunker,  Investment
Director, has overall responsibility for Asian investment policy. Mr. Bunker has
more  than 20 years'  investment  experience,  primarily  in Asian  markets.  He
started  managing  GAM Pacific  Basin Fund on May 6, 1987,  and also manages the
offshore fund, GAM Pacific Inc. Mr. Bunker is based in London.

GAM EUROPE FUND John Bennett,  Investment Director,  is responsible for European
markets. He joined GAM in 1993; before that, he was Senior Fund Manager, Ivory &
Sime,  responsible  for  Continental  European  equity  portfolios.  Mr. Bennett
started  managing  GAM Europe  Fund on January 1,  1993,  and also  manages  the
offshore fund GAM Pan European Inc. Mr. Bennett is based in London.


GAM AMERICAN FOCUS FUND James A. Abate,  Investment Director,  joined GAM USA as
Investment  Director in January 2001.  Previously,  Mr. Abate served as Managing
Director and  Portfolio  Manager  with  responsibility  for Credit  Suisse Asset
Management's  U.S. Select Equity portfolios as well as the firm's New York based
global sector funds. Mr. Abate managed assets for Credit Suisse Asset Management
and its  predecessor  firms for 5 years before  joining  Viewpoint  Corporation.
Prior to  joining  GAM USA,  Mr.  Abate  was the  Chief  Financial  Officer  for
Viewpoint Corporation.  Previously, he was a co-founder and Managing Director of
Vert Independent  Capital  Research,  a Wall Street equity research boutique and
investment advisor, and a Manager in PricewaterhouseCooper's Valuation/Corporate
Finance  Group.  Mr. Abate  manages  other funds and accounts for GAM USA and is
based in New York.


GAMERICA CAPITAL FUND Gordon Grender,  Investment Director,  has been associated
with GAM since 1983. He has managed North  American  stock funds since 1974. Mr.
Grender started managing GAMerica Capital Fund on May 12, 1995, and also manages
GAMerica Inc., an offshore fund with similar investment objectives.  Mr. Grender
is based in London.


GAM GABELLI LONG/SHORT FUND Investment decisions for the Fund are generally made
by an investment management team at GAMCO. An investment management team at GIML
conducts  and  maintains a  continuous  review of the  portfolio of the Fund and
provides  recommendations  as to  specific  purchases  and  sales  of  portfolio
securities,  if any, to GAMCO. No member of either investment management team is
primarily responsible for making recommendations for portfolio purchases.




                  FOR MORE INFORMATION PLEASE CALL 800-426-4685
DISTRIBUTOR

GAM Services, Inc., 135 East 57th Street, New York, New York 10022, an affiliate
of GAM USA and GIML, serves as the distributor and principal  underwriter of the
Funds' shares.  GAM USA and GIML are indirect  wholly owned  subsidiaries of GAM
Holding  AG  ("GAM  AG").  GAM AG is  wholly  owned  by  UBS  AG.  GAM  Services
compensates  financial  services firms that sell shares of the Funds pursuant to
agreements with GAM Services. Compensation payments come from sales charges paid
by shareholders at the time of purchase (for Class A, C and D shares),  from GAM
Services'  resources  (for Class B and C shares) and from 12b-1 fees paid out of
Fund assets.  The Funds have adopted  Distribution Plans under Rule 12b-1 to pay
for distribution and sale of their shares.  Under these Plans, Class A, Class B,
Class C and Class D shares pay 12b-1 fees.  Please see "Sales Charge  Schedules"
on page __ for details.

In the case of Class A, B, C and D share  accounts  which are not  assigned to a
financial  services firm, GAM Services  retains the entire fee.  Should the fees
collected  under the Plans exceed the expenses of GAM Services in any year,  GAM
Services would realize a profit.

GAM  Services,  or the Funds,  may also contract  with banks,  trust  companies,
broker-dealers, or other financial organizations to act as shareholder servicing
agents to provide administrative services for the Funds such as:

o    Processing purchase and redemption transactions.

o    Transmitting  and  receiving  monies for the purchase and sale of shares in
     the Funds.

o    Answering routine inquires about the Funds.

o    Furnishing  monthly and year-end  statements and confirmations of purchases
     and sales of shares.

o    Transmitting periodic reports,  updated prospectuses,  proxy statements and
     other shareholder communications.

For these services, each Fund pays fees which may vary depending on the services
provided.  Fees will not exceed an annual  rate of 0.25% of the net daily  asset
value of the shares of a Fund under the service contract.



III.     Shareholder Information
--------------------------------------------------------------------------------

CHOOSING THE APPROPRIATE SHARE CLASS

When you buy,  sell, or exchange  shares of a Fund,  you do so at the Fund's net
asset value  ("NAV"),  plus any applicable  sales charge or Contingent  Deferred
Sales  Charge  (CDSC).  NAV is  determined  by  dividing  the  value of a Fund's
securities,  cash,  and other assets  (including  accrued  interest),  minus all
liabilities  (including  accrued  expenses),  by the number of the Fund's shares
outstanding.

The  Funds  calculate  their  NAVs at the  close  of  regular  trading  each day
(normally 4:00 p.m. Eastern Time) the New York Stock Exchange is open. GAM Japan
Capital Fund's NAV is calculated normally at 4:00 p.m. Eastern Time using prices
at the close of trading on the Tokyo  Stock  Exchange  (approximately  2:00 a.m.
Eastern Time) each day the New York Stock Exchange is open.

Fund shares are offered on a continuous  basis.  When you issue an order to buy,
sell,  or exchange  shares by 4:00 p.m.  Eastern Time on a regular  trading day,
your  order  will be  processed  at that  day's  NAV plus any  applicable  sales
charges.  Each Fund  calculates its NAV based on the current market value of its
portfolio securities. If a market value is not readily available for a security,
the security  will be valued at fair value as  determined in good faith or under
the direction of the Board of Directors.

The Funds invest in securities traded on foreign exchanges.  Generally,  trading
in foreign  securities  markets is completed at various  times prior to the time
that the Funds  calculate  their NAVs. The values of foreign  securities held by
the Funds are  determined  at the last quoted  sales  prices  available  in each
security's  principal  foreign market for the purpose of calculating the NAVs of
the Funds. If events that materially  affect the value of the securities held by
a Fund  occur  subsequent  to the close of the  securities  market on which such
securities are principally  traded,  then the affected securities will be valued
at fair value as described  above.  Because the Funds own securities  that trade
primarily  in  foreign  markets,  which  may trade on days when the Funds do not
price their shares,  the NAV of a Fund may change on days when shareholders will
not be able to purchase or redeem shares of the Fund.


The  Company  offers A, B, C and D class  shares.  The B class  shares  are only
available  through  exchanges  with other  Funds' B class shares as described in
"How to Exchange  Shares" on page 67, and through  reinvestment of dividends for
existing B class  shareholders.  Each class  involves  different  sales charges,
features and expenses.





                  FOR MORE INFORMATION PLEASE CALL 800-426-4685


A, B, C AND D SHARE COMPARISON

------------  --------------------- ----------------------  ------------------ ------------------
              Class A               Class B                 Class C            Class D

TERMS         Offered at NAV plus   Offered at NAV with no  Offered at NAV     Offered at NAV
              a front-end sales     front-end sales         plus a front-end   plus a front-end
              charge                charge, but with a      sales charge of    sales charge which
                                    Contingent Deferred     1.00%, and with a  is lower than the
                                    Sales Charge (CDSC)     Contingent         sales charge on A
                                    when shares are sold    Deferred Sales     Shares
                                                            Charge (CDSC) of
                                                            1.00% if shares
                                                            are sold within
                                                            one year after
                                                            purchase

------------  --------------------- ----------------------  ------------------  ------------------
AVAILABILITY  All Funds             Only available through  All Funds          GAM International,
                                    exchanges of Class B                       GAM Global, and
                                    shares between Funds                       GAM Pacific Basin
                                    and reinvestment of                        Funds
                                    dividends for current
                                    Class B shareholders

------------  --------------------- ----------------------  ------------------  ------------------
ONGOING
EXPENSES      Lower than Class B,   Higher than Class A or  Higher than        Higher than
              C, or D               D                       Class A or D       Class A shares,
                                                                               but lower than
                                                                               Class B or C

------------  --------------------- ----------------------  ------------------  ------------------
APPROPRIATE
FOR           o  Who prefer a       o  Who are              o  Who want        o  Who want
INVESTORS        single front-end      existing Class B        a lower            a lower
                 sales charge          shareholders            front-end          front-end
                                                               sales charge       sales charge
              o  With a longer
                 investment horizon                         o  With a          o  Who may
                                                               shorter            have a
              o  Who qualify                                   investment         shorter
                 for reduced sales                             horizon            investment
                 charges on larger                                                horizon
                 investments                                o  Who may
                                                               benefit from
                                                               a lower CDSC
                                                               if shares are
                                                               sold within
                                                               one year

------------  --------------------- ----------------------  ------------------  ------------------
MAXIMUM
INVESTMENT    Unlimited             $1,000,000              $1,000,000         Unlimited, though
                                    Your purchase of        Your purchase of   purchases for more
                                    Class B Shares must be  Class C Shares     than $1,000,000
                                    for less than           must be for less   should be for
                                    $1,000,000, because if  than $1,000,000    Class A Shares as
                                    you invest $1,000,000   because if you     you would pay a
                                    or more, you will pay   invest $1,000,000  lower 12b-1 fee.
                                    less in fees and        or more, you will
                                    charges if you buy      pay less in fees
                                    Class A Shares.         and charges if
                                                            you buy Class A
                                                            Shares.



INFORMATION ABOUT THE REDUCTION OR WAIVER OF FRONT-END SALES CHARGES:

Front-end sales charges may be reduced by:

o    Rights of Accumulation. This means that you may add the value of any shares
     you already own of the same class to the amount of your next  investment in
     that class for purposes of  calculating  the sales charge.  To determine if
     you qualify for a reduced sales charge, the amount of your current purchase
     is added to the cost or current value,  whichever is higher,  of the shares
     of that class that you already own.

o    Combination  Privilege.  This means you may combine shares of more than one
     GAM Fund of the same class for purposes of  calculating  the sales  charge.
     Also, you may combine  shares  purchased in your own account with shares of
     the same class purchased for your spouse or children under the age of 21.

Please refer to the Purchase Application or consult with your financial services
firm to take advantage of these purchase options.

Front-end sales charges may be waived...

o    For GAM employees or others  connected in  designated  ways to the firm, to
     its affiliates,  or to its registered  representatives.  Please see the SAI
     for details.

o    For large orders and  purchases by eligible  plans.  Please see the SAI for
     details,  including a  description  of the  commissions  GAM may advance to
     dealers for these purchases.

INFORMATION ABOUT CONTINGENT DEFERRED SALES CHARGES (CDSCs)

Class A Shares are subject to a front-end  sales charge at the time of purchase.
However,  for certain purchases,  the initial sales charge may be waived.  Those
purchases may be subject to a contingent  deferred  sales charge of 1% on shares
sold within 12 months of purchase  if GAM has paid a  commission  (not waived by
the dealer) on the original purchase of shares.

Class B Shares  are  subject  to a CDSC on any sale of  shares  which  drops the
aggregate  value of your Class B Share account  below the  aggregate  amount you
have invested during the years preceding your redemption.  Class B shares may be
converted  into Class A shares  after eight,  six,  four,  three,  or two years,
depending on the amount of Class B Shares you purchased and when.

Class C Shares are subject to a front-end  sales charge at the time of purchase,
and are subject to a CDSC on any sale of shares which drops the aggregate  value
of your Class C Share  account  below the  aggregate  amount  you have  invested
during the one year preceding your redemption.

CDSCs will be waived...

o    When you sell off the profit from shares that have  increased in value over
     certain  periods  (12 months for Class A, up to 6 years for Class B, 1 year
     for Class C).

o    When  you  sell  shares  you  have  bought  by  reinvesting   dividends  or
     distributions,  or that you have bought by  exchanging  shares of other GAM
     Funds.

Note:  When the Funds  determine  whether  or not you owe a CDSC at the time you
sell shares, the Funds assume that the amounts described in the two points above
are sold first.



                  FOR MORE INFORMATION PLEASE CALL 800-426-4685


Sales Charge Schedules

Front-End Sales Charges on Class A, C and D Shares

   Class A Sales Charges
-------------------------- --------------- ----------------- -------------------
                           Sales Charge    Sales Charge     Amount Reallowed to
                           (as % of        (as % of Net     Dealers (as % of
Purchase amount            Offering Price) Amount Invested) Offering Price)

Less than $50,000.........     5.50%            5.82%            5.00%
$50,000 to $99,999........     4.50             4.71             4.00
$100,000 to $249,999......     3.50             3.63             3.00
$250,000 to $499,999......     2.50             2.56             2.00
$500,000 to $999,999......     2.00             2.04             1.75
$1,000,000 and over (1)...     None             None             Up to 1.00(2)

(1)  A CDSC of 1% of the  shares'  offering  price or the net asset value at the
     time of sale by the shareholder,  whichever is less, is charged on sales of
     shares made within twelve months of purchase.  Class A shares  representing
     reinvestment of dividends are not subject to this 1% charge. Withdrawals in
     the first year after purchase of up to 10% of the value of the fund account
     under a Fund's Systematic Withdrawal Plan are not subject to this charge.

(2)  GAM Services  pays 1.00% to the dealer for sales of greater than $1 million
     but less than $3  million,  0.75% for sales of at least $3 million but less
     than $5  million,  0.50% for sales of at least $5 million but less than $50
     million, and 0.25% for sales of $50 million or more.

Class A shares pay a 0.30% 12b-1 fee (of which 0.25% is reallowed to dealers).

   Class C Sales Charges
 ------------------------- --------------- -----------------  ------------------
                           Sales Charge     Sales Charge      Amount Reallowed
                           (as % of         (as % of Net      to Dealers (as %
                           Offering Price)  Amount Invested)  of Offering Price)

                             1.00%            1.01%               1.00%

     Class C shares pay a 1%  12b-1/service  fee (all of which is  reallowed  to
     dealers beginning in year 2).

   Class D Sales Charges
-------------------------- --------------- ----------------- -------------------
                           Sales Charge    Sales Charge     Amount Reallowed to
                           (as % of        (as % of Net     Dealers (as % of
Purchase amount            Offering Price) Amount Invested) Offering Price)

Up to $100,000............     3.50%           3.63%            2.50%
$100,000-$299,999.........     2.50%           2.56%            1.50%
$300,000-$599,999.........     2.00%           2.04%            1.00%
$600,000-$999,999.........     1.50%           1.52%            1.00%
$1,000,000 and over*......     0.00%

Class D shares pay a 0.50% 12b-1 fee (all of which is reallowed to dealers).

*Purchases  of $1 million or more should be for Class A shares.  Please  consult
your financial services firm.

Contingent Deferred Sales Charges (CDSCs) on Class B and C Shares

   Class B Sales Charges
--------------------------------------------------------------------------------
                   Percentage (based on amount of investment)
               by which the shares' net asset value is multiplied:
--------------------------------------------------------------------------------
If you sell Class B    Less        $100,000      $250,000      $500,000
                       than           to            to            to
shares within:       $100,000      $249,999      $499,999      $999,999
-------------        --------      --------      --------      --------

1st year since
   purchase.......      5%            3%            3%            2%
2nd year since
   purchase.......      4%            2%            2%            1%
3rd year since
   purchase.......      3%            2%            1%           None
4th year since
   purchase.......      2%            1%           None          None
5th year since
   purchase.......      2%           None          None          None
6th year since
   purchase.......      1%           None          None          None
7th year since
   purchase.......     None          None          None          None

If you are eligible for a complete  waiver of the sales charge on Class A shares
because  you are  investing  $1 million or more,  you  should  purchase  Class A
shares, which have lower ongoing expenses.


Class B shares are only available  through  reinvestment of dividends by current
Class B  shareholders  and through  exchanges  of Class B shares of one Fund for
Class B shares of another Fund, as described under "How to Exchange Shares."


Class B shares  automatically  convert  to Class A shares  after  the end of the
sixth year,  if you  purchase  less than  $100,000,  after the end of the fourth
year, if you purchase at least $100,000 but less than $250,000, after the end of
the third year, if you purchase at least  $250,000 but less than  $500,000,  and
after the end of the second year, if you purchase $500,000 or more but less than
$1  million.  To  qualify  for the  lower  deferred  sales  charge  and  shorter
conversion  schedule,  you  must  make  the  indicated  investment  as a  single
purchase.

Regardless  of the amount of the  investment,  Prior  Class B Shares (as defined
below) are subject to a deferred  sales charge at the time of  redemption at the
following  percentages:  (i) 5%, if shares are sold  within the first year since
purchase;  (ii) 4%, if shares are sold  within the second  year since  purchase;
(iii) 3%, if shares  are sold  within the third or fourth  year since  purchase;
(iv) 2%, if shares are sold within the fifth year since purchase; and (v) 1%, if
shares are sold  within the sixth year of  purchase.  Prior  Class B Shares held
longer than six years are not subject to a deferred sales charge and after eight
years  automatically  convert  to  Class A  shares,  which  have  lower  ongoing
expenses.

Prior Class B Shares are Class B shares of the Funds purchased or acquired prior
to  January  30,  2002  and  exchanged   (including   exchanges  as  part  of  a
reorganization) for Class B shares of the Funds after January 30, 2002.

Class B shares  pay a 1%  12b-1/service  fee (of  which  0.25% is  reallowed  to
dealers beginning in year 2).

     Class C Sales Charges
---------------------------- ----------- -------------
The year you sell shares     1st         2nd & after
C Shares                     1%          0%

Dealer commission:  1% (Investment must be held at least 12 months).



                  FOR MORE INFORMATION PLEASE CALL 800-426-4685


CDSC WAIVERS (continued from pg. 55)

o    For shares  sold from the  registered  accounts of persons who have died or
     become disabled within one year after death or disability.

o    For redemptions  representing minimum required distributions from an IRA or
     other tax-qualified retirement plan to a shareholder who is over 701/2years
     old. If a shareholder holds other investments in the same IRA or plan, then
     all investments must be distributed on a pro rata basis.

o    For sales of shares  from  Qualified  Retirement  Plans  that  offer  Funds
     managed by GIML if the Plan is being  fully  "cashed  out," with all assets
     distributed to its participants.

o    For share sales under the Systematic  Withdrawal Plan. No more than 10% per
     year of the account balance may be sold by Systematic  Withdrawal,  and the
     account  must  have a  minimum  $10,000  balance  at the  beginning  of the
     Systematic Withdrawal Plan.


o    For exchanges  between same share  classes of other GAM Funds,  and through
     July 31, 2003, for exchanges  between same share classes of funds which UBS
     Global  Asset  Management  (US)  Inc.  or one of its  affiliates  serves as
     principal underwriter ("UBS Family Funds").


For detailed rules applicable to CDSC waivers, please read the SAI.

INFORMATION ABOUT 12B-1 FEES:

o    The 12b-1  Plans  adopted by the Fund for the Class A, Class B, Class C and
     Class D Shares  permit the Fund to pay  distribution  fees for the sale and
     distribution of its shares.

o    Because these fees are paid out of Fund assets on an on-going  basis,  over
     time these fees will increase the cost of your  investment and may cost you
     more than paying other types of sales charges.

HOW TO BUY SHARES


You may buy shares through your  financial  services firm, or you may buy shares
directly by mail from PFPC Inc., the Transfer Agent for the Funds.

To buy shares directly by mail,  complete the appropriate  parts of the Purchase
Application  (included  with  this  Prospectus).  Make  your  check  out  in the
appropriate amount to the order of "GAM Funds, Inc."

Send the application and check (U.S. dollars) to:

         GAM Funds, Inc.
         c/o PFPC
         P.O. Box 8716
         Wilmington, Delaware 19899-8716

You may pay for shares by wire  transfer  after you have mailed in your Purchase
Application. See the wire instructions on the Purchase Application.

Minimum investment amounts
--------------------------

Initial investment                         $5,000
Subsequent investment                         100
Initial IRA account investment              2,000
Subsequent IRA account investment             100

At their  discretion,  the Funds may waive minimum  investment  requirements for
custodial  accounts,  employee benefit plans or accounts opened under provisions
of the Uniform Gifts to Minors Act (UGMA).


Each Fund  reserves  the right to refuse any order for the  purchase  of shares.
Shareholders will be notified of any such action as required by law.

The  Funds  are not  designed  for  professional  market  timing  organizations,
individuals,  or entities  using  programmed  or frequent  exchanges  or trades.
Frequent  exchanges or trades may be disruptive  to the  management of the Funds
and can raise their  expenses.  The Funds'  principal  underwriter  reserves the
right to reject or restrict any specific  purchase  and exchange  requests  with
respect  to market  timers  and  reserves  the right to  determine,  in its sole
discretion, that an individual or entity is or has acted as a market timer.


Each of GAM Global Fund,  GAM  International  Fund,  GAM Pacific Basin Fund, GAM
Japan Capital Fund and GAM Europe Fund imposes a 1.00%  redemption fee on shares
redeemed  (including in connection  with an exchange) 90 days or less from their
date of purchase. The redemption fee applies to Class A and D shares only.


The  redemption  fee  is  not a  sales  charge.  Neither  the  Funds'  principal
underwriter,  nor Fund  management  realizes  any of these fees as revenue.  The
proceeds will be paid directly to the applicable  Fund and therefore  affect its
NAV.


The Board of Directors of the Funds  approved  the  redemption  fee to limit the
disruptive  effects on the  portfolio  management  of the Funds that result from
"market  timing" of Fund  shares  and to  protect  the  interests  of  long-term
shareholders.  The  redemption fee is intended to offset  portfolio  transaction
costs and costs  associated  with erratic  redemption  activity,  as well as the
administrative  costs  associated  with  processing  redemptions.  The  Board of
Directors  also  approved  resolutions  that permit GIML and GAM USA upon proper
notice to shareholders,  to impose redemption fees on the GAMerica Capital Fund,
the GAM  American  Focus Fund  and/or the GAM Gabelli  Long/Short  Fund at their
discretion,  and to impose  such fee on any class of shares  established  in the
future which have a front end sales charge.

The redemption fee is intended to offset portfolio  transaction  costs and costs
associated with erratic redemption activity, as well as the administrative costs
associated  with processing  redemptions.  To the extent that the redemption fee
applies,  the price you will receive when you redeem your shares is the NAV next
determined  after receipt of your  redemption  request in good order,  minus the
redemption  fee. The  redemption fee is applied only against the portion of your
redemption  proceeds that  represents  the lower of: (i) the initial cost of the
shares  redeemed,  and (ii) the NAV of the shares at the time of redemption,  so
that you will not pay a fee on amounts  attributable to capital  appreciation of
your shares.  The redemption fee is not assessed on shares acquired  through the
reinvestment of dividends or distributions paid by the Funds.

For the purpose of computing the redemption fee, redemptions by a shareholder to
which the fee applies will be deemed to have been made in the  following  order:
(i)  from  shares   purchased   through  the   reinvestment   of  dividends  and
distributions  paid  by  the  Funds;  and  (ii)  from  all  other  shares,  on a
first-purchased,  first-redeemed  basis.  Only shares  described  in clause (ii)
above that are  redeemed  90 days or less from their  date of  purchase  will be
subject to the redemption fee.


The Funds' principal  underwriter  may, at its discretion,  waive the redemption
fee upon the death or permanent disability of a shareholder.

HOW TO SELL SHARES


You may sell  shares  on any day the New York  Stock  Exchange  is open,  either
through your financial services firm or directly,  through PFPC Inc., the Funds'
Transfer  Agent.  Financial  services  firms must receive your sell order before
4:00 p.m.  Eastern  Time,  and are  responsible  for  furnishing  all  necessary
documentation to the Transfer Agent.


TO SELL SHARES BY MAIL VIA THE TRANSFER AGENT

o    Send a written request,  indicating the Fund name, class of shares,  number
     of shares or dollar amount to be sold,  and signed by the  person(s)  whose
     name(s) appear on the account records, to the Funds' Transfer Agent.


     Send request to:

         GAM Funds, Inc.
         c/o PFPC
         P.O. Box 8716
         Wilmington, Delaware 19899-8716


o    You will need a signature guarantee (a) if you sell shares worth $50,000 or
     more;  (b) if you want the money from your sale to be paid to someone other
     than the registered  account holder  (usually,  this means to someone other
     than yourself) or (c) if you want the money mailed to an address other than
     the address of record  (usually some other address than your own).  You can
     get a signature guarantee from most banks, from a member firm of a national
     stock exchange, or from another guarantor  institution.  A notary public is
     not acceptable.

o    If you are required to provide a signature  guarantee  and live outside the
     United States,  a foreign bank acceptable to the Transfer Agent may provide
     a signature guarantee. If such signature guarantee is not acceptable to the
     Transfer Agent, you may experience a delay in processing of the redemption.
     You may get a signature  guarantee from a foreign bank which,  for example,
     is an  overseas  branch of a United  States  bank,  member  firm of a stock
     exchange or has a branch office in the United States.

o    If you hold share  certificates  for the shares you want to sell,  you must
     send them along with your sell  order.  Please call the  Transfer  Agent at
     800-426-4685 before you send share certificates.

o    If you sell shares as a  corporation,  agent,  fiduciary,  surviving  joint
     owner,  or  individual  retirement  account  holder,  you will  need  extra
     documentation.  Contact  the  Transfer  Agent to make sure you  include all
     required documents with your order.

TO SELL SHARES BY PHONE OR FAX VIA THE TRANSFER AGENT

To sell  shares by  telephone  or fax order,  you must have first  selected  the
telephone redemption privilege,  either on your initial Purchase Application, or
later, before placing your sell order.

INVOLUNTARY REDEMPTIONS

Your  account may be closed by the Fund if,  because of  withdrawals,  its value
falls below $1,000. These rules apply:

o    You will be asked by the Fund to buy more  shares  within  30 days to raise
     your account value above $1,000. If you do not do this, the Fund may redeem
     your  account and send you the  proceeds.  You will not owe any CDSC on the
     proceeds of an involuntarily redeemed account.

o    If you draw your account below $1,000 via the  Systematic  Withdrawal  Plan
     (see  "Account  Services,"  below),  your  account  will not be  subject to
     involuntary redemption.

o    Involuntary  redemption  does not apply to retirement  accounts or accounts
     maintained by administrators in retirement plans.

o    No account will be closed if its value drops below  $1,000  because of Fund
     performance, or because of the payment of sales charges.

REINSTATEMENT PRIVILEGE
If you sell  shares  of a Fund,  you may  reinvest  some or all of the  proceeds
within 60 days without a sales charge. These rules apply:

o    You must  reinvest in the same account or a new account,  in the same class
     of shares.

o    If you  paid a CDSC at the  time of sale,  you  will be  credited  with the
     portion of the CDSC paid from of the reinvested proceeds.

HOW TO EXCHANGE SHARES


You may exchange  shares of Class A, Class B, Class C or Class D of any Fund for
shares of the same class of another  GAM Fund  (including  the GAM Money  Market
Account).  Through July 31, 2003,  you may also  exchange  shares of Class A and
Class  C of any  Fund  for  shares  of the  same  class  of a UBS  Family  Fund.
Generally, you will not pay any sales charge when making exchanges of shares for
which an applicable  sales charge has been paid.  Exchanges may be done by phone
or fax, or by mail.  The GAM Money Market  Account is an  open-ended  investment
management company not offered through this Prospectus. For a free prospectus on
the GAM Money Market Account, contact your advisor or call 800-426-4685.


TO EXCHANGE SHARES BY PHONE OR FAX VIA THE TRANSFER AGENT
Before you try to exchange  shares by telephone or fax,  make sure you have this
privilege.  You must have selected it on your initial Purchase  Application.  If
you don't have this  privilege now, you can still get it by calling the Transfer
Agent at 800-426-4685.

TO EXCHANGE SHARES BY MAIL VIA THE TRANSFER AGENT
o    Send a written request,  indicating the Fund name, class of shares,  number
     of shares or dollar  amount to be  exchanged,  and signed by the  person(s)
     whose name(s) appear on the account records, to the Funds' Transfer Agent.


     Send request to:

         GAM Funds, Inc.
         c/o PFPC
         P.O. Box 8716
         Wilmington, Delaware 19899-8716


o    Send a new Purchase  Application,  showing the simultaneous purchase of new
     Fund shares. You can get a new Purchase Application by calling the Transfer
     Agent at 800-426-4685.

EXCHANGES TO OR FROM THE GAM MONEY MARKET ACCOUNT
o    Shares of one GAM Fund may be  exchanged  for  shares of the same  class of
     another GAM Fund or for shares of the GAM Money Market Account.

o    The GAM Money Market  Account  does not offer D shares.  You may exchange a
     Fund's Class D shares for Class A shares of the GAM Money Market Account.

o    Fund shares  subject to a CDSC (i.e.,  Class B and Class C Shares)  will be
     subject to the same CDSC after  exchanging them for shares of the GAM Money
     Market Account. They will "age" from the original Fund purchase date.

Limits on exchanges
The exchange vehicle is not intended for short-term trading.  Excessive exchange
activity may interfere with  portfolio  management and have an adverse effect on
shareholders.  Each Fund  reserves the right to revise or terminate the exchange
privilege,  limit the amount or number of  exchanges,  or reject  any  exchange.
Shareholders will be notified of any such action as required by law.

ACCOUNT SERVICES

You may select the following account services on your Purchase  Application,  or
at any time thereafter, in writing.

o    Dividend reinvestment
     Automatic, unless you direct that your dividends be mailed to you.

o    Systematic withdrawal plan
     You may order a specific dollar amount sale of shares at regular  intervals
     (monthly or quarterly). $10,000 account minimum.

o    Automatic investment plan
     You may order a  specific  dollar  amount  purchase  of  shares at  regular
     intervals (monthly or quarterly), with payments made electronically from an
     account you designate at a financial services institution. $100 minimum per
     automatic investment.

Voice Response Unit
You may access GAM Fund  information  through our phone inquiry system.  You may
select from a menu of choices that includes prices, dividends and capital gains,
account balances and ordering duplicate statements.

Telephone  and facsimile  privileges.  Telephone  requests may be recorded.  The
Transfer Agent has procedures in place to verify caller identity.  Proceeds from
telephone  or  facsimile  sales will be mailed only to your  registered  account
address or  transferred  by wire to an account you designate  when you establish
this privilege.  As long as the Fund and the Transfer Agent follow  instructions
communicated  by telephone  that were  reasonably  believed to be genuine at the
time of their receipt,  neither they nor any of their  affiliates will be liable
for any loss to the account holder caused by an unauthorized transaction.

Please contact you financial  representative for further help with your account,
or contact the Funds' Transfer Agent.

Contact:


         PFPC
         P.O. Box 8716
         Wilmington, DE 19899-8716
         (800) 426-4685
         Fax:  (302) 791-1007


DIVIDENDS AND TAX MATTERS

So long as each  Fund  meets  the  requirements  of a  tax-qualified  registered
investment company, it pays no federal income tax on the earnings it distributes
to shareholders.  Each Fund intends to pay a semi-annual  dividend  representing
its entire net investment  income and to distribute all its realized net capital
gains. In so doing, the Fund will avoid the imposition of any excise taxes.

Dividends, whether reinvested or taken as cash, are generally taxable. Dividends
from capital gains are taxable at the rate  applicable to the length of time the
investments  have  been held by the  Fund.  Dividends  from  other  sources  are
generally taxable as ordinary income.

After a Fund makes its semi-annual  distribution,  the value of each outstanding
share  will  decrease  by the  amount  of the  distribution.  If you buy  shares
immediately  before the record date of the  distribution,  you will pay the full
price for the shares,  then  receive some portion of the price back as a taxable
dividend or capital gain distribution.

Form  1099  DIV and Tax  Notice,  mailed  to you  every  January,  details  your
distributions and their Federal tax category.

Normally,  any sale or exchange of shares is a taxable event.  Depending on your
purchase price and sale price,  you may have a gain or loss on the  transaction.
Please verify your tax liability with your tax professional. Consult the SAI for
certain other tax consequences to shareholders.



IV.      Financial Highlights
--------------------------------------------------------------------------------

The financial  highlights  table is intended to help you  understand  the Fund's
financial  performance  for  the  past 5  years.  Certain  information  reflects
financial  results  for a single  Fund  share.  The total  returns  in the table
represent  the rate that an investor  would have earned or lost on an investment
in the Fund (assuming  reinvestment of all dividends and distributions).  Unless
otherwise  noted,  the selected  financial  information  below is for the fiscal
periods ending December 31 of each year.



GAM GLOBAL FUND

                                                              Class A Shares
                                             --------- --------- --------- --------- ---------

                                                02        01        00        99        98
                                             --------- --------- --------- --------- ---------

Net asset value,
   beginning of period                                  $17.53    $21.75    $19.04    $18.71
                                                        ------    ------    ------    ------


INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss)++                           (0.23)    (0.26)    (0.13)    (0.05)
Net realized and unrealized gain/(loss) on
   investments                                           (2.11)    (3.31)     2.84      0.55
                                                        ------     -----      ----      ----
Total from investment operations                         (2.34)    (3.57)     2.71      0.50
                                                        ------    ------      ----      ----


LESS DISTRIBUTIONS
Dividends from net investment income                        --        --        --        --
Distributions in excess of net investment
   income                                                   --     (0.48)       --        --
Distributions from net realized gains                       --     (0.17)       --     (0.17)
                                                        ------    ------    ------    ------
Total distributions                                         --     (0.65)       --     (0.17)
                                                        ------    ------    ------    ------
Net asset value, end of period                          $15.19    $17.53    $21.75    $19.04
                                                        ======    ======    ======    ======

TOTAL RETURN
Total return for the period+
   (without deduction of sales charge)                  (13.35)%  (16.34)%   14.23%     2.57%


RATIOS/SUPPLEMENTAL DATA
Total net assets (millions)                                $15       $31       $67      $140
Ratio of expenses to average net assets                   2.72%     2.13%     1.89%     1.71%
Ratio of net investment income/(loss) to
   average net assets                                    (1.52)%   (1.34)%   (0.69)%   (0.25)%
Portfolio turnover rate                                     58%      199%      107%      123%




GAM GLOBAL FUND

                                                              Class B Shares
                                             --------- --------- --------- --------- ---------

                                                02        01        00        99        98(a)
                                             --------- --------- --------- --------- ---------

Net asset value,
   beginning of period                                  $17.50    $21.66    $19.11    $20.99
                                                        ------    ------    ------    ------


INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss)++                           (0.36)    (0.40)    (0.30)    (0.13)
Net realized and unrealized gain/(loss) on
   investments                                           (2.09)    (3.29)     2.85     (1.75)
                                                        ------     -----      ----      ----
Total from investment operations                         (2.45)    (3.69)     2.55     (1.88)
                                                        ------    ------      ----      ----


LESS DISTRIBUTIONS
Dividends from net investment income                        --        --        --        --
Distributions in excess of net investment
   income                                                   --     (0.30)       --        --
Distributions from net realized gains                       --     (0.17)       --        --
                                                        ------    ------    ------    ------
Total distributions                                         --     (0.47)       --        --
                                                        ------    ------    ------    ------
Net asset value, end of period                          $15.05    $17.50    $21.66    $19.11
                                                        ======    ======    ======    ======

TOTAL RETURN
Total return for the period+
   (without deduction of sales charge)                  (14.00)%  (16.96)%   13.34%     8.96%


RATIOS/SUPPLEMENTAL DATA
Total net assets (millions)                                 $4        $6        $9       $10
Ratio of expenses to average net assets                   3.58%     2.92%     2.76%     2.70%+
Ratio of net investment income/(loss) to
   average net assets                                    (2.37)%   (2.11)%   (1.61)%   (1.14)%+
Portfolio turnover rate                                     58%      199%      107%      123%



GAM GLOBAL FUND

                                                              Class C Shares
                                             --------- --------- --------- --------- ---------

                                                02        01        00        99        98(b)
                                             --------- --------- --------- --------- ---------

Net asset value,
   beginning of period                                  $17.53    $21.63    $19.10    $21.06
                                                        ------    ------    ------    ------


INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss)++                           (0.39)    (0.41)    (0.30)    (0.14)
Net realized and unrealized gain/(loss) on
   investments                                           (2.08)    (3.27)     2.83     (1.82)
                                                        ------     -----      ----      ----
Total from investment operations                         (2.47)    (3.68)     2.53     (1.96)
                                                        ------    ------      ----      ----


LESS DISTRIBUTIONS
Dividends from net investment income                        --        --        --        --
Distributions in excess of net investment
   income                                                   --     (0.25)       --        --
Distributions from net realized gains                       --     (0.17)       --        --
                                                        ------    ------    ------    ------
Total distributions                                         --     (0.42)       --        --
                                                        ------    ------    ------    ------
Net asset value, end of period                          $15.06    $17.53    $21.63    $19.10
                                                        ======    ======    ======    ======

TOTAL RETURN
Total return for the period+
   (without deduction of sales charge)                  (14.09)%  (16.97)%   13.25%     9.31%


RATIOS/SUPPLEMENTAL DATA
Total net assets (millions)                                 $2        $3        $8        $9
Ratio of expenses to average net assets                   3.74%     2.95%     2.77%     2.83%+
Ratio of net investment income/(loss) to
   average net assets                                    (2.53)%   (2.16)%   (1.62)%   (1.27)%+
Portfolio turnover rate                                     58%      199%      107%      123%



GAM GLOBAL FUND

                                                              Class D Shares
                                             --------- --------- --------- --------- ---------

                                                02        01        00        99        98
                                             --------- --------- --------- --------- ---------

Net asset value,
   beginning of period                                  $17.36    $21.41    $18.79    $18.50
                                                        ------    ------    ------    ------


INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss)(++)                         (0.33)    (0.33)    (0.18)    (0.08)
Net realized and unrealized gain/(loss) on
   investments                                           (2.08)    (3.23)     2.80      0.54
                                                        ------     -----      ----      ----
Total from investment operations                         (2.41)    (3.56)     2.62      0.46
                                                        ------    ------      ----      ----


LESS DISTRIBUTIONS
Dividends from net investment income                        --        --        --        --
Distributions in excess of net investment
   income                                                   --     (0.32)       --        --
Distributions from net realized gains                       --     (0.17)       --     (0.17)
                                                        ------    ------    ------    ------
Total distributions                                         --     (0.49)       --     (0.17)
                                                        ------    ------    ------    ------
Net asset value, end of period                          $14.95    $17.36    $21.41    $18.79
                                                        ======    ======    ======    ======

TOTAL RETURN
Total return for the period(+)
   (without deduction of sales charge)                  (13.88)%  (16.57)%   13.94%     2.38%


RATIOS/SUPPLEMENTAL DATA
Total net assets (millions)                                 $1        $2        $6       $10
Ratio of expenses to average net assets                   3.35%     2.51%     2.16%     1.87%
Ratio of net investment income/(loss) to
   average net assets                                    (2.14)%   (1.76)%   (0.98)%   (0.41)%+
Portfolio turnover rate                                     58%      199%      107%      123%



(a)  For the period from 26th May, 1998  (commencement  of  operations)  to 31st
     December, 1998.
(b)  For the period from 19th May, 1998  (commencement  of  operations)  to 31st
     December, 1998.
(+)  Total return calculated for a period less than one year is not annualized.
(++) Net investment  income per share has been determined  based on the weighted
     average shares outstanding method.
+    Annualized.






IV.      Financial Highlights
----------------------------------------------------------------------------------------------
GAM INTERNATIONAL FUND

                                                              Class A Shares
                                             --------- --------- --------- --------- ---------

                                                02        01        00        99        98
                                             --------- --------- --------- --------- ---------

Net asset value,
   beginning of period                                  $20.02    $32.16    $30.06    $28.46
                                                        ------    ------    ------    ------


INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss)++                           (0.03)    (0.23)     0.17      0.08
Net realized and unrealized gain/(loss) on
   investments                                           (4.88)    (7.07)     1.93      2.03
                                                        ------     -----      ----      ----
Total from investment operations                         (4.91)    (7.30)     2.10      2.11
                                                        ------    ------      ----      ----


LESS DISTRIBUTIONS
Dividends from net investment income                        --     (2.82)       --     (0.05)
Distributions in excess of net investment
   income                                                   --     (2.02)       --        --
Distributions from net realized gains                       --        --        --     (0.46)
                                                        ------    ------    ------    ------
Total distributions                                         --     (4.84)       --     (0.51)
                                                        ------    ------    ------    ------
Net asset value, end of period                          $15.11    $20.02    $32.16    $30.06
                                                        ======    ======    ======    ======

TOTAL RETURN
Total return for the period+
   (without deduction of sales charge)                  (24.53)%  (22.74)%    6.99%     7.22%


RATIOS/SUPPLEMENTAL DATA
Total net assets (millions)                               $190      $440    $1,271    $2,868
Ratio of expenses to average net assets                   2.01%     1.90%     1.76%     1.66%
Ratio of net investment income/(loss) to
   average net assets                                    (0.16)%   (0.86)%   (0.62)%   (0.27)%
Portfolio turnover rate                                    105%      180%      117%       73%




GAM INTERNATIONAL FUND

                                                              Class B Shares
                                             --------- --------- --------- --------- ---------

                                                02        01        00        99        98(a)
                                             --------- --------- --------- --------- ---------

Net asset value,
   beginning of period                                  $20.28    $32.31    $30.41    $33.39
                                                        ------    ------    ------    ------


INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss)++                           (0.14)    (0.38)    (0.07)    (0.20)
Net realized and unrealized gain/(loss) on
   investments                                           (4.93)    (7.09)     1.97     (2.78)
                                                        ------     -----      ----      ----
Total from investment operations                         (5.07)    (7.47)     1.90     (2.98)
                                                        ------    ------      ----      ----


LESS DISTRIBUTIONS
Dividends from net investment income                        --     (2.71)       --        --
Distributions in excess of net investment
   income                                                   --     (7.85)       --        --
Distributions from net realized gains                       --        --        --        --
                                                        ------    ------    ------    ------
Total distributions                                         --     (4.56)       --        --
                                                        ------    ------    ------    ------
Net asset value, end of period                          $15.21    $20.08    $32.31    $30.41
                                                        ======    ======    ======    ======

TOTAL RETURN
Total return for the period+
   (without deduction of sales charge)                  (25.00)%  (23.22)%    6.25%    (8.92)%


RATIOS/SUPPLEMENTAL DATA
Total net assets (millions)                                $18       $35       $72       $65
Ratio of expenses to average net assets                   2.67%     2.51%     2.48%     2.54%+
Ratio of net investment income/(loss) to
   average net assets                                    (0.83)%   (1.44)%   (0.24)%   (1.10)%+
Portfolio turnover rate                                    105%      180%      117%       73%



GAM INTERNATIONAL FUND

                                                              Class C Shares
                                             --------- --------- --------- --------- ---------

                                                02        01        00        99        98(b)
                                             --------- --------- --------- --------- ---------

Net asset value,
   beginning of period                                  $20.47    $32.29    $32.37    $32.61
                                                        ------    ------    ------    ------


INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss)++                           (0.14)    (0.40)    (0.05)    (0.20)
Net realized and unrealized gain/(loss) on
   investments                                           (4.98)    (7.08)     1.97     (2.04)
                                                        ------     -----      ----      ----
Total from investment operations                         (5.12)    (7.48)     1.92     (2.24)
                                                        ------    ------      ----      ----


LESS DISTRIBUTIONS
Dividends from net investment income                        --     (2.58)       --        --
Distributions in excess of net investment
   income                                                   --     (1.76)       --        --
Distributions from net realized gains                       --        --        --        --
                                                        ------    ------    ------    ------
Total distributions                                         --     (4.34)       --        --
                                                        ------    ------    ------    ------
Net asset value, end of period                          $15.35    $20.47    $32.29    $30.37
                                                        ======    ======    ======    ======

TOTAL RETURN
Total return for the period+
   (without deduction of sales charge)                  (25.01)%  (23.25)%    6.32%    (6.87)%


RATIOS/SUPPLEMENTAL DATA
Total net assets (millions)                                $12       $28       $80       $78
Ratio of expenses to average net assets                   2.71%     2.54%     2.48%     2.52%+
Ratio of net investment income/(loss) to
   average net assets                                    (0.85)%   (1.48)%   (0.19)%   (1.14)%+
Portfolio turnover rate                                    105%      180%      117%       73%



GAM INTERNATIONAL FUND

                                                              Class D Shares
                                             --------- --------- --------- --------- ---------

                                                02        01        00        99        98
                                             --------- --------- --------- --------- ---------

Net asset value,
   beginning of period                                  $19.90    $31.96    $29.92    $28.34
                                                        ------    ------    ------    ------


INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss)(++)                         (0.06)    (0.25)    (0.09)    (0.04)
Net realized and unrealized gain/(loss) on
   investments                                           (4.84)    (7.02)     1.95      2.03
                                                        ------     -----      ----      ----
Total from investment operations                         (4.90)    (7.27)     2.04      2.07
                                                        ------    ------      ----      ----


LESS DISTRIBUTIONS
Dividends from net investment income                        --     (2.81)       --     (0.03)
Distributions in excess of net investment
   income                                                   --     (1.98)       --        --
Distributions from net realized gains                       --        --        --     (0.46)
                                                        ------    ------    ------    ------
Total distributions                                         --     (4.79)       --     (1.49)
                                                        ------    ------    ------    ------
Net asset value, end of period                          $15.00    $19.90    $31.96    $29.92
                                                        ======    ======    ======    ======

TOTAL RETURN
Total return for the period(+)
   (without deduction of sales charge)                  (24.62)%  (22.82)%    6.82%     7.13%


RATIOS/SUPPLEMENTAL DATA
Total net assets (millions)                                $13       $34      $101      $159
Ratio of expenses to average net assets                   2.19%     2.01%     1.94%     1.80%
Ratio of net investment income/(loss) to
   average net assets                                    (0.38)%   (0.96)%   (0.34)%   (0.14)%+
Portfolio turnover rate                                    105%      180%      117%       73%


(a)  For the period from 26th May, 1998  (commencement  of  operations)  to 31st
     December, 1998.
(b)  For the period from 19th May, 1998  (commencement  of  operations)  to 31st
     December, 1998.
(+)  Total return calculated for a period less than one year is not annualized.
(++) Net investment  income per share has been determined  based on the weighted
     average shares outstanding method.
+    Annualized.



IV.      Financial Highlights
----------------------------------------------------------------------------------------------
GAM PACIFIC BASIN FUND

                                                              Class A Shares
                                             --------- --------- --------- --------- ---------

                                                02        01        00        99        98
                                             --------- --------- --------- --------- ---------

Net asset value,
   beginning of period                                   $9.57    $14.17     $8.23     $9.69
                                                        ------    ------    ------    ------


INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss)++                           (0.11)    (0.06)    (0.04)    (0.01)
Net realized and unrealized gain/(loss) on
   investments                                           (1.56)    (3.19)     6.19     (0.51)
                                                        ------     -----      ----      ----
Total from investment operations                         (1.67)    (3.25)     6.15     (0.52)
                                                        ------    ------      ----      ----


LESS DISTRIBUTIONS
Dividends from net investment income                        --     (1.35)    (0.01)    (0.22)
Distributions in excess of net investment
   income                                                   --        --     (0.20)       --
Distributions from net realized gains                       --        --        --     (0.72)
                                                        ------    ------    ------    ------
Total distributions                                         --     (1.35)    (0.21)    (0.94)
                                                        ------    ------    ------    ------
Net asset value, end of period                           $7.90     $9.57    $14.17     $8.23
                                                        ======    ======    ======    ======

TOTAL RETURN
Total return for the period+
   (without deduction of sales charge)                  (17.45)%  (23.21)%   74.91%    (3.91)%


RATIOS/SUPPLEMENTAL DATA
Total net assets (millions)                                 $8       $15       $47       $17
Ratio of expenses to average net assets                   3.37%     2.20%     2.26%     2.42%
Ratio of net investment income/(loss) to
   average net assets                                    (1.26)%   (0.54)%   (0.42)%   (0.11)%
Portfolio turnover rate                                     51%       51%       63%       55%




GAM PACIFIC BASIN FUND

                                                              Class B Shares
                                             --------- --------- --------- --------- ---------

                                                02        01        00        99        98(a)
                                             --------- --------- --------- --------- ---------

Net asset value,
   beginning of period                                  $10.04    $14.89     $8.96     $9.15
                                                        ------    ------    ------    ------


INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss)++                           (0.21)    (0.17)    (0.19)    (0.35)
Net realized and unrealized gain/(loss) on
   investments                                           (1.62)    (3.33)     6.26      0.32
                                                        ------     -----      ----      ----
Total from investment operations                         (1.83)    (3.50)     6.07     (0.03)
                                                        ------    ------      ----      ----


LESS DISTRIBUTIONS
Dividends from net investment income                        --     (1.35)       --     (0.04)
Distributions in excess of net investment
   income                                                   --        --     (0.14)       --
Distributions from net realized gains                       --        --        --     (0.12)
                                                        ------    ------    ------    ------
Total distributions                                         --     (1.35)    (0.14)    (0.16)
                                                        ------    ------    ------    ------
Net asset value, end of period                           $8.21    $10.04    $14.89     $8.96
                                                        ======    ======    ======    ======

TOTAL RETURN
Total return for the period+
   (without deduction of sales charge)                  (18.23)%  (23.80)%   67.89%    (0.35)%


RATIOS/SUPPLEMENTAL DATA
Total net assets (millions)                                 $1        $3        $6     $0.30
Ratio of expenses to average net assets                   4.40%     3.07%     3.48%     9.39%+
Ratio of net investment income/(loss) to
   average net assets                                    (2.33)%   (1.39)%   (1.59)%   (7.52)%+
Portfolio turnover rate                                     51%       51%       63%       55%



GAM PACIFIC BASIN FUND

                                                              Class C Shares
                                             --------- --------- --------- --------- ---------

                                                02        01        00        99        98(b)
                                             --------- --------- --------- --------- ---------

Net asset value,
   beginning of period                                   $8.70    $13.21     $8.12     $8.54
                                                        ------    ------    ------    ------


INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss)++                           (0.33)    (0.21)    (0.39)    (0.70)
Net realized and unrealized gain/(loss) on
   investments                                           (1.40)    (2.95)     5.51     (0.37)
                                                        ------     -----      ----      ----
Total from investment operations                         (1.73)    (3.16)     5.12     (0.33)
                                                        ------    ------      ----      ----


LESS DISTRIBUTIONS
Dividends from net investment income                        --     (1.35)       --        --
Distributions in excess of net investment
   income                                                   --        --     (0.03)       --
Distributions from net realized gains                       --        --        --     (0.09)
                                                        ------    ------    ------    ------
Total distributions                                         --     (1.35)    (0.03)    (0.09)
                                                        ------    ------    ------    ------
Net asset value, end of period                           $6.97     $8.70    $13.21     $8.12
                                                        ======    ======    ======    ======

TOTAL RETURN
Total return for the period+
   (without deduction of sales charge)                  (19.89)%  (24.28)%   63.15%    (3.87)%


RATIOS/SUPPLEMENTAL DATA
Total net assets (millions)                              $0.31     $0.46        $2     $0.20
Ratio of expenses to average net assets                   6.43%     3.65%     5.57%    20.34%+
Ratio of net investment income/(loss) to
   average net assets                                    (4.32)%   (2.00)%   (3.82)%  (19.15)%+
Portfolio turnover rate                                     51%       51%       63%       55%



GAM PACIFIC BASIN FUND

                                                              Class D Shares
                                             --------- --------- --------- --------- ---------

                                                02        01        00        99        98
                                             --------- --------- --------- --------- ---------

Net asset value,
   beginning of period                                   $9.33    $13.95     $8.11     $9.62
                                                        ------    ------    ------    ------


INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss)++                           (0.22)    (0.14)    (0.16)    (0.01)
Net realized and unrealized gain/(loss) on
   investments                                           (1.51)    (3.13)     6.13     (0.53)
                                                        ------     -----      ----      ----
Total from investment operations                         (1.73)    (3.27)     5.97     (0.54)
                                                        ------    ------      ----      ----


LESS DISTRIBUTIONS
Dividends from net investment income                        --     (1.35)       --     (0.25)
Distributions in excess of net investment
   income                                                   --        --     (0.13)       --
Distributions from net realized gains                       --        --        --     (0.72)
                                                        ------    ------    ------    ------
Total distributions                                         --     (1.35)    (0.13)    (0.97)
                                                        ------    ------    ------    ------
Net asset value, end of period                           $7.60     $9.33    $13.95     $8.11
                                                        ======    ======    ======    ======

TOTAL RETURN
Total return for the period+
   (without deduction of sales charge)                  (18.54)%  (23.75)%   73.71%    (4.64)%


RATIOS/SUPPLEMENTAL DATA
Total net assets (millions)                              $0.52        $1        $2        $1
Ratio of expenses to average net assets                   4.73%     2.95%     2.89%     2.53%
Ratio of net investment income/(loss) to
   average net assets                                    (2.62)%   (1.28)%   (1.55)%   (0.17)%
Portfolio turnover rate                                     51%       51%       63%       55%


(a)  For the period from 26th May, 1998  (commencement  of  operations)  to 31st
     December, 1998.
(b)  For the period from 1st June, 1998  (commencement  of  operations)  to 31st
     December, 1998.
(+)  Total return calculated for a period less than one year is not annualized.
(++) Net investment  income per share has been determined  based on the weighted
     average shares outstanding method.
+    Annualized.



IV.      Financial Highlights
----------------------------------------------------------------------------------------------
GAM JAPAN CAPITAL FUND

                                                              Class A Shares
                                             --------- --------- --------- --------- ---------

                                                02        01        00        99        98
                                             --------- --------- --------- --------- ---------

Net asset value,
   beginning of period                                   $7.44    $13.85     $7.65     $8.44
                                                        ------    ------    ------    ------


INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss)++                           (0.17)    (0.17)    (0.14)    (0.06)
Net realized and unrealized gain/(loss) on
   investments                                           (1.56)    (4.05)     6.77     (0.16)
                                                        ------     -----      ----      ----
Total from investment operations                         (1.73)    (4.22)     6.63     (0.22)
                                                        ------    ------      ----      ----


LESS DISTRIBUTIONS
Dividends from net investment income                        --     (1.29)       --        --
Distributions in excess of net investment
   income                                                   --        --     (0.43)       --
Distributions from net realized gains                       --     (0.90)       --     (0.57)
                                                        ------    ------    ------    ------
Total distributions                                         --     (2.19)    (0.43)    (0.57)
                                                        ------    ------    ------    ------
Net asset value, end of period                           $5.71     $7.44    $13.85     $7.65
                                                        ======    ======    ======    ======

TOTAL RETURN
Total return for the period+
   (without deduction of sales charge)                  (23.25)%  (32.30)%   87.05%    (2.75)%


RATIOS/SUPPLEMENTAL DATA
Total net assets (millions)                                 $8       $19       $67       $22
Ratio of expenses to average net assets                   3.35%     2.07%     2.06%     2.16%
Ratio of net investment income/(loss) to
   average net assets                                    (2.55)%   (1.45)%   (1.38)%   (0.78)%
Portfolio turnover rate                                     82%       48%       77%       59%




GAM JAPAN CAPITAL FUND

                                                              Class B Shares
                                             --------- --------- --------- --------- ---------

                                                02        01        00        99        98(a)
                                             --------- --------- --------- --------- ---------

Net asset value,
   beginning of period                                   $7.76    $14.45     $8.11     $8.49
                                                        ------    ------    ------    ------


INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss)++                           (0.28)    (0.29)    (0.34)    (0.19)
Net realized and unrealized gain/(loss) on
   investments                                           (1.56)    (4.21)     6.98     (0.19)
                                                        ------     -----      ----      ----
Total from investment operations                         (1.84)    (4.50)     6.64     (0.38)
                                                        ------    ------      ----      ----


LESS DISTRIBUTIONS
Dividends from net investment income                        --     (1.29)       --        --
Distributions in excess of net investment
   income                                                   --        --     (0.30)       --
Distributions from net realized gains                       --     (0.90)       --        --
                                                        ------    ------    ------    ------
Total distributions                                         --     (2.19)    (0.30)       --
                                                        ------    ------    ------    ------
Net asset value, end of period                           $5.92     $7.76    $14.45     $8.11
                                                        ======    ======    ======    ======

TOTAL RETURN
Total return for the period+
   (without deduction of sales charge)                  (23.71)%  (32.94)%   82.18%    (4.48)%


RATIOS/SUPPLEMENTAL DATA
Total net assets (millions)                                 $1        $1        $3        $1
Ratio of expenses to average net assets                   4.74%     3.06%     3.80%     5.31%+
Ratio of net investment income/(loss) to
   average net assets                                    (4.00)%   (2.46)%   (3.16)%   (4.22)%+
Portfolio turnover rate                                     82%       48%       77%       59%



GAM JAPAN CAPITAL FUND

                                                              Class C Shares
                                             --------- --------- --------- --------- ---------

                                                02        01        00        99        98(b)
                                             --------- --------- --------- --------- ---------

Net asset value,
   beginning of period                                   $7.88    $14.65     $8.12     $8.56
                                                        ------    ------    ------    ------


INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss)++                           (0.36)    (0.32)    (0.34)    (0.15)
Net realized and unrealized gain/(loss) on
   investments                                           (1.57)    (4.26)     7.09     (0.29)
                                                        ------     -----      ----      ----
Total from investment operations                         (1.93)    (4.58)     6.75     (0.44)
                                                        ------    ------      ----      ----


LESS DISTRIBUTIONS
Dividends from net investment income                        --     (1.29)       --        --
Distributions in excess of net investment
   income                                                   --        --     (0.22)       --
Distributions from net realized gains                       --     (0.90)       --        --
                                                        ------    ------    ------    ------
Total distributions                                         --     (2.19)    (0.22)       --
                                                        ------    ------    ------    ------
Net asset value, end of period                           $5.95     $7.88    $14.65     $8.12
                                                        ======    ======    ======    ======

TOTAL RETURN
Total return for the period+
   (without deduction of sales charge)                  (24.49)%  (33.05)%   83.30%    (5.14)%


RATIOS/SUPPLEMENTAL DATA
Total net assets (millions)                              $0.32        $1        $2        $1
Ratio of expenses to average net assets                   5.67%     3.21%     3.94%     3.99%+
Ratio of net investment income/(loss) to
   average net assets                                    (4.95)%   (2.60)%   (3212)%   (3.00)%+
Portfolio turnover rate                                     82%       48%       77%       59%


(a)  For the period from 26th May, 1998  (commencement  of  operations)  to 31st
     December, 1998.
(b)  For the period from 19th May, 1998  (commencement  of  operations)  to 31st
     December, 1998.
(+)  Total return calculated for a period less than one year is not annualized.
(++) Net investment  income per share has been determined  based on the weighted
     average shares outstanding method.
+    Annualized.




IV.      Financial Highlights
----------------------------------------------------------------------------------------------
GAM EUROPE FUND

                                                              Class A Shares
                                             --------- --------- --------- --------- ---------

                                                02        01        00        99        98
                                             --------- --------- --------- --------- ---------

Net asset value,
   beginning of period                                  $12.18    $13.08    $12.63    $12.57
                                                        ------    ------    ------    ------


INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss)++                           (0.07)    (0.12)    (0.09)     0.03
Net realized and unrealized gain/(loss) on
   investments                                           (2.52)     0.67      1.96      1.28
                                                        ------     -----      ----      ----
Total from investment operations                         (2.59)     0.55      1.87      1.31
                                                        ------    ------      ----      ----


LESS DISTRIBUTIONS
Dividends from net investment income                        --        --        --     (0.02)
Distributions from net realized gains                    (0.02)    (1.45)    (1.42)    (1.23)
                                                        ------    ------    ------    ------
Total distributions                                      (0.02)    (1.45)    (1.42)    (1.25)
                                                        ------    ------    ------    ------
Net asset value, end of period                           $9.57    $12.18    $13.08    $12.63
                                                        ======    ======    ======    ======

TOTAL RETURN
Total return for the period+
   (without deduction of sales charge)                  (21.29)%    4.61%    16.21%    10.70%


RATIOS/SUPPLEMENTAL DATA
Total net assets (millions)                                 $20      $24       $20       $49
Ratio of expenses to average net assets                   2.72%     2.49%     2.48%     2.06%
Ratio of net investment income/(loss) to
   average net assets                                    (0.66)%   (0.86)%   (0.79)%    0.24%
Portfolio turnover rate                                     92%      194%      109%      168%




GAM EUROPE FUND

                                                              Class B Shares
                                             --------- --------- --------- --------- ---------

                                                02        01        00        99        98(a)
                                             --------- --------- --------- --------- ---------

Net asset value,
   beginning of period                                  $12.06    $13.08    $12.82    $15.38
                                                        ------    ------    ------    ------


INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss)++                           (0.17)    (0.25)    (0.29)    (0.20)
Net realized and unrealized gain/(loss) on
   investments                                           (2.47)     0.68      1.97     (1.37)
                                                        ------     -----      ----      ----
Total from investment operations                         (2.64)     0.43      1.68     (1.57)
                                                        ------    ------      ----      ----


LESS DISTRIBUTIONS
Dividends from net investment income                        --        --        --        --
Distributions from net realized gains                    (0.02)    (1.45)    (1.42)    (0.99)
                                                        ------    ------    ------    ------
Total distributions                                      (0.02)    (1.45)    (1.42)    (0.99)
                                                        ------    ------    ------    ------
Net asset value, end of period                           $9.40    $12.06    $13.08    $12.82
                                                        ======    ======    ======    ======

TOTAL RETURN
Total return for the period+
   (without deduction of sales charge)                  (21.91)%    3.68%    14.48%    (9.82)%


RATIOS/SUPPLEMENTAL DATA
Total net assets (millions)                                 $3        $4        $2        $2
Ratio of expenses to average net assets                   3.62%     3.39%     4.17%     3.93%+
Ratio of net investment income/(loss) to
   average net assets                                    (1.64)%   (1.80)%   (2.41)%    (2.58)%+
Portfolio turnover rate                                     92%      194%      109%      168%



GAM EUROPE FUND

                                                              Class C Shares
                                             --------- --------- --------- --------- ---------

                                                02        01        00        99        98(b)
                                             --------- --------- --------- --------- ---------

Net asset value,
   beginning of period                                  $11.66    $12.77    $12.70    $15.16
                                                        ------    ------    ------    ------


INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss)++                           (0.24)    (0.33)    (0.43)    (0.28)
Net realized and unrealized gain/(loss) on
   investments                                           (2.40)     0.67      1.92     (1.19)
                                                        ------     -----      ----      ----
Total from investment operations                         (2.64)     0.34      1.49     (1.47)
                                                        ------    ------      ----      ----


LESS DISTRIBUTIONS
Dividends from net investment income                        --        --        --        --
Distributions from net realized gains                    (0.02)    (1.45)    (1.42)    (0.99)
                                                        ------    ------    ------    ------
Total distributions                                      (0.02)    (1.45)    (1.42)    (0.99)
                                                        ------    ------    ------    ------
Net asset value, end of period                           $9.00    $11.66    $12.77    $12.70
                                                        ======    ======    ======    ======

TOTAL RETURN
Total return for the period+
   (without deduction of sales charge)                  (22.67)%    3.07%    13.11%    (9.32)%


RATIOS/SUPPLEMENTAL DATA
Total net assets (millions)                               $0.5        $1        $1        $1
Ratio of expenses to average net assets                   4.44%     4.04%     5.35%     4.93%+
Ratio of net investment income/(loss) to
   average net assets                                    (2.39)%   (2.48)%   (3.62)%   (3.46)%+
Portfolio turnover rate                                     92%      194%      109%      168%


(a)  For the period from 26th May, 1998  (commencement  of  operations)  to 31st
     December, 1998.
(b)  For the period from 20th May, 1998  (commencement  of  operations)  to 31st
     December, 1998.
(+)  Total return calculated for a period less than one year is not annualized.
(++) Net investment  income per share has been determined  based on the weighted
     average shares outstanding method.
+    Annualized.




IV.      Financial Highlights
----------------------------------------------------------------------------------------------
GAM AMERICAN FOCUS FUND

                                                              Class A Shares
                                             --------- --------- --------- --------- ---------

                                                02      01++        00        99        98
                                             --------- --------- --------- --------- ---------

Net asset value,
   beginning of period                                  $15.97    $18.30    $16.74    $17.32
                                                        ------    ------    ------    ------


INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss)++                           (0.07)    (0.10)    (0.07)    (0.07)
Net realized and unrealized gain/(loss) on
   investments                                           (0.88)    (0.16)     1.63      4.76
                                                        ------     -----      ----      ----
Total from investment operations                         (0.95)    (0.26)     1.56      4.69
                                                        ------    ------      ----      ----


LESS DISTRIBUTIONS
Dividends from net investment income                        --        --        --        --
Distributions from net realized gains                    (0.01)    (2.07)       --    (5.27)
                                                        ------    ------    ------    ------
Total distributions                                      (0.01)    (2.07)       --    (5.27)
                                                        ------    ------    ------    ------
Net asset value, end of period                          $15.01    $15.97    $18.30    $16.74
                                                        ======    ======    ======    ======

TOTAL RETURN
Total return for the period+
   (without deduction of sales charge)                  (5.94)%    (1.46)%    9.32%    29.44%


RATIOS/SUPPLEMENTAL DATA
Total net assets (millions)                                 $47      $21       $29       $17
Ratio of expenses to average net assets                   2.11%     2.00%     1.90%     2.10%
Ratio of net investment income/(loss) to
   average net assets                                    (0.52)%   (0.58)%   (0.42)%   (0.34)%
Portfolio turnover rate                                    256%       12%       13%       70%




GAM AMERICAN FOCUS FUND

                                                              Class B Shares
                                             --------- --------- --------- --------- ---------

                                                02      01++        00        99        98(a)
                                             --------- --------- --------- --------- ---------

Net asset value,
   beginning of period                                  $15.71    $18.19    $16.87    $20.08
                                                        ------    ------    ------    ------


INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss)++                           (0.21)    (0.25)    (0.29)    (0.57)
Net realized and unrealized gain/(loss) on
   investments                                           (0.84)    (0.16)     1.61      2.17
                                                        ------     -----      ----      ----
Total from investment operations                         (1.05)     0.41      1.32      1.60
                                                        ------    ------      ----      ----


LESS DISTRIBUTIONS
Dividends from net investment income                        --        --        --        --
Distributions from net realized gains                    (0.01)    (2.07)       --     (4.81)
                                                        ------    ------    ------    ------
Total distributions                                      (0.01)    (2.07)       --     (4.81)
                                                        ------    ------    ------    ------
Net asset value, end of period                          $14.65    $15.71    $18.19    $16.87
                                                        ======    ======    ======    ======

TOTAL RETURN
Total return for the period+
   (without deduction of sales charge)                  (6.67)%    (2.31)%    7.82%     9.68%


RATIOS/SUPPLEMENTAL DATA
Total net assets (millions)                                 $4        $4        $4        $1
Ratio of expenses to average net assets                   3.02%     2.86%     3.11%     7.56%+
Ratio of net investment income/(loss) to
   average net assets                                    (1.44)%   (1.44)%   (1.66)%    (5.81)%+
Portfolio turnover rate                                    256%       12%       13%       70%



GAM AMERICAN FOCUS FUND

                                                              Class C Shares
                                             --------- --------- --------- --------- ---------

                                                02      01++        00        99        98(b)
                                             --------- --------- --------- --------- ---------

Net asset value,
   beginning of period                                  $15.41    $17.91    $16.58    $21.58
                                                        ------    ------    ------    ------


INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss)++                           (0.23)    (0.25)    (0.25)    (0.44)
Net realized and unrealized gain/(loss) on
   investments                                           (0.83)    (0.18)     1.58     (0.25)
                                                        ------     -----      ----      ----
Total from investment operations                         (1.06)    (0.43)     1.33     (0.19)
                                                        ------    ------      ----      ----


LESS DISTRIBUTIONS
Dividends from net investment income                        --        --        --        --
Distributions from net realized gains                    (0.01)    (2.07)       --     (4.81)
                                                        ------    ------    ------    ------
Total distributions                                      (0.01)    (2.07)       --     (4.81)
                                                        ------    ------    ------    ------
Net asset value, end of period                          $14.34    $15.41    $17.91    $16.58
                                                        ======    ======    ======    ======

TOTAL RETURN
Total return for the period+
   (without deduction of sales charge)                  (6.86)%    (2.47)%    8.02%     0.69%


RATIOS/SUPPLEMENTAL DATA
Total net assets (millions)                                 $2        $3        $6        $1
Ratio of expenses to average net assets                   3.17%     2.89%     2.90%     8.16%+
Ratio of net investment income/(loss) to
   average net assets                                    (1.59)%   (1.46)%   (1.45)%   (6.50)%+
Portfolio turnover rate                                    256%       12%       13%       70%


(a)  For the period from 26th May, 1998  (commencement  of  operations)  to 31st
     December, 1998.
(b)  For the period from 7th July, 1998  (commencement  of  operations)  to 31st
     December, 1998.
(+)  Total return calculated for a period less than one year is not annualized.
(++) Net investment  income per share has been determined  based on the weighted
     average shares outstanding method.
+    Annualized.
++   On March 26,  2001, the Board of Directors  approved the appointment of GAM
     USA as  Co-Investment  Advisor  to Fund  pursuant  to an  Interim  Advisory
     Agreement  to replace  Fayez  Sarofim & Co.,  who  served as  co-investment
     advisor  to Fund from its  inception  until  March 23,  2001.  The Board of
     Directors  approved a new  advisory  agreement  with GAM USA to replace the
     Interim Advisory Agreement on April 25, 2001 (the "GAM USA Contract").  The
     GAM  USA  Contract  was  submitted  to the  holders  of a  majority  of the
     outstanding  shares of the Fund for  approval,  and on June 20,  2001,  the
     shareholders  of the Fund met via proxy and  approved  the GAM USA Contract
     between  the Fund and GAM USA.  Therefore,  as of  June 20,  2001,  GAM USA
     became  the  sole  and  permanent  investment  advisor  to the  Fund  until
     terminated.




IV.      Financial Highlights
-------------------------------------------------------------------------------------------------------------------
GAMERICA CAPITAL FUND

                                                              Class A Shares
                                             --------- --------- --------- --------- ---------

                                                02        01        00        99        98
                                             --------- --------- --------- --------- ---------

Net asset value,
   beginning of period                                  $22.49    $21.45    $17.08    $13.43
                                                        ------    ------    ------    ------


INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss)++                            0.03      0.06      0.13     (0.01)
Net realized and unrealized gain/(loss) on
   investments                                           (0.57)     1.35      4.78      4.08
                                                        ------     -----      ----      ----
Total from investment operations                         (0.54)     1.41      4.91      4.07
                                                        ------    ------      ----      ----


LESS DISTRIBUTIONS
Dividends from net investment income                        --        --     (0.07)       --
Distributions from net realized gains                    (0.01)    (0.37)    (0.47)    (0.42)
                                                        ------    ------    ------    ------
Total distributions                                      (0.01)    (0.37)    (0.54)    (0.42)
                                                        ------    ------    ------    ------
Net asset value, end of period                          $21.94    $22.49    $21.45    $17.08
                                                        ======    ======    ======    ======

TOTAL RETURN
Total return for the period+
   (without deduction of sales charge)                  (2.42)%    6.54%    28.97%    30.59%


RATIOS/SUPPLEMENTAL DATA
Total net assets (millions)                                 $98      $70       $51       $11
Ratio of expenses to average net assets                   1.84%     1.79%     1.84%     2.46%
Ratio of net investment income/(loss) to
   average net assets                                     0.12%     0.25%     0.66%    (0.03)%
Portfolio turnover rate                                     14%       20%       20%       29%




GAMERICA CAPITAL FUND

                                                              Class B Shares
                                             --------- --------- --------- --------- ---------

                                                02        01        00        99        98(a)
                                             --------- --------- --------- --------- ---------

Net asset value,
   beginning of period                                  $22.46    $21.54    $17.26    $16.57
                                                        ------    ------    ------    ------


INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss)++                           (0.13)    (0.10)    (0.07)    (0.26)
Net realized and unrealized gain/(loss) on
   investments                                           (0.57)     1.39      4.82      1.10
                                                        ------     -----      ----      ----
Total from investment operations                         (0.70)     1.29      4.75      0.84
                                                        ------    ------      ----      ----


LESS DISTRIBUTIONS
Dividends from net investment income                        --        --        --        --
Distributions from net realized gains                    (0.01)    (0.37)    (0.47)    (0.15)
                                                        ------    ------    ------    ------
Total distributions                                      (0.01)    (0.37)    (0.47)    (0.15)
                                                        ------    ------    ------    ------
Net asset value, end of period                          $21.75    $22.46    $21.54    $17.26
                                                        ======    ======    ======    ======

TOTAL RETURN
Total return for the period+
   (without deduction of sales charge)                  (3.14)%     5.97%    27.68%     5.13%


RATIOS/SUPPLEMENTAL DATA
Total net assets (millions)                                $17       $14       $19        $1
Ratio of expenses to average net assets                   2.54%     2.49%     2.88%     5.19%+
Ratio of net investment income/(loss) to
   average net assets                                    (0.59)%   (0.44)%   (0.34)%   (2.74)%+
Portfolio turnover rate                                     14%       20%       20%       29%



GAMERICA CAPITAL FUND

                                                              Class C Shares
                                             --------- --------- --------- --------- ---------

                                                02        01        00        99        98(a)
                                             --------- --------- --------- --------- ---------

Net asset value,
   beginning of period                                  $22.30    $21.42    $17.13    $16.57
                                                        ------    ------    ------    ------


INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss)++                           (0.12)    (0.10)    (0.04)    (0.37)
Net realized and unrealized gain/(loss) on
   investments                                           (0.58)     1.35      4.80      1.08
                                                        ------     -----      ----      ----
Total from investment operations                         (0.70)     1.25      4.76      0.71
                                                        ------    ------      ----      ----


LESS DISTRIBUTIONS
Dividends from net investment income                        --        --        --        --
Distributions from net realized gains                    (0.01)    (0.37)    (0.47)    (0.15)
                                                        ------    ------    ------    ------
Total distributions                                      (0.01)    (0.37)    (0.47)    (0.15)
                                                        ------    ------    ------    ------
Net asset value, end of period                          $21.59    $22.30    $21.42    $17.13
                                                        ======    ======    ======    ======

TOTAL RETURN
Total return for the period+
   (without deduction of sales charge)                   (3.17)%    5.81%    27.95%     4.34%


RATIOS/SUPPLEMENTAL DATA
Total net assets (millions)                                $14       $12       $10        $1
Ratio of expenses to average net assets                   2.54%     2.48%     2.74%     7.15%+
Ratio of net investment income/(loss) to
   average net assets                                    (0.57)%   (0.45)%   (0.23)%   (4.77)%+
Portfolio turnover rate                                     14%       20%       20%       29%


(a)  For the period from 26th May, 1998  (commencement  of  operations)  to 31st
     December, 1998.
(+)  Total return calculated for a period less than one year is not annualized.
(++) Net investment  income per share has been determined  based on the weighted
     average shares outstanding method.
+    Annualized.



GAM Funds, Inc. - Purchase Application


Please mail in the enclosed  envelope to: GAM Funds,  Inc., c/o PFPC Inc.,  P.O.
Box 8716, Wilmington, DE 19899-8716 (300 Bellevue Parkway,  Wilmington, DE 19809
for express mail services) with your check or money order payable to "GAM Funds,
Inc." To make  payment by wire,  please  notify  PFPC at (800)  426-4685  of the
incoming wire and to receive a wire reference number. Instruct your bank to wire
the funds with the assigned reference number to: PNC Bank Philadelphia, PA, ABA#
031000053,  Account #  8614972919,  FBO:  GAM Funds,  fund  name,  and your fund
account #.


--------------------------------------------------------------------------------
ACCOUNT REGISTRATION
--------------------------------------------------------------------------------


     Joint  tenant  registration  will be as  "joint  tenants  with the right of
     survivorship"  and not as "tenants in common"  unless  specified,  and both
     registrants should sign this application.
     Trust  registrations  should  specify  the name of the  trust,  trustee(s),
     beneficiary(ies),  date of  trust  instrument,  and the  trustee,  or other
     fiduciary, should sign this application.
     Uniform Gifts/Transfers to Minors registration should be in the name of one
     custodian and one minor and include the state under which the custodianship
     is created  (using the minor's  Social  Security  Number) and the custodian
     should sign the application.
     Institutional  registrations should be in the name of the institution,  and
     an officer  should  sign,  indicating  corporate or  partnership  office or
     title, this application.
     For an Individual  Retirement  Account  (IRA),  a different  application is
     required.   Please  call  (800)   426-4685   ext.  5  or  your   investment
     representative to obtain an IRA application.


Registration Type:  (Choose One)  / /  Individual     / /  Gift/Transfer to Minor   / / Other __________
                                  / /  Joint Tenants  / /  Trust

Investor(s) Information                     Owner                            Joint Owner
Name                           ______________________________      ______________________________
Address                        ______________________________      ______________________________
                               ______________________________      ______________________________
City/State/Zip                 ______________________________      ______________________________
Taxpayer ID/Social
Security Number                ______________________________      ______________________________
Date of Birth                  ______________________________      ______________________________
Daytime Phone                 (______) ______________________      ______________________________
E-Mail Address                 ______________________________      ______________________________

--------------------------------------------------------------------------------
INVESTMENT SELECTION
--------------------------------------------------------------------------------

The minimum initial investment is $5,000 per fund and subsequent investments are
$100 per fund.

                         Investment    Class   Class   Class   Class
                           Amount        A       B       C       D
GAM Global Fund:        $___________    / /     / /     / /     / /

GAM International Fund: $___________    / /     / /     / /     / /

GAM Pacific Basin Fund: $___________    / /     / /     / /     / /

GAM Japan Capital Fund: $___________    / /     / /     / /

GAM Europe Fund:        $___________    / /     / /     / //

GAM American Focus Fund:$___________    / /     / /     / /

GAMerica Capital Fund:  $___________    / /     / /     / /

GAM American Focus
Long/Short Fund:        $___________    / /     / /     / /




Capital Gain and Dividend Distributions
All dividends and capital gains  distributions  will be reinvested in additional
shares of the same class of the same Fund unless the appropriate boxes below are
checked:

         / / Pay dividends in cash    / / Pay capital gains distributions in cash



--------------------------------------------------------------------------------
INVESTMENT ADVISOR/BROKER (IF APPLICABLE)
--------------------------------------------------------------------------------


Representative's Name _______________________      Branch Address __________________

Representative's Number _____________________      _________________________________

Representative's Phone Number (______) ______      _________________________________

Firm Name ___________________________________      Branch Address___________________

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

Telephone Privileges
Unless you check the boxes  below,  you  authorize  the Funds or their agents to
honor  telephone  or  facsimile  requests  from you  after  you have  reasonably
identified yourself.
/ /  I do not want Telephone  Exchange--Exchange shares of any Fund for shares
     of any other Fund in the same class.
/ /  I do not want Telephone Redemption--Redemption of shares by telephone.

Wire Transfer
Please complete wiring instructions below if you wish to be able to instruct the
Funds to wire  redemption  proceeds.  A nominal  fee will be  deducted  from the
redemption proceeds.

Bank Name ___________________________________      ABA #* __________________________

Name on Account _____________________________      Account # _______________________

Bank Address ________________________________      _________________________________

*    The ABA # is the nine-digit  number that precedes your account number along
     the bottom of your check.
**   Savings and loan  associations  or credit unions may not be able to receive
     wire redemptions.

Automatic Investment Plan (Optional)
By  completing  the section  below you  authorize  the Fund's  Agent to initiate
Automated  Clearing  House  ("ACH")  debits on the 25th day of each month or the
next business day. Please attach a voided check.

Fund                    Investment Amount          Monthly    or    Quarterly

__________________      $________________            / /               / /

__________________      $________________            / /               / /

Bank Name ___________________________________      ABA #* __________________________

Name on Account _____________________________      Account # _______________________

Bank Address ________________________________      _________________________________

*    The ABA # is the nine-digit  number that precedes your account number along
     the bottom of your check.

Systematic Withdrawal Plan* (Optional)
By  completing  the section  below you  authorize the Fund's Agent to redeem the
necessary number of shares from your account in order to make periodic payments.
The minimum is $100 per Fund.

                                                          Choose One
Fund                 Withdrawal Amount       Monthly   Quarterly   Semi-annually  Annually

________________    $_________________         / /        / /           / /          / /

________________    $_________________         / /        / /           / /          / /

/ /  Credit to bank account as  designated  under Wire  Transfer or
/ /  Send check to name and address of account registration
*    This request for  Systematic  Withdrawal  Plan must be received by the 18th
     day of the month in which you wish  withdrawals  to  begin.  Redemption  of
     shares will occur on the 25th day of the month prior to payment or the next
     business day.

Right of Accumulation (Optional)
/ /  I/we qualify for the Right of  Accumulation  described  in the  Prospectus.
     (Please identify in whose name shares are registered, in which Fund(s), the
     shareholder's account number, and the shareholder's relationship to you):

   _____________________________________________________________________________

   _____________________________________________________________________________

Net Asset Value Eligibility

/ /  Check here if eligible for waiver of sales  charge.  (Reason must be stated
     or sales charge will be incurred.)

   Specify reason_______________________________________________________________

Agreement and Signature(s)
1.   I/we  have  received,  read and  carefully  reviewed  a copy of the  Funds'
     prospectus.
2.   All share  purchases are subject to acceptance and are governed by New York
     law.
3.   I/we authorize you to honor redemption  requests by telephone or facsimile,
     if so elected above.
4.   I/we authorize you to accept telephone or facsimile exchange  instructions,
     if so elected above.
5.   I/we authorize you to wire proceeds of redemptions, if so elected above.
6.   I/we  hereby  agree that  neither the  Company  nor Boston  Financial  Data
     Services  will be liable for any loss,  liability or expense as a result of
     any action taken upon  instructions  believed by it to be genuine and which
     were in accordance with the procedures set forth in the prospectus.


     ______ U.S.  Citizen/taxpayer:  Under penalty of perjury, I/we certify that
     (1) the number shown on this form is my/our correct taxpayer identification
     number and (2) I/we am/are not subject to backup withholding either because
     I/we have not been  notified  by the  Internal  Revenue  Service  that I/we
     am/are  subject to backup  withholding as a result of failure to report all
     interest and dividends,  or the Internal Revenue Service has notified me/us
     that I/we am/are no longer subject to backup withholding. (If you have been
     notified by the Internal Revenue Service that you are currently  subject to
     backup  withholding,  strike out phrase (2)  above.) The  Internal  Revenue
     Service  does not require your  consent to any  provision of this  document
     other  than  the   preceding   certifications   required  to  avoid  backup
     withholding.

     ______ Non-U.S.  Citizens/Taxpayer:  Indicated country of residence for tax
     purposes

     Under penalties of perjury,  I/we certify that we are not U.S.  citizens or
     residents  and I/we are exempt  foreign  persons  as  defined  by  Internal
     Revenue Service.


X  _________________________________      X  _______________________________________

X  _________________________________      X  _______________________________________

SIGNATURE(S)  OF ALL  APPLICANTS  REGISTERED  ABOVE - Sign exactly as name(s) of
registered  owner(s)  appear(s)  above  (including  legal  title if signing  for
corporation, trust, custodial account, etc.)         Date_______________________




More Information About the Funds


The Funds'  Statement  of  Additional  Information  (SAI)  gives  more  detailed
information  about  the  Funds,  and is  incorporated  by  reference  into  this
Prospectus.

Annual and  semi-annual  reports  published for the Funds describe in detail the
Funds'  performance  and the market  conditions and investment  strategies  that
significantly  contributed to that performance.  Annual and semi-annual  reports
are not yet  available for GAM American  Focus  Long/Short  Fund,  which has not
commenced operations.

For copies of SAIs, annual reports or semi-annual  reports free of charge,  call
the funds at the telephone number below, or...

o    Go to the Public Reference Room of the Securities and Exchange  Commission.
     Please call the SEC at (202) 942-8090 for hours of operation.

o    E-mail your request to the SEC at  publicinfo@sec.gov,  or write to them at
     the  Public  Reference  Room,  c/o  Securities  and  Exchange   Commission,
     Washington,  D.C.  20549-0102,  and ask them to send you a copy. There is a
     fee for this service.

o    Download documents from the SEC's Internet website at http://www.sec.gov

GAM has  authorized  the use of  information  in this  Prospectus,  and only the
information  in this  Prospectus,  as an  accurate  representation  of the Funds
offered in this  Prospectus.  This  Prospectus may not be used or regarded as an
offer of the Funds in any jurisdiction where (or to any person for whom) such an
offer would be unlawful. To request other information about the Funds or to make
shareholder inquiries, please call the number below.



                                 GAM FUNDS, INC.

                              135 East 57th Street
                               New York, NY 10022
                     Tel: (800) 426-4685 Fax: (212) 407-4684
                          Internet: http://www.gam.com


SEC Registration Number: 002-92136






                                 GAM FUNDS, INC.

                              135 EAST 57TH STREET
                               NEW YORK, NY 10022
                     TEL: (212) 407-4600/FAX: (212) 407-4684

                       STATEMENT OF ADDITIONAL INFORMATION


                                 April 30, 2003


     This  Statement  of  Additional  Information  pertains to the funds  listed
below,  each of which is a separate  series of common  stock of GAM Funds,  Inc.
(the "Company"),  a diversified  open-end management  investment  company.  Each
series of the Company  represents  a separate  portfolio of  securities  (each a
"Fund" and collectively,  the "Funds"). The investment objective of each Fund is
to seek long term capital  appreciation  through investment  primarily in equity
securities.  Each Fund seeks to achieve its  objective  by  investing  primarily
within a particular  geographic  region in  accordance  with its own  investment
policy. There is no assurance that the Funds will achieve their objectives.


     The Funds described in this Statement of Additional Information, other than
GAM  American  Focus Fund and GAM Gabelli  Long/Short  Fund,  are managed by GAM
International  Management  Limited ("GIML").  Global Asset Management (USA) Inc.
("GAM USA") serves as the Investment  Advisor to GAM American  Focus Fund.  GIML
and GAMCO  Investors,  Inc.  ("GAMCO")  serve as  Co-Investment  Advisors to GAM
Gabelli  Long/Short  Fund  pursuant  to  separate  Interim  Investment  Advisory
Agreements  (each, a "Co-Investment  Advisor" and together,  the  "Co-Investment
Advisors").  GAMCO is not affiliated  with either GIML or GAM USA. GIML, GAM USA
and  GAMCO  are  collectively  referred  to as the  "Investment  Advisors."  GAM
Services, Inc. ("GAM Services"), an affiliate of GAM USA and GIML, serves as the
principal underwriter for the Funds' securities.


     GAM Global Fund invests primarily in the United States, Europe, the Pacific
Basin and Canada.

     GAM International  Fund invests primarily in Europe,  the Pacific Basin and
Canada.

     GAM Pacific Basin Fund invests  primarily in the Pacific  Basin,  including
Japan, Hong Kong, Korea, Taiwan, Singapore,  Malaysia,  Thailand,  Indonesia and
Australia.

     GAM Japan Capital Fund invests primarily in Japan.

     GAM Europe Fund invests primarily in Europe.

     GAM  American  Focus Fund  (previously,  GAM North  America  Fund)  invests
primarily in the United States.

     GAMerica Capital Fund invests primarily in the United States.


     GAM Gabelli Long/Short Fund invests primarily in the United States.


     This Statement of Additional  Information,  which should be kept for future
reference,  is not a  prospectus.  It  should  be read in  conjunction  with the
Prospectus  of the Funds,  dated April 30, 2003,  which can be obtained  without
cost upon request at the address indicated above.


     The Funds' 2002 Annual Report to  Shareholders is incorporated by reference
in this Statement of Additional Information.


     INVESTMENTS IN THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS  OF, OR GUARANTEED
OR ENDORSED BY, ANY BANK, AND ARE NOT FEDERALLY  INSURED BY THE FEDERAL  DEPOSIT
INSURANCE  CORPORATION,   THE  FEDERAL  RESERVE  BOARD,  OR  ANY  OTHER  AGENCY.
INVESTMENTS IN THE FUNDS INVOLVE  INVESTMENT RISKS,  INCLUDING THE POSSIBLE LOSS
OF PRINCIPAL.





--------------------------------------------------------------------------------
                                TABLE OF CONTENTS
--------------------------------------------------------------------------------

INVESTMENT OBJECTIVE AND STRATEGIES............................................2
Rating of Securities...........................................................2
United States Government Obligations...........................................3
Repurchase Agreements..........................................................3
Adjustable Rate Index Notes....................................................3
Options........................................................................3
Stock Index Futures and Options................................................4
Interest Rate Futures and Options..............................................5
Foreign Currency Transactions..................................................5
Lending Portfolio Securities...................................................7
Warrants.......................................................................7
Borrowing......................................................................7
Short-Selling..................................................................7
Restricted Securities..........................................................8
Future Developments............................................................8
Fundamental Investment Restrictions............................................8
Non-Fundamental Investment Restrictions........................................9
Risk Considerations...........................................................10
Policy of Concentration for GAM Pacific Basin Fund............................11
Portfolio Turnover............................................................11

MANAGEMENT OF THE COMPANY.....................................................11
Compensation of Directors and Executive Officers..............................14
Principal Holders of Securities...............................................15

INVESTMENT ADVISORY AND OTHER SERVICES........................................19
Investment Advisors...........................................................19
Investment Advisory Contracts.................................................21
Advisory Fees.................................................................24
Principal Underwriter and Plans of Distribution...............................25
Custodian and Administrator...................................................30
Transfer Agent................................................................31
Legal Counsel.................................................................31
Independent Accountants.......................................................31
Reports to Shareholders.......................................................31
Codes of Ethics...............................................................31

BROKERAGE ALLOCATION..........................................................31
Affiliated Transactions.......................................................32

SHAREHOLDER INFORMATION.......................................................33
Sales Charge Reductions and Waivers...........................................33
Waivers of Front-End Sales Charges............................................33
Contingent Deferred Sales Charge Waivers......................................37
Conversion Feature............................................................37

NET ASSET VALUE, DIVIDENDS AND TAXES..........................................38
Net Asset Value...............................................................38
Suspension of the Determination of Net Asset Value............................38
Tax Status....................................................................38

PERFORMANCE INFORMATION.......................................................39

DESCRIPTION OF SHARES.........................................................41

FINANCIAL STATEMENTS..........................................................41





--------------------------------------------------------------------------------
                       INVESTMENT OBJECTIVE AND STRATEGIES
--------------------------------------------------------------------------------

     The  investment  objective and strategies of each Fund are described in the
Prospectus  under the "Risk and  Return  Summary"  heading.  Set forth  below is
additional  information with respect to the investment  objective and strategies
of each Fund.


     Strategies. Each Fund, other than the GAM Global Fund and GAM International
Fund, has adopted an investment policy relating to the geographic areas in which
it may invest.  In the case of the GAM Pacific  Basin,  GAM Japan  Capital,  GAM
Europe,  GAMerica  Capital  Fund,  GAM  American  Focus  Fund  and  GAM  Gabelli
Long/Short Funds, each Fund intends to invest substantially all of its assets in
the region  dictated by its name and,  under normal market  circumstances,  will
invest at least 80% of its net assets in securities of companies or  governments
in the relevant  geographic  area. Each of these Funds will notify  investors at
least 60 days prior to any change in the  investment  policy  described  in this
paragraph.


     GAM Global Fund may invest in securities issued by companies in any country
of the world,  including the United States,  and normally  invests in securities
issued  by  companies  in  the  United  States,   Canada,  the  United  Kingdom,
Continental Europe and the Pacific Basin.  Under normal market  conditions,  GAM
Global Fund  invests in  securities  of  companies  in at least three  different
countries.

     GAM International  Fund may invest in securities issued by companies in any
country other than the United States and normally  invests in securities  issued
by companies in Canada,  the United Kingdom,  Continental Europe and the Pacific
Basin.  Under  normal  market  conditions,  GAM  International  Fund  invests in
securities  of  companies in at least three  foreign  countries.  For  temporary
defensive  purposes,  GAM  International  Fund may invest in debt  securities of
United States  companies and the United States  government  and its agencies and
instrumentalities.

     GAM Pacific Basin Fund invests  primarily in securities issued by companies
in the Pacific Basin, including Japan, Hong Kong, Singapore, Malaysia, Thailand,
Vietnam, Indonesia, the Philippines,  Korea, China, Taiwan, India, Australia and
New Zealand.

     GAM Japan  Capital Fund invests  primarily  in  securities  of companies in
Japan.

     GAM Europe Fund  invests  primarily  in  securities  issued by companies in
Europe, including the United Kingdom, Ireland, France, Germany, Denmark, Norway,
Sweden, Finland, Iceland, Switzerland, Austria, Belgium, Spain, Portugal, Italy,
Greece, Hungary, Poland, the Czech Republic and Slovakia.

     GAM American Focus Fund invests primarily in securities issued by companies
in the United States.

     GAMerica  Capital Fund invests  primarily in securities of companies in the
United States.


     GAM Gabelli  Long/Short  Fund  invests  primarily in  securities  issued by
companies in the United States.


     A company  will be  considered  to be in or from a  particular  country for
purposes of the preceding paragraphs if (a) at least 50% of the company's assets
are  located in the  country or at least 50% of its total  revenues  are derived
from goods or services produced in the country or sales made in the country; (b)
the principal trading market for the company's  securities is in the country; or
(c) the company is incorporated under the laws of the country.

     Each Fund will seek  investment  opportunities  in all types of  companies,
including  smaller  companies in the earlier  stages of  development.  In making
investment  decisions,  each  Fund will  rely on the  advice  of its  Investment
Advisor(s) and its own judgement rather than on any specific objective criteria.


                                      -2-


     Rating Of  Securities.  Each Fund may invest a  substantial  portion of its
assets in debt securities  issued by companies or governments and their agencies
and  instrumentalities  if it determines that the long-term capital appreciation
of such debt  securities  may equal or exceed the  return on equity  securities.
Each Fund is not required to maintain  any  particular  proportion  of equity or
debt securities in its portfolio.  Any dividend or interest income realized by a
Fund on its  investments  will be  incidental  to its goal of long-term  capital
appreciation.  The debt  securities  (bonds  and  notes)  in which the Funds may
invest  are not  required  to have any  rating.  Each  Fund may,  for  temporary
defensive purposes, invest in debt securities (with remaining maturities of five
years or less)  issued by  companies  and  governments  and their  agencies  and
instrumentalities and in money market instruments denominated in currency of the
United States or foreign nations.

     None of the Funds will commit more than 5% of its assets, determined at the
time of investment, to investments in debt securities which are rated lower than
"investment  grade"  by a rating  service.  Debt  securities  rated  lower  than
"investment  grade," also known as "junk bonds," are those debt  securities  not
rated in one of the four highest  categories by a rating  service  (e.g.,  bonds
rated lower than BBB by Standard & Poor's Corporation  ("S&P") or lower than Baa
by  Moody's  Investors  Services,  Inc.  ("Moody's")).   Junk  bonds,  and  debt
securities rated in the lowest  "investment  grade"  category,  have speculative
characteristics,  and changes in economic  circumstances or other  circumstances
are more  likely to lead to a weakened  capacity  on the part of issuers of such
lower rated debt securities to make principal and interest payments than issuers
of higher rated  investment  grade bonds.  Developments  such as higher interest
rates may lead to a higher  incidence of junk bond  defaults,  and the market in
junk bonds may be more  volatile  and  illiquid  than that in  investment  grade
bonds. A decrease in the ratings of debt securities held by a Fund may cause the
Fund to have more than 5% of its assets  invested in debt  securities  which are
not  "investment  grade." In such a case,  the Fund will not be required to sell
such securities.

     United States Government Obligations. The Funds may invest in securities of
the United States government, its agencies and instrumentalities.  United States
government securities include United States Treasury obligations,  which include
United States  Treasury  bills,  United States  Treasury notes and United States
Treasury bonds; and obligations issued or guaranteed by United States government
agencies  and  instrumentalities.  Agencies  and  instrumentalities  include the
Federal Land Banks, Farmers Home Administration,  Central Bank for Cooperatives,
Federal  Intermediate  Credit  Banks,  Federal  Home  Loan  Bank,  Student  Loan
Marketing  Association,  Federal  National  Mortgage  Association and Government
National Mortgage Association.

     Repurchase  Agreements.  Each Fund may, for temporary  defensive  purposes,
invest in repurchase agreements. In such a transaction,  at the same time a Fund
purchases a security,  it agrees to resell it to the seller and is  obligated to
redeliver the security to the seller at a fixed price and time. This establishes
a yield during the Fund's holding period, since the resale price is in excess of
the purchase price and reflects an agreed-upon  market rate.  Such  transactions
afford  an  opportunity  for  a  Fund  to  invest  temporarily  available  cash.
Repurchase  agreements may be considered loans to the seller  collateralized  by
the underlying  securities.  The risk to a Fund is limited to the ability of the
seller  to pay the  agreed-upon  sum on the  delivery  date;  in the  event of a
default the repurchase  agreement provides that the Fund is entitled to sell the
underlying  collateral.  If the  value  of the  collateral  declines  after  the
agreement is entered into, however, and if the seller defaults when the value of
the underlying  collateral is less than the repurchase price, a Fund could incur
a loss of both principal and interest.  The collateral is marked-to-market daily
and the Investment  Advisors monitor the value of the collateral in an effort to
determine  that  the  value of the  collateral  always  equals  or  exceeds  the
agreed-upon  sum to be paid to a Fund.  If the  seller  were to be  subject to a
United  States  bankruptcy  proceeding,  the ability of a Fund to liquidate  the
collateral  could be delayed or impaired  because of certain  provisions  in the
bankruptcy  law.  Each  Fund may only  enter  into  repurchase  agreements  with
domestic or foreign securities dealers,  banks and other financial  institutions
deemed to be creditworthy under guidelines approved by the Board of Directors.


     Adjustable Rate Index Notes.  The Funds may invest in adjustable rate index
notes,  which are a form of promissory  note issued by brokerage  firms or other
counterparties  which pay more  principal  or  interest  if the value of another
security falls,  and less principal or interest if the value of another security
rises. The Funds may also invest in similar types of derivatives,  the effect of
which is a synthetic short position.


     Options.  Each Fund may  invest up to 5% of its net  assets in  options  on
equity or debt securities or securities  indices and up to 10% of its net assets
in warrants,  including options and warrants traded in over-the-counter markets.
An option on a security gives the owner the right to acquire ("call  option") or
dispose of ("put option") the underlying  security at a fixed price (the "strike
price") on or before a specified date in the future.  A warrant is equivalent to
a call option written by the issuer of the underlying security.


                                      -3-


     Each Fund may write  covered call options on  securities in an amount equal
to not more than 100% of its net assets  and  secured  put  options in an amount
equal to not more than 50% of its net assets. A call option written by a Fund is
"covered" if the Fund owns the underlying securities subject to the option or if
the Fund holds a call at the same exercise price, for the same period and on the
same securities as the call written.  A put option will be considered  "secured"
if a Fund  segregates  liquid assets having a value equal to or greater than the
exercise  price of the option,  or if the Fund holds a put at the same  exercise
price, for the same period and on the same securities as the put written.

     The  principal  reason for  writing  covered  call  options is to  realize,
through the receipt of  premiums,  a greater  return than would be realized on a
Fund's  portfolio  securities  alone.  In return for a premium,  the writer of a
covered call option  forfeits the right to any  appreciation in the value of the
underlying  security above the strike price for the life of the option (or until
a closing purchase transaction can be effected).  Nevertheless,  the call writer
retains  the  risk  of a  decline  in  the  price  of the  underlying  security.
Similarly,  the principal  reason for writing  secured put options is to realize
income in the form of premiums.  The writer of a secured put option  accepts the
risk of a decline in the price of the underlying  security. A Fund may invest up
to 5% of its net assets in options on  securities or indices  including  options
traded in over-the-counter markets.

     Although each Fund  generally will purchase or write only those options for
which it  believes  there is an  active  secondary  market  so as to  facilitate
closing transactions,  there is no assurance that sufficient trading interest to
create a liquid  secondary  market on a securities  exchange  will exist for any
particular  option  or at any  particular  time,  and for some  options  no such
secondary  market may exist. A liquid secondary market in an option may cease to
exist for a variety of  reasons.  In such  event,  it might not be  possible  to
effect closing  transactions in particular options. If, as a covered call option
writer, a Fund is unable to effect a closing purchase transaction in a secondary
market,  it will not be able to sell the  underlying  security  until the option
expires or it delivers the underlying security upon exercise.

     The success of each Fund's options  trading  activities  will depend on the
ability of the Investment  Advisors to predict  correctly  future changes in the
prices of securities.  Purchase or sale of options to hedge each Fund's existing
securities  positions  is also  subject to the risk that the value of the option
purchased  or sold may not move in  perfect  correlation  with the  price of the
underlying  security.  The greater  leverage in options and futures  trading may
also tend to increase the daily fluctuations in the value of a Fund's shares.

     Stock Index  Futures and  Options.  Each Fund may  purchase  and sell stock
index futures  contracts,  and purchase,  sell and write put and call options on
stock index futures contracts, for the purpose of hedging its portfolio. A stock
index  fluctuates with changes in the market value of the stocks included in the
index.  An option on a  securities  index gives the holder the right to receive,
upon  exercise  of the  option,  an amount of cash if the  closing  level of the
securities  index upon which the option is based is greater than, in the case of
a call option,  or less than,  in the case of a put option,  the strike price of
the option.  Some stock index options are based on a broad market index, such as
the NYSE Composite  Index,  or a narrower  market index,  such as the Standard &
Poor's  100.  In the case of a stock  index  future,  the seller of the  futures
contract is obligated to deliver, and the purchaser obligated to take, an amount
of cash equal to a specific dollar amount  multiplied by the difference  between
the value of a specific  stock index at the close of the last trading day of the
contract and the price at which the agreement is made.  No physical  delivery of
the  underlying  stocks  in the  index  is  made.  If the  assets  of a Fund are
substantially  invested  in equity  securities,  the Fund  might  sell a futures
contract  based on a stock index which is expected to reflect  changes in prices
of stocks in the Fund's  portfolio in order to hedge against a possible  general
decline in market  prices.  A Fund may similarly  purchase a stock index futures
contract to hedge against a possible  increase in the price of stocks before the
Fund is able to invest cash or cash equivalents in stock in an orderly fashion.

     The  effectiveness  of  trading in stock  index  futures  and  options as a
hedging  technique  will depend upon the extent to which  price  movements  in a
Fund's  portfolio  correlate with price  movements of the stock index  selected.
Because the value of an index  future or option  depends  upon  movements in the
level of the index rather than the price of a particular  stock,  whether a Fund
will realize a gain or loss from the purchase,  sale or writing of a stock index
future or option  depends  upon  movements  in the level of stock  prices in the
stock market  generally,  or in the case of certain  indices,  in an industry or
market segment, rather than movements in the price of a particular stock.


                                      -4-


     Successful  use of stock index  futures by the Funds also is subject to the
ability  of  the  Investment  Advisor  to  correctly  predict  movements  in the
direction  of  the  market.  For  example,  if a Fund  has  hedged  against  the
possibility of a decline in the market  adversely  affecting  stocks held in its
portfolio and stock prices increase  instead,  the Fund will lose part or all of
the benefit of the increased  value of its stocks which it has hedged because it
will have offsetting losses in its futures positions.

     Each Fund may purchase and sell commodity futures contracts,  and purchase,
sell or write options on futures  contracts,  for bona fide hedging  purposes or
otherwise in accordance with applicable  rules of the Commodity  Futures Trading
Commission  (the "CFTC").  CFTC rules permit an entity such as a Fund to acquire
commodity  futures and  options as part of its  portfolio  management  strategy,
provided that the sum of the amount of initial margin deposits and premiums paid
for unexpired commodity futures contracts and options would not exceed 5% of the
fair  market  value  of the  assets  of the  Fund,  after  taking  into  account
unrealized  profits and unrealized losses on such contracts it has entered into.
In the case of an option that is  in-the-money  at the time of purchase  (option
contract on a stock whose current  market price is above the striking price of a
call  option or below the  striking  price of a put  option),  the  in-the-money
amount may be excluded in calculating the 5%.

     When a Fund enters into a futures contract or writes an option on a futures
contract,  it will instruct its custodian to segregate cash or liquid securities
having a market value which,  when added to the margin deposited with the broker
or futures commission merchant,  will at all times equal the purchase price of a
long position in a futures contract, the strike price of a put option written by
the  Fund,  or the  market  value  (marked-to-market  daily)  of  the  commodity
underlying a short  position in a futures  contract or a call option  written by
the Fund, or the Fund will otherwise cover the transaction.

     Interest  Rate  Futures  and  Options.  Each  Fund may  hedge  against  the
possibility of an increase or decrease in interest rates adversely affecting the
value of  securities  held in its  portfolio by  purchasing or selling a futures
contract on a specific debt security whose price is expected to reflect  changes
in interest rates.  However, if a Fund anticipates an increase in interest rates
and rates decrease instead, the Fund will lose part or all of the benefit of the
increased  value of the  securities  which it has  hedged  because  it will have
offsetting losses in its futures  position.  A Fund may purchase call options on
interest rate futures contracts to hedge against a decline in interest rates and
may  purchase  put  options on  interest  rate  futures  contracts  to hedge its
portfolio securities against the risk of rising interest rates. A Fund will sell
options  on  interest  rate  futures  contracts  as  part  of  closing  purchase
transactions to terminate its options positions.  No assurance can be given that
such closing  transactions  can be effected or that there will be a  correlation
between  price  movements  in the  options on  interest  rate  futures and price
movements in the  portfolio  securities of the Fund which are the subject of the
hedge.  In  addition,  a Fund's  purchase  of such  options  will be based  upon
predictions  as to  anticipated  interest  rate trends,  which could prove to be
inaccurate.  The  potential  loss  related  to the  purchase  of an option on an
interest rate futures contracts is limited to the premium paid for the option.

     Although each Fund intends to purchase or sell commodity  futures contracts
only if there is an active  market for each such  contract,  no assurance can be
given that a liquid market will exist for the contracts at any particular  time.
Many  futures  exchanges  and boards of trade  limit the  amount of  fluctuation
permitted in futures contract prices during a single trading day. Once the daily
limit has been reached in a particular contract,  no trades may be made that day
at a price beyond that limit.  Futures  contract  prices could move to the daily
limit for several  consecutive  trading days with little or no trading,  thereby
preventing  prompt  liquidation of futures positions and subjecting some futures
traders to substantial  losses.  In such event and in the event of adverse price
movements,  a Fund would be  required to make daily cash  payments of  variation
margin.  In such  circumstances,  an increase in the value of the portion of the
portfolio being hedged, if any, may offset partially or completely losses on the
futures  contract.  However,  no  assurance  can be given  that the price of the
securities  being hedged will  correlate  with the price  movements in a futures
contract and thus provide an offset to losses on the futures contract.


                                      -5-


     Foreign Currency Transactions. Since investments in foreign securities will
usually  involve  currencies  of  foreign  countries,  and  since  each Fund may
temporarily  hold  funds  in  foreign  or  domestic  bank  deposits  in  foreign
currencies during the completion of investment programs, the value of the assets
of each Fund as measured in United States  dollars may be affected  favorably or
unfavorably by changes in foreign  currency  exchange rates and exchange control
regulations,  and the Funds  may  incur  costs in  connection  with  conversions
between various  currencies.  The Funds may enter into foreign currency exchange
transactions  either on a spot (i.e., cash) basis at the spot rate prevailing in
the foreign currency exchange market, or through entering into forward contracts
to purchase or sell foreign  currencies.  A forward  foreign  exchange  contract
involves an obligation to purchase or sell a specific currency at a future date,
which may be any fixed number of days from the date of the contract  agreed upon
by the parties, at a price set at the time of the contract.  These 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 is consummated  without payment of any
commission.

     Each Fund may enter into forward foreign exchange contracts for speculative
purposes  and under  the  following  circumstances:  when a Fund  enters  into a
contract  for the  purchase  or  sale of a  security  denominated  in a  foreign
currency,  or when a Fund  anticipates  the  receipt  in a foreign  currency  of
dividends or interest  payments on such a security which it purchases or already
holds, it may desire to "lock-in" the United States dollar price of the security
or the United States dollar equivalent of such dividend or interest payment,  as
the case may be. By entering  into a forward  contract for the purchase or sale,
for a fixed amount of dollars, of the amount of foreign currency involved in the
underlying  security  transactions,  the  Fund  will be able to  protect  itself
against a possible loss  resulting  from an adverse  change in the  relationship
between the United States  dollar and the subject  foreign  currency  during the
period  between the date the  security  is  purchased  or sold,  or on which the
dividend or interest payment is declared,  and the date on which payment is made
or received.

     If it is believed  that the  currency of a particular  foreign  country may
suffer a  substantial  decline  against  the  United  States  dollar or  another
currency,  a Fund may enter into a forward  contract to sell, for a fixed amount
of dollars,  the amount of foreign currency  approximating  the value of some or
all of the Fund's portfolio securities denominated in such foreign currency. The
precise matching of the forward contract amounts and the value of the securities
involved  will  not  generally  be  possible  since  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.

     The  projection  of  short-term  currency  market  movements  is  extremely
difficult,  and the  successful  execution of a short-term  hedging  strategy is
highly  uncertain.  Each Fund will place cash or liquid securities in a separate
custody  account of the Fund with the Company's  custodian in an amount equal to
the value of the Fund's total assets  committed to the consummation of the hedge
contracts or otherwise  cover such  transactions.  The securities  placed in the
separate account will be marked-to-market  daily. If the value of the securities
placed in the separate account  declines,  additional cash or liquid  securities
will be placed in the  account on a daily basis so that the value of the account
will equal the amount of the Fund's  uncovered  commitments with respect to such
contracts.

     At the maturity of a forward contract, a Fund may either sell the portfolio
security  and make  delivery  of the  foreign  currency,  or it may  retain  the
security  and  terminate  its  contractual  obligation  to deliver  the  foreign
currency by purchasing an  "offsetting"  contract with the same currency  trader
obligating  it to purchase,  on the same maturity  date,  the same amount of the
foreign currency. A Fund may also purchase an "offsetting" contract prior to the
maturity  of the  underlying  contract.  There  is no  assurance  that  such  an
"offsetting" contract will always be available to a Fund.

     It is impossible to forecast with absolute  precision what the market value
of portfolio securities will be at the expiration of a related forward contract.
Accordingly,  it may be  necessary  for a Fund to  purchase  additional  foreign
currency  on the spot  market  (and bear the  expense of such  purchase)  if the
market  value of a  security  being  sold is less  than the  amount  of  foreign
currency the Fund is obligated  to deliver.  Conversely,  a Fund may sell on the
spot market some of the foreign currency received upon the sale of the portfolio
security if its market value exceeds the amount of foreign  currency the Fund is
obligated to deliver.

     A Fund is not  required to enter into hedging  transactions  with regard to
its foreign  currency-denominated  securities  and will not do so unless  deemed
appropriate by the Investment Advisors.  Hedging the value of a Fund's portfolio
securities  against a  decline  in the value of a  currency  does not  eliminate
fluctuations in the underlying prices of the securities. Although such contracts
tend to  minimize  the risk of loss due to a decline  in the value of the hedged
currency,  at the same time,  they tend to limit any potential  gain which might
result should the value of such currency increase.


                                      -6-


     The Funds may purchase or sell  options to buy or sell  foreign  currencies
and options on foreign currency futures,  or write such options, as a substitute
for  entering  into forward  foreign  exchange  contracts  in the  circumstances
described above. For example,  in order to hedge against the decline in value of
portfolio  securities  denominated in a specific  foreign  currency,  a Fund may
purchase  an option to sell,  for a specified  amount of dollars,  the amount of
foreign  currency  represented by such portfolio  securities.  In such case, the
Fund will pay a "premium" to acquire the option,  as well as the agreed exercise
price if it exercises the option.  Although each Fund values its assets daily in
terms of United States dollars, the Funds do not intend to convert their foreign
currency holdings into United States dollars on any regular basis. A Fund may so
convert  from  time to time,  and  thereby  incur  certain  currency  conversion
charges.  Although  foreign  exchange  dealers do not generally charge a fee for
conversion,  they do realize a profit  based on the  difference  (the  "spread")
between  the prices at which they are buying  and  selling  various  currencies.
Thus, a dealer may offer to sell a foreign currency to a Fund at one rate, while
offering  a lesser  rate of  exchange  should  the Fund  desire to  resell  that
currency to the dealer.

     Lending Portfolio  Securities.  Each Fund may lend its portfolio securities
to brokers,  dealers and financial  institutions  considered  creditworthy  when
secured by collateral maintained on a daily  marked-to-market basis in an amount
equal to at least  100% of the market  value,  determined  daily,  of the loaned
securities.  A Fund may at any time call the loan and  obtain  the return of the
securities  loaned.  No such loan will be made which would  cause the  aggregate
market value of all securities  lent by a Fund to exceed 15% of the value of the
Fund's  total  assets.  The Fund will  continue  to receive the income on loaned
securities and will, at the same time, earn interest on the loan collateral. Any
cash collateral  received under these loans will be invested in short-term money
market instruments.

     Warrants.  Each Fund may purchase warrants. The holder of a warrant has the
right to purchase a given number of shares of a particular issuer at a specified
price until  expiration of the warrant.  Such  investments can provide a greater
potential  for profit or loss than an equivalent  investment  in the  underlying
security.  Each Fund may invest up to 10% of its net assets, valued at the lower
of cost or market value,  in warrants  (other than those that have been acquired
in units or  attached to other  securities),  including  warrants  not listed on
American or foreign  stock  exchanges.  Prices of warrants do not move in tandem
with the prices of the underlying securities,  and are speculative  investments.
They pay no dividends  and confer no rights other than a purchase  option.  If a
warrant is not  exercised  by the date of its  expiration,  a Fund will lose its
entire investment in such warrant.


     Borrowing.  Each  Fund  may  borrow  from  banks  for  temporary  emergency
purposes,  and GAM Gabelli  Long/Short Fund may borrow from banks for investment
purposes,  as well as for temporary emergency purposes.  Each Fund will maintain
continuous  asset coverage  (that is, total assets  including  borrowings,  less
liabilities exclusive of borrowings) of 300% of the amount borrowed. If the 300%
asset  coverage  should  decline  as a result  of market  fluctuations  or other
reasons,  a Fund may be required to sell some of its portfolio  holdings  within
three days to reduce the debt and restore the 300% asset  coverage,  even though
it may be  disadvantageous  from an  investment  standpoint  to  sell  portfolio
holdings at the time.

     Borrowing  money,  also  known as  leveraging,  will  cause a Fund to incur
interest  charges,  and may increase the effect of  fluctuations in the value of
the investments of the Fund on the net asset value of its shares.  A Fund (other
than GAM Gabelli  Long/Short Fund) will not purchase  additional  securities for
investment while there are bank borrowings outstanding representing more than 5%
of the total assets of the Fund.

     Short-Selling. GAM International Fund, GAM Global Fund, GAM Europe Fund and
GAM Gabelli  Long/Short  Fund may from time to time  engage in short  selling of
securities,  including  shares of exchange  traded  funds.  Short  selling is an
investment  technique  wherein  the  Fund  sells  a  security  it  does  not own
anticipating  a decline in the market  value of the  security.  To complete  the
transaction,  the Fund must borrow the  security to make  delivery to the buyer.
The Fund is  obligated  to  replace  the  security  borrowed  by  purchasing  it
subsequently at the market price at the time of  replacement.  The price at such
time may be more or less than the price at which  the  security  was sold by the
Fund, which would result in a loss or gain. Until the security is replaced,  the
Fund is required to pay to the lender amounts equal to any dividends or interest
which accrue  during the period of the loan.  To borrow the  security,  the Fund
also may be required  to pay a premium,  which  would  increase  the cost of the
security sold. The proceeds of the short sale will be retained by the broker, to
the extent  necessary to meet margin  requirements,  until the short position is
closed  out.  The Fund will  incur a loss as a result  of the short  sale if the
price of the security  increases between the date of the short sale and the date
on which the Fund replaces the borrowed  security.  The Fund will realize a gain
if the  security  declines  in price  between  those  dates.  This result is the
opposite  of what one would  expect  from a  purchase  of a long  position  in a
security.  The amount of any gain will be decreased,  and the amount of any loss
increased,  by the amount of any  premium or  amounts  in lieu of  dividends  or
interest the Fund may be required to pay in connection with a short sale.



                                      -7-


     Short sales by the Fund involve risk. If the Fund incorrectly predicts that
the price of the borrowed  security will decline,  the Fund will have to replace
the securities  sold short with  securities with a greater value than the amount
received from the sale.  As a result,  losses from short sales may be unlimited,
whereas losses from long positions can equal only the total amount invested.


     GAM  International  Fund,  GAM Global Fund, GAM Europe Fund and GAM Gabelli
Long/Short  Fund may also make  short  sales  "against  the  box." A short  sale
"against the box" is a transaction in which the Fund enters into a short sale of
a security  which the Fund owns.  The  proceeds  of the short sale are held by a
broker until the settlement date at which time the Fund delivers the security to
close the short  position.  The Fund  receives the net  proceeds  from the short
sale.

     Until the Fund  replaces a borrowed  security  in  connection  with a short
sale, the Fund will: (a) maintain daily a segregated  account,  containing cash,
U.S. government  securities,  or certain liquid assets, at such a level that (i)
the amount deposited in the account plus the amount deposited with the broker as
collateral  will equal the current value of the security sold short and (ii) the
amount  deposited in the segregated  account plus the amount  deposited with the
broker as  collateral  will not be less than the market value of the security at
the time it was sold short; or (b) otherwise cover its short position.  The Fund
anticipates  that the  frequency  of short sales will vary  substantially  under
different market  conditions,  and it does not intend that any specified portion
of its assets as a matter of  practice  will be in short  sales.  As a matter of
policy,  the Board of Directors has determined  that securities will not be sold
short if, after  effect is given to any such short sale,  the total market value
of all  securities  sold short  would  exceed 20% of the value of the Fund's net
assets,  with  respect to the GAM  International  Fund,  GAM Global Fund and GAM
Europe Fund,  or 50% of the value of the Fund's net assets,  with respect to GAM
Gabelli Long/Short Fund.


     Restricted  Securities.  The Funds  may  purchase  securities  that are not
registered for sale to the general public in the United States, but which can be
resold to  institutional  investors in the United States,  including  securities
offered  pursuant  to Rule 144A  adopted by the  United  States  Securities  and
Exchange Commission ("SEC"). If a dealer or institutional trading market in such
securities exists,  either within or outside the United States, these restricted
securities will not be treated as illiquid securities for purposes of the Funds'
investment  restrictions.  The Board of Directors will  establish  standards for
determining  whether or not 144A  securities  are  liquid  based on the level of
trading activity,  availability of reliable price information and other relevant
considerations.   The  Funds  may  also  purchase  privately  placed  restricted
securities for which no  institutional  market exists.  The absence of a trading
market  may  adversely  affect the  ability  of the Funds to sell such  illiquid
securities  promptly  and at an  acceptable  price,  and may  also  make it more
difficult to ascertain a market value for illiquid securities held by the Funds.

     Future  Developments.  The Funds may take advantage of opportunities in the
area of options and futures contracts and other derivative financial instruments
which are  developed in the future,  to the extent such  opportunities  are both
consistent  with each Fund's  investment  objective  and permitted by applicable
regulations.  The Funds' Prospectus and Statement of Additional Information will
be  amended  or  supplemented,  if  appropriate  in  connection  with  any  such
practices.

     Fundamental  Investment   Restrictions.   Each  Fund  has  adopted  certain
investment restrictions which cannot be changed without approval by holders of a
majority of its outstanding  voting shares. As defined in the Investment Company
Act of 1940, as amended (the "Act"), this means the lesser of (a) 67% or more of
the  shares of the Fund at a  meeting  where  more  than 50% of the  outstanding
shares are present in person or by proxy or (b) more than 50% of the outstanding
shares of the Fund.

     In accordance with these restrictions, each Fund may not:

     (1) With  respect to 75% of its total  assets,  invest  more than 5% of its
total assets in any one issuer  (other than the United  States  government,  its
agencies  and  instrumentalities)  or  purchase  more  than  10% of  the  voting
securities, or more than 10% of any class of securities, of any one issuer. (For
this purpose all outstanding  debt securities of an issuer are considered as one
class, and all preferred stocks of an issuer are considered as one class).

     (2) Invest for the purpose of  exercising  control or management of another
company.


                                      -8-


     (3) Invest in real estate  (including  real estate  limited  partnerships),
although a Fund may invest in  marketable  securities  which are secured by real
estate and securities of companies which invest or deal in real estate.

     (4)  Concentrate  more than 25% of the value of its total assets in any one
industry (including  securities of non-United States  governments),  except that
GAM Pacific Basin Fund will  concentrate more than 25% of the value of its total
assets in the finance  sector,  as such sector is defined in the Morgan  Stanley
Capital  International  ("MSCI")  Indices.  See "Policy of Concentration for GAM
Pacific Basin Fund" below.  The finance sector is defined by the MSCI to include
the  following  industries:  banking;  financial  services;  insurance  and real
estate.

     (5) Make loans,  except that this  restriction  shall not  prohibit (1) the
purchase of publicly  distributed  debt  securities in accordance  with a Fund's
investment objectives and policies, (2) the lending of portfolio securities, and
(3) entering into repurchase agreements.


     (6) Borrow money,  except from banks for temporary  emergency purposes (for
all Funds  other than the GAM  Gabelli  Long/Short  Fund) and,  in no event,  in
excess of 33 1/3% of its total assets at value or cost,  whichever  is less;  or
(with  respect to all Funds) pledge or mortgage its assets or transfer or assign
or otherwise  encumber  them in an amount  exceeding the amount of the borrowing
secured  thereby.  In the case of GAM Gabelli  Long/Short Fund, the Fund may not
borrow money,  except from banks,  and, in no event, in excess of 33 1/3% of its
total assets at value or cost, whichever is less.


     (7) Underwrite securities issued by others except to the extent the Company
may be deemed  to be an  underwriter,  under the  Federal  securities  laws,  in
connection with the disposition of its portfolio securities.


     (8)  Purchase  securities  of other  investment  companies,  except  (a) in
connection with a merger, consolidation, reorganization or acquisition of assets
or (b) a Fund may purchase securities of closed-end  investment  companies up to
(i) 3% of the outstanding  voting stock of any one investment company (including
for this purpose investments by any other series of the Company), (ii) 5% of the
total  assets of the Fund with respect to any one  investment  company and (iii)
10% of the  total  assets  of the  Fund in the  aggregate.  Notwithstanding  the
foregoing,  the GAM Gabelli  Long/Short  Fund shall not purchase  securities  of
other   investment   companies,   except  (x)  in  connection   with  a  merger,
consolidation,  reorganization  or  acquisition  of assets and (y) such Fund may
purchase  securities  of  investment  companies up to (i) 3% of the  outstanding
voting  stock  of  any  one  investment  company  (including  for  this  purpose
investments by any other series of the Company),  (ii) 5% of the total assets of
such Fund with respect to any one investment  company and (iii) 10% of the total
assets of the Fund in the aggregate.


     (9)  Participate  on a joint or a joint and  several  basis in any  trading
account in securities.

     (10) Issue  senior  securities  (as defined in the Act),  other than as set
forth in paragraph 6.

     (11) Invest in commodities or commodity futures contracts, except that each
Fund may enter into forward foreign  exchange  contracts and may invest up to 5%
of its net assets in initial margin or premiums for futures contracts or options
on futures contracts.

     For purposes of  restriction  (6), a Fund may borrow money in an amount not
exceeding 33 1/3% of the value of the Fund's total assets  (including the amount
borrowed).

     Non-Fundamental Investment Restrictions. Each Fund has also adopted certain
investment  restrictions,  which are  deemed  non-fundamental,  which  cannot be
changed without a vote of the majority of the Board of Directors. In addition to
non-fundamental restrictions stated elsewhere, each Fund may not:


     (1) Make short sales of  securities on margin,  except for such  short-term
credits as are  necessary for the clearance of  transactions.  This  restriction
does not apply to GAM  International  Fund, GAM Global Fund, GAM Europe Fund and
GAM Gabelli Long/Short Fund. See "Short-Selling" above for a further discussion.
(Management may recommend to the Board of Directors  removal of this restriction
for the other Funds).



                                      -9-


     (2)  Invest  more than 15% of the Fund's  net  assets in  securities  which
cannot be readily  resold to the public  because there are no market  quotations
readily available because of legal or contractual  restrictions or because there
are no market  quotations  readily  available or in other "illiquid  securities"
(including  non-negotiable  deposits with banks and  repurchase  agreements of a
duration of more than seven days).

     If a percentage  restriction  (other than the  restriction  on borrowing in
paragraph 6) is adhered to at the time of investment,  a subsequent  increase or
decrease in the percentage beyond the specified limit resulting from a change in
value or net assets will not be considered a violation.  Whenever any investment
policy or investment  restriction states a maximum percentage of a Fund's assets
which may be invested in any  security or other  property,  it is intended  that
such maximum  percentage  limitation  be determined  immediately  after and as a
result of the acquisition of such security or property.

     Risk  Considerations.   Investments  in  the  Funds  are  not  deposits  or
obligations of, or guaranteed or endorsed by, any bank,  including UBS AG or any
of its  affiliates  and are not insured or  guaranteed  by the  Federal  Deposit
Insurance  Corporation,  the  Federal  Reserve  Board,  or any other  government
agency.  Investments  in the  Funds  involve  investment  risks,  including  the
possible loss of principal.

     Investors  should  carefully  consider the risks involved in investments in
securities of companies and  governments  of foreign  nations,  which add to the
usual risks  inherent in domestic  investments.  Such special  risks include the
lower  level of  government  supervision  and  regulation  of  stock  exchanges,
broker-dealers  and listed  companies,  fluctuations in foreign  exchange rates,
future  political  and economic  developments,  and the possible  imposition  of
exchange  controls  or  other  foreign  governmental  laws or  restrictions.  In
addition,  securities  prices in  foreign  countries  are  generally  subject to
different  economic,  financial,  political  and social  factors  than prices of
securities of United States issuers.

     The Company  anticipates  that the portfolio  securities of foreign issuers
held by each Fund  generally  will not be  registered  with the SEC nor will the
issuers  thereof be subject to the  reporting  requirements  of such agency.  In
addition,  the governments  under which these companies are organized may impose
less government supervision than is required in the United States.  Accordingly,
there may be less  publicly  available  information  concerning  certain  of the
issuers of  securities  held by the Funds than is  available  concerning  United
States  companies.  In addition,  foreign companies are not generally subject to
uniform  accounting,  auditing and financial reporting standards or to practices
and requirements comparable to those applicable to United States companies.

     It is contemplated that the Funds' foreign portfolio  securities  generally
will be purchased on stock exchanges or in  over-the-counter  markets located in
the  countries  in which the  principal  offices of the  issuers of the  various
securities  are located,  if that is the best  available  market.  Foreign stock
exchanges  generally  have  substantially  less  volume  than the New York Stock
Exchange and may be subject to less  government  supervision and regulation than
those in the United States. Accordingly,  securities of foreign companies may be
less liquid and more  volatile  than  securities  of  comparable  United  States
companies.  Similarly, volume and liquidity in most foreign bond markets is less
than in the United States and, at times, price volatility can be greater than in
the United States.

     The Funds may also  invest in  American  Depositary  Receipts  ("ADRs")  or
European  Depositary  Receipts  ("EDRs")  representing   securities  of  foreign
companies,  including both sponsored and unsponsored ADRs.  Unsponsored ADRs may
be created without the  participation  of the foreign  issuer.  Holders of these
ADRs generally bear all the cost of the ADR facility,  whereas  foreign  issuers
typically  bear  certain  costs in a sponsored  ADR.  The bank or trust  company
depository  of an  unsponsored  ADR may be under  no  obligation  to  distribute
shareholder  communications  received from the foreign issuer or to pass through
voting rights. The markets for ADRs and EDRs,  especially  unsponsored ADRs, may
be  substantially  more  limited  and  less  liquid  than  the  markets  for the
underlying securities.

     Foreign  broker-dealers also may be subject to less government  supervision
than those in the United States. Although the Funds endeavor to achieve the most
favorable net results on their  portfolio  transactions,  fixed  commissions for
transactions  on certain  foreign stock  exchanges may be higher than negotiated
commissions available on United States exchanges.


                                      -10-


     With respect to certain  foreign  countries,  there is the  possibility  of
adverse changes in investment or exchange control regulations,  expropriation or
confiscatory  taxation,  and limitations on the transfer or exchange of funds or
other assets of the Funds.  The Funds' ability and decisions to purchase or sell
portfolio  securities  may be  affected by laws or  regulations  relating to the
convertibility  and  repatriation  of assets.  There is also the risk in certain
foreign countries of political or social instability, or diplomatic developments
which could affect United States investments as well as the prices of securities
in those countries.  Moreover, individual foreign economies may differ favorably
or  unfavorably  from the United  States  economy in such  respects as growth of
gross  national  product,  rate of  inflation,  capital  reinvestment,  resource
self-sufficiency and balance of payment position.

     Because the shares of the Funds are  redeemable  on a daily basis in United
States  dollars,  each  Fund  intends  to  manage  its  portfolio  so as to give
reasonable assurance that it will be able to obtain United States dollars to the
extent necessary to meet anticipated redemptions.  The Funds do not believe that
this  consideration  will  have  any  significant  effects  on  their  portfolio
strategies under present conditions.

     Policy of Concentration for GAM Pacific Basin Fund. Since GAM Pacific Basin
Fund has a fundamental  policy to concentrate  its  investments in the financial
services sector,  it may be subject to greater share price  fluctuations  than a
non-concentrated  fund.  There is a risk that the  Fund's  concentration  in the
securities  of financial  services  companies  will expose the Fund to the price
movements  of companies  in one  industry  more than a more broadly  diversified
mutual fund.  Because GAM Pacific  Basin Fund  invests  primarily in one sector,
there is the risk that the Fund will  perform  poorly  during a downturn in that
sector.   Also,   businesses  in  the  finance   sector  may  be  affected  more
significantly by changes in government policies and regulation,  interest rates,
currency exchange rates, and other factors affecting the financial markets.  The
finance  sector is  defined  by the MSCI to include  the  following  industries:
banking; financial services; insurance and real estate.

     Portfolio  Turnover.  Portfolio turnover rate is calculated by dividing the
lesser of a Fund's sales or purchases  of  portfolio  securities  for the fiscal
year  (exclusive  of purchases or sales of all  securities  whose  maturities or
expiration  dates  at the  time of  acquisition  were  one  year or less) by the
monthly average value of the securities in a Fund's  portfolio during the fiscal
year. A portfolio  turnover  rate in excess of 100% is  considered to be high. A
high portfolio  turnover rate may result in higher  short-term  capital gains to
shareholders  for tax purposes and  increased  brokerage  commissions  and other
transaction costs borne by the Fund.

--------------------------------------------------------------------------------
                            MANAGEMENT OF THE COMPANY
--------------------------------------------------------------------------------

     The business of the Funds is supervised by the Board of Directors,  who may
exercise all powers not required by statute,  the Articles of Incorporation,  or
the By-laws to be exercised by the shareholders.  When appropriate, the Board of
Directors will consider separately matters relating to each Fund or to any class
of shares of a Fund.  The Board  elects the  officers of the Company and retains
various  companies  to  carry  out Fund  operations,  including  the  investment
advisors, custodian, administrator and transfer agent.

     Certain  biographical  information for each  Independent  Director and each
Interested Director of the Company is set forth in the tables below, including a
description of each Director's  experience as a Director of the Company and as a
director  or  trustee  of  other  funds,  as well as other  recent  professional
experience.


                                      -11-


Independent Directors
------------------- ---------- ---------- ----------------------------------------- ------------- --------------------

                               Term of                                              Number of
                               Office1                                              Portfolios
                               and                                                  within the    Other
                               Length                                               GAM Fund      Directorships of
Name, Address and              of                                                   Complex2      Public Companies
       Age          Position   Service    Principal Occupation During Past 5 Years  Overseen      Held
------------------- ---------- ---------- ----------------------------------------- ------------- --------------------
------------------- ---------- ---------- ----------------------------------------- ------------- --------------------
George W. Landau    Director     Since    Senior Advisor, Latin America, The        12            Director, Credit
2601 South                       1994     Coca-Cola Company, Atlanta, GA, 1988 to   portfolios    Suisse Asset
Bayshore Drive                            present.  President, Council of           in 5          Management (CSAM)
Suite 1109                                Advisors, Latin America, Guardian         registered    Fund Complex
Coconut Grove, FL                         Industries, Auburn Hills, MI, 1993 to     investment    (5 portfolios).
33133                                     present.  Director, Emigrant Savings      companies
Age: 82                                   Bank, New York, NY, 1987 to present.
------------------- ---------- ---------- ----------------------------------------- ------------- --------------------
------------------- ---------- ---------- ----------------------------------------- ------------- --------------------
Robert J. McGuire   Director     Since    Attorney/Consultant, Morvillo,            12            Director,
1085 Park Avenue                 1998     Abramowitz, Grand, Iason & Silberberg,    portfolios    Brazilian Equity
New York, NY 10128                        P.C., 1998 to present.  Director,         in 5          Fund, Inc., (CSAM
Age:  66                                  Emigrant Savings Bank, 1999 to            registered    Fund Complex);
                                          present.  President/Chief Operating       investment    Director, Mutual
                                          Officer, Kroll Associates, 1989-1997.     companies     of America
                                          Director (since 1984) and President                     Investment Corp.,
                                          (since 1997), Police Athletic League.                   Director, Trump
                                          Director, Volunteers of Legal Services,                 Hotels & Casino
                                          1995 to present. Director Office of the                 Resorts
                                          Appellate Defender, 1995 to present.
                                          Trustee, Iona College, 1996 to present.
------------------- ---------- ---------- ----------------------------------------- ------------- --------------------
------------------- ---------- ---------- ----------------------------------------- ------------- --------------------
Roland Weiser       Director     Since    Chairman, Intervista business             12            None
Director                         1988     consulting, 1984 to present.  Trustee     portfolios
86 Beekman Road                           and Treasurer, New Jersey Center for      in 5
Summit, NJ 07901                          Visual Arts, 1999 to present.             registered
Age:  72                                                                            investment
                                                                                    companies
------------------- ---------- ---------- ----------------------------------------- ------------- --------------------

Interested Director
------------------- ---------- ---------- ----------------------------------------- ------------- --------------------

                               Term of                                              Number of
                               Office1                                              Portfolios
                               and                                                  within the    Other
                               Length                                               GAM Fund      Directorships of
Name, Address and              of                                                   Complex2      Public Companies
       Age          Position   Service    Principal Occupation During Past 5 Years  Overseen      Held
------------------- ---------- ---------- ----------------------------------------- ------------- --------------------
------------------- ---------- ---------- ----------------------------------------- ------------- --------------------
Dr. Burkhard        Chairman,      Since    Group Chief Executive Officer,         12            None
Poschadel*          Director       2000     Global Asset Management Limited,       portfolios
12 St. James's      and                     March 2000 to present.  Head of        in 5
Place               President               Human Resources, UBS Private           registered
London SWlA 1NX                             Banking, 1998-2000.  Global Head of    investment
England                                     Research and Portfolio Management,     companies
Age:56                                      UBS Private Banking, 1994-1997.
------------------- ------------ ---------- -------------------------------------- ------------- ---------------------


                                      -12-


1    Each  Director  holds  office  for  an  indefinite  term  until  his or her
     successor is duly qualified.

2    Each  Director  is a  director  of each of the  six  registered  investment
     companies  within the GAM Fund Complex,  which  include:  the Company;  GAM
     Avalon Lancelot, LLC; GAM Avalon Palamedes.,  LLC; GAM Avalon Galahad, LLC;
     and GAM Avalon Dinadan, LLC.

*    Dr. Poschadel is considered an Interested  Director because he is deemed to
     be an "interested person" of the Company, as that term is defined under the
     1940 Act,  due to his position as Group Chief  Executive  Officer of Global
     Asset Management Limited, the parent of the Funds' investment advisors.

     Information  relating to each Director's ownership (including the ownership
of his or  her  immediate  family)  in  each  Fund  of  the  Company  and in all
registered  investment companies in the GAM Fund Complex as of December 31, 2002
is set forth in the chart below.

------------------------- ------------------------------ ----------------------------------------
                   Name    Dollar Range of Fund Shares   Aggregate Dollar Range of Shares Owned
                                                          in All Funds Overseen by Director in
                                      Owned                  Family of Investment Companies
------------------------- ------------------------------ ----------------------------------------
------------------------- ------------------------------ ----------------------------------------
Independent Directors:
------------------------- ------------------------------ ----------------------------------------
------------------------- ------------------------------ ----------------------------------------
George M. Landau                       $0                                  $0

------------------------- ------------------------------ ----------------------------------------
------------------------- ------------------------------ ----------------------------------------
Robert J. McGuire                      $0                                  $0

------------------------- ------------------------------ ----------------------------------------
------------------------- ------------------------------ ----------------------------------------
Ronald Weiser             GAMerica Capital Fund (Class                Over $100,000
                          A) - $10,001 to $50,000

                          GAM American Focus Fund
                          (Class A) - $10,001 to
                          $50,000

                          GAM Pacific Basin Fund
                          (Class A) - $10,001 to
                          $50,000

                          GAM Europe Fund (Class A) -
                          $10,001 to $50,000
-------------------------- ------------------------------ ----------------------------------------
-------------------------- ------------------------------ ----------------------------------------
Interested Director:
-------------------------- ------------------------------ ----------------------------------------
-------------------------- ------------------------------ ----------------------------------------
Dr. Burkhard Poschadel                  $0                                  $0

-------------------------- ------------------------------ ----------------------------------------

Officers

     Below is the name, address,  age, information  regarding positions with the
Company and the principal occupation for each officer of the Fund.

------------------------------- ----------------- --------- -------------------------------------------------
                                                  Term of
                                                  Office1
                                                  and
                                                  Length
                                                  of
 Name, Address and Age          Position          Service   Principal Occupation During Past 5 Years
------------------------------- ----------------- --------- -------------------------------------------------
------------------------------- ----------------- --------- -------------------------------------------------
Kevin J. Blanchfield            Vice President    Since     Managing Director-Chief Operating Officer and
Global Asset Management         and Treasurer     1993      Treasurer, GAM USA+, GAM Investments Inc.+ and
(USA) Inc.                                                  GAM Services Inc.++, 1993 to present.  Vice
135 East 57th Street                                        President and Treasurer, GAM Avalon Funds+,
New York, NY 10022                                          2000 to Present.
Age: 47
------------------------------- ----------------- --------- -------------------------------------------------
------------------------------- ----------------- --------- -------------------------------------------------
Joseph J. Allessie              Secretary and     Since     General Counsel and Corporate Secretary, GAM
Global Asset Management         General Counsel   1999      USA+, GAM Investments Inc.+, and GAM Services
(USA) Inc.                                                  Inc.++, 1999 to present.  Secretary and General
135 East 57th Street                                        Counsel, GAM Avalon Funds+, 2000 to Present;
New York, NY 10022                                          Regulatory Officer to State of New Jersey,
Age: 37                                                     Department of Law and Public Safety, Bureau of
                                                            Securities, 1993-1999.
------------------------------- ----------------- --------- -------------------------------------------------
------------------------------- ----------------- --------- -------------------------------------------------


                                      -14-


Teresa B. Riggin                Assistant         Since     Senior Vice President-Administration, GAM USA+,
Global Asset Management         Secretary         1994      GAM Investments Inc.+ and GAM Services Inc.++,
(USA) Inc.                                                  1994 to present.  Assistant Secretary, GAM
135 East 57th Street                                        Avalon Funds+, 2000 to Present.
New York, NY 10022
Age: 43
------------------------------- ----------------- --------- -------------------------------------------------
------------------------------- ----------------- --------- -------------------------------------------------
John C. Smith                   Assistant         Since     Associate--Fund Administration, Brown Brothers
Brown Brothers Harriman & Co.   Secretary         2001      Harriman & Co., Inc. 1999 to present.  Fund
40 Water Street                                             Accountant, State Street Bank, 1994-1999.
Boston, MA  02109
Age:  37
------------------------------- ----------------- --------- -------------------------------------------------
------------------------------- ----------------- --------- -------------------------------------------------
Gregory V. Lomakin              Assistant         Since     Assistant Treasurer, Brown Brothers Harriman &
Brown Brothers Harriman & Co.   Secretary         2001      Co., Inc., 1997 to present.
40 Water Street
Boston, MA  02109
Age:  38
------------------------------- ----------------- --------- -------------------------------------------------
1    Each officer is appointed by the Board of Directors  and holds office for a
     term  of one  year  and  until  his or her  successor  is duly  chosen  and
     qualified.
+    Affiliate of the Company.
++   Principal Underwriter of the Company.

     Compensation of Directors and Executive Officers. Each Independent Director
of the Company receives annual compensation from the Company of $25,000 per year
plus $1,000 for each meeting of the Board of Directors  attended.  Each Director
is reimbursed  by the Company for travel  expenses  incurred in connection  with
attendance at Board of Directors meetings. The officers and interested Directors
of the Company do not receive any compensation from the Company.

     The name,  position(s) and information  related to the compensation of each
of the Directors in the most recent fiscal year are as follows:

                                              Pension or                           Compensation
Name and Position(s)        Aggregate     Retirement Benefits   Total Estimated   from the Company
   Held with each         Compensation    Accrued as Part of    Annual Benefits   and GAM Fund Complex
    Complex Fund        from the Company   Company Expenses     upon Retirement   Paid to Directors
    ------------        ----------------   ----------------     ----------------   ----------------

Dr. Burkhard Poschadel        $0                     N/A               N/A         $0
Director & President

George W. Landau              $29,500                N/A               N/A         $40,500 from 13
Director                                                                           portfolios

Robert J. McGuire             $29,500                N/A               N/A         $40,500 from 13
Director                                                                           portfolios

Roland Weiser                 $29,500                N/A               N/A         $40,500 from 13
Director                                                                           portfolios

     Principal  Holders of  Securities.  As of March 31, 2003, all Directors and
Officers of the Funds as a group owned beneficially or of record less than 1% of
the  outstanding  securities of any Fund.  To the knowledge of the Funds,  as of
[March 31, 2003], no shareholders  owned  beneficially (b) or of record (r) more
than 5% of a Fund's outstanding  shares,  except as set forth below. UBS AG, the
ultimate  beneficial  owner of the Funds, may be deemed to have shared voting or
investment  power over shares owned by clients or held by custodians or nominees
for clients of UBS AG or its  affiliates,  or by employee  benefit plans for the
benefit of employees of UBS AG or its  affiliates.  UBS AG disclaims  beneficial
ownership of such shares.

                                     GLOBAL
          NAME AND ADDRESS        Class A      Class B      Class C      Class D
                                  -------      ------       -------      -------

Charles Schwab & Co., Inc.
FBO Customers
101 Montgomery St.
San Francisco, CA  94104-4122

Merrill Lynch
FBO Customers of MLPF&S
4800 Deer Lake Dr. East
Jacksonville, FL  32246-6486

UBS Jersey Nominees Ltd
P.O. Box 350
St. Helier
Jersey Channel Islands

                                  INTERNATIONAL
          NAME AND ADDRESS         Class A     Class B      Class C      Class D
                                   -------     -------      -------      -------

Charles Schwab & Co., Inc.
FBO Customers
101 Montgomery St.
San Francisco, CA  94104-4122

Merrill Lynch
FBO Customers of MLPF&S
5210 E. Williams CIR
Ste 900
Tucson, AZ 85711-3750


                                      -15-


Merrill Lynch
FBO Customers of MLPF&S
4800 Deer Lake Dr. East
Jacksonville, FL  32246-6486

Deutsche Bank Securities Inc.
FBO 201-25091-19
P.O. Box 1346
Baltimore, MD  21203-1346


                                          PACIFIC BASIN               AMERICAN FOCUS
       NAME AND ADDRESS       Class A  Class B  Class C  Class D  Class A  Class B  Class C
                              -------  -------  -------  -------  -------  -------  -------

Charles Schwab & Co., Inc.
FBO Customers
101 Montgomery St.
San Francisco, CA 94104-4122

FISERV Securities, Inc.
FBO Customers
One Commerce Square
2005 Market Street
Suite 1200
Philadelphia, PA 19103-7084

PaineWebber for the benefit of
UBS PaineWebber CDN FBO
Anthony W. Barrett
P.O. Box 3321
Weehawken, NJ 07086-8154

Bear Stearns Securities Corp.
FBO of Various Customers
1 Metrotech Center North
Brooklyn, NY 11201-3870

Harris InvestorLine, Inc.
Clarabelle Partnership
1700 Century Square
1501 4th Avenue
Seattle, WA  98101

Merrill Lynch
FBO Customers of
MLPF&S
4800 Deer Lake Dr. East
Jacksonville, FL 32246-6486

Fayez Sarofim & Co.
P.O. Box 52830
Houston, TX  77052-2830


                                      -16-


SEI Trust Company
c/o Christiana Bank
Attn. Mutual Fund Admin.
One Freedom Valley Dr.
Oaks, PA 19456

SEI Trust Company
c/o Christiana Bank
Euram Beta
Attn. Mutual Fund Admin.
One Freedom Valley Dr.
Oaks, PA 19456

SEI Trust Company
c/o Christiana Bank
Euram Zeta
Attn. Mutual Fund Admin.
One Freedom Valley Dr.
Oaks, PA 19456

Peter A. Cohn and Elizabeth S.
Cohn Foundation
John P. Engel & Associates
c/o John P. Engel, Esq.
1740 Broadway, 25th Fl.
New York, NY  10019-4315

Salomon Smith Barney, Inc.
FBO Customers
333 W. 34th St., 3rd Fl.
New York, NY 10001

Donaldson, Lufkin & Jenrette
Securities Corp., Inc.
P.O. Box 2052
Jersey City, NJ 07303-2052

PaineWebber for the benefit of
PaineWebber CDN FBO Donald E.
Tambini
P.O. Box 3321
Weehawken, NJ
07087-8154

                                          JAPAN CAPITAL                    EUROPE
          NAME AND ADDRESS    Class A  Class B  Class C  Class D  Class A  Class B  Class C
                              -------  -------  -------  -------  -------  -------  -------

Charles Schwab & Co., Inc.
FBO Customers
101 Montgomery St.
San Francisco, CA  94104-4122


                                      -17-


Merrill Lynch
FBO Customers of MLPF&S
4800 Deer Lake Dr. East
Jacksonville, FL  32246-6486

SEI Trust Company
c/o Christiana Bank
Attn. Mutual Fund Admin.
One Freedom Valley Dr.
Oaks, PA  19456

SEI Trust Company
c/o Christiana Bank
Euram Beta
Attn: Mutual Fund Admin.
One Freedom Valley Dr.
Oaks, PA  19456

SEI Trust Company
c/o Christiana Bank
Euram Zeta
Attn. Mutual Fund Admin.
One Freedom Valley Dr.
Oaks, PA  19456

Raymond James Assoc., Inc.
Cust for
Sandra Crausman 403B
7740 Laytonia Dr.
Derward, MD  20855-1013

U.S. Bancorp Piper Jaffray
A/C 6641-2034
U.S. Bancorp Center
800 Nicollet Mall
Minneapolis, MN  55402-7000

PaineWebber FBO
Banca Popolare Emilia Romagna
Europe International
30 Blvd. Royal
L-2012
Luxembourg, Luxembourg


                                      -18-


                                       GAMERICA          GAM GABELLI LONG/SHORT
          NAME AND ADDRESS    Class A  Class B  Class C  Class A  Class B  Class C
                              -------  -------  -------  -------  -------  -------

Charles Schwab & Co., Inc
FBO Customers
101 Montgomery St.
San Francisco, CA  94104-4122

Merrill Lynch
FBO Customers of MLPF&S
4800 Deer Lake Dr. East
Jacksonville, FL  32246-6486

SEI Trust Company
c/o Christiana Bank
Euram Zeta
Attn. Mutual Fund Admin.
One Freedom Valley Dr.
Oaks, PA  19456

SEI Trust Company
c/o Christiana Bank
Attn. Mutual Funds Admin.
One Freedom Valley Dr.
Oaks, PA  19456

--------------------------------------------------------------------------------
                     INVESTMENT ADVISORY AND OTHER SERVICES
--------------------------------------------------------------------------------

     Investment Advisors. Each Investment Advisor is registered under the United
States Investment Advisers Act of 1940, as amended.  Each of GIML and GAM USA is
controlled  by and under  common  control  with other  investment  advisors  (as
described  below),  which have  substantial  experience  managing foreign mutual
funds. GAM USA also serves as the investment advisor to the following registered
closed-end funds: GAM Avalon Galahad, LLC, GAM Avalon Lancelot,  LLC, GAM Avalon
Palamedes, LLC and GAM Avalon Dinadan, LLC.


      The Directors of GIML and their principal occupations are as follows:

Name and Position Held
with GIML                                   Principal Occupation
-----------------------------------         --------------------

Andrew Wills, Director                      Investment Director, GIML
Andrew Hanges, Director                     Investment Director, GIML
Gordon D. Grender, Director                 Investment Director, GIML

     GIML is a  wholly  owned  subsidiary  of  Global  Asset  Management  (U.K.)
Limited, a holding company.  Global Asset Management Ltd., an investment advisor
organized  under the laws of Bermuda,  controls  GIML  through its wholly  owned
subsidiaries,  Greenpark  Management N.V.,  Global Asset Management GAM SARL and
GAMAdmin  B.V.  (the  latter  of which is the  direct  parent  of  Global  Asset
Management (U.K.) Limited).  Global Asset Management Ltd. is wholly owned by UBS
AG, a banking corporation organized under the laws of Switzerland.  UBS AG, with
headquarters in Switzerland, is an internationally diversified organization with
operations in many aspects of the financial services  industry.  UBS AG operates
in over 50  countries,  has more than  48,000  employees  and was  formed by the
merger of Union Bank of Switzerland and Swiss Bank Corporation in June 1998. UBS
AG also  maintains  direct  and  indirect  subsidiaries  in the  United  States,
including UBS PaineWebber  Incorporated,  an investment bank and  broker-dealer;
UBS Warburg LLC, an investment bank and broker-dealer; J.C. Bradford & Co., LLC,
a registered  investment advisor and broker-dealer;  UBS Global Asset Management
(US) Inc., a registered  investment advisor and broker-dealer;  UBS Brinson Inc.
and UBS Global Asset Management  (Americas) Inc.,  investment advisors;  and UBS
Warburg Futures Inc., a futures commission merchant and broker-dealer. Among UBS
AG's direct and  indirect  affiliates  and related  persons are various  foreign
broker-dealers, investment advisors and banking organizations.


                                      -19-


     The  Directors  and  principal  executive  officers  of GAM USA  and  their
principal occupations are as follows:

Name and Position Held
with GAM USA                      Principal Occupation
----------------------------      --------------------

Dr. Burkhard Poschadel, Director  See "Management of the Company" above.
Benjamin Franklin Lenhardt, Jr.   Director; CEO and Managing Director of
                                  UBS Global Asset Management (Americas) Inc.
Kevin J. Blanchfield              See "Management of the Company" above.
David A. Anderson                 Director; Managing Director, Clients-Americas,
                                  GAM USA
Joseph J. Allessie                See "Management of the Company" above.
Teresa B. Riggin                  Vice President, Administration, and Assistant
                                  Secretary, GAM USA
James A. Abate                    Investment Director, GAM USA
Nancy S. Andrews                  Investment Manager, GAM USA
David Ahn                         Investment Manager, GAM USA


     GAM USA is an  indirect,  wholly-owned  subsidiary  of UBS AG,  and has its
principal  offices at 135 East 57th  Street,  New York,  NY 10022.  GAM USA is a
wholly-owned  subsidiary  of  GAMAdmin  B.V.  GAMAdmin  B.V.  is a  wholly-owned
subsidiary  of  Greenpark  Management  N.V.,  which  in turn  is a  wholly-owned
subsidiary of Global Asset  Management  Ltd., an  investment  advisor  organized
under the laws of  Bermuda.  Global  Asset  Management  Ltd.  is a  wholly-owned
subsidiary of UBS AG.

     GAMCO,  a corporation  organized in 1999 under the laws of the State of New
York,  is located at One  Corporate  Center,  Rye,  New York  10580.  GAMCO is a
wholly-owned  subsidiary of Gabelli Asset Management Inc.  ("GAMI"),  a publicly
held company listed on the New York Stock  Exchange,  and is not affiliated with
either GIML or GAM USA. Mr.  Mario J. Gabelli may be deemed to be a  controlling
person  of GAMCO on the basis of his  controlling  interest  in GAMI.  GAMCO has
several affiliates that also provide advisory services.

     The Directors and principal executive officers of GAMCO and their principal
occupations are as follows:

Name and Position Held
with GAMCO                           Principal Occupation
----------------------------         --------------------
Mario J. Gabelli                     Senior Executive Officer of GAMCO and
   Chief Executive Officer and       Senior Executive and Majority  Shareholder
   Chief Investment Officer          of Gabelli Asset Management, Inc., ultimate
                                     parent company of GAMCO.
Douglas R. Jameson                   Executive Officer and Director of GAMCO
   Executive Vice President, Chief
   Operating Officer, Managing
   Director and Director
Regina M. Pitaro                     Executive Officer and Director of GAMCO
   Managing Director and Director
Joseph R. Rindler                    Executive Officer and Director of GAMCO
   Chairman and Director
William S. Selby                     Executive Officer and Director of GAMCO
   Managing Director and Director
Frederick W. Scholz                  Executive Officer and Director of GAMCO
   Managing Director and Director
Robert S. Zuccarro                   Executive Officer of GAMCO
   Vice President and Chief
   Financial Officer
James E. McKee                       Executive Officer of GAMCO
   Vice President, General Counsel
   and Secretary


                                      -20-


     Investment  Advisory  Contracts.  On December 17, 1999, UBS AG acquired all
the  outstanding  shares of Global Asset  Management  Ltd. (the  "Acquisition").
Global Asset Management Ltd.  indirectly  wholly owns GIML and GAM USA. Prior to
the  completion  of the  Acquisition,  the  Board of  Directors  considered  the
continuance  of the  then  current  Amended  and  Restated  Investment  Advisory
Contract dated April 14, 1994 (the "GIML  Contract")  with GIML as an Investment
Advisor to the Funds.  The Board of Directors on September 29, 1999 (including a
majority  of the  Directors  who  were  not  parties  to the  GIML  Contract  or
interested  persons of any such  party)  approved  the  continuance  of the GIML
Contract on behalf of each Fund,  which  approval  was  further  ratified by the
Board  (including a majority of the  Directors  who were not parties to the GIML
Contract  or  interested  persons  of any such  party) on behalf of each Fund on
October 27, 1999. The  shareholders of each Fund approved the continuance of the
GIML  Contract  on  October  26,  1999.  As such,  a new  Amended  and  Restated
Investment  Advisory Contract  (hereinafter  referred to as the "GIML Contract")
was executed  upon  completion  of the  Acquisition,  December  17,  1999,  with
identical  terms and  conditions  as the original  GIML  Contract.  The Board of
Directors  (including  a majority of the  Directors  who were not parties to the
GIML Contract or interested  persons of any such party) approved the continuance
of the GIML Contract on October 24, 2001.


     On March 26, 2001, the Board of Directors  approved the  appointment of GAM
USA as  Co-Investment  Advisor to the GAM  American  Focus Fund  pursuant  to an
Interim  Advisory  Agreement  to  replace  Fayez  Sarofim & Co.,  who  served as
co-investment  advisor to GAM American Focus Fund  (formerly  known as GAM North
America  Fund) from its inception  until March 23, 2001.  The Board of Directors
approved a new advisory  agreement with GAM USA to replace the Interim  Advisory
Agreement on April 25, 2001 (the "GAM USA  Contract").  The GAM USA Contract was
submitted  to the  holders of a majority  of the  outstanding  shares of the GAM
American Focus Fund for approval,  and on June 20, 2001, the shareholders of the
GAM American Focus Fund met via proxy and approved the GAM USA Contract  between
the Fund and GAM USA.  Therefore,  as of June 20, 2001,  GAM USA became the sole
and  permanent   investment  advisor  to  the  GAM  American  Focus  Fund  until
terminated.  On October 24, 2001, the Board of Directors approved an amended and
restated GAM USA Contract  whereby GAM USA also served as Investment  Advisor to
GAM Gabelli  Long/Short Fund. As noted below, the Board of Directors  terminated
the portion of the GAM USA Contract that applies to GAM Gabelli Long/Short Fund,
effective October 8, 2002.



     The GIML  Contract  and the GAM USA Contract  will each  continue in effect
from year to year if approved  annually by the Board of Directors or by the vote
of a majority  of the  outstanding  shares of each Fund (as  defined in the Act)
and, in either event,  by the approval of a majority of those  Directors who are
not parties to the GIML Contract or the GAM USA Contract or  interested  persons
of any such party ("Independent Directors").

     At the October 23, 2002 meeting of the Company's  Board of  Directors,  the
Directors  approved,  for a period of  one-year,  the  continuation  of the GIML
Contract  and  GAM  USA  Contract  (each  a  "Contract"  and  collectively,  the
"Contracts")  for the respective  Funds.  In approving the  continuation  of the
Contracts,  the Board of Directors,  considered a number of factors,  including:
(i) the  nature,  extent and  quality of  services  provided  by the  Investment
Advisor to each respective  Fund; (ii) the fees and expenses borne by each Fund;
and (iii) the performance of each Fund. When  considering the nature and quality
of the  services  provided  by the  Investment  Advisor to a Fund,  the Board of
Directors  reviewed the scope,  depth and experience of the organization and the
investment  professionals  currently providing  management services to the Fund.
The Board of Directors evaluated each Investment  Advisor's portfolio management
process. When considering the fees and expenses borne by a Fund, and considering
the  reasonableness  of the management  fees paid to the  Investment  Advisor in
light of the services provided to the Fund and any additional  benefits received
by the Investment  Advisor (or its affiliates) in connection with providing such
services,  the Board of Directors  compared  the fees charged by the  Investment
Advisor  to the Fund to the  fees  charged  the  funds  in its  peer  group  for
comparable  services,  and  analyzed  the  expenses  incurred by the  Investment
Advisor with respect to the Fund.  The Board of Directors  also  considered  the
financial  condition  of  each  Investment  Advisor.   The  Board  of  Directors
considered  the extent to which  management of the Fund was working with outside
vendors,  such as the Fund's custodian and transfer agent to reduce costs to the
Fund. They considered the business plan and strategy of the Fund's  distributor,
particularly  the plan to leverage  relationships  with  affiliates  to increase
assets of the Fund.  The Board of Directors also reviewed the average net assets
and expense  ratios by series and class of the Fund,  as well as a memorandum of
Counsel to the Independent  Directors  regarding their fiduciary duties relative
to the approval of the  continuation  of each  Contract.  After  requesting  and
reviewing  such  materials  as it  deemed  necessary,  the  Board  of  Directors
concluded that the management  fees of each Fund are fair and that  shareholders
have received reasonable value in return for paying such fees and expenses.  The
Board of Directors,  including the Independent  Directors,  therefore  concluded
that the  continuation of the respective  Contract for each Fund was in the best
interests of the Fund and its shareholders.


                                      -21-



     At a meeting  held on October 4, 2002,  the  Company's  Board of  Directors
terminated  the  portion  of the  GAM  USA  Contract  relating  to  GAM  Gabelli
Long/Short  Fund,  effective  as of the close of the New York Stock  Exchange on
October 8, 2002.  GAM USA had served as the  Investment  Advisor to GAM  Gabelli
Long/Short  Fund since its  inception.  Additionally,  on  October 4, 2002,  the
Company's Board of Directors  approved the appointment of GAMCO Investors,  Inc.
("GAMCO") and GIML as Co-Investment  Advisors (each, a  "Co-Investment  Advisor"
and together,  the  "Co-Investment  Advisors") to GAM Gabelli  Long/Short  Fund,
pursuant to separate Interim Investment  Advisory Contracts between the Company,
on  behalf of GAM  Gabelli  Long/Short  Fund,  and each  Co-Investment  Advisor,
effective  as of the opening of the New York Stock  Exchange on October 9, 2002.
GAMCO is not  affiliated  with  either  GIML or GAM USA.  At a  meeting  held on
October 23,  2002,  the  Company's  Board of Directors  approved new  Investment
Advisory  Agreements  between the Company,  on behalf of GAM Gabelli  Long/Short
Fund, and GAMCO and GIML,  respectively.  The new Investment Advisory Agreements
for GAM  Gabelli  Long/Short  Fund were  submitted  to  shareholders  of the GAM
Gabelli  Long/Short Fund for approval at a special meeting of shareholders,  and
on February  25,  2003,  the  shareholders  of the GAM Gabelli  Long/Short  Fund
approved the new Investment Advisory Agreements for the Fund between the Company
and GAMCO and GIML, respectively.

     In approving  the Interim  Investment  Advisory  Contracts  for GAM Gabelli
Long/Short Fund on October 4, 2002, and the new Investment  Advisory  Agreements
for GAM Gabelli  Long/Short  Fund on October 23, 2002,  the  Company's  Board of
Directors, considered a number of factors, including: (i) the nature, extent and
quality of services to be  provided by the  Co-Investment  Advisors to the Fund;
(ii) the fees and  expenses to be borne by the Fund;  and (iii) the  performance
and  volatility  of  the  Fund  under  the  previous  investment  advisor.  When
considering  the  nature and  quality of the  services  to be  provided  by each
Co-Investment Advisor to the Fund, the Company's Board of Directors reviewed the
scope, depth and experience of the organization and the investment professionals
that  will  be  providing  management  services  to the  Fund,  as  well as each
Co-Investment  Advisor's  in-house  research  capabilities,  and other resources
available  to  each  Co-Investment  Advisor's  investment   professionals.   The
Company's Board of Directors  evaluated each Co-Investment  Advisor's  portfolio
management  process.  When  considering the fees and expenses to be borne by the
Fund, and  considering the  reasonableness  of the management fees to be paid to
each  Co-Investment  Advisor in light of the services to be provided to the Fund
and any  additional  benefits to be received by the  Co-Investment  Advisors (or
their  respective  affiliates) in connection  with providing such services,  the
Company's  Board  of  Directors   compared  the  fees  to  be  charged  by  each
Co-Investment  Advisor  to the Fund to the fees to be  charged  the funds in its
peer group for comparable services,  and analyzed the expenses to be incurred by
the  Co-Investment  Advisors with respect to the Fund.  The  Company's  Board of
Directors also considered the financial condition of each Co-Investment  Advisor
and assessed the adequacy of the regulatory  compliance procedures instituted by
each Co-Investment  Advisor.  The Company's Board of Directors also reviewed the
average  net assets and expense  ratios of each class of the Fund,  as well as a
memorandum of Counsel to the  Independent  Directors  regarding  their fiduciary
duties relative to the approval of each Interim  Investment  Advisory  Contract.
After  requesting  and  reviewing  such  materials as it deemed  necessary,  the
Company's Board of Directors concluded that the management fees to be charged to
the Fund are fair and that shareholders will receive  reasonable value in return
for paying such fees and expenses.  The Company's Board of Directors,  including
the Independent Directors, therefore concluded that the approval of each Interim
Investment  Advisory Contract and each new Investment Advisory Agreement for the
Fund was in the best interests of the Fund and its shareholders.



                                      -22-



     The GIML Contract requires GIML to conduct and maintain a continuous review
of the  portfolio of each Fund and to make all  investment  decisions  regarding
purchases and sales of portfolio  securities  and brokerage  allocation for each
Fund,  other than GAM American Focus Fund and GAM Gabelli  Long/Short Fund. GIML
will render its services  from outside the United  States.  The GAM USA Contract
requires  GAM USA to provide  the same  services  to GAM  American  Focus  Fund.
Pursuant to its Investment  Advisory  Agreement for GAM Gabelli Long/Short Fund,
GAMCO is required to conduct and maintain a continuous  review of the  portfolio
of Fund in cooperation with GIML, as the Co-Investment  Advisor, and to make all
investment  decisions regarding purchases and sales of portfolio  securities and
brokerage   allocation,   all  subject  to  any  written  instruction  from  the
Co-Investment  Advisor.  GIML, under its Investment  Advisory  Agreement for GAM
Gabelli Long/Short Fund, is required to conduct and maintain a continuous review
of the portfolio of the Fund, in cooperation  with GAMCO,  as the  Co-Investment
Advisor,  and to provide  the  Co-Investment  Advisor,  from time to time,  with
written  recommendations  or instructions,  if any, as to specific purchases and
sales of portfolio securities and brokerage allocation.


     Each Contract and each new Investment  Agreement for GAM Gabelli Long/Short
Fund (each, an "Agreement"  and together,  the  "Agreements")  provides that the
Investment Advisors will select brokers and dealers for execution of each Fund's
portfolio  transactions  consistent  with the  Company's  brokerage  policy (see
"Brokerage  Allocation").  Although the services  provided by  broker-dealers in
accordance with the brokerage  policy  incidentally may help reduce the expenses
of or otherwise benefit the other investment  advisory clients of the Investment
Advisors or their  affiliates,  as well as the Funds, the value of such services
is  indeterminable  and the  Investment  Advisors'  fees are not  reduced by any
offset arrangement by reason thereof.  Each of the Agreements  provides that the
Investment Advisors shall have no liability to the Company or to any shareholder
of a Fund for any error of judgement, mistake of law, or any loss arising out of
any  investment  or other act or omission in the  performance  by an  Investment
Advisor of its duties under such Agreements or for any loss or damage  resulting
from the imposition by any  government of exchange  control  restrictions  which
might affect the  liquidity of a Fund's  assets  maintained  with  custodians or
securities  depositories in foreign  countries or from any political acts of any
foreign governments to which such assets might be exposed,  except for liability
resulting  from  willful  misfeasance,  bad  faith  or gross  negligence  on the
Investment  Advisor's  part  or  reckless  disregard  of its  duties  under  the
Agreement.  In addition,  GAM Gabelli  Long/Short Fund indemnifies GAMCO for any
loss or damage  incurred by GAMCO arising out of any action seeking to enforce a
liability for which GAMCO is not liable  pursuant to the terms of its Investment
Advisory Agreement.

     Each Agreement will terminate automatically in the event of its assignment,
as such term is defined under the Act, and may be terminated by each Fund at any
time  without  payment  of any  penalty  on 60 days'  written  notice,  with the
approval of a majority of the  Directors of the Company or by vote of a majority
of the outstanding shares of a Fund (as defined in the Act).


     The Company acknowledges that it has obtained its corporate name by consent
of GIML and agrees that if: (i) GIML should cease to be the Company's investment
advisor or (ii) Global  Asset  Management  Ltd.  should  cease to own a majority
equity interest in GIML, the Company,  upon request of GIML, shall submit to its
shareholders  for their vote a proposal  to delete the  initials  "GAM" from its
name and cease to use the name "GAM  Funds,  Inc." or any  other  name  using or
derived from "GAM" or "Global Asset  Management",  any component  thereof or any
name  deceptively  similar  thereto,  and indicate on all  letterheads and other
promotional material that GIML is no longer the Company's investment advisor. If
GIML makes such request  because Global Asset  Management  Ltd. no longer owns a
majority  equity  interest in GIML, the question of continuing the GIML Contract
must be  submitted  to a vote of the  Company's  shareholders.  The  Company has
agreed that GIML or any of its  successors  or assigns may use or permit the use
of the names "Global Asset Management" and "GAM" or any component or combination
thereof  in  connection  with any  entity or  business,  whether or not the same
directly or indirectly  competes or conflicts  with the Company and its business
in any manner.


                                      -23-


     GAMCO  acknowledges  that it has no right,  title or  interest in or to the
names  "Global  Asset  Management,"  "GAM,"  "GAM Funds,  Inc." or "GAM  Gabelli
Long/Short  Fund,"  and that it  cannot  use any such  name,  or any  derivation
thereof,  without  the prior  written  permission  of the  Company.  GAMCO  also
acknowledges  that it will not undertake  any marketing  efforts on behalf of or
with  respect to the Company or GAM Gabelli  Long/Short  Fund  without the prior
written  permission  of the  Company.  GIML,  as  Co-Investment  Adviser for GAM
Gabelli Long/Short Fund, has, while GAMCO's Interim Investment Advisory Contract
is in  effect,  the  limited  right to use the  names  "GAMCO,"  "Gabelli  Asset
Management  Company" and  "Gabelli" in  connection  with GAM Gabelli  Long/Short
Fund, but otherwise the Co-Investment Advisor has no right, title or interest in
or to the names "GAMCO,"  "Gabelli Asset  Management  Company" or "Gabelli," and
will not use any such name, or any derivation thereof, without the prior written
permission of the Company  (except to the extent  previously  granted by written
agreement).

     Advisory Fees. For its service to the Funds,  other than GAM American Focus
Fund and GAM Gabelli  Long/Short Fund, GIML receives a quarterly fee of 0.25% of
the average  daily net assets of each of the Funds during the quarter  preceding
each payment.  For its services to GAM American  Focus Fund,  GAM USA receives a
quarterly  fee of 0.25% of the average  daily net assets of GAM  American  Focus
Fund during the quarter  preceding each payment.  Prior to June 20, 2001,  GIML,
with  respect to GAM  American  Focus  Fund,  paid a portion  of the  investment
management  fee to GAM USA as agreed  between  the  parties.  Prior to March 23,
2001, a fee in the same amount was paid, one-half each to GIML and Fayez Sarofim
& Co. Inc. by GAM American  Focus Fund.  The level of advisory fees paid by each
Fund is higher than the rate of advisory fee paid by most registered  investment
companies.

     For their  services to GAM  Gabelli  Long/Short  Fund,  GAMCO and GIML (the
"Co-Investment  Advisors")  receive a fee comprised of two components,  of which
GAMCO receives two-thirds and GIML receives one-third.  The first component is a
base fee equal to 1.50%, annualized, of the Fund's average daily net assets. The
second component is a performance  adjustment that either increases or decreases
the base  fee,  depending  on how GAM  Gabelli  Long/Short  Fund  has  performed
relative to the S&P 500  Composite  Stock Price  Index (the  "S&P"),  the Fund's
benchmark.  The base fee  will be  increased  (or  decreased)  by a  performance
adjustment of 0.125% for each whole percentage point that the Fund's  investment
performance  is 3.00% better (or worse) than the  performance  of the S&P during
the performance  period,  which is a rolling  twelve-month  period.  The maximum
performance adjustment upward or downward is 0.50% annualized.  Depending on the
performance of the Fund, during any twelve-month  period,  the two Co-Investment
Advisors together may receive as much as 2.00% or as little as 1.00% in advisory
fees. During the first twelve months of the Fund's  operations,  which concludes
May 29, 2003, the advisory fee will be charged at the base fee of 1.50%, with no
performance  adjustment.  In the event the total  advisory  fee for any  monthly
period is less than 1.20%  annualized,  GAMCO will  receive  60%,  and GIML will
receive  40%, of 1/12th of 1.00% of the average  daily net assets of GAM Gabelli
Long/Short Fund. The table below describes the advisory fee, with the applicable
performance  adjustment  that  the two  Co-Investment  Advisors  together  would
receive,  based on the performance of GAM Gabelli Long/Short Fund as compared to
its benchmark index, the S&P:

                                                           The Co-Investment Advisors
                                                       together receive a fee of (as a %
If the Performance of GAM                               of average daily net assets on an
Gabelli Long/Short Fund:                                        annual basis):
------------------------                                        --------------
                                         Base Fee +/-
                                         Performance
                                          Adjustment
                                          ----------
Underperforms the S&P by 6.00% or more   1.50% - 0.500%           1.00%
Underperforms the S&P by 5.00% to 5.99%  1.50% - 0.375%          1.125%
Underperforms the S&P by 4.00% to 4.99%  1.50% - 0.250%           1.25%
Underperforms the S&P by 3.00% to 3.99%  1.50% - 0.125%          1.375%
Underperforms the S&P by 0.01% to 2.99%  1.50% - 0.000%           1.50%
Equals the S&P                                1.50%               1.50%
Outperforms the S&P by 0.01% to 2.99%    1.50% + 0.000%           1.50%
Outperforms the S&P by 3.00% to 3.99%    1.50% + 0.125%          1.625%
Outperforms the S&P by 4.00% to 4.99%    1.50% + 0.250%           1.75%
Outperforms the S&P by 5.00% to 5.99%    1.50% + 0.375%          1.875%
Outperforms the S&P by 6.00% or more     1.50% + 0.500%           2.00%


                                      -24-


     The investment  performance of the GAM Gabelli  Long/Short  Fund during any
performance  period shall be the cumulative  monthly  asset-weighted  investment
performance of all classes of shares of the Fund. The asset-weighted  investment
performance for the Fund for a given month will be calculated by multiplying the
investment  performance  of each class for the month by its  average  net assets
(determined  as of the close of  business  on each  business  day of the month),
adding the results  together and dividing the sum by the aggregate net assets of
all classes of the Fund for that month.  Any class that does not complete a full
month of operations in a given month will be excluded  from the  calculation  of
the Fund's  investment  performance  for that month. In computing the investment
performance  of the Fund and the  investment  record  of the S&P,  the  value of
distributions  on realized  capital gains,  the value of capital gains taxed per
share  paid  or  payable  on  undistributed  realized  long-term  capital  gains
accumulated  to the end of such  period  and  dividends  paid out of  investment
income on the part of the Fund,  and all cash  distributions  of the  securities
included in the S&P, will be treated as reinvested.

     The actual  advisory  fee paid by each Fund  during the fiscal  years ended
December 31, 2002, 2001 and 2000 are set forth below:

                                 Pacific     Japan                American    GAMerica
         Global   International   Basin     Capital    Europe      Focus      Capital      Long/Short
         ------   -------------   -----     -------    ------      -----      -------      ----------

2002   $         $              $         $          $          $           $             $
2001   $ 280,823 $ 3,421,671    $ 149,703 $ 153,033  $ 264,372  $ 332,629   $ 1,090,821   $          0
2000   $ 637,339 $ 9,649,867    $ 378,878 $ 483,283  $ 289,252  $ 308,873   $   792,475   $          0


     The expense  ratio of each Fund may be higher than that of most  registered
investment  companies  since the cost of  maintaining  the  custody  of  foreign
securities is higher than that for most domestic  funds and the rate of advisory
fees paid by the Funds exceeds that of most registered investment companies.  In
addition, each Fund bears its own operating expenses.



     Principal  Underwriter and Plans of  Distribution.  The Company has entered
into distribution  agreements (the "Distribution  Agreements") with GAM Services
under which GAM Services has agreed to act as principal  underwriter  and to use
reasonable efforts to distribute each Fund's Class A, Class B, Class C and Class
D shares.  GAM Services is an indirect  wholly owned  subsidiary of Global Asset
Management  Ltd.,  which also controls  GIML.  Global Asset  Management  Ltd. is
wholly  owned by UBS AG,  a  banking  corporation  organized  under  the laws of
Switzerland.

     Pursuant to the Distribution  Agreements,  GAM Services  receives the sales
load on sales of Class A,  Class B,  Class C and Class D shares of the Funds and
reallows a portion  of the sales  load to  dealers/brokers.  GAM  Services  also
receives  the  distribution  fees  payable  pursuant  to  the  Funds'  Plans  of
Distribution  for Class A, Class B, Class C and Class D Shares  described  below
(the "Plans"). The Distribution Agreements may be terminated at any time upon 60
days' written notice,  without payment of a penalty, by GAM Services, by vote of
a majority of the outstanding  class of voting  securities of the affected Fund,
or by vote of a majority of the  Directors  of the Fund who are not  "interested
persons"  of the Fund and who have no direct or indirect  financial  interest in
the operation of the Distribution  Agreements.  The Distribution Agreements will
terminate automatically in the event of their assignment.


                                      -25-


     In  addition to the amount  paid to dealers  pursuant  to the sales  charge
tables in the Prospectus, GAM Services from time to time may offer assistance to
dealers  and  their  registered  representatives  in the  form of  business  and
educational or training seminars. Dealers may not use sales of any of the Funds'
shares to qualify for or  participate in such programs to the extent such may be
prohibited by a dealer's internal  procedures or by the laws of any state or any
self-regulatory  agency, such as the National  Association of Securities Dealers
Regulation,  Inc. Costs associated with incentive or training programs are borne
by GAM Services and paid from its own resources or from fees collected under the
Plans.  GAM Services from time to time may reallow all or a portion of the sales
charge on Class A, Class C and Class D shares to individual selling dealers. The
aggregate  dollar amount of underwriting  commissions and the amount retained by
the Distributor for each of the last three fiscal years is as follows.  Prior to
January 30, 2002, Class C shares were offered without a front-end sales charge.



                                                                   2002*
                                                              (000's omitted)
                                  CLASS A                    CLASS C                   CLASS D
                                        After                   After                   After
                          Aggregate  Reallowance  Aggregate  Reallowance  Aggregate  Reallowance
                          ---------  -----------  ---------  -----------  ---------  -----------

GAM Global Fund
GAM International Fund
GAM Pacific Basin Fund
GAM Japan Capital Fund
GAM Europe Fund
GAM American Focus Fund
GAMerica Capital Fund
GAM Gabelli Long/Short
Fund


     For the  fiscal  year  ended  December  31,  2002,  GAM  Services  retained
front-end sales loads of $[ ] from the sale of Fund shares.

                                                              2001*
                                                         (000's omitted)
                                        CLASS A                                   CLASS D
                                                    After                                     After
                             Aggregate           Reallowance           Aggregate           Reallowance
                             ---------           -----------           ---------           -----------

GAM Global Fund                      1           $        1           $        0           $        0
GAM International Fund              18                   14                    2                    1
GAM Pacific Basin Fund               0                    0                    0                    0
GAM Japan Capital Fund              18                   15                  N/A                  N/A
GAM Europe Fund                     37                   17                  N/A                  N/A
GAM American Focus Fund             27                   11                  N/A                  N/A
GAMerica Capital Fund               64                   47                  N/A                  N/A

     For the  fiscal  year  ended  December  31,  2001,  GAM  Services  retained
front-end sales loads of $107,538 from the sale of Fund shares.

                                                              2000*
                                                         (000's omitted)
                                        CLASS A                                   CLASS D
                                                    After                                     After
                             Aggregate           Reallowance           Aggregate           Reallowance
                             ---------           -----------           ---------           -----------

GAM Global Fund              $      18            $       8            $       1            $       0
GAM International Fund             151                   54                   25                   10
GAM Pacific Basin Fund              28                   10                    0                    0
GAM Japan Capital Fund              29                   18                  N/A                  N/A
GAM Europe Fund                     50                   22                  N/A                  N/A
GAM American Focus Fund             29                   15                  N/A                  N/A
GAMerica Capital Fund              137                   58                  N/A                  N/A


                                      -26-


     For the  fiscal  year  ended  December  31,  2000,  GAM  Services  retained
front-end sales loads of $195,503 from the sale of Fund shares.

*  GAM Gabelli Long/Short Fund commenced operations on May 29, 2002.

     The aggregate  dollar amount of contingent  deferred  sales charges paid to
and retained by the  Distributor  for the fiscal year ended December 31, 2002 is
as follows:

                                                         2002
                             CLASS A           CLASS B          CLASS C           CLASS D

GAM Global Fund              $                 $                $                 $
GAM International Fund
GAM Pacific Basin Fund
GAM Japan Capital Fund
GAM Europe Fund
GAM American Focus Fund
GAMerica Capital Fund
GAM Gabelli Long/Short Fund

     For the  fiscal  year  ended  December  31,  2002,  GAM  Services  received
contingent  deferred  sales  loads of $[ ] from  the  redemption  of the  Funds'
Shares.

     The aggregate  dollar amount of contingent  deferred  sales charges paid to
and retained by the  Distributor  for the fiscal year ended December 31, 2001 is
as follows:

                                                2001
                                CLASS A       CLASS C              CLASS D

GAM Global Fund              $         0   $       684          $         0
GAM International Fund            39,307        12,521                    0
GAM Pacific Basin Fund                 0           103                    0
GAM Japan Capital Fund                 0            59                  N/A
GAM Europe Fund                        0           132                  N/A
GAM American Focus Fund                0         1,275                  N/A
GAMerica Capital Fund                185         2,435                  N/A

     For the  fiscal  year  ended  December  31,  2001,  GAM  Services  received
contingent  deferred  sales loads of $56,701 from the  redemption  of the Funds'
Shares.


     Each Fund has adopted separate  distribution  plans under Rule 12b-1 of the
Act for each class of its shares.  The Plans permit each Fund to compensate  GAM
Services  in  connection  with  activities  intended to promote the sale of each
class of shares of each Fund. Pursuant to the Plan for Class A shares, each Fund
may pay GAM Services up to 0.30% of average daily net assets of the Fund's Class
A shares.  Under the Plan for Class B shares,  each Fund may pay GAM Services up
to 1.00% of daily net  assets of the Fund's  Class B shares.  The Class C shares
under the Plan for Class C shares may pay GAM  Services up to 1.00% of daily net
assets of the  Fund's  Class C shares.  Under the Plan for Class D shares,  each
Fund  may  pay  GAM  Services  up to  0.50%  of the  average  daily  net  assets
attributable  to Class D shares of the Fund.  Expenditures by GAM Services under
the Plans may consist of: (i)  commissions  to sales  personnel for selling Fund
shares;  including travel & entertainment  expenses;  (ii)  compensation,  sales
incentives  and  payments  to sales,  marketing  and  service  personnel;  (iii)
payments to  broker-dealers  and other financial  institutions that have entered
into  agreements  with GAM  Services in the form of a Dealer  Agreement  for GAM
Funds,  Inc. for services  rendered in connection with the sale and distribution
of  shares  of the  Funds;  (iv)  payment  of  expenses  incurred  in sales  and
promotional activities, including advertising expenditures related to the Funds;
(v) the costs of preparing and distributing promotional materials; (vi) the cost
of printing the Funds'  Prospectus and Statement of Additional  Information  for
distribution  to  potential  investors;  and  (vii)  other  activities  that are
reasonably calculated to result in the sale of shares of the Funds.



                                      -27-


     A portion  of the fees paid to GAM  Services  pursuant  to the  Plans,  not
exceeding  0.25% annually of the average daily net assets of each Fund's shares,
may be paid as compensation for providing services to each Fund's  shareholders,
including  assistance  in  connection  with  inquiries  related  to  shareholder
accounts (the "Service Fees"). In order to receive Service Fees under the Plans,
participants  must  meet  such  qualifications  as are  established  in the sole
discretion  of GAM  Services,  such as  services  to each  Fund's  shareholders;
services  providing each Fund with more efficient  methods of offering shares to
coherent  groups of clients;  members or  prospects of a  participant;  services
permitting  more  efficient   methods  of  purchasing  and  selling  shares;  or
transmission of orders for the purchase or sale of shares by  computerized  tape
or other electronic equipment; or other processing.

     The Board of Directors has concluded that there is a reasonable  likelihood
that the Plans will  benefit each Fund and its  shareholders  and that the Plans
should result in greater  sales and/or fewer  redemptions  of Fund shares.  On a
quarterly  basis,  the Directors will review a report on expenditures  under the
Plans and the purposes for which  expenditures  were made.  The  Directors  will
conduct an additional, more extensive review annually in determining whether the
Plans  should  be  continued.  Continuation  of the  Plans  from year to year is
contingent on annual approval by a majority of the Directors  acting  separately
on behalf of each Fund and class and by a majority of the  Directors who are not
"interested  persons" (as defined in the Act) and who have no direct or indirect
financial  interest in the operation of the Plans or any related agreements (the
"Plan  Directors").  The Plans  provide that they may not be amended to increase
materially  the  costs  that a Fund may bear  pursuant  to the  applicable  Plan
without  approval of the  shareholders  of the affected  class of shares of each
Fund and that  other  material  amendments  to the Plans must be  approved  by a
majority of the Plan Directors acting separately on behalf of each Fund, by vote
cast  in  person  at a  meeting  called  for the  purpose  of  considering  such
amendments.  The Plans  further  provide that while each Plan is in effect,  the
selection and nomination of Directors who are not "interested  persons" shall be
committed to the discretion of the Directors who are not "interested persons." A
Plan may be terminated  at any time by vote of a majority of the Fund  Directors
or a majority of the  outstanding  shares of the Class of shares of the affected
Fund to which the Plan relates.

     Total dollar  amounts  paid by each of the Funds  pursuant to the Plans for
the fiscal year ended December 31, 2002 are as follows:*

                               CLASS A      CLASS B      CLASS C        CLASS D

GAM Global Fund              $           $            $               $
GAM International Fund
GAM Pacific Basin Fund
GAM Japan Capital Fund
GAM Europe Fund
GAM American Focus Fund
GAMerica Capital Fund
GAM Gabelli Long/Short Fund


*    GAM Gabelli Long/Short Fund commenced operations on May 29, 2002.

Amounts  spent on behalf of each of the Funds on various  items  pursuant to the
Plans during the fiscal year ended December 31, 2002 are as follows:


                                      -28-


                                          Printing &
                                          Mailing of
                                          Prospectuses                                            Interest,
                                           to Other                                               Carrying
                                           Than      Compensation   Compensation  Compensation  or Other
                                           Current         to             to         to Sales    Financing
Fund                        Advertising  Shareholders Underwriters   Broker-Dealers Personnel     Charges    Other*
----                        -----------  ------------ ------------   -------------  ---------     -------    ------
CLASS A
GAM Global Fund                       $            $              $             $             $          $          $
GAM International Fund
GAM Pacific Basin Fund
GAM Japan Capital Fund
GAM Europe Fund
GAM American Focus Fund
GAMerica Capital Fund
GAM Gabelli Long/Short
   Fund

*    The category  designated as "Other"  includes fees paid in connection  with
     dealer services and wholesaler activities.

                                          Printing &
                                          Mailing of
                                          Prospectuses                                           Interest,
                                          to Other                                                Carrying
                                          Than         Compensation   Compensation  Compensation  or Other
                                          Current           to             to         to Sales    Financing
Fund                        Advertising   Shareholders Underwriters   Broker-Dealers Personnel     Charges    Other*
----                        -----------  ------------ ------------   -------------  ---------     -------     ------
CLASS B
GAM Global Fund                       $            $              $             $             $          $          $
GAM International Fund
GAM Pacific Basin Fund
GAM Japan Capital Fund
GAM Europe Fund
GAM American Focus Fund
GAMerica Capital Fund
GAM Gabelli Long/Short
   Fund

*    The category  designated as "Other"  includes fees paid in connection  with
     dealer services and wholesaler activities.


                                      -29-


                                          Printing &
                                          Mailing of
                                          Prospectuses                                           Interest,
                                          to Other                                                Carrying
                                          Than         Compensation   Compensation  Compensation  or Other
                                          Current           to             to         to Sales    Financing
Fund                        Advertising   Shareholders Underwriters   Broker-Dealers Personnel     Charges    Other*
----                        -----------  ------------ ------------   -------------  ---------     -------     ------
CLASS C
GAM Global Fund                        $            $              $             $              $          $        $
GAM International Fund
GAM Pacific Basin Fund
GAM Japan Capital Fund
GAM Europe Fund
GAM American Focus Fund
GAMerica Capital Fund
GAM Gabelli Long/Short
   Fund

*    The category  designated as "Other"  includes fees paid in connection  with
     dealer services and wholesaler activities.

                                          Printing &
                                          Mailing of
                                          Prospectuses                                           Interest,
                                          to Other                                                Carrying
                                          Than         Compensation   Compensation  Compensation  or Other
                                          Current           to             to         to Sales    Financing
Fund                        Advertising   Shareholders Underwriters   Broker-Dealers Personnel     Charges    Other*
----                        -----------  ------------ ------------   -------------  ---------     -------     ------
CLASS D
GAM Global Fund                       $            $              $             $             $          $          $
GAM International Fund
GAM Pacific Basin Fund
GAM Japan Capital Fund
GAM Europe Fund
GAM American Focus Fund
GAMerica Capital Fund
GAM Gabelli Long/Short
   Fund

*    The category  designated as "Other"  includes fees paid in connection  with
     dealer services and wholesaler activities.

     Custodian  and  Administrator.   The  Custodian,   Administrator  and  Fund
Accounting  Agent for the  Company is Brown  Brothers  Harriman  & Co.,  Private
Bankers ("BBH&Co."), a New York Limited Partnership established in 1818. BBH&Co.
has offices  worldwide  and  provides  services to the Company  from its offices
located at 40 Water Street,  Boston,  MA 02109. As Custodian,  Administrator and
Fund Accounting  Agent,  BBH&Co. is responsible for the custody of the Company's
portfolio  securities and cash,  maintaining the financial and accounting  books
and records of the Company,  computing  the  Company's net asset value per share
and  providing  the  administration  services  required  for the daily  business
operations of the Company.  For its services to the Company,  BBH&Co.  is paid a
fee based on the net asset value of each Fund and is  reimbursed  by the Company
for its  disbursements,  certain  expenses and charges based on an out-of-pocket
schedule agreed upon by BBH&Co. and the Company from time to time.


                                      -30-


     For the fiscal years ended December 31, 2002,  2001 and 2000,  BBH&Co.  was
paid the following fees for its services as  Administrator  and Fund  Accounting
Agent:*

                             2002                  2001                     2000
                             ----                  ----                     ----

GAM Global Fund                        $         57,741        $         86,068
GAM International Fund                          351,590                 867,546
GAM Pacific Basin Fund                           44,146                  66,424
GAM Japan Capital Fund                           36,705                  71,580
GAM Europe Fund                                  50,979                  48,492
GAM American Focus Fund                          60,633                  50,278
GAMerica Capital Fund                           136,977                  96,754
GAM Gabelli Long/Short Fund                           0                       0

*    GAM Gabelli Long/Short Fund commenced operations on May 29, 2002.

     Transfer  Agent.  PFPC Inc.,  400 Bellevue  Parkway,  Wilmington,  Delaware
19809,  serves  as  shareholder  service  agent,  dividend-disbursing  agent and
transfer agent for the Funds.

     Legal Counsel. Coudert Brothers, 1114 Avenue of the Americas, New York, New
York 10036,  acts as legal  counsel  for the Funds,  as well as for GIML and GAM
USA.

     Independent  Accountants.  PricewaterhouseCoopers  LLP,  1177 Avenue of the
Americas, New York, New York 10019-6013, are the independent accountants for the
Company for the fiscal year ending  December 31, 2002.  In addition to reporting
annually on the  financial  statements of each Fund,  the Company's  accountants
will  review  certain  filings of the  Company  with the SEC and will review the
Company's Federal and state corporation tax returns.

     Reports To  Shareholders.  The fiscal year of the Company  ends on December
31.  Shareholders  of each Fund will be  provided  at least  semi-annually  with
reports  showing the portfolio of the Fund and other  information,  including an
annual report with financial statements audited by independent accountants.


     Code Of Ethics.  Pursuant to Rule 17j-1 of the Act, each Investment Advisor
has adopted a Code of Ethics which applies to the personal trading activities of
their  employees.  The Code of Ethics for each  Investment  Advisor  establishes
standards for personal  securities  transactions by employees  covered under the
Codes of Ethics.  Under the Codes of Ethics,  employees have a duty at all times
to place the  interests  of  shareholders  above  their  own,  and never to take
inappropriate  advantage of their  position.  As such,  employees are prohibited
from engaging in, or recommending, any securities transaction which involves any
actual or potential conflict of interest, or any abuse of an employee's position
of trust and responsibility.



                                      -31-



     The Code of Ethics  adopted  by GIML and GAM USA  applies to them and their
affiliates,  including the Company, and the Company's principal underwriter. All
employees  of  GIML  and GAM USA are  prohibited  from  recommending  securities
transactions  by any  Fund  without  disclosing  his or her  interest,  and  are
prohibited from disclosing  current or anticipated  portfolio  transactions with
respect to any Fund to anyone unless it is properly  within his or her duties to
do so.  Employees  who are also deemed  investment  personnel  under the Code of
Ethics,  defined  as any  person  who,  in  connection  with his or her  regular
functions or duties,  makes,  participates in, or obtains information  regarding
the purchase or sale of a security by the Investment Advisor, or whose functions
relate to the making of any  recommendations  with respect to such  purchases or
sales,  are also prohibited  from:  participating in initial public offerings or
private  placements  which  present  conflicts of interest  with the Funds;  and
engaging in any securities  transaction  for their own benefit or the benefit of
others,  including  the  Funds,  while in  possession  of  material,  non-public
information  concerning such securities.  All portfolio  managers and investment
related staff of GIML and GAM USA are required to notify their local  compliance
officer in advance of any personal  dealings in securities  which they intend to
carry out and are not permitted to deal  personally  in securities  within seven
working  days  (either  in  advance  or  retrospectively)  of  carrying  out any
transaction in the same security on behalf of the Fund(s) they manage.

     The Code of Ethics  adopted  by GAMCO is  designed  to ensure  that  access
persons act in the interest of the  investment  companies for which GAMCO serves
as investment advisor,  such as GAM Gabelli Long-Short Fund, with respect to any
personal trading of securities. Under GAMCO's Code of Ethics, access persons are
generally  prohibited from knowingly  buying or selling  securities  (except for
mutual funds, U.S. government securities and money market instruments) which are
being  purchased,  sold or  considered  for  purchase  or  sale  by GAM  Gabelli
Long-Short Fund unless their proposed purchases are approved in advance.


     The  Investment   Advisors  have  established  under  the  Code  of  Ethics
compliance  procedures to review the personal  securities  transactions of their
associated  persons in an effort to ensure compliance with the Code of Ethics in
accord with Rule 17j-1 of the Act.

 Copies of the Code of Ethics are on file with and publicly available from the
                                      SEC.

--------------------------------------------------------------------------------
                              BROKERAGE ALLOCATION
--------------------------------------------------------------------------------



     The Agreements  provide that the  Investment  Advisors shall be responsible
for the  selection  of brokers and dealers for the  execution  of the  portfolio
transactions of each Fund and, when  applicable,  the negotiation of commissions
in connection therewith.


     Purchase  and sale  orders  will  usually be placed  with  brokers  who are
selected  based on their  ability to achieve  "best  execution"  of such orders.
"Best  execution"  means  prompt and reliable  execution  at the most  favorable
security price, taking into account the other provisions  hereinafter set forth.
The  determination  of what  may  constitute  best  execution  and  price in the
execution  of a  securities  transaction  by  a  broker  involves  a  number  of
considerations,  including  the overall  direct net economic  result to the Fund
(involving  both price paid or  received  and any  commissions  and other  costs
paid),  the efficiency  with which the  transaction is effected,  the ability to
effect the transaction at all where a large block is involved,  the availability
of the broker to stand ready to execute possibly  difficult  transactions in the
future,  and  the  financial   strength  and  stability  of  the  broker.   Such
considerations are weighed by the Investment Advisors in determining the overall
reasonableness of brokerage commissions.

     Each Investment  Advisor is authorized to allocate  brokerage and principal
business to brokers who have provided brokerage and research  services,  as such
services are defined in Section 28(e) of the Securities Exchange Act of 1934, as
amended (the "1934 Act"),  for the Company  and/or other  accounts for which the
Investment  Advisor  exercises  investment  discretion  (as  defined  in Section
3(a)(35)  of the 1934 Act) and,  as to  transactions  for  which  fixed  minimum
commission  rates are not  applicable,  to cause a Fund to pay a commission  for
effecting a securities  transaction in excess of the amount another broker would
have  charged  for  effecting  that  transaction,   if  the  Investment  Advisor
determines  in good  faith  that such  amount of  commission  is  reasonable  in
relation to the value of the  brokerage and research  services  provided by such
broker, viewed in terms of either that particular  transaction or the Investment
Advisor's  overall  responsibilities  with  respect  to the Fund  and the  other
accounts  as to which it  exercises  investment  discretion.  In  reaching  such
determination,  the  Investment  Advisors  will not be  required  to place or to
attempt to place a specific  dollar value on the research or execution  services
of a broker  or on the  portion  of any  commission  reflecting  either  of said
services.

     Research services  provided by brokers to the Investment  Advisors includes
that which brokerage houses customarily  provide to institutional  investors and
statistical and economic data and research  reports on particular  companies and
industries. Research furnished by brokers may be used by each Investment Advisor
for any of its accounts, and not all such research may be used by the Investment
Advisors for the Funds.

     The  amount of  brokerage  commissions  paid by each Fund  during the three
fiscal years ended December 31, 2002, 2001 and 2000 are set forth below:*


                                      -32-


                                                 Pacific        Japan                       American       GAMerica
                 Global       International       Basin        Capital        Europe          Focus        Capital
                 ------       -------------       -----        -------        ------          -----        -------

2002
2001          $     82,372   $  1,952,192     $     46,679   $     43,291  $     87,591   $    350,938   $     38,309
2000          $    291,940   $  7,200,495     $    147,272   $    113,974  $    250,331   $     16,235   $     32,740

*    GAM Gabelli Long/Short Fund commenced operations on May 29, 2002.

     Affiliated Transactions. GAM USA and GIML are each an indirect wholly owned
subsidiary  of UBS AG.  UBS AG, a  banking  organization  with  headquarters  in
Switzerland,  is an internationally  diversified organization with operations in
many  aspects of the  financial  services  industry.  Among UBS AG's  direct and
indirect affiliates and related persons are various  broker-dealers that include
direct and indirect subsidiaries in the United States including UBS Warburg LLC,
an  investment  bank  and  broker-dealer,   UBS  PaineWebber  Incorporated,   an
investment  bank and  broker-dealer,  J.C.  Bradford & Co.,  LLC,  a  registered
investment  advisor and  broker-dealer,  and UBS Warburg Futures Inc., a futures
commission  merchant  and  broker-dealer.  Among UBS AG's  direct  and  indirect
affiliates and related persons are various foreign broker-dealers  including UBS
AG London.

     As such, when buying or selling  securities,  the Funds may pay commissions
to brokers who are affiliated  with the Investment  Advisors in accordance  with
procedures adopted by the Board of Directors.  The Funds may purchase securities
in certain  underwritten  offerings  for which an  affiliate of the Funds or the
Investment  Advisors  may act as an  underwriter.  The Funds may effect  futures
transactions  through,  and pay commissions to, futures commission merchants who
are  affiliated  with the  Investment  Advisors or the Funds in accordance  with
procedures adopted by the Board of Directors.


     For the fiscal  year ended  December  31,  2002,  the Funds paid  brokerage
commissions to affiliated broker-dealers as set forth below:


                  [ ]Fund:

                                                             % of Aggregate
                   Aggregate           % of Aggregate        Dollar Amount
                   Dollar Amount of    Commissions           of Transactions
Affiliated Broker  Commissions Paid    Paid to UBS Warburg   Paid to UBS Warburg
-----------------  ----------------    -------------------   -------------------




     For the fiscal  year ended  December  31,  2001,  the Funds paid  brokerage
commissions to affiliated broker-dealers as set forth below:

                  GAM Global Fund:

                                                             % of Aggregate
                   Aggregate           % of Aggregate        Dollar Amount
                   Dollar Amount of    Commissions           of Transactions
Affiliated Broker  Commissions Paid    Paid to UBS Warburg   Paid to UBS Warburg
-----------------  ----------------    -------------------   -------------------

UBS Warburg
Securities Limited             $273                 0.33%                  0.28%


                                      -33-


                  GAM American Focus Fund:

                                                             % of Aggregate
                   Aggregate           % of Aggregate        Dollar Amount of
                   Dollar Amount of    Commissions Paid      Transactions Paid
Affiliated Broker  Commissions Paid    to UBS AG Stamford    to UBS AG Stamford
-----------------  ----------------    ------------------    -------------------

UBS AG Stamford                $150                 0.04%                  0.09%


     For the fiscal year ended  December  31, 2000,  the GAM Pacific  Basin Fund
paid brokerage commissions to affiliated broker-dealer(s) as set forth below:

                                                             % of Aggregate
                   Aggregate           % of Aggregate        Dollar Amount
                   Dollar Amount of    Commissions           of Transactions
Affiliated Broker  Commissions Paid    Paid To Warburg       Paid To Warburg
-----------------  ----------------    ---------------       ---------------

UBS Warburg LLC               $207                0.14%                 0.15%

--------------------------------------------------------------------------------
                             SHAREHOLDER INFORMATION
--------------------------------------------------------------------------------

     The  Company  offers A, B, C and D Class  Shares.  Class B Shares  are only
available  through  reinvested  dividends and exchanges between Class B of other
Funds.  Each Class involves  different  sales charges,  features and expenses as
described more fully in the Prospectus.

PURCHASES AND SALES THROUGH BROKERS

     The Funds have  authorized  one or more  brokers to receive on their behalf
purchase  and  redemption  orders.  Such  brokers are  authorized  to  designate
intermediaries  to receive orders on the Funds' behalf. A Fund will be deemed to
have received an order when an authorized broker or  broker-authorized  designee
receives the order. Customer orders, in such cases, will be priced at the Fund's
net asset value per share next computed after they are received by an authorized
broker or the  broker-authorized  designee.  Investors who purchase  shares on a
load waived  basis may be charged a fee by their  broker or agent if they effect
transactions  in Fund shares through a broker or agent that waives the front end
load.


SALES CHARGE REDUCTIONS AND WAIVERS

     Prior to January 30, 2002, Class A Shares of the Funds were offered subject
to the following sales charge schedule:

                                                                 Amount Reallowed to
                      Sales Load (as %     Sales Load (as % of     Dealers (as % of
Purchase Amount      of Offering Price)    Net Amount Invested)     Offering Price)

up to $100,000         5.00%                  5.26%                    4.00%
$100,000 - $299,999    4.00%                  4.17%                    3.00%
$300,000 - $599,999    3.00%                  3.09%                    2.00%
$600,000 - $999,999    2.00%                  2.04%                    1.00%
$1,000,000 and over    0.00%

     Waivers of Front-End Sales Charges. Class A Front-End Sales Charge Waivers.
Front-end  sales  charges will be waived if you buy Class A Shares with proceeds
from the following sources:


                                      -34-


     1. Redemptions from any registered mutual fund for which GAM Services,  UBS
Global Asset  Management (US) Inc. ("UBS Global AM") or any of their  affiliates
serve as principal underwriter or advisor if you:

     o    Originally paid a front-end sales charge on the shares; and

     o    Reinvest the money within 60 days of the redemption date.

     The Funds'  front-end  sales  charges  will also not apply to  purchases of
Class A Shares by or through:

     2. Employees of UBS AG and its  subsidiaries  and members of the employees'
immediate  families;  active  and  retired  Fund  Directors  and  other  persons
affiliated  with the Funds or GAM Services or its  affiliates and their spouses,
minor children and trusts; and members of the Board of Directors/Trustees of any
investment  company  for  which  GAM  Services,  UBS  Global  AM or any of their
affiliates serves as principal underwriter.

     3. Trust companies and bank trust departments  investing on behalf of their
clients if clients pay the bank or trust company an asset-based fee for trust or
asset management services.

     4. Retirement plans,  deferred  compensation  plans and trusts used to fund
those  plans that have  assets of at least $1  million  or at least 25  eligible
employees.

     5. Broker-dealers and other financial  institutions  (including  registered
investment  advisers and  financial  planners)  that have entered into a selling
agreement  with GAM Services or UBS Global AM (or otherwise  have an arrangement
with a  broker-dealer  or other financial  institution  with respect to sales of
fund shares),  on behalf of clients  participating in a fund  supermarket,  wrap
program,  or other  program in which  clients pay a fee for  advisory  services,
executing  transactions in Fund shares,  or for otherwise  participating  in the
program.

     6. Employees of broker-dealers and other financial institutions  (including
registered  investment advisers and financial planners) that have entered into a
selling  agreement  with GAM Services or UBS Global AM (or  otherwise  having an
arrangement with a broker-dealer or other financial  institution with respect to
sales of fund shares),  and their immediate  family  members,  as allowed by the
internal policies of their employer.

     7. Insurance company separate accounts.

     8.  Shareholders of the Class N shares of any UBS fund who held such shares
at the time they were redesignated as Class A shares.

     9. Reinvestment of capital gains distributions and dividends.

     10.  College  savings  plans  qualified  under  Section 529 of the Internal
Revenue Code of 1986, as amended (the "Code") whose  sponsors or  administrators
have entered into an agreement with GAM Services,  UBS Global AM or any of their
affiliates to perform advisory or administrative services.

     11. A UBS  PaineWebber  Financial  Advisor who was formerly  employed as an
investment executive with a competing brokerage firm, and

          o    you  were  the  Financial   Advisor's  client  at  the  competing
               brokerage firm;

          o    within 90 days of buying  shares in the Fund,  you sell shares of
               one or more mutual funds that were  principally  underwritten  by
               the competing  brokerage firm or its  affiliates,  and you either
               paid  a  sales  charge  to buy  those  shares,  pay a  contingent
               deferred  sales  charge when  selling  them or held those  shares
               until the contingent deferred sales charge was waived; and

          o    you  purchase an amount that does not exceed the total  amount of
               money you received from the sale of the other mutual fund.


                                      -35-


     12. Companies  exchanging  shares with or selling assets to a Fund pursuant
to a merger, acquisition or exchange offer.

     13. Accounts managed by an affiliate of GAM Services.

     14. Organizations described in Section 501(c)(3) of the Code.

     15. Charitable remainder trusts.

     16. Certain tax qualified plans of  administrators  who have entered into a
service agreement with GAM Services or the Fund.

     17. Other  categories of  investors,  at the  discretion  of the Board,  as
disclosed in the then current Prospectus of the Funds.

     Class C Front-End  Sales Charge  Waivers.  Front-end  sales charges will be
waived if you buy Class C Shares through a UBS PaineWebber Financial Advisor who
was formerly  employed as an  investment  executive  with a competing  brokerage
firm, and

          o    you  were  the  Financial   Advisor's  client  at  the  competing
               brokerage firm;

          o    within 90 days of buying  shares in the Fund,  you sell shares of
               one or more mutual funds that were  principally  underwritten  by
               the competing  brokerage firm or its  affiliates,  and you either
               paid  a  sales  charge  to buy  those  shares,  pay a  contingent
               deferred  sales  charge when  selling  them or held those  shares
               until the contingent deferred sales charge was waived; and

          o    you  purchase an amount that does not exceed the total  amount of
               money you received from the sale of the other mutual fund.

     Class D Front-End Sales Charge  Waivers.  Shares may be offered without the
front-end  sales charge to active and retired Fund  Directors  and other persons
affiliated  with  the  Fund  or  GAM  Services  or  its  affiliates,  registered
representatives of broker-dealers having sales agreements with GAM Services, and
spouses  and minor  children  of the  foregoing  persons  or  trusts;  companies
exchanging  shares  with or  selling  assets  to a Fund  pursuant  to a  merger,
acquisition or exchange offer; persons investing the proceeds of a redemption of
shares of any other  investment  company managed or sponsored by an affiliate of
GAM  Services;  accounts  managed by an  affiliate of GAM  Services;  registered
investment  advisors and accounts over which they have discretionary  authority;
organizations  providing  administrative services with respect to persons in the
preceding category;  registered investment advisors and other financial services
firms that purchase shares for the benefit of their clients  participating  in a
"wrap  account"  or  similar  program  under  which  clients  pay a fee  to  the
investment advisor or other firm;  organizations  described in Section 501(c)(3)
of the Code;  trust  companies,  bank trust  departments;  retirement,  deferred
compensation  plans and trusts used to fund those  plans;  charitable  remainder
trusts;  certain tax qualified plans of  administrators  who have entered into a
service  agreement  with GAM  Services  or the  Fund;  and other  categories  of
investors,  at the  discretion  of the Board,  as  disclosed in the then current
Prospectus of the Funds.

     Large Orders Purchases and Purchases by Eligible Plans.  Purchase orders of
$1 million or more and all  purchase  orders by employee  retirement  plans with
more than 100 participants  will not be subject to the front-end sales charge on
Class A Shares.  GAM Services  may advance to dealers a commission  from its own
resources in connection with these purchases based upon cumulative sales in each
year or  portion  thereof  except  when such  orders  are  received  from  other
registered investment companies or investment funds. GAM Services will pay 1% of
sales of more than $1 million but less than $3  million;  0.75% on sales of more
than $3 million but less than $5 million, 0.50% on sales of more than $5 million
but less than $50  million,  and 0.25% on sales of $50 million and above.  Those
purchases for which GAM Services pays a commission (and the payment of which has
not been waived by the dealer) are  subject to a 1%  contingent  deferred  sales
charge ("CDSC") on any shares sold within 12 months of purchase.  In the case of
eligible  retirement plans, the CDSC will apply to redemptions at the plan level
only.  12b-1  fees  earned on  assets  representing  large  order  purchases  or
purchases by eligible  plans will be retained by GAM Services for one year after
the  purchase is effected in order to  reimburse  it for a portion of the dealer
payment.


                                      -36-


     Contingent  Deferred Sales Charge  Waivers.  A CDSC will not be imposed on:
(i) any amount which  represents an increase in value of shares purchased within
the  applicable  period  (12  months  for  Class  A; 8, 6, 4, 3 or 2  years,  as
applicable,  for Class B; and one year for Class C (i) preceding the redemption;
(ii) the  current net asset value of shares  purchased  prior to the  applicable
period;  or (iii) the  current  net  asset  value of  shares  purchased  through
reinvestment  of dividends or  distributions  and/or shares acquired in exchange
for  shares of other  GAM  Funds.  Moreover,  in  determining  whether a CDSC is
applicable,  it will be assumed  that amounts  described in (i),  (ii) and (iii)
above (in that order) are redeemed first.

     In addition, the CDSC, if otherwise applicable,  will be waived in the case
of:

     (1)  redemptions  of shares held at the time a shareholder  dies or becomes
disabled,  only if the  shares  are:  (a)  registered  either  in the name of an
individual  shareholder  (not a trust),  or in the names of such shareholder and
his or her spouse as joint tenants with right of survivorship;  or (b) held in a
qualified  corporate or  self-employed  retirement plan,  Individual  Retirement
Account  ("IRA") or Custodial  Account under  Section  403(b)(7) of the Internal
Revenue  Code  ("403(b)  Custodial  Account"),  provided in either case that the
redemption is requested within one year of the death or initial determination of
disability;

     (2) redemptions in connection with minimum  required  distributions  from a
qualified  corporate or  self-employed  retirement plan following  retirement or
attainment of age 70 1/2, or from an IRA or 403(b) Custodial  Account  following
attainment  of age 59 1/2,  but only with respect to that portion of the minimum
distribution which bears the same relation to the entire mandatory  distribution
as the shares of each class bear to the total assets in the plan;

     (3) all  redemptions  of shares held for the benefit of a participant  in a
Qualified  Retirement  Plan  which  offers  investment  companies  managed by an
affiliate of GAM Services ("Eligible Plan"),  provided that the redemption is in
connection with the complete  termination of the plan involving the distribution
of all plan assets to participants;

     (4) redemptions under the Systematic  Withdrawal Plan, subject to a maximum
of 10% per year of the account balance, and further subject to a minimum balance
of $10,000 at the beginning of the Systemic Withdrawal Plan; and

     (5) in  connection  with  exchanges for shares of the same class of another
GAM Fund.

     With reference to (1) above, for the purpose of determining disability, the
Distributor  utilizes the definition of disability contained in Section 72(m)(7)
of the Code,  which  relates to the  inability to engage in gainful  employment.
With reference to (2) above, the term  "distribution"  does not encompass direct
transfer  of IRA,  403(b)  Custodial  Accounts  or  retirement  plan assets to a
successor  custodian  or trustee.  All waivers  will be granted  only  following
receipt by the Distributor of confirmation of the shareholder's entitlement.

     Conversion  Feature.  Class B Shares are sold at net asset value without an
initial sales charge so that the full amount of an investor's  purchase  payment
may be  immediately  invested in the Fund. A CDSC,  however,  will be imposed on
Class B Shares redeemed within six years,  four years,  three years or two years
after purchase,  depending on the amount purchased and the date of purchase,  as
more  fully   described  in  the   Prospectus.   Class  B  Shares  will  convert
automatically into Class A Shares, based on the relative net asset values of the
shares of the two Classes on the conversion  date,  which will be  approximately
eight (8), six (6),  four (4),  three (3) or two (2) years after the date of the
original purchase, depending on the amount of Class B Shares purchased and when.
In the case of Class B Shares previously exchanged (see "How to Exchange Shares"
in the  Prospectus),  the period of time the  shares  were held in the GAM Money
Market Account is included in the holding period for conversion.

     Effectiveness  of the  conversion  feature  is  subject  to the  continuing
availability  of a ruling of the  Internal  Revenue  Service  or an  opinion  of
counsel that:  (i) the  conversion of shares does not constitute a taxable event
under the Code,  (ii) Class A Shares  received on  conversion  will have a basis
equal to the  shareholder's  basis in the converted  Class B Shares  immediately
prior to the  conversion,  and (iii) Class A Shares  received on conversion will
have a holding period that includes the holding period of the converted  Class B
Shares.  The conversion  feature may be suspended if the ruling or opinion is no
longer available.  In such event, Class B Shares would continue to be subject to
Class B 12b-1 fees.


                                      -37-


--------------------------------------------------------------------------------
                      NET ASSET VALUE, DIVIDENDS AND TAXES
--------------------------------------------------------------------------------

     Net Asset Value.  Each Fund determines its net asset value each day the New
York Stock  Exchange is open for trading.  The New York Stock Exchange is closed
on the following holidays, in addition to Saturdays and Sundays: New Year's Day,
President's  Day,  Martin  Luther  King,  Jr. Day,  Good Friday,  Memorial  Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day.

     Portfolio securities,  including ADR's, EDR's and options, which are traded
on stock  exchanges or a national  securities  market will be valued at the last
sale  price as of the  close of  business  on the day the  securities  are being
valued or, lacking any sales, at the last available bid price. Securities traded
in the over-the-counter market will be valued at the last available bid price in
the  over-the-counter  market  prior  to the  time of  valuation.  Money  market
securities  will be valued at market  value,  except that  instruments  maturing
within  60 days of the  valuation  are  valued  at  amortized  cost.  The  other
securities  and  assets  of each  Fund for which  market  quotations  may not be
readily  available  (including   restricted  securities  which  are  subject  to
limitations as to their sale) will be valued at fair value as determined in good
faith by or under the direction of the Board of Directors.  Securities quoted in
foreign  currencies will be converted to United States dollar  equivalents using
prevailing market exchange rates.

     Suspension Of The  Determination Of Net Asset Value. The Board of Directors
may suspend the determination of net asset value and,  accordingly,  redemptions
for a Fund for the whole or any part of any period during which (1) the New York
Stock  Exchange  is  closed  (other  than  for  customary  weekend  and  holiday
closings),  (2)  trading on the New York Stock  Exchange is  restricted,  (3) an
emergency  exists as a result of which disposal of securities  owned by the Fund
is not reasonably  practicable or it is not reasonably  practicable for the Fund
fairly to  determine  the value of its net  assets,  or (4) the  Securities  and
Exchange Commission may by order permit for the protection of the holders of the
Fund's shares.

     Tax Status. Although each Fund is a series of the Company, it is treated as
a separate  corporation  for purposes of the Internal  Revenue Code of 1986,  as
amended    (the    "Code").     Each    Fund    expects    to    meet    certain
diversification-of-assets  and other  requirements in order to qualify under the
Code as a regulated  investment  company.  If it  qualifies,  a Fund will not be
subject  to United  States  Federal  income tax on net  ordinary  income and net
capital gains which are  distributed  to its  shareholders  within  certain time
periods  specified in the Code. Each Fund intends to distribute  annually all of
its  net  ordinary  income  and net  capital  gains.  If a Fund  were to fail to
distribute  timely  substantially all such income and gains, it would be subject
to Federal corporate income tax and, in certain  circumstances,  a 4% excise tax
on its undistributed income and gains.

     Distributions from net ordinary income and net short-term capital gains are
taxable to  shareholders  as ordinary  income.  The 70%  deduction  available to
corporations  for dividends  received from a Fund will apply to ordinary  income
distributions only to the extent that they are attributable to a Fund's dividend
income from United States corporations. Distributions from net long-term capital
gains are taxable to a shareholder as long-term  capital gains regardless of the
length of time the shares in respect of which such  distributions  are  received
have  been held by the  shareholder.  Dividends  declared  in  December  will be
treated  as  received  in  December  as long as they are  actually  paid  before
February 1 of the following year.

     Income  from  foreign  securities  purchased  by a Fund may be reduced by a
withholding tax at the source.  If as of the fiscal year-end of a Fund more than
50% of the Fund's  assets are invested in  securities  of foreign  corporations,
then the Fund may make an election which will result in the shareholders  having
the option to elect either to deduct  their pro rata share of the foreign  taxes
paid by the Fund or to use their pro rata share of the foreign taxes paid by the
Fund in  calculating  the  foreign  tax  credit  to  which  they  are  entitled.
Distributions  by a Fund will be  treated  as United  States  source  income for
purposes other than computing the foreign tax credit limitation.

     Distributions  of net  ordinary  income  or net  short-term  capital  gains
received by a non-resident alien individual or foreign  corporation which is not
engaged in a trade or business in the United States generally will be subject to
Federal  withholding  tax at the rate of 30%,  unless such rate is reduced by an
applicable  income tax treaty to which the  United  States is a party.  However,
gains  from  the  sale  by  such   shareholders  of  shares  of  the  Funds  and
distributions to such  shareholders  from long-term capital gains generally will
not be subject to the Federal withholding tax.

     Ordinarily, distributions and redemption proceeds earned by a United States
shareholder  of a Fund are not  subject to  withholding  of Federal  income tax.
However,  distributions  or redemption  proceeds paid by a Fund to a shareholder
may be subject to 20% backup  withholding if the shareholder fails to supply the
Fund or its agent with such shareholder's  taxpayer  identification number or an
applicable exemption certificate.


                                      -38-


     In addition to the Federal income tax consequences described above relating
to an  investment  in a Fund,  there  may be other  Federal,  state or local tax
considerations  that depend upon the circumstances of each particular  investor.
Prospective  shareholders are therefore urged to consult their tax advisors with
respect to the effect of this investment on their own specific situations.

--------------------------------------------------------------------------------
                             PERFORMANCE INFORMATION
--------------------------------------------------------------------------------

     The average  annual  total  return of each Fund (other than the GAM Gabelli
Long/Short  Fund,  which did not have a full year of operation as of the date of
this  Statement of Additional  Information)  for the periods ended  December 31,
2002 are set forth in the  table  below.  The  results  are shown  both with and
without  deduction  of the sales  load,  since the sales  load can be waived for
certain investors. [To be provided in 485(b) filing]

                                           AVERAGE ANNUAL TOTAL RETURN (%)
---------------- -------------- ---------------------------- ---------------------------- ----------------------------
                                         10 Years                      5 Years                      1 Year
                                   (or since inception)                  to                           to
                                   to December 31, 2002           December 31, 2002            December 31, 2002
------------------------------- ------------- -------------- ------------- -------------- -------------- -------------
                                    With         Without         With         Without         With         Without
Fund                               Sales          Sales         Sales          Sales          Sales         Sales
Class (Inception Date)              Load          Load           Load          Load           Load           Load
------------------------------- ------------- -------------- ------------- -------------- -------------- -------------
GAM Global Fund
Class A          5/28/86
Class B          5/26/98
Class C          5/19/98
Class D          10/6/95

GAM International Fund
Class A          1/02/85
Class B          5/26/98
Class C          5/19/98
Class D          9/18/95

GAM Europe Fund
Class A          1/01/90
Class B          5/26/98
Class C          5/20/98

GAM Pacific Basin Fund
Class A          5/06/87
Class B          5/26/98
Class C          6/01/98
Class D          10/18/95

GAM Japan Capital Fund
Class A          7/01/94
Class B          5/26/98
Class C          5/19/98

GAM American Focus Fund
Class A          1/01/90
Class B          5/26/98
Class C          7/07/98

GAMerica Capital Fund
Class A          5/12/95
Class B          5/26/98
Class C          5/26/98


                                      -39-


     As  the  following  formula  indicates,  average  annual  total  return  is
determined  by finding the average  annual  compounded  rates of return over the
stated time period that would equate a  hypothetical  initial  purchase order of
$1,000 to its redeemable value (including capital  appreciation/depreciation and
dividends  and  distributions  paid and  reinvested  less any fees  charged to a
shareholder  account)  at the end of the stated  time  period.  The  calculation
assumes  that all  dividends  and  distributions  are  reinvested  at the public
offering  price on the  reinvestment  dates  during the  period.  The  quotation
assumes the account  was  completely  redeemed at the end of each period and the
deduction of all applicable charges and fees. According to the SEC formula:

                  P(1 + T)n = ERV
         where:
          P    = a hypothetical initial payment of $1,000
          T    = average annual total return
          n    = number of years
          ERV  = ending  redeemable value of a hypothetical  $1,000 payment made
               at the beginning of the one-,  five-, and ten-year periods at the
               end of the one-,  five-,  and  ten-year  periods  (or  fractional
               portion thereof).

     Prospective  investors  should note that past results may not be indicative
of future performance.  The investment return and principal value of shares of a
Fund will fluctuate so that an investor's  shares,  when redeemed,  may be worth
more or less than their original cost.


     Comparative  performance  information  may be  used  from  time  to time in
advertising  each  Fund's  shares.  The  performance  of GAM Global  Fund may be
compared to the Morgan Stanley Capital  International  ("MSCI") World Index. The
performance  of GAM  International  Fund may be  compared  to the  MSCI  Europe,
Australia,  Far East ("EAFE")  Index.  The performance of GAM Pacific Basin Fund
may be compared to the MSCI Pacific Index.  The performance of GAM Japan Capital
Fund may be compared to the Tokyo Stock Exchange  Index.  The performance of GAM
American Focus Fund, GAM Gabelli  Long/Short Fund and GAMerica  Capital Fund may
be compared to the Standard & Poor's 500 Composite Stock Price Index and the Dow
Jones Industrial Average.  The performance of GAM Europe Fund may be compared to
the MSCI Europe and Financial Times Actuaries World  Indices-Europe.  Each stock
index is an unmanaged index of common stock prices,  converted into U.S. dollars
where appropriate.  Any index selected by a Fund may not compute total return in
the same manner as the Funds and may  exclude,  for example,  dividends  paid on
stocks included in the index and brokerage or other fees.



                                      -40-


--------------------------------------------------------------------------------
                              DESCRIPTION OF SHARES
--------------------------------------------------------------------------------


     GAM Funds, Inc., a Maryland corporation,  was organized on May 7, 1984. The
Company  has  eight  series of common  stock  outstanding,  each of which may be
divided  into five  classes  of  shares:  Class A, Class B, Class C, Class D and
Class Y  Shares  (which  are not  currently  offered).  Class B  Shares  include
Sub-Class B-0 Shares,  Sub-Class B-1 Shares, Sub-Class B-2 Shares, Sub-Class B-3
Shares  and  Sub-Class  B-4  Shares.  The five  classes  of  shares  of a series
represent interests in the same portfolio of investments,  have the same rights,
and are generally  identical in all  respects,  except that each class bears its
separate distribution and certain class expenses and has exclusive voting rights
with respect to any matter on which a separate  vote of any class is required by
the Act or Maryland law. The net income attributable to each class and dividends
payable  on  the  shares  of  each  class  will  be  reduced  by the  amount  of
distribution  fees and other expenses of each class.  Class D Shares bear higher
12b-1 fees than Class A Shares, which will cause the Class D Shares to pay lower
dividends  than the Class A Shares.  Class B and Class C Shares pay higher 12b-1
fees than  Class A and Class D Shares,  which will cause the Class B and Class C
Shares  to pay  lower  dividends  than  the  Class  A and  Class D  Shares.  The
Directors,  in the exercise of their fiduciary duties under the Act and Maryland
law, will seek to ensure that no conflicts  arise among the classes of shares of
a Fund.


     Each share  outstanding is entitled to share equally in dividends and other
distributions  and in the net assets of the  respective  class of the respective
series on  liquidation.  Shares are fully paid and  non-assessable  when issued,
freely  transferable,  have  no  pre-emptive  or  subscription  rights,  and are
redeemable and subject to redemption under certain  conditions  described above.
The Funds do not generally issue certificates for shares purchased.

     Each  share  outstanding  entitles  the  holder to one  vote.  If a Fund is
separately  affected by a matter requiring a vote, the shareholders of each such
Fund shall vote separately.  The Company is not required to hold annual meetings
of  shareholders,  although  special  meetings will be held for purposes such as
electing or removing directors,  changing fundamental  policies, or approving an
investment  advisory  agreement.  Shareholders will be assisted in communicating
with other  shareholders in connection with removing a director as if Section 16
(c) of the Act were applicable.

--------------------------------------------------------------------------------
                              FINANCIAL STATEMENTS
--------------------------------------------------------------------------------


     The audited  financial  statements of each Fund, other than the GAM Gabelli
Long/Short  Fund, for the fiscal year ended December 31, 2002, and the report of
the Funds' independent accountants in connection therewith,  are included in the
2002 Annual Report to  Shareholders  and are  incorporated  by reference in this
Statement of Additional Information.



                                      -41-










                                     PART C

                                OTHER INFORMATION

ITEM 23. EXHIBITS.

     (a)(1) Articles of Incorporation of Registrant,  as filed with the State of
          Maryland on May 7, 1984, as amended or supplemented from time to time,
          are incorporated  herein by reference to Post-Effective  Amendment No.
          35 to Registrant's  Registration Statement on Form N-1A, as filed with
          the U.S. Securities and Exchange  Commission  ("Commission") via EDGAR
          on November 16, 2001 ("PEA 35").

     (a)(2)   Articles   Supplementary   to   the   Registrant's   Articles   of
          Incorporation,  adding  GAM  Global  Fund,  as filed with the State of
          Maryland on January 16, 1986, are incorporated  herein by reference to
          PEA 35.

     (a)(3) Articles of Amendment to the Registrant's Articles of Incorporation,
          changing the name of the Registrant  from GAM  International,  Inc. to
          GAM Funds,  Inc.,  as filed with the State of Maryland on February 18,
          1986, are incorporated herein by reference to PEA 35.

     (a)(4)   Articles   Supplementary   to   the   Registrant's   Articles   of
          Incorporation,  adding  GAM  Tokyo  Fund,  as filed  with the State of
          Maryland on December 30, 1986, are incorporated herein by reference to
          PEA 35.

     (a)(5)   Articles   Supplementary   to   the   Registrant's   Articles   of
          Incorporation,  adding GAM Pacific Basin Fund, as filed with the State
          of Maryland on March 10, 1987, are incorporated herein by reference to
          PEA 35.

     (a)(6) Articles of Amendment to the Registrant's Articles of Incorporation,
          amending the indemnification  provisions of Article NINTH and amending
          Article  FIFTH,  as filed with the State of Maryland on September  14,
          1988, are incorporated herein by reference to PEA 35.

     (a)(7)   Articles   Supplementary   to   the   Registrant's   Articles   of
          Incorporation,  adding GAM Europe Fund and GAM North  America Fund, as
          filed with the State of Maryland on October 18, 1989, are incorporated
          herein by reference to PEA 35.

     (a)(8)   Articles   Supplementary   to   the   Registrant's   Articles   of
          Incorporation,  adding GAM Japan Capital Fund, as filed with the State
          of Maryland on April 29, 1994, are incorporated herein by reference to
          PEA 35.

     (a)(9)   Articles   Supplementary   to   the   Registrant's   Articles   of
          Incorporation,  adding  GAMerica  Capital Fund and  redesignating  GAM
          Tokyo  Fund as GAM  Asia  Capital  Fund,  as filed  with the  State of
          Maryland on March 16, 1995,  are  incorporated  herein by reference to
          PEA 35.

     (a)(10)   Articles   of   Amendment   to  the   Registrant's   Articles  of
          Incorporation,  redesignating the shares of each of the Funds as Class
          A Shares,  as filed with the State of Maryland on August 30, 1995, are
          incorporated herein by reference to Post-Effective Amendment No. 27 to
          Registrant's  Registration  Statement on Form N-1A,  as filed with the
          Commission via EDGAR on April 30, 1996 ("PEA 27").

     (a)(11)   Articles   Supplementary   to  the   Registrant's   Articles   of
          Incorporation,  adding GAM  Mid-Cap  U.S.  Fund and  creating  Class D
          shares of each existing series, as filed with the State of Maryland on
          August 30, 1995, are incorporated herein by reference to PEA 27.

     (a)(12)   Articles   Supplementary   to  the   Registrant's   Articles   of
          Incorporation,   increasing  the  number  of  authorized   shares  and
          allocating  such shares  among the classes of the existing  Funds,  as
          filed  with  the  State  of  Maryland  on  December  15,   1995,   are
          incorporated herein by reference to PEA 35.

     (a)(13)  Certificate  of  Correction  to  the   Registrant's   Articles  of
          Incorporation,  correcting the Articles  Supplementary  filed December
          15, 1995, as filed with the State of Maryland on February 22, 1996, is
          incorporated herein by reference to PEA 35.

     (a)(14)   Articles   Supplementary   to  the   Registrant's   Articles   of
          Incorporation,   increasing  the  number  of  authorized   shares  and
          allocating  such shares to certain  classes of certain Funds, as filed
          with the State of Maryland  on February  22,  1996,  are  incorporated
          herein by reference to PEA 35.

     (a)(15) Articles  Supplementary to Registrant's  Articles of Incorporation,
          increasing the number of authorized  shares,  adding shares of certain
          Funds  as  Class B and  Class C  shares  of the  existing  series  and
          creating GAM Emerging Markets Capital Fund, as filed with the State of
          Maryland on May 7, 1998, are  incorporated  herein by reference to PEA
          35.

     (a)(16) Articles  Supplementary to Registrant's  Articles of Incorporation,
          reallocating  shares due to the closing of GAM Asian  Capital Fund, as
          filed with the State of Maryland  on May 13,  1999,  are  incorporated
          herein by reference to Post-Effective Amendment No. 33 to Registrant's
          Registration  Statement on Form N-1A, as filed with the Commission via
          EDGAR on February 29, 2000 ("PEA 33").

     (a)(17) Articles  Supplementary to Registrant's  Articles of Incorporation,
          redesignating  the Class A, B and C shares  of the GAM  North  America
          Fund series to reflect a name change to GAM  American  Focus Fund,  as
          filed with the State of Maryland on June 22,  2001,  are  incorporated
          herein by reference to PEA 35.

     (a)(18) Articles  Supplementary to Registrant's  Articles of Incorporation,
          adding  GAM  International  Long/Short  Fund  and GAM  American  Focus
          Long/Short  Fund series of the Registrant and adding Class Y shares to
          each of the  Funds  of the  Registrant,  as filed  with  the  State of
          Maryland on December 10, 2001, are incorporated herein by reference to
          Post-Effective Amendment No. 36 to Registrant's Registration Statement
          on Form N-1A,  as filed with the  Commission  via EDGAR on January 30,
          2002 ("PEA 36").

     (a)(19) Articles of Amendment to  Registrant's  Articles of  Incorporation,
          redesignating the shares of each Sub-Class B-1 class of shares of each
          of the Funds as  Sub-Class  B-0 and  redesignating  the shares of each
          Sub-Class  B-2 class of shares of each of the Funds as Sub-Class  B-1,
          as filed  with the  State  of  Maryland  on May 31,  2002,  are  filed
          herewith as Exhibit No. EX-99.a.19.

     (a)(20) Articles  Supplementary to Registrant's  Articles of Incorporation,
          reallocating  shares of the Classes and Funds, as filed with the State
          of  Maryland  on May 31,  2002,  are filed  herewith  as  Exhibit  No.
          EX-99.a.20.

     (a)(21) Articles of Amendment to  Registrant's  Articles of  Incorporation,
          redesignating  the  GAM  American  Focus  Long/Short  Fund  as the GAM
          Gabelli  Long/Short  Fund,  as filed  with the  State of  Maryland  on
          November 22, 2002, are filed herewith as Exhibit No. EX-99.a.21.

     (b)  Second  Amended  By-Laws  of  Registrant  are  incorporated  herein by
          reference to PEA 33.

     (c)  See Articles FIFTH,  SIXTH and EIGHTH of the Registrant's  Articles of
          Incorporation,  as filed with the State of Maryland on May 7, 1984, as
          amended  or  supplemented  from time to time,  which are  incorporated
          herein by reference.

          See also, the following  sections of the Second Amended By-Laws of the
          Registrant,  which are incorporated  herein by reference:  By-Law Two:
          Stockholders;  By-Law Three:  Directors,  Article 3.3,  Majority To Be
          Elected by Stockholders; By-Law Five: General Provisions, Article 5.1,
          Waiver of Notice; and By-Law Six: Certificates of Stock.

     (d)(1)  Amended  and  Restated   Investment  Advisory  Agreement  with  GAM
          International   Management  Limited,   dated  December  17,  1999,  is
          incorporated herein by reference to PEA 33.

     (d)(2) Investment Advisory Agreement (Interim) with Global Asset Management
          (USA),  Inc. for the GAM American Focus Fund, dated March 26, 2001, is
          incorporated herein by reference to Post-Effective Amendment No. 34 to
          Registrant's  Registration  Statement on Form N-1A,  as filed with the
          Commission via EDGAR on April 23, 2001 ("PEA 34").

     (d)(3) Investment  Advisory  Agreement with Global Asset  Management  (USA)
          Inc.  for the GAM  American  Focus  Fund,  dated  April 25,  2001,  as
          approved by the Board of  Directors  and  effective  upon  shareholder
          approval, is incorporated herein by reference to PEA 34.

     (d)(4) Amendment to Amended and Restated Investment Advisory Agreement with
          GAM  International  Management  Limited,  dated  December 17, 1999, as
          approved by the Board of  Directors  and  effective  upon  shareholder
          approval  of the  Investment  Advisory  Agreement  with  Global  Asset
          Management (USA) Inc., dated April 25, 2001, is incorporated herein by
          reference to PEA 34.

     (d)(5) Amended and Restated Investment Advisory Agreement with Global Asset
          Management (USA) Inc., dated October 23, 2001, adding the GAM American
          Focus  Long/Short Fund series of the Registrant,  is filed herewith as
          Exhibit No. EX-99.d.5.

     (d)(6) Investment  Advisory  Agreement  with GAM  International  Management
          Limited for the GAM Gabelli Long/Short Fund, dated October 9, 2002, is
          filed herewith as Exhibit No. EX-99.d.6.

     (d)(7) Investment Advisory Agreement with GAMCO Investors, Inc. for the GAM
          Gabelli  Long/Short  Fund, dated October 9, 2002, is filed herewith as
          Exhibit No. EX-99.d.7.

     (e)(1) Third Amended and Restated Distribution Agreement for Class A Shares
          with GAM  Services,  Inc.,  dated as of May 1, 2000,  is  incorporated
          herein by reference to PEA 35.

     (e)(2) First Amended and Restated Distribution Agreement for Class B Shares
          with GAM  Services,  Inc.,  dated as of May 1, 2000,  is  incorporated
          herein by reference to PEA 35.

     (e)(3) First Amended and Restated Distribution Agreement for Class C Shares
          with GAM  Services,  Inc.,  dated as of May 1, 2000,  is  incorporated
          herein by reference to PEA 35.

     (e)(4) Second  Amended  and  Restated  Distribution  Agreement  for Class D
          Shares  with  GAM  Services,  Inc.,  dated  as  of  May  1,  2000,  is
          incorporated herein by reference to PEA 35.

     (e)(5) Distribution  Agreement for Class Y Shares with GAM Services,  Inc.,
          dated as of October 23, 2001, is  incorporated  herein by reference to
          PEA 35.

     (f)  Not Applicable.

     (g)(1) Custodian  Agreement with Brown Brothers  Harriman & Co., dated June
          27, 2001, is incorporated herein by reference to PEA 35.

     (g)(2) Addendum  dated  November 12, 2001 to the Custodian  Agreement  with
          Brown  Brothers  Harriman & Co.,  dated June 27, 2001,  adding the GAM
          International  Long/Short  Fund and the GAM American Focus  Long/Short
          Fund series of the Registrant,  is incorporated herein by reference to
          PEA 35.

     (h)(1) Administration  Agreement with Brown Brothers  Harriman & Co., dated
          October 1, 1995, is incorporated herein by reference to PEA 28.

     (h)(2) Addendum  dated  November 12, 2001 to the  Administration  Agreement
          with Brown Brothers  Harriman & Co., dated October 1, 1995, adding the
          GAM   International   Long/Short  Fund  and  the  GAM  American  Focus
          Long/Short  Fund series of the Registrant,  is incorporated  herein by
          reference to PEA 35.

     (h)(3) Transfer  Agency  Agreement  with PFPC,  Inc.  dated May 20, 2002 is
          filed herewith as Exhibit No. EX-99.h.3.

     (i)(1) Legal opinion of Venable,  Baetjer and Howard,  LLP, is incorporated
          herein by reference to PEA 36.

     (i)(2) Legal  opinion of Coudert  Brothers LLP, is  incorporated  herein by
          reference to PEA 36.

     (j)(1) Consent of PricewaterhouseCoopers to be filed by amendment.

     (j)(2) Powers of Attorney,  dated  January 29, 2003,  for Mr.  Landau,  Mr.
          McGuire,  Mr. Weiser,  and Dr. Poschadel are filed herewith as Exhibit
          No. EX-99.j.2.

     (k)  Not Applicable.

     (l)  None.

     (m)(1) First Amended Plan of  Distribution  for Class A Shares,  adopted by
          the Registrant pursuant to Rule 12b-1 under the Investment Company Act
          of 1940,  as amended,  (the "1940  Act"),  is  incorporated  herein by
          reference to PEA 35.

     (m)(2) First Amended Plan of  Distribution  for Class B Shares,  adopted by
          the  Registrant  pursuant  to  Rule  12b-1  under  the  1940  Act,  is
          incorporated herein by reference to PEA 35.

     (m)(3) First Amended Plan of  Distribution  for Class C Shares,  adopted by
          the  Registrant  pursuant  to  Rule  12b-1  under  the  1940  Act,  is
          incorporated herein by reference to PEA 35.

     (m)(4) First Amended Plan of  Distribution  for Class D Shares,  adopted by
          the  Registrant  pursuant  to  Rule  12b-1  under  the  1940  Act,  is
          incorporated herein by reference to PEA 35.

     (m)(5) Second Amended Plan of Distribution  for Class A Shares,  adopted by
          the  Registrant  on October 23, 2001  pursuant to Rule 12b-1 under the
          1940 Act, effective as of January 30, 2002, is incorporated  herein by
          reference to PEA 35.

     (m)(6) Second Amended Plan of Distribution  for Class B Shares,  adopted by
          the  Registrant  on October 23, 2001  pursuant to Rule 12b-1 under the
          1940 Act, effective as of January 30, 2002, is incorporated  herein by
          reference to PEA 35.

     (m)(7) Second Amended Plan of Distribution  for Class C Shares,  adopted by
          the  Registrant  on October 23, 2001  pursuant to Rule 12b-1 under the
          1940 Act, effective as of January 30, 2002, is incorporated  herein by
          reference to PEA 35.

     (m)(8) Second Amended Plan of Distribution  for Class D Shares,  adopted by
          the  Registrant  on October 23, 2001  pursuant to Rule 12b-1 under the
          1940 Act, effective as of January 30, 2002, is incorporated  herein by
          reference to PEA 35.

     (n)  Rule 18f-3  Multiple  Class  Plan for  Classes A, B, C, D and Y shares
          adopted by the  Registrant  on October 23, 2001 pursuant to Rule 18f-3
          under the 1940 Act, as amended  and  restated  on April 30,  2002,  is
          filed herewith as Exhibit No. EX-99.n.

     (o)  Reserved.

     (p)(1) Joint Code of Ethics for Global  Asset  Management  (USA) Inc.,  GAM
          International Management Limited, GAM Investments, Inc., GAM Services,
          Inc.  and the  Registrant,  pursuant to Rule 17j-1 of the 1940 Act, is
          incorporated herein by reference to PEA 35.

     (p)(2) Code of Ethics for GAMCO Investors,  Inc., pursuant to Rule 17j-1 of
          the 1940 Act, is filed herewith as Exhibit No. EX-99.p.2.

ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.

     None.

ITEM 25. INDEMNIFICATION.

     All officers,  directors,  employees and agents of the Registrant are to be
indemnified  to the fullest extent  permitted by law for any  liabilities of any
nature  whatsoever  incurred in connection  with the affairs of the  Registrant,
except in cases  where  willful  misfeasance,  bad faith,  gross  negligence  or
reckless  disregard of duties to the  Registrant  are  established.  See Article
NINTH of the Articles of Incorporation of the Registrant, as amended, for a more
complete description of matters related to indemnification.

     GAM Services Inc. ("GAM Services"), the Registrant's principal underwriter,
will be indemnified against all claims, demands,  liabilities and expenses which
may be  incurred by it arising out of any untrue  statement,  or alleged  untrue
statement,  of a  material  fact  contained  in  the  Registrant's  registration
statement or material omission, or alleged material omission, therein.

ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISERS.

     GAM International  Management  Limited,  Global Asset Management (USA) Inc.
and GAMCO Investors, Inc. are the investment advisors and co-investment advisors
to the Registrant.  Global Asset Management (USA) Inc. and GAMCO Investors, Inc.
also  provide  investment  advisory  services  to a number  of other  investment
companies.

                      GAM INTERNATIONAL MANAGEMENT LIMITED

Name and Address                       Principal Occupations During the Past Two Years

DR. BURKHARD POSCHADEL                 2000 to present - Group Chief Executive Officer, Global
                                       Asset Management Limited, 12 St. James's Place, London
Global Asset Management (USA) Inc.     SW1A 1NX; 1998-2000 - Head of Human Resources, UBS AG,
135 East 57th Street                   Gartenstrasse 9, Basel, CH 4052.
New York, NY 10022

ANDREW WILLS (Director)                July 1986 to  present -  Financial  Services  Controller,
                                       GAM  International  Management  Limited,  12 St.  James's
Global Asset Management Limited        Place, London SW1A 1NX, United Kingdom.
12 St. James's Place
London SW1A 1NX
United Kingdom

ANDREW HANGES (Director)               November 2000 to present - Chief Executive Officer and
                                       Director, GAM International Management Limited, Global
Global Asset Management Limited        Asset Management Limited, Global Asset Management (UK)
12 St. James's Place                   Ltd., 12 St. James's Place, London SW1A 1NX, United
London SW1A 1NX                        Kingdom; February 1997 to present - Director -
United Kingdom                         Operations, Global Asset Management (UK) Ltd., 12 St.
                                       James's Place, London SW1A 1NX, United Kingdom.

GORDON DAVID GRENDER (Director)        May 1983 to present  - Independent Contractor, Global
                                       Asset Management (UK) Ltd., 12 St. James's Place, London
Global Asset Management Limited        SW1A 1NX, United Kingdom; 1994 to present - Director,
12 St. James's Place                   GAM International Management Ltd., 12 St. James's Place,
London SW1A 1NX                        London SW1A 1NX, United Kingdom.
United Kingdom



                       GLOBAL ASSET MANAGEMENT (USA) Inc.

Name and Address                       Principal Occupations During the Past Two Years

DR. BURKHARD POSCHADEL                 Business Background: May 2000 to Present, President and
                                       Director, Global Asset Management (USA) Inc., 135 East
President and Director                 57th Street, New York, NY 10022; May 2000-Present, Chief
Global Asset Management (USA) Inc.     Executive Officer, Global Asset Management Limited
135 East 57th Street                   (Zurich), Klaustrasse 10, 8034 Zurich, Switzerland; 1984
New York, NY 10022                     - 2000, Head of Human Resources, UBS AG, Gartenstrasse
                                       9, Basel, CH 4052.

BENJAMIN FRANKLIN LENHARDT JR.         Business Background: May 2000 to Present, Director,
                                       Global Asset Management (USA) Inc., 135 East 57th
Director; President, CEO and           Street, New York, NY; 1995 to Present, Director, UBS
Managing Director of Brinson Partners  Brinson, Inc., 209 South LaSalle Street, Chicago, IL.
UBS Asset Management
209 S. LaSalle Street
Chicago, IL

DAVID ALAN ANDERSON                    Business Background: March 1998 to present, Managing
                                       Director-Clients - Americas, Global Asset Management
Managing Director-Clients - Americas   (USA) Inc., 135 East 57th Street, New York, NY; since
Global Asset Management (USA) Inc.     July 1995, Registered Principal, GAM Services, Inc., 135
135 East 57th Street                   East 57th Street, New York, NY.
New York, NY 10022

KEVIN JOHN BLANCHFIELD                 Business Background: November 1993 to present, Chief
                                       Operating Officer, Treasurer and Managing Director,
Chief Operating Officer,               Global Asset Management (USA) Inc., GAM Funds, Inc., GAM
Treasurer and Managing Director        Investments, Inc. and GAM Services, Inc., 135 East 57th
Global Asset Management (USA) Inc.     Street, New York, NY.
135 East 57th Street
New York, NY 10022

JOSEPH J. ALLESSIE                     Business Background: February 1999 to present, General
                                       Counsel and Corporate Secretary, Global Asset Management
General Counsel and                    (USA) Inc., GAM Funds, Inc., GAM Investments Inc., and
Corporate Secretary                    GAM Services Inc., 135 East 57th Street, New York, NY.
Global Asset Management (USA) Inc.
135 East 57th Street
New York, NY 10022

TERESA B. RIGGIN                       Business Background: January 1994 to present, Vice
                                       President - Administration, Global Asset Management
Vice President - Administration        (USA) Inc., GAM Funds, Inc., GAM Investments, Inc. and
Global Asset Management (USA) Inc.     GAM Services, Inc, 135 East 57th Street, New York, NY.
135 East 57th Street
New York, NY 10022

JAMES A. ABATE                         Business Background: January 2001 to present, Investment
                                       Director, Global Asset Management (USA) Inc., 135 East
Investment Director                    57th Street, New York, NY; 1995-2000, Managing
Global Asset Management (USA) Inc.     Director/Portfolio Manager, Credit Suisse Asset
135 East 57th Street                   Management, 153 East 53rd Street, New York, NY.
New York, NY 10022

NANCY S. ANDREWS                       Business Background: September 2000 to present,
                                       Investment Manager in the GAM Multi-Manager Group,
Investment Manager                     Global Asset Management (USA) Inc., 135 East 57th
Global Asset Management (USA) Inc.     Street, New York, NY.
135 East 57th Street
New York, NY 10022

DAVID S. AHN                           Business Background: August 1999 to Present - Investment
                                       Manager in the GAM Multi-Manager Group, Global Asset
Investment Manager                     Management (USA) Inc., 135 East 57th Street, New York,
Global Asset Management (USA) Inc.     NY; 1997-1999, Hedge Fund Analyst, Hennessee Group, 500
135 East 57th Street                   5th Ave. #47, New York, NY.
New York, NY 10022




                              GAMCO Investors, Inc.

Name and Address                       Principal Occupations During the Past Two Years

MARIO J. GABELLI                       Business Background:  Senior Executive Officer of GAMCO
                                       Investors, Inc. and Senior Executive and Majority
Chief Executive Officer and            Shareholder of Gabelli Asset Management, Inc., the
Chief Investment Officer               ultimate parent company of GAMCO Investors, Inc.
GAMCO Investors, Inc.
One Corporate Center
Rye, NY  10580-1422

DOUGLAS R. JAMESON                     Business Background:  Executive Officer and Director of
                                       GAMCO Investors, Inc.
Executive Vice President, Chief
Operating Officer, Managing Director,
and Director
GAMCO Investors, Inc.
One Corporate Center
Rye, NY  10580-1422

REGINA M. PITARO                       Business Background:  Executive Officer and Director of
                                       GAMCO Investors, Inc.
Managing Director and Director
GAMCO Investors, Inc.
One Corporate Center
Rye, NY  10580-1422

JOSEPH R. RINDLER                      Business Background:  Executive Officer and Director of
                                       GAMCO Investors, Inc.
Chairman and Director
GAMCO Investors, Inc.
One Corporate Center
Rye, NY  10580-1422

WILLIAM S. SELBY                       Business Background:  Executive Officer and Director of
                                       GAMCO Investors, Inc.
Managing Director and Director
GAMCO Investors, Inc.
One Corporate Center
Rye, NY  10580-1422

FEDERICK W. SCHOLZ                     Business Background:  Executive Officer and Director of
                                       GAMCO Investors, Inc.
Managing Director and Director
GAMCO Investors, Inc.
One Corporate Center
Rye, NY  10580-1422

ROBERT S. ZUCCARRO                     Business Background:  Executive Officer of GAMCO
                                       Investors, Inc.
Vice President and Chief
Financial Officer
GAMCO Investors, Inc.
One Corporate Center
Rye, NY  10580-1422

JAMES E. MCKEE                         Business Background:  Executive Officer of GAMCO
                                       Investors, Inc.
Vice President, General Counsel
and Secretary
GAMCO Investors, Inc.
One Corporate Center
Rye, NY  10580-1422


ITEM 27. PRINCIPAL UNDERWRITERS.

(a)      None.

(b)  Name and Principal          Position & Offices              Positions & Offices
      Business Address            with Underwriter                 with Registrant
      ----------------            ----------------                 ---------------
    Kevin J. Blanchfield      Chief Operating Officer,      Vice President and Treasurer
    135 East 57th Street       Treasurer and Director
    New York, NY 10022
    Joseph J. Allessie     General Counsel and Secretary    General Counsel and Secretary
    135 East 57th Street
    New York, NY 10022
    Teresa B. Riggin              Vice President -               Assistant Secretary
    135 East 57th Street    Administration and Assistant
    New York, NY 10022               Secretary

(c)      Not Applicable.


ITEM 28. LOCATION OF ACCOUNTS AND RECORDS.

     The  accounts,  books and other  documents  required  to be  maintained  by
Registrant pursuant to Rule 31a-1(a) of the Act are maintained as follows:

Accounts and Records Pursuant to Rule:                   Location

31a - 1(b)(1)                             Brown Brothers Harriman & Co.
31a - 1(b)(2)(i)                          40 Water Street
31a - 1(b)(2)(ii)                         Boston, Massachusetts 02109
31a - 1(b)(2)(iii)
31a - 1(b)(3)
31a - 1(b)(5)-(8)
31a - 1(b)(10)

31a - 1(b)(1)                             Boston Financial Data Services, Inc.
31a - 1(b)(2)(iv)                         PO Box 8264
                                          Boston, MA 02266

31a - 1(b)(9)-(11)                        GAM International Management Limited
                                          12 St. James's Place
                                          London SW1A 1NX, England

                                          Global Asset Management (USA) Inc.
                                          135 East 57th Street
                                          New York, NY 10022

                                          GAMCO Investors, Inc.
                                          One Corporate Center
                                          Rye, NY  10580-1422

31a - 1(b)(4)                             Coudert Brothers
                                          1114 Avenue of the Americas
                                          New York, New York 10036

                                          Global Asset Management (USA) Inc.
                                          135 East 57th Street
                                          New York, NY 10022


ITEM 29. MANAGEMENT SERVICES.

     Not Applicable.

ITEM 30. UNDERTAKINGS.

     Insofar as  indemnification  for liability arising under the Securities Act
of 1933 may be permitted to directors,  officers and controlling  persons of the
Registrant  pursuant  to the  provisions  described  in  response to Item 25, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and  Exchange  Commission  such  indemnification  is  against  public  policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for  indemnification  against  such  liabilities  (other than the payment by the
registrant of expenses  incurred or paid by a director,  officer or  controlling
person of the  Registrant  in the  successful  defense  of any  action,  suit or
proceeding)  is  asserted by such  director,  officer or  controlling  person in
connection with the securities being registered,  the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit  to a  court  of  appropriate  jurisdiction  the  question  whether  such
indemnification  by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.





                                   SIGNATURES

     Pursuant to the requirements of the Securities Act of 1933, as amended (the
"1933 Act") and the Investment  Company Act of 1940, as amended,  the Registrant
has duly caused this  Registration  Statement  to be signed on its behalf by the
undersigned, duly authorized, in the City of New York, and the State of New York
on the 27th day of February, 2003.


                                                GAM Funds, Inc.


                                                /s/ Joseph J. Allessie
                                                ----------------------
                                                Joseph J. Allessie
                                                Secretary


     Pursuant to the requirements of the 1933 Act, this  Registration  Statement
has been signed  below by the  following  persons in the  capacities  and on the
date(s) indicated.


Signature                           Title                      Date
---------                           -----                      ----

/s/ Dr. Burkhard Poschadel    *     President and Director     February 27, 2003
-------------------------------
Dr. Burkhard Poschadel
(Principal Executive Officer)

/s/ Kevin J. Blanchfield            Vice President             February 27, 2003
-------------------------------     and Treasurer
Kevin J. Blanchfield                (Principal Financial
                                    and Accounting Officer)

/s/ Roland Weiser             *     Director                   February 27, 2003
-------------------------------
Roland Weiser

/s/ George W. Landau          *     Director                   February 27, 2003
-------------------------------
George W. Landau

/s/ Robert J. McGuire         *     Director                   February 27, 2003
-------------------------------
Robert J. McGuire


* By /s/ Joseph J. Allessie
     -----------------------------
     Executed  by Joseph J.  Allessie on behalf of those  indicated  pursuant to
     Powers of Attorney filed herewith dated January 29, 2003.




                                  EXHIBIT INDEX
                                  -------------

FORM N-1A                                                               EDGAR
EXHIBIT NO.     DESCRIPTION                                           EXHIBIT NO.

Item 23(a)(19)  Articles of Amendment filed with the State of         EX-99.a.19
                Maryland on May 31, 2002

Item 23(a)(20)  Articles Supplementary filed with the State of        EX-99.a.20
                Maryland on May 31, 2002

Item 23(a)(21)  Articles of Amendment filed with the State of         EX-99.a.21
                Maryland on November 22, 2002

Item 23(d)(5)   Amended and Restated Investment Advisory Agreement    EX-99.d.5
                with Global Asset Management (USA) Inc. dated
                October 23, 2001

Item 23(d)(6)   Investment Advisory Agreement with GAM                EX-99.d.6
                International Management Limited for GAM Gabelli
                Long/Short Fund dated October 9, 2002

Item 23(d)(7)   Investment Advisory Agreement with GAMCO              EX-99.d.7
                Investors, Inc. for GAM Gabelli Long/Short Fund dated
                October 9, 2002

Item 23(h)(3)   Transfer Agency Agreement with PFPC, Inc. dated May   EX-99.h.3
                20, 2002

Item 23(j)(2)   Powers of Attorney dated January 29, 2003             EX-99.j.2

Item 23(n)      Rule 18f-3 Multiple Class Plan dated October 23,      EX-99.n
                2001, as amended and restated on April 30, 2002

Item 23(p)(2)   Code of Ethics for GAMCO Investors, Inc.              EX-99.p.2