Monthly Commentary January

GAM Star Credit Opportunities (EUR), GAM Euro Special Bond Inc.

During January the fund posted steady positive gains representing both income and capital gains. In particular, there were price increase of over 5% in holdings of floating rate notes including Ageas, Aegon and BNP Paribas Fortis.

There were also significant price gains in contingent capital fixed to floating rate notes of HSBC, BBVA and Banco Santander. During the month the fund participated in the new US dollar senior debt issues of Puma Energy, the mid and downstream oil company, paying 5% for a maturity of 2026 and 6.125% Burford Capital, which provides finance to the legal market, paying 6.125% for a maturity of 2025.

However most of the activity involved purchases of both fixed and floating rate securities of major banks and insurance companies in the secondary market. We remain conscious of the prospect of rising generic interest rates and continue to invest in a balance of fixed rate and discounted floating rate notes as well as high coupon securities with relatively short call dates.

GAM Star Credit Opportunities (GBP), GAM Sterling Special Bond Inc.

During January the fund posted strong positive gains despite the market experienced a rise in the 10-year gilt yield from 1.19% to 1.51%. Gains were made not only amongst floating rate notes but also among fixed to floater bonds and some fixed rate bonds where yields often above 5% were relatively impervious towards what was happening to the much lower gilt yields.

During the month a wide variety of new investments were made including further acquisitions of contingent capital securities of Barclays, HSBC and Lloyds Bank where the outstanding period to the next interest refix provides a yield over 5% with a relatively short duration. In small size we have continued to add to other fixed rate securities of Aviva, Lloyds Bank, National Westminster and Royal Sun Alliance with yields between 5% and 6%. We also participated in the new USD issue 6.125% Burford 2025, the UK company providing finance to the legal profession.

The fundamental results of our companies, both the banks and the insurance companies, continue to show progress in the multi-year process of capital strengthening. This reinforces their value within the context of historically wide interest spreads. We expect that the income offered by our portfolio with its blend of fixed-rate, fixed-to-floating bonds and discounted floating rate notes will provide an attractive return as well as the potential for selective capital gains.

GAM Star Credit Opportunities (USD), GAM US Dollar Special Bond Inc.

During January the fund posted steady positive gains despite a rise in 10-year US treasury bond rates from 2.40% to 2.70%. Gains of over 3% were made in the discounted floating rate notes of Aegon, BNP, HSBC, Den Norske Bank and Westpac and there were also smaller gains in some of the fixed rate bonds.

Investments were made during the month in the new senior debt issues of Puma Energy, the mid and downstream oil company, paying 5% for a maturity of 2026, Burford Capital, which provides specialized finance to the legal market, paying 6.125% for a maturity of 2025 and in the new 5% UBS contingent capital securities. In the secondary market a wide variety of holdings were bought including an investment in euro denominated floating rate notes of Ageas at 64.5%.

We remain conscious of the prospect of rising interest rates and continue to invest in a balance of fixed rate, fixed to floating rate notes and discounted floating rate note securities as well as high coupon securities with relatively short call dates.

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