<PAGE>
WHERE INCOME
POTENTIAL AND
REDUCED VOLATILITY
CONVERGE
GT GLOBAL
FLOATING
RATE FUND, INC.
SEMIANNUAL REPORT
JUNE 30, 1997
[LOGO]
<PAGE>
TABLE
OF CONTENTS
<TABLE>
<S> <C>
Message from the
Chairman............. 1
Report from the Fund
Managers and Key
Portfolio Holdings... 2
Financial
Statements........... F1
The views of the Fund's manage-
ment as described in this report
are as of the date it was
written. Portfolio holdings and
allocations are as of June 30,
1997, unless otherwise noted.
Views, portfolio holdings and
allocations may have changed
subsequent to these dates.
</TABLE>
<PAGE>
MESSAGE FROM THE CHAIRMAN
Dear Investor,
This report is written in a style we hope you find enjoyable to read and easy
to understand. Our intention is to provide our shareholders with meaningful
information about the performance of GT Global Funds.
We describe our management process and offer insights into the Fund's
investment strategy. Securities and industries in which the Fund invests are
discussed, as well as issues pertinent to decisions affecting the Fund.
Biographical information on portfolio managers' background and experience is
also included, and through our question and answer format, we make it
possible for shareholders to be included in the thought processes that form
the basis of their investment decisions.
We make every effort to communicate as clearly as possible because we want
you, our shareholders, to have a useful understanding of what is happening
with your investments in GT Global Funds, and why.
We would also like to emphasize that today--as global investing continues to
become increasingly complex, information travels as quickly as a keystroke,
and critical decisions must be made within shorter time frames--prudent
advice, professional management, global diversification and investing for the
long term have never been more important.
As always, we appreciate and value your support of GT Global Funds. Sincerely,
/s/ William J. Guilfoyle
William J. Guilfoyle
Chairman of the Board and President
GT Global Funds
1
* * *
<PAGE>
THE TEAM APPROACH TO INVESTING
Teamwork among talented investment professionals is at the center of our
investment discipline. Our Floating Rate Fund management team has an average
of 11 years of industry experience. We believe working together as a team
creates a combination of strengths and facilitates the investment process.
Within this framework, individual team members concentrate on their defined
industries, ensuring a deeper and broader group understanding of companies,
markets and world events. The continual exchange of knowledge and ideas
promotes style integrity and reflects our belief that the key to achieving
consistent results is following a disciplined investment process.
ABOUT THE PORTFOLIO MANAGERS
DAN BALDWIN(1) - Portfolio Manager for the Fund's sub-advised assets. Mr.
Baldwin has been the Head of the High Yield Products Group for Chancellor LGT
Asset Management since 1985. From 1982 to 1984, Mr. Baldwin was Chief
Investment Officer at First Pyramid Life. Prior to that, he was a Portfolio
Manager for First Variable Life and began his career in 1974 as a Portfolio
Manager for Union Planters National Bank.
STEPHEN ALFIERI - Portfolio Manager and Research Analyst for Chancellor LGT
Senior Secured Management, Inc. since 1992. From 1986 to 1992, Mr. Alfieri
was associated with Manufacturers Hanover Trust Company (now Chase Manhattan
Bank), where he served in various capacities in the Acquisition Finance Group.
CHRISTOPHER JANSEN - Portfolio Manager and Research Analyst for Chancellor
LGT Senior Secured Management, Inc. since 1990. From 1983 to 1990, Mr. Jansen
worked in the Acquisition Finance Group at Manufacturers Hanover Trust
Company, where he specialized in the structuring and negotiation of highly
leveraged financings.
CHRISTOPHER BONDY - Senior Secured Loan Research Analyst for Chancellor LGT
Senior Secured Management, Inc. since 1993. From 1988 to 1993, Mr. Bondy held
a variety of positions with The Bank of Tokyo Trust Company. From 1986 to
1988, Mr. Bondy was a Statistical Analyst with Moody's Investor Services.
GREGORY SMITH - Senior Secured Loan Research Analyst for Chancellor LGT Senior
Secured Management, Inc. since 1995. Mr. Smith was a Vice President with the
Continental Bank/Bank of America from 1993 to 1995 and held a variety of
positions with Chemical Bank (now Chase Manhattan Bank) from 1986 to 1993.
(1) Mr. Baldwin was an employee of Chancellor Capital Management until
10/31/96, when LGT Asset Management merged with Chancellor. The resulting
entity was renamed Chancellor LGT Asset Management, the Fund's sub-advisor.
[PHOTO]
THE GT GLOBAL FLOATING RATE FUND MANAGEMENT TEAM PORTFOLIO MANAGERS: (FRONT,
LEFT TO RIGHT) ANALYST TIM DAILEADER, GREGORY SMITH, DAN BALDWIN, (BACK, LEFT
TO RIGHT) CHRISTOPHER BONDY, CHRISTOPHER JANSEN, STEPHEN ALFIERI.
2
* * *
<PAGE>
INTERVIEW WITH THE
PORTFOLIO MANAGEMENT TEAM
Q HOW DID THE FUND PERFORM?
A The current yield based on the one-month period ended June 30, 1997 is
7.41%. Since the Fund's commencement of operations on May 1 of this year to
June 30, 1997, total return was 1.25%. Total return including the maximum 3%
early withdrawal charge was -1.75%. Although we are pleased with the Fund's
initial performance, please keep in mind that the performance quoted is for a
limited period of time.
Q WHAT DRIVES THE MARKETPLACE FOR THIS ASSET CLASS?
A The floating rate market is generally driven by merger and acquisition
(M&A) activity. Many acquisitive companies rely on non-investment grade loans
and debt securities as a primary source of capital for these transactions.
Typically, those loans represent the most attractive type of financing
available because of their senior position in the firm's capital structure
and the security they offer in the form of collateral. Factors that spur such
M&A activity include the amount of private capital available to investment
funds, corporate restructuring and industry consolidation. Specifically,
corporate spinoffs can generate opportunities for either investment funds or
established industry players to purchase businesses.
Q WHAT TYPE OF RISK IS THE PORTFOLIO SUBJECT TO?
A The Fund does not take on any significant interest rate risk since loans
pay interest based on a base rate that resets periodically, usually LIBOR
(London InterBank Offered Rate), that reflects current interest rate levels.
From an investor viewpoint, this is a positive in an environment where
interest rates are uncertain, especially since it can act as a hedge against
any interest rate increases.
One of the risks the Fund is exposed to is credit risk because the loans
purchased are generally non-investment grade quality. However, the Fund's
management has a strong credit background, specifically in non-investment
grade lending. The team is composed of six professionals with considerable
investment and banking experience, averaging approximately 11 years. Our
extensive experience and contacts in the marketplace afford the Fund a full
array of loan investment opportunities from which to build an attractive
portfolio. We employ a rigorous, methodical and disciplined credit review
process, analyzing each available loan based on its merits and risks. Before
any loan is included in the portfolio, it must meet the investment team's
credit criteria.
Q WHAT IS YOUR INVESTMENT PROCESS?
A In terms of overall investment strategy, we seek to invest in the best
risk/return investments. The process begins with determining our outlook on
macroeconomic trends, such as interest rate movements, debt supply and
demand, and earnings momentum for various industries. Input from multiple
sources in equity and high-yield markets provides more insight into specific
industry trends and contributes to our ability to evaluate total transaction
and security valuations. Again, through our extensive network of banks and
dealers, we believe we have superior access to a broad offering of investment
opportunities. We conduct a thorough review of both public and private
information in our financial analyses and valuations of collateral packages.
Constant credit monitoring of loans in the portfolio and ongoing evaluation
of other opportunities in the loan marketplace complete the investment
process.
Q WHAT IS YOUR OUTLOOK GOING FORWARD?
A The new loan issue calendar was fairly quiet for the first half of 1997,
but activity has since increased significantly, which we expect to continue
throughout the remainder of the year. Credit quality in the market in general
appears to remain sound, although there is some increase in leverage
(measured by the ratio of the borrowers' indebtedness to operating cash
flow). We continue to carefully monitor credit quality in both existing and
new issues and believe quality investments are in ample supply.
Although a number of new entrants into the marketplace have currently
generated an excess of loan investment demand over supply, we have still been
able to find sources of attractive new investment opportunities because of
our strong, long-standing reputation.
At this time, we find no adverse economic pressures that create significant
cause for concern. The non-investment grade market, overall, has exhibited
rational behavior. In general, we believe the structure and credit standards
at underwriting institutions have remained sound despite heavy demand.
3
* * *
<PAGE>
SECTOR ALLOCATION OF NET ASSETS %
JUNE 30, 1997
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Services 27.4
Capital Goods 18.0
Materials/Basic Industry 17.9
Technologoy 10.4
Consumer Non-Durables 6.3
Health Care 6.2
Finance/Other 4.3
Energy 3.6
Consumer Durables 3.1
Short-Term & Other 2.8
A complete listing of holdings and allocations may be found in the Financial
Statements section of this report.
<TABLE>
<CAPTION>
GT GLOBAL FLOATING RATE FUND % of
KEY HOLDINGS(2) Country Net Assets
<S> <C> <C>
STAR MARKETS, INC. A regional food retailer operating 48 stores in eastern U.S. 7.4
Massachusetts, with 31 in the metropolitan Boston area. The company also
operates a wholesale food business serving New England and New York locations.
L-3 COMMUNICATIONS CORP. Headquartered in New York City, the company is an U.S. 6.8
independent supplier of secure communications systems, avionics, telemetry
and microwave products and support services to aerospace prime contractors
and other commercial customers, as well as to the U.S. military and federal
agencies.
DEL MONTE CORP. Among the largest U.S. canned fruit and vegetable companies, U.S. 6.3
Del Monte was sold by a financial group led by Merrill Lynch & Co. Other
joint owners of Del Monte were Citicorp's venture capital unit, Charterhouse
International and a Japanese foods company.
OMNI SERVICES, INC. The U.S. subsidiary of the Elis Group, a diversified U.S. 6.2
rental service company that principally focuses on textile and laundry
rentals. Specifically, Omni is involved in the rental and laundering of
workwear and industrial items.
HUNTSMAN SPECIALITY CHEMICALS CORP. Manufactures and distributes a variety U.S. 6.2
of basic products for the chemical, plastics, detergent, personal care,
rubber and packaging industries.
BRIDGE INFORMATION SYSTEMS, INC. A market data company, that supplies over U.S. 6.1
6,500 institutions with information and news on equities, fixed-income,
foreign exchange, derivatives and commodities.
KSL RECREATION GROUP, INC. The third-largest owner and operator of golf U.S. 5.6
courses in the country.
ACME METALS, INC. Through its operating subsidiaries, ACME is a fully U.S. 4.3
integrated producer of steel, steel strapping products, welded steel tubing
and auto and light trucks and jacks.
TELEX COMMUNICATIONS, INC. Manufactures multimedia presentation, U.S. 4.3
professional audio, communications, aviation and hearing instrument products.
STONE CONTAINER INTERNATIONAL SERVICES, INC. A multinational paper, paper U.S. 4.3
packaging and pulp company.
</TABLE>
(2) Holdings represent senior secured corporate loans and/or senior secured
debt securities made to or issued by these companies.
Source: Bloomberg, August 1997.
4
* * *
<PAGE>
GT GLOBAL
FLOATING RATE
FUND, INC.
FINANCIAL
STATEMENTS
<PAGE>
GT GLOBAL FLOATING RATE FUND, INC. -- CONSOLIDATED
PORTFOLIO OF INVESTMENTS
June 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE % OF NET
SENIOR SECURED FLOATING RATE INTERESTS * *{/\} AMOUNT (NOTE 1) ASSETS
- ---------------------------------------------------------------------- ----------- ------------ -------------
<S> <C> <C> <C>
Services (27.4%)
Star Markets, Inc.: ................................................ -- -- 7.4
RETAILERS-FOOD
Term Loan C due 12/31/02 ......................................... 6,000,000 $ 6,000,000 --
Omni Services, Inc.: ............................................... -- -- 6.2
BUSINESS & PUBLIC SERVICES
Axel due 10/30/05 ................................................ 5,000,000 5,006,250 --
KSL Recreation Group, Inc.: ........................................ -- -- 5.6
LEISURE & TOURISM
Term loan A due 4/30/05 .......................................... 1,964,286 1,964,286 --
Term loan B due 4/30/06 .......................................... 1,964,286 1,964,286 --
Revolving credit due 4/30/03 ..................................... 661,225 661,225 --
Atlas Freighter Leasing, Inc.: ..................................... -- -- 3.7
TRANSPORTATION - AIRLINES
Term loan due 5/29/04 ............................................ 3,000,000 2,992,500 --
SC International Services, Inc.: ................................... -- -- 3.0
CARGO - AIRLINES
Term loan A-2 due 9/15/00 ........................................ 2,368,405 2,371,366 --
Term loan A due 9/15/00 .......................................... 20,835 20,862 --
Affinity Group: .................................................... -- -- 1.5
LEISURE & TOURISM
Revolving credit due 3/31/02 ..................................... 1,187,500 1,181,563 --
------------
22,162,338
------------
Capital Goods (18.0%)
L-3 Communications Corp.: .......................................... -- -- 6.8
AEROSPACE/DEFENSE
Term loan B due 3/31/05 .......................................... 2,500,000 2,495,000 --
Term loan C due 3/31/06 .......................................... 1,650,000 1,646,700 --
Term loan A due 3/31/04 .......................................... 1,375,000 1,372,250 --
Telex Communications, Inc.: ........................................ -- -- 4.3
ELECTRICAL PLANT/EQUIPMENT
Term loan B due 11/6/04 .......................................... 3,500,000 3,500,000 --
Laidlaw Chemical Waste, Inc.: ...................................... -- -- 3.7
ENVIRONMENTAL
Term loan B due 5/15/04 .......................................... 1,500,000 1,496,250 --
Term loan C due 5/15/05 .......................................... 1,500,000 1,496,250 --
Amphenol Corp.: .................................................... -- -- 3.2
ELECTRICAL PLANT/EQUIPMENT
Term loan B due 5/19/05 .......................................... 1,275,000 1,275,000 --
Term loan C due 5/19/06 .......................................... 1,275,000 1,275,000 --
------------
14,556,450
------------
Materials/Basic Industry (17.9%)
Huntsman Specialty Chemicals Corp.: ................................ -- -- 6.2
CHEMICALS
Term loan due 3/15/07 ............................................ 2,727,273 2,727,273 --
Term loan C due 3/15/05 .......................................... 2,272,727 2,272,727 --
ACME Metals, Inc.: ................................................. -- -- 4.3
METALS - STEEL
Term loan A due 8/1/01 ........................................... 3,500,000 3,508,750 --
</TABLE>
The accompanying notes are an integral part of the financial statements.
F1
<PAGE>
GT GLOBAL FLOATING RATE FUND, INC. -- CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE % OF NET
SENIOR SECURED FLOATING RATE INTERESTS * *{/\} AMOUNT (NOTE 1) ASSETS
- ---------------------------------------------------------------------- ----------- ------------ -------------
<S> <C> <C> <C>
Materials/Basic Industry (Continued)
Stone Container International Services, Inc.: ...................... -- -- 4.3
PAPER/PACKAGING
Term loan E due 10/1/03 .......................................... 3,500,000 $ 3,494,750 --
Interlake Corp.: ................................................... -- -- 3.1
METALS - NON-FERROUS
Term loan due 6/30/99 ............................................ 2,500,000 2,496,875 --
------------
14,500,375
------------
Technology (10.4%)
Bridge Information Systems, Inc.: .................................. -- -- 6.1
NETWORKING
Term loan C due 2/15/02 .......................................... 3,167,677 3,165,302 --
Term loan B due 12/31/01 ......................................... 1,755,738 1,754,421 --
Sprint Spectrum L.P.: .............................................. -- -- 4.3
WIRELESS COMMUNICATIONS
Term loan due 6/30/01 ............................................ 3,500,000 3,482,500 --
------------
8,402,223
------------
Consumer Non-Durables (6.3%)
Del Monte Corp.: ................................................... -- -- 6.3
FOOD
Term loan B due 3/31/05 .......................................... 5,100,000 5,119,125 --
------------
Health Care (6.2%)
Dade International, Inc.: .......................................... -- -- 3.7
MEDICAL TECHNOLOGY & SUPPLIES
Term loan C due 12/31/03 ......................................... 1,861,159 1,863,485 --
Term loan B due 12/31/02 ......................................... 1,129,427 1,130,836 --
Leiner Health Products Group: ...................................... -- -- 2.5
PHARMACEUTICALS
Term loan C due 12/30/05 ......................................... 2,000,000 2,000,000 --
------------
4,994,321
------------
Finance - Other (4.3%)
WCI Communities L.P., Inc.: ........................................ -- -- 4.3
REAL ESTATE
Term loan due 2/18/00 ............................................ 3,500,000 3,482,500 --
------------
Energy (3.6%)
Centennial Resoures, Inc.: ......................................... -- -- 3.6
COAL
Term loan B due 3/31/04 .......................................... 1,988,889 1,983,916 --
Term loan A due 3/31/02 .......................................... 950,000 947,625 --
------------
2,931,541
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F2
<PAGE>
GT GLOBAL FLOATING RATE FUND, INC. -- CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE % OF NET
SENIOR SECURED FLOATING RATE INTERESTS * *{/\} AMOUNT (NOTE 1) ASSETS
- ---------------------------------------------------------------------- ----------- ------------ -------------
<S> <C> <C> <C>
Consumer Durables (3.1%)
Manchester Tank & Equipment Co.: ................................... -- -- 3.1
APPLIANCES & HOUSEHOLD
Term loan due 7/30/97 ............................................ 2,493,725 $ 2,487,491 --
------------ -----
TOTAL SENIOR SECURED FLOATING RATE INTERESTS (cost $78,649,107) ...... 78,636,364 97.2
------------ -----
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- ---------------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C>
Dated June 30, 1997, with State Street Bank & Trust Co., due July 1,
1997, for an effective yield of 5.75%, collateralized by $135,000
U.S. Treasury Note, 6.125% due 3/31/98 (market value of collateral
is $137,385, including accrued interest). (cost $130,021) ........ 130,021 0.2
------------ -----
TOTAL INVESTMENTS (cost $78,779,128) * .............................. 78,766,385 97.4
Other Assets and Liabilities ......................................... 2,098,760 2.6
------------ -----
NET ASSETS ........................................................... $ 80,865,145 100.0
------------ -----
------------ -----
</TABLE>
- --------------
* For Federal income tax purposes, cost is $78,779,128 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 72,119
Unrealized depreciation: (84,862)
-------------
Net unrealized depreciation: $ (12,743)
-------------
-------------
</TABLE>
** Senior secured corporate loans and senior secured debt securities
in the Fund's portfolio generally have variable rates which adjust
to a base, such as the London Inter-Bank Offered Rate ("LIBOR"), on
set dates, typically every 30 days but not greater than one year;
and/or have interest rates that float at a margin above a widely
recognized base lending rate such as the Prime Rate of a designated
U.S. bank. Senior secured floating rate interests are, at present,
not readily marketable and may be subject to restrictions on
resale.
{/\} Senior secured floating rate interests often require prepayments
from excess cash flow or permit the borrower to prepay at its
election. The degree to which borrowers repay, whether as a
contractual requirement or at their election, cannot be predicted
with accuracy. As a result, the actual remaining maturity may be
substantially less than the stated maturities shown. However, it is
anticipated that the senior secured floating rate interests will
have an expected average life of three to five years.
The accompanying notes are an integral part of the financial statements.
F3
<PAGE>
GT GLOBAL FLOATING RATE FUND, INC. -- CONSOLIDATED
STATEMENT OF ASSETS
AND LIABILITIES
June 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments, at value (cost $78,779,128) (Note 1).............................. $ 78,766,385
U.S. currency.................................................................. 844
Receivable for Fund shares sold................................................ 1,542,138
Interest receivable............................................................ 739,776
Receivable for investments sold................................................ 206,472
Unamortized organizational costs (Note 1)...................................... 205,252
Receivable from Chancellor LGT Asset Management, Inc........................... 78,544
-------------
Total assets................................................................. 81,539,411
-------------
Liabilities:
Payable for distribution....................................................... 278,813
Payable for organization expenses (Note 1)..................................... 212,350
Payable for investment management and administration fees (Note 2)............. 92,500
Payable for transfer agent fees................................................ 31,671
Deferred facility fees (Note 1)................................................ 28,308
Payable for printing and postage expenses...................................... 13,725
Payable for professional fees.................................................. 10,069
Payable for custodian fees..................................................... 3,050
Payable for fund accounting fees (Note 2)...................................... 1,772
Payable for Directors' and Trustees' fees and expenses (Note 2)................ 570
Payable for registration and filing fees....................................... 280
Other accrued expenses......................................................... 1,058
-------------
Total liabilities............................................................ 674,166
-------------
Minority interest (Note 1)..................................................... 100
-------------
Net assets....................................................................... $ 80,865,145
-------------
-------------
Net asset value per share ($80,865,145 DIVIDED BY 8,087,189 shares
outstanding).................................................................... $ 10.00
-------------
-------------
Net assets consist of:
Paid in capital (Note 4)....................................................... $ 80,871,571
Undistributed net investment income............................................ 5,707
Accumulated net realized gain on investments................................... 610
Net unrealized depreciation of investments..................................... (12,743)
-------------
Total -- representing net assets applicable to capital shares outstanding........ $ 80,865,145
-------------
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F4
<PAGE>
GT GLOBAL FLOATING RATE FUND, INC. -- CONSOLIDATED
STATEMENT OF OPERATIONS
May 1, 1997 (commencement of operations) to June 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income:
Interest income....................................................................................... $ 965,931
Interest expense (Note 1)............................................................................. (8,177)
Facility fees earned (Note 1)......................................................................... 428
---------
Total investment income............................................................................. 958,182
---------
Expenses:
Investment management and administration fees (Note 2)................................................ 127,069
Transfer agent fees................................................................................... 39,650
Professional fees..................................................................................... 34,455
Printing and postage expenses......................................................................... 13,725
Amortization of organization costs (Note 1)........................................................... 7,098
Directors' and Trustees' fees and expenses (Note 2)................................................... 6,770
Fund accounting fees (Note 2)......................................................................... 3,226
Custodian fees........................................................................................ 3,050
Registration and filing fees.......................................................................... 1,305
Other expenses........................................................................................ 5,305
---------
Total expenses before reimbursement................................................................. 241,653
Expenses reimbursed by Chancellor LGT Asset Management, Inc....................................... (78,544)
---------
Total net expenses.................................................................................. 163,109
---------
Net investment income................................................................................... 795,073
---------
Net realized and unrealized loss on investments: (Note 1)
Net realized gain on investments...................................................................... 610
Net unrealized depreciation during the period......................................................... (12,743)
---------
Net realized and unrealized loss on investments......................................................... (12,133)
---------
Net increase in net assets resulting from operations.................................................... $ 782,940
---------
---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F5
<PAGE>
GT GLOBAL FLOATING RATE FUND, INC. -- CONSOLIDATED
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MAY 1, 1997
(COMMENCEMENT
OF OPERATIONS)
TO
JUNE 30, 1997
(UNAUDITED)
--------------
<S> <C>
Increase (decrease) in net assets
Operations:
Net investment income......................................................... $ 795,073
Net realized gain on investments.............................................. 610
Net change in unrealized depreciation of investments.......................... (12,743)
--------------
Net increase in net assets resulting from operations........................ 782,940
--------------
Distributions to shareholders: (Note 1)
From net investment income.................................................... (789,366)
--------------
Capital share transactions: (Note 4)
Increase from capital shares sold............................................. 80,344,479
Increase from shares reinvested............................................... 427,092
Decrease from capital shares repurchased...................................... --
--------------
Net increase from capital share transactions................................ 80,771,571
--------------
Total increase in net assets.................................................... 80,765,145
Net assets:
Beginning of period........................................................... 100,000
--------------
End of period *............................................................... $ 80,865,145
--------------
--------------
* Includes undistributed net investment income of.............................. $ 5,707
--------------
--------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F6
<PAGE>
GT GLOBAL FLOATING RATE FUND, INC. -- CONSOLIDATED
STATEMENT OF CASH FLOWS
May 1, 1997 (commencement of operations) to June 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Cash Provided by Operating Activities:
Net increase in net assets resulting from operations...... $ 782,940
Adjustments to reconcile net increase in net assets
resulting from operations to net cash provided by
operating activities:
Increase in receivables................................. (818,320)
Decrease in unamortized organizational costs............ 7,098
Net realized and unrealized loss on investments......... 12,133
Increase in payables.................................... 433,608
Deferred facility fees.................................. 28,308
------------
Net cash provided by operating activities............. 445,767
------------
Cash Used for Investing Activities:
Proceeds from principal payments and sales of senior
secured floating rate interests.......................... 294,778
Purchases of senior secured floating rate interests....... (79,149,747)
Purchases of short-term investments....................... (32,966,021)
Proceeds from sales and maturities of short-term
investments.............................................. 32,836,000
------------
Net cash used for investing activities................ (78,984,990)
------------
Cash Provided by Financing Activities:
Proceeds from capital shares sold......................... 78,802,341
Proceeds from bank line of credit......................... 10,711,000
Repayment of bank line of credit.......................... (10,711,000)
Dividends paid to shareholders............................ (362,274)
------------
Net cash provided by financing activities............. 78,440,067
------------
Net decrease in cash...................................... (99,156)
Cash, beginning of the period............................. 100,000
------------
Cash, end of the period................................... $ 844
------------
------------
Non-Cash Financing Activities:
Capital shares issued in reinvestment of dividends paid to
shareholders............................................. $ 427,092
------------
------------
</TABLE>
F7
<PAGE>
GT GLOBAL FLOATING RATE FUND, INC. -- CONSOLIDATED
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding,
total investment return, ratios and supplemental data. This information has been
derived from information provided in the financial statements.
<TABLE>
<CAPTION>
MAY 1, 1997
(COMMENCEMENT
OF
OPERATIONS)
TO
JUNE 30, 1997
(UNAUDITED)
-------------
<S> <C>
Per Share Operating Performance:
Net asset value, beginning of period............................................ $ 10.00
-------------
Income from investment operations:
Net investment income......................................................... 0.11
Net realized and unrealized loss on investment................................ --(c)
-------------
Net increase from investment operations..................................... 0.11
Distributions to shareholders:
From net investment income.................................................... (0.11)
-------------
Net asset value, end of period.................................................. $ 10.00
-------------
-------------
Total investment return......................................................... 1.25% (b)
Ratios and supplemental data:
Net assets, end of period (in 000's)............................................ $80,865
Ratio of net investment income to average net assets............................ 7.31% (a)
Ratio of expenses to average net assets:
With expense reimbursement by Chancellor LGT Asset Management, Inc. (Notes 1 &
5)........................................................................... 1.50% (a)
Without expense reimbursement by Chancellor LGT Asset Management, Inc......... 2.22% (a)
Ratio of interest expense to average net assets (Note 1)........................ .08% (a)
Portfolio turnover rate......................................................... 4% (a)
</TABLE>
- --------------
(a) Annualized
(b) Not annualized
(c) Amount is less than $.01 per share.
The accompanying notes are an integral part of the financial statements.
F8
<PAGE>
GT GLOBAL FLOATING RATE FUND, INC. -- CONSOLIDATED
NOTES TO
FINANCIAL STATEMENTS
June 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
GT Global Floating Rate Fund, Inc. ("Fund") is organized as a Maryland
corporation and is registered under the Investment Company Act of 1940, as
amended ("1940 Act"), as a continuously offered non-diversified, closed-end
management investment company.
The Fund invests all of its investable assets in the Floating Rate Portfolio
("Portfolio"). The Portfolio is organized as a Delaware Business Trust and is
registered under the 1940 Act as a non-diversified, closed-end management
investment company.
The Portfolio has investment objectives, policies, and limitations substantially
identical to those of the Fund. Therefore, the financial statements of the Fund
and the Portfolio have been presented on a consolidated basis, and represent all
activities of both the Fund and Portfolio. Through June 30, 1997, all of the
beneficial interest in the Portfolio was owned either by the Fund or Chancellor
LGT Asset Management, Inc., which has a nominal ($100) investment in the
Portfolio.
The following is a summary of significant accounting policies consistently
followed by the Fund and Portfolio in the preparation of the financial
statements. The policies are in conformity with generally accepted accounting
principles, and the financial statements may include certain estimates made by
management.
(A) PORTFOLIO VALUATION
The Portfolio invests primarily in senior secured corporate loans ("Corporate
Loans") and senior secured debt securities ("Corporate Debt Securities") that
meet credit standards established by Chancellor LGT Senior Secured Management,
Inc. (the "Manager").
When possible, the Manager will rely on quotations provided by banks, dealers or
pricing services with respect to Corporate Loans and Corporate Debt Securities.
Whenever it is not possible to obtain such quotes, the Manager, subject to
guidelines reviewed by the Portfolio's Board of Trustees, values the Corporate
Loans and Corporate Debt Securities at fair value, which approximates market
value. In valuing a Corporate Loan or Corporate Debt Security, the Manager
considers, among other factors, (i) the creditworthiness of the U.S. or non-U.S.
Company borrowing or issuing Corporate Debt Securities ("Borrower") and any
intermediate loan participants, (ii) the current interest rate, period until
next interest rate reset and maturity of the Corporate Loan or Corporate Debt
Security, and (iii) recent prices in the market for instruments of similar
quality, rate, period until next interest rate reset and maturity.
The value of interest rate swaps, caps and floors is determined in accordance
with a formula and then confirmed periodically by obtaining a bank quotation.
Obligations with remaining maturities of 60 days or less are valued at amortized
cost unless this method no longer produces fair valuations. Repurchase
agreements are valued at cost plus accrued interest. Rights or warrants to
acquire stock or stock acquired pursuant to the exercise of a right or warrant,
may be valued taking into account various factors such as original cost to the
Portfolio, earnings and net worth of the issuer, market prices for securities of
similar issuers, assessment of the issuer's future prosperity, liquidation value
or third party transactions involving the issuer's securities.
Investments for which market quotations are not readily available (including
restricted securities which are subject to limitations on their sale) are valued
at fair value as determined in good faith by or under the direction of the
Portfolio's Board of Trustees.
(B) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by the Portfolio, it is the
Portfolio's policy to always receive, as collateral, United States government
securities or other high quality debt securities of which the value, including
accrued interest, is at least equal to the amount to be repaid to the Portfolio
under each agreement at its maturity.
(C) FOREIGN CURRENCY SWAPS
Foreign currency swaps are the exchange by the Portfolio with another party (the
"counterparty") of the right to receive the currency in which a loan is
denominated for the right to receive U.S. dollars.
The Portfolio may enter into a transaction subject to a foreign currency swap
only if, at the time of entering into such swap, the outstanding debt
obligations of the counterparty are investment grade or determined to be of
comparable quality in the judgement of the Manager. The amounts of U.S. dollar
payments to be received by the Portfolio and the foreign currency payments to be
received by the counterparty are fixed at the time the swap arrangement is
entered into. The swap protects the Portfolio from fluctuations in exchange
rates and locks in the right to receive payments under the loan in a
predetermined amount of U.S. dollars.
(D) SECURITY TRANSACTIONS
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on a first-in,
first-out basis, unless otherwise specified. The Portfolio may trade securities
on other than normal settlement terms. This may increase the market risk if the
other party to the transaction fails to deliver and causes the Portfolio to
subsequently invest at less advantageous prices.
(E) TAXES
It is the policy of the Fund to meet the requirements for qualification as a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended ("Code"). It is also the intention of the Fund to make distributions
sufficient to avoid imposition of any excise tax under Section 4982 of the Code.
Therefore, no provision has been made for Federal taxes on income, capital
gains, and unrealized appreciation of securities held, or excise tax on income
and capital gains.
F9
<PAGE>
GT GLOBAL FLOATING RATE FUND, INC. -- CONSOLIDATED
(F) DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders from net investment income are declared daily and
paid or reinvested monthly. Income and capital gain distributions are determined
in accordance with Federal income tax regulations which may differ from
generally accepted accounting principles. These differences are primarily due to
differing treatments of income and gains on various investment securities held
by the Portfolio and timing differences.
(G) DEFERRED ORGANIZATIONAL EXPENSES
Expenses incurred by the Fund or Portfolio in connection with its organization,
its registration with the Securities and Exchange Commission and with various
states aggregated $212,350. These expenses are being amortized on a basis over a
five-period period.
(H) RESTRICTED SECURITIES
The Portfolio may invest all or substantially all of its assets in Corporate
Loans, Corporate Debt Securities or other securities that are rated below
investment grade by a nationally recognized statistical rating organization, or
in comparable unrated securities. The Portfolio is permitted to invest in
privately placed restricted securities. These securities may be resold in
transactions exempt from registration or to the public if the securities are
registered. Disposal of these securities may involve time-consuming negotiations
and expense, and prompt sale at an acceptable price may be difficult.
(I) SECURITIES PURCHASED ON A WHEN-ISSUED AND DELAYED DELIVERY BASIS
The Portfolio may purchase and sell interests in Corporate Loans and Corporate
Debt Securities and other portfolio securities on a when-issued and delayed
delivery basis, with payment and delivery scheduled for a future date. No income
accrues to the Portfolio on such interests or securities in connection with such
transactions prior to the date the Portfolio actually takes delivery of such
interests or securities. These transactions are subject to market fluctuations
and are subject to the risk that the value at delivery may be more or less than
the trade date purchase price. Although the Portfolio will generally purchase
these securities with the intention of acquiring such securities, they may sell
such securities before the settlement date. These securities are identified on
the accompanying Portfolio of Investments. The Portfolio has set aside
sufficient cash or liquid high grade debt securities as collateral for these
purchase commitments.
(J) LINE OF CREDIT
The Fund, along with certain other funds advised by Chancellor LGT Asset
Management, Inc., has a line of credit with BankBoston and State Street Bank.
The arrangements with the banks allow the Fund to borrow an aggregate maximum
amount of $200,000,000. The Fund is limited to borrowing up to 33 1/3% of the
value of the Fund's total assets.
For the period ended June 30, 1997, the weighted average outstanding daily
balance of bank loans (based on the number of days the loans were outstanding)
was $1,484,525 with a weighted average interest rate of 6.28%.
(K) INTEREST RATE SWAPS
Interest rate swaps involve the exchange by the Portfolio with another party of
their respective commitments to pay or receive interest, such as an exchange of
fixed rate payments for floating rate payments. The Portfolio will enter into
interest rate swaps in order to hedge all of its fixed rate Corporate Loans and
Corporate Debt Securities against fluctuations in interest rates. The Portfolio
usually will enter into interest rate swaps on a net basis, i.e., the two
payment streams are netted out with the Portfolio receiving or paying, as the
case may be, only the net amount of the two payments. The Portfolio will not
enter into any interest rate hedging transaction unless the Manager considers
the credit quality of the unsecured senior debt or the claims-paying ability of
the other party thereto to be investment grade. The risk of loss with respect to
interest rate swaps is limited to the net amount of interest payments that the
Portfolio is contractually obligated to make.
(L) INVESTMENT INCOME
Interest income is recorded on an accrual basis. Where a high level of
uncertainty exists as to collection of income on securities, income is recorded
net of all withholding tax with any rebate recorded when received. Facility fees
received are recognized as income ratably over the expected life of the loan.
Market discounts are accreted over the stated life of each applicable security.
2. RELATED PARTIES
Chancellor LGT Senior Secured Management, Inc. is the Portfolio's investment
manager and administrator. The Portfolio pays investment management and
administration fees to the Manager at the annualized rate of 0.95% of the
Portfolio's average daily net assets. Chancellor LGT Asset Management, Inc., an
affiliate of the Manager, ("Chancellor LGT") acts as administrator of the Fund.
The Fund pays Chancellor LGT administration fees, which are computed and paid
monthly, at an annualized rate of 0.25% of the Fund's average daily net assets.
GT Global, Inc., an affiliate of the Manager, acts as the distributor of shares
of Common Stock of the Fund.
The Manager, Chancellor LGT and GT Global voluntarily have undertaken during the
first year of operations to limit the Fund's expenses (exclusive of brokerage
commissions, taxes, interest, and extraordinary expenses) to the maximum annual
rate of 1.50% of the average daily net assets of the Fund.
GT Global Investor Services, Inc. ("GT Services"), an affiliate of the Manager,
Chancellor LGT and GT Global, is the transfer agent of the Funds. For performing
shareholder servicing, reporting, and general transfer agent services, GT
Services receives an annual maintenance fee of $17.50 per account, a new account
fee of $4.00 per account, a per transaction fee of $1.75 for all transactions
other than exchanges and a per exchange fee of $2.25. GT Services also is
reimbursed by the Funds for its out-of-pocket expenses for such items as
postage, forms, telephone charges, stationery and office supplies.
Chancellor LGT is the pricing and accounting agent for the Fund and Portfolio.
Each of the Fund and the Portfolio pays a monthly fee for
F10
<PAGE>
GT GLOBAL FLOATING RATE FUND, INC. -- CONSOLIDATED
these services to Chancellor LGT at the annualized rate, respectively of .02%
and .01% of their average daily net assets.
The Fund pays each of its Directors who is not an employee, officer or director
of the Manager or any of its affiliated companies $5,000 per year plus $300 for
each meeting of the board attended by the Director and reimburses travel and
other expenses incurred in connection with attending board meetings. The
Portfolio pays each of its Trustees who is not an employee, officer, or director
of the Manager or any of its affiliated companies $500 per year plus $150 for
each meeting of the board or any committee thereof attended by the Trustee.
3. PURCHASES AND SALES OF SECURITIES
For the period ended June 30, 1997, purchases and sales of investment securities
by the Portfolio, other than U.S. government obligations and short-term
investments, aggregated $79,149,747 and $501,250, respectively. There were no
purchases or sales of U.S. government obligations by the Portfolio for the
period ended June 30, 1997.
4. CAPITAL SHARES
At June 30, 1997, the Fund is authorized to issue 1 billion shares of capital
stock, $0.001 par value, all of which is classified as Common Stock.
<TABLE>
<CAPTION>
MAY 1, 1997 (COMMENCEMENT OF
OPERATIONS) TO JUNE 30, 1997
(UNAUDITED)
-----------------------------------
SHARES AMOUNT
--------------- ------------------
<S> <C> <C>
Shares sold............................. 8,044,480 $ 80,344,479
Shares issued in connection with
reinvestment of distributions......... 42,709 427,092
--------------- ------------------
8,087,189 80,771,571
Shares repurchased...................... -- --
--------------- ------------------
Net increase............................ 8,087,189 $ 80,771,571
--------------- ------------------
--------------- ------------------
</TABLE>
5. UNFUNDED LOAN INTEREST
As of June 30, 1997, the fund had unfunded loan commitments of $1,842,788, which
would be extended at the option of the borrower, pursuant to the following loan
agreements:
<TABLE>
<CAPTION>
UNFUNDED
COMMITMENT
BORROWER (IN THOUSANDS)
- --------------------------------------------- --------------
<S> <C>
KSL Recreation Group......................... $ 2,571
Affinity Group............................... 1,250
</TABLE>
6. TENDER OFFER
The Fund's Board of Directors considers each quarter the making of Tender Offers
which are offers to repurchase all or a portion of its shares of Common Stock
from stockholders at a price per share equal to the net asset value per share of
the Fund's Common Stock determined at the close of business on the day an offer
terminates. Shares of common stock held less than four years and which are
repurchased by the Fund pursuant to Tender Offers will be subject to an early
withdrawal charge of up to 3% of the lesser of the then current net asset value
or the original purchase price of the Common Stock being tendered.
F11
<PAGE>
GT GLOBAL FLOATING RATE FUND
GT GLOBAL FUNDS
GT GLOBAL OFFERS A BROAD RANGE OF FUNDS TO COMPLEMENT MANY INVESTORS'
PORTFOLIOS. FOR MORE INFORMATION AND A PROSPECTUS ON ANY OF THE GT GLOBAL
FUNDS, PLEASE CONTACT YOUR INVESTMENT ADVISOR OR CALL GT GLOBAL DIRECTLY AT
1-800-824-1580. THE PROSPECTUS CONTAINS MORE COMPLETE INFORMATION, INCLUDING
CHARGES, EXPENSES AND THE RISKS OF GLOBAL AND EMERGING MARKET INVESTING.
INVESTORS SHOULD READ THE PROSPECTUS CAREFULLY BEFORE INVESTING.
GROWTH FUNDS
/ / GLOBALLY DIVERSIFIED FUNDS
GT GLOBAL WORLDWIDE GROWTH FUND
Invests around the world, including the U.S.
GT GLOBAL INTERNATIONAL GROWTH FUND
Provides portfolio diversity by investing outside the U.S.
GT GLOBAL EMERGING MARKETS FUND
Gives access to the growth potential of developing economies
/ / GLOBAL FUNDS
GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
Focuses on worldwide opportunities from the demand for consumer products and
services
GT GLOBAL HEALTH CARE FUND
Invests in growing health care industries worldwide
GT GLOBAL FINANCIAL SERVICES FUND
Focuses on the worldwide opportunities from the demand for financial services
and products
GT GLOBAL INFRASTRUCTURE FUND
Seeks companies that build, improve or maintain infrastructure
GT GLOBAL NATURAL RESOURCES FUND
Concentrates on companies that own, explore or develop natural resources
GT GLOBAL TELECOMMUNICATIONS FUND
Invests in companies worldwide that develop, manufacture or sell
telecommunications services or equipment
/ / REGIONALLY DIVERSIFIED FUNDS
GT GLOBAL NEW PACIFIC GROWTH FUND
Offers access to the emerging and established markets of the Pacific Rim,
excluding Japan
GT GLOBAL EUROPE GROWTH FUND
Focuses on investment opportunities in the new, unified Europe
GT GLOBAL LATIN AMERICA GROWTH FUND
Invests in the emerging markets of Latin America
/ / SINGLE COUNTRY FUNDS
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
Invests in equity securities of small U.S. companies
GT GLOBAL AMERICA MID CAP GROWTH FUND
Concentrates on medium-sized companies in the U.S.
GT GLOBAL AMERICA VALUE FUND
Concentrates on equity securities of large cap U.S. companies believed to be
undervalued
GT GLOBAL JAPAN GROWTH FUND
Provides U.S. investors with direct access to the Japanese market
GROWTH AND INCOME FUND
GT GLOBAL GROWTH & INCOME FUND
Invests in blue-chip stocks and government securities
from around the world
INCOME FUNDS
GT GLOBAL GOVERNMENT INCOME FUND
Earns monthly income from global government securities
GT GLOBAL STRATEGIC INCOME FUND
Allocates its assets among debt securities from the U.S., developed foreign
countries and emerging markets
GT GLOBAL HIGH INCOME FUND
Invests in debt securities in emerging markets
GT GLOBAL FLOATING RATE FUND
Invests primarily in senior secured floating rate loans that have the potential
to achieve a high level of current income
MONEY MARKET FUND
GT GLOBAL DOLLAR FUND
Invests in high quality, U.S. dollar-denominated money market securities
worldwide for stability and preservation of capital
[LOGO]
THIS REPORT MUST BE ACCOMPANIED OR PRECEDED BY A CURRENT PROSPECTUS.
<PAGE>
[LOGO]
GT Global, Inc.
Fifty California Street
27th Floor
San Francisco, California
94111-4624
DATED MATERIAL
PLEASE EXPEDITE
GT GLOBAL FLOATING RATE FUND
FLOSR708015M
