<PAGE>
LGT ASSET MANAGEMENT
OVER 25 YEARS
OF INVESTING
WORLDWIDE
G.T. GLOBAL
DEVELOPING
MARKETS
FUND, INC.
SEMIANNUAL REPORT
JUNE 30, 1996
[LOGO]
<PAGE>
TABLE
OF CONTENTS
<TABLE>
<S> <C>
Report from the Fund
Managers and Key
Portfolio Holdings... 1
Financial
Statements........... F1
The views of the
Funds' management and
portfolio holdings
described in this
semiannual report are
as of August 1, 1996;
these views and
portfolio holdings
may have changed.
</TABLE>
<PAGE>
INTERVIEW WITH PORTFOLIO MANAGERS JIM BOGIN AND SIMON NOCERA
Q HOW DID THE FUND PERFORM?
A The Fund had a strong six months to June 30, 1996, based on net asset
value (NAV), returning a total of 14.05%. The Fund's one year performance as
of June 30, 1996, based on total return of NAV, placed it second within its
peer group of 18 emerging market funds, according to Micropal.(1)
Although the Fund's NAV has fared well within the universe of emerging
markets, discounts of closed-end funds are currently at a high level. The
share price of the Fund, as traded on the New York Stock Exchange, was at a
15.9% discount to NAV on June 30. As interest in this asset class increases,
we believe investors will recognize funds that continue to provide superior
returns and effective management, and look for the Fund's discount to narrow
accordingly.
Q WHY DO YOU THINK THE FUND'S HOLDINGS HAVE DONE AS WELL AS THEY HAVE?
A Both the bond and equity portions contributed. On the equity side,
Brazilian companies performed quite well, including stocks in banking, beer
and utilities. Colombian banks recovered, and the Venezuelan market had a
healthy run. In Asia, our Hong Kong stocks rose nicely, as did our small
stake in the Philippines. Our Czech telephone stock also enhanced the Fund's
returns. South Africa, on the other hand, was negative.
STOCK MARKET PERFORMANCE
Venezuela 56.44%
Brazil 28.41
Philippines 19.48
Hong Kong 12.68
Colombia 2.92
South Africa -7.14
Six-month total return of the Morgan Stanley Capital Indices to June 30, 1996.
Returns are in U.S. dollars with reinvested dividends.
Q HOW DID THE FUND'S DEBT PORTION PERFORM?
A At June 30, 1996, the Fund had 32.2% invested in emerging market debt
instruments. The year-to-date total return to June 30 was 15.8% for the bond
portion. During this period, Brady bonds outperformed emerging market equities
as evidenced by the return of the JP Morgan Emerging Markets Brady Index
(EMBI)(2) 10.33%, versus the return of the Morgan Stanley Emerging Markets
Free Index 8.86%.(3)
As the effects of the Mexican crisis have been absorbed, we believe emerging
market fundamentals have been significantly improved by strict adherence to
critical reform programs. The two economies that suffered the most, Mexico and
Argentina, seem to be demonstrating positive signs of economic growth. While
some uncertainties remain about Brazil's commitment to reform, especially
fiscal, most of the bad news appears to have already been priced into the
market. Emerging fixed income markets have done well because yields started to
rise in the aftermath of the crisis. As investors began to realize these
countries were serious in their commitment to stabilize their economies and pay
back debt, many returned to fixed income markets.
Another significant event for emerging fixed income markets was the rerating
of Polish bonds to investment grade--a first for Brady bonds. Also,
investors' interest in Russian debt was heightened with the agreement of a
three-year International Monetary Fund (IMF) facility, improving fundamentals
and the prospect of a Yeltsin presidential victory ensuring continuity in
macro- management. Expectations are that Russian GDP will range from flat to
a possible increase of 2% to 3%, compared to a contraction of 5% in 1995.
Inflation is coming down, the ruble is stable and a fairly successful fiscal
program has been implemented, supported by a stronger monetary policy.
Moreover, Russia's external credit indicators are better than those in some
other markets.
Q WHAT WERE THE IMPLICATIONS OF THE CORRECTIONS IN U.S. TREASURIES FOR WORLD
BOND MARKETS?
A The February and March corrections in U.S. Treasuries interrupted the rally
in emerging fixed income markets, but the asset class recovered and recouped
most of its early March losses, despite the fact that U.S. Treasuries were
moving up in terms of yield. We believe this reflects increasing recognition of
the outstanding value in emerging fixed income markets. The emerging market debt
portion of the Fund's performance followed these developments quite closely and
enjoyed increasing returns until mid-February, when gains were reversed due to
the rise in U.S. yields; performance began to strengthen again beginning mid-
March.
Q WHAT ABOUT DISAPPOINTMENTS ON THE BOND SIDE?
A Bulgaria did not live up to expectations and negatively affected the debt
portion of the Fund. For the last three years, Bulgaria's lack of political
consensus has hindered the implementation of reforms necessary to bring down
inflation, address the fiscal deficit and stabilize the economy. Under these
circumstances, multilateral agencies have been reluctant to provide assistance.
As the currency weakened, the Bulgarian government intervened in support,
costing the country in reserves and, in turn, giving rise to fears of a default
on its Brady commitments. Recently the government finally agreed to close down
loss-making enterprises and is close to completion of a standby agreement with
the IMF.
(1) The Fund was ranked third out of 16 funds for the two-year period ended
June 30, 1996. Micropal rankings do not include sales charges. Past performance
is no guarantee of future results. Micropal is a nationally recognized mutual
fund research organization.
1
<PAGE>
INTERVIEW WITH THE PORTFOLIO MANAGERS CONTINUED
Q ALTHOUGH THE EQUITY PORTION PERFORMED WELL, WERE THERE ANY AREAS THAT DID
NOT LIVE UP TO EXPECTATIONS?
A The South Korean market has been plagued by political scandals and falling
dynamic random access memory (DRAM) prices. Gold prices weakened so our holding
in Ashanti Goldfields, an African producer, fell somewhat. Singer, the sewing
machine and appliance company, did not perform well as a result of weak
consumption in Mexico and a strike at its plant in Brazil.
Q WHAT HAS HAPPENED IN LATIN AMERICA OVER THE PAST SIX MONTHS?
A All the Latin American markets experienced gains with the exception of
Chile. However, despite weak returns, Chile's situation is attractive; sound
growth is forcing them to raise interest rates--which we think is bad for the
stock market in the short term, but good for Chile's economy in the long term.
Argentina and Mexico are recovering slowly after their deep recessions last
year, and interest rates have come down quite a bit in Mexico.
In Brazil, the market has been dominated by the telephone companies, which were
able to raise rates and are expected to be privatized. At the same time, most
private sector companies have suffered, since the government has kept interest
rates so high,indicating that it's really a two-tiered market. Venezuela's
market enjoyed sharp gains as money flowed in on expectations of an agreement
with the IMF to free the currency and cut the budget deficit. Colombia is still
under pressure from relatively high interest rates and attempts to force the
president to resign. In Peru, the New York Stock Exchange listing of the
telephone company, which is almost half their stock market, dominated the
news.(4)
Q HOW DID THE NEGATIVE INVESTMENT ENVIRONMENT IN SOUTH AFRICA AFFECT THE
FUND?
A In South Africa, investors decided interest rates were not high enough to
support the currency at its then current level, resulting in a selloff of more
than 20%. The Fund maintained approximately 5% in South Africa, so we were not
significantly affected. We hold some resource stocks and a beer company (one of
the world's largest). With the end of apartheid, South Africa's main challenge
is to grow the economy more than 4% per year just to hold unemployment steady;
yet, they can't grow too quickly or inflation might edge up uncomfortably.
Although they have many world class companies, we think they may be in a bit of
a macroeconomic bind at present.
Q HONG KONG REPRESENTS THE FUND'S LARGEST GEOGRAPHIC CONCENTRATION OF EQUITY
INVESTMENTS. HOW WOULD YOU CHARACTERIZE OPPORTUNITIES THERE IN LIGHT OF THE
TURNOVER TO CHINA NEXT YEAR?
A We feel that when a political event is as well anticipated and publicized
as the return of Hong Kong, the news is likely already in the price. It's always
possible that Hong Kong will not be run as well as it has been in the past, but
the economy is still one of the most dynamic in the world, and we find
attractive opportunities in the stock market.
Q WHY DO FINANCE STOCKS COMPOSE YOUR LARGEST SECTOR HOLDINGS?
A In emerging markets, finance stocks account for about 25% of the IFC Global
Index (IFCG).(5) Unlike in the U.S., finance and banking are in the early stages
of development in many nations. As incomes rise, people open bank accounts and
demand ever greater, sophisticated financial services. In some countries banks
are quite strong, and they can often be considered proxies for the economy or
market as a whole.
Q WHAT WAS THE FUND'S INVESTMENT STRATEGY OVER THE COURSE OF THE SIX MONTHS?
A In Latin American equities, we continued to hold our Colombian, Brazilian
and Venezuelan positions. We stayed out of Mexico and Argentina, which seemed
expensive in valuation terms. We also hold a Panamanian trade bank, which did
quite well. We increased our allocation to eastern Europe through Poland and the
Czech Republic, and bought shares in a Portugese bank. We raised our weighting
to the Philippines, which did well, and have kept most of our small weighting in
India.
In terms of the Fund's debt position, we maintained a fairly high portion in
emerging market debt, over 40% for the first four months of the year, and
gradually reduced it to about 32% as we felt more bullish on the growth
recovery, and hence equities, in emerging markets. We continued to diversify
geographically and increased our debt position in eastern Europe and Asia,
especially in Russia, Poland and Indonesia, while reducing our exposure in
Bulgaria.
We increased our exposure to Russian debt from 0% to 10% over the six months,
primarily as a result of stronger fundamentals and outstanding value, with the
spread over U.S. Treasuries at 1,650 basis points (100 bp equal 1%). As the
volatility of Russian debt increased prior to the second round of the election
on July 3, we reduced our exposure to a position neutral to the index (J.P.
Morgan EMBI), with the intent of raising our position only when Yeltsin's
victory was confirmed.
We also increased our allocation to Brazilian and Mexican debt. Despite Brazil's
slow progress toward political and economic reform, we believe it is poised for
outperformance compared to other Latin American countries, particularly since
the market has already priced in much of the bad news. Given progress made
toward privatization and the decline in inflation, which means real interest
rates are coming down (thereby lessening the government's burden to service
their ballooning debt), we expect the fiscal situation to improve. Continued
evidence of a Mexican
2
<PAGE>
recovery and the success of the Mexican Brady debt swap into a 30-year Eurobond
made Mexican Brady and Eurobonds attractive fixed income investments for us.
Q WHERE DO YOU EXPECT TO FIND OPPORTUNITIES GOING FORWARD?
A We may buy a small amount of stock in Russia, which is cheap but high in
risk. We may use the weakness in South Africa and South Korea as opportunities
to increase our equity weightings there.
On the debt side, we believe emerging market economies continue to provide
considerable value and growth potential against a backdrop of accommodative
monetary policy in the global arena, with the exception of the U.S. which is
experiencing moderately strong growth. We have raised exposure (in terms of
spread duration) to emerging markets debt while maintaining an underweighted
U.S. interest rate exposure. We believe the value of emerging countries, based
on the policies being implemented and the growth potential, is outstanding. In
other words, the spread between yields in these markets and U.S. Treasuries is
very appealing and, in our view, fully prices in any risk that these economies
could turn sour. Even if U.S. Treasuries rise to 7 1/4% or even 7 3/4%, as long
as they do so in a moderate fashion, then emerging markets could still do
extremely well. There may be hiccups along the way, but investors ultimately
return to value, and we believe value is the fundamental story in emerging
markets as long as they continue their current paths of reform.
EMERGING MARKETS DEBT YIELD
U.S. 30-Year Treasury Emerging Markets Bond Index
--------------------- ---------------------------
12/90 8.3 14.8
8.225 14.63
8.222 13.81
8.235 13.2
8.193 12.81
8.246 12.82
8.417 12.44
8.382 12.17
8.086 11.63
7.809 11.34
7.894 11.48
7.978 11.79
7.451 11.03
7.785 11.12
7.8 11.26
7.946 11.65
8.052 11.44
7.833 11.22
7.784 11.08
7.456 10.65
7.476 10.63
7.375 10.89
7.629 11.53
7.621 12.36
7.383 12.24
7.212 12.03
6.959 11.72
6.912 11.4
6.943 11.37
6.979 11.09
6.677 10.6
7/93 6.566 10.18
6.235 9.79
6.034 9.72
5.957 8.95
6.288 9.31
6.336 8.69
6.21 8.65
6.671 9.99
7.101 12
7.309 12.26
7.394 11.51
7.622 13.45
7.385 13.15
7.56 12.68
7.818 13.01
7.959 13.73
7.988 13.95
7.881 15.11
7.757 15.67
7.508 16.6
7.43 17.12
7.339 15.47
6.667 13.78
6.624 13.61
6.904 13.87
6.764 13.64
6.485 13.21
6.347 13.38
6.135 12.91
5.955 12.04
6.029 11.05
6.24 12.47
6.6 12.58
6.79 12.18
6.93 12.3
7.06 11.91
7/96 7.03 12
Please keep in mind that there are significant risks involved in emerging fixed
income markets and that U.S. Treasuries are considered low risk. The indices
represented above are unmanaged and do not reflect the performance of any GT
Global Mutual Fund.
Sources: Datastream and Bloomberg, July 1996
ABOUT THE PORTFOLIO MANAGERS
JAMES M. BOGIN - Portfolio manager for LGT Asset Management since 1993.
Previously, Mr. Bogin was a fund manager for Nomura Investment Management from
1989 to 1993. He received his B.A. from Harvard College.
SIMON E. NOCERA - Chief investment officer of emerging market debt for LGT Asset
Management since 1996; portfolio manager and director of research since 1992.
Previously, Mr. Nocera was senior vice president, and director of global fixed
income research for the Putnam Companies from 1991 to 1992, and an economist for
the International Monetary Fund from 1986 to 1991.
GEOGRAPHIC ALLOCATION OF NET ASSETS(6)
JUNE 30, 1996 JUNE 30, 1995
ARGENTINA 5.4% 8.5%
BRAZIL 12.9 10.7
BULGARIA 1.2 4.3
CANADA 0.5 _
CHILE 3.2 _
CHINA 0.1 -
COLOMBIA 5.5 3.8
COSTA RICA 0.1 0.2
CZECH REPUBLIC 3.3 0.6
ECUADOR 1.7 3.0
GHANA 1.9 -
HONG KONG 10.4 5.8
HUNGARY 0.6 -
INDIA 3.5 4.1
INDONESIA 1.2 -
JORDAN - 1.4
KOREA 3.1 3.0
LUXEMBOURG 0.2 -
MALAYSIA 1.0 4.0
MEXICO 5.6 9.3
MOROCCO 1.8 3.6
NIGERIA 3.0 3.6
PAKISTAN 0.6 2.1
PANAMA 5.1 1.8
PERU - 4.3
PHILIPPINES 3.2 -
POLAND 3.8 4.1
PORTUGAL 2.2 -
RUSSIA 3.5 0.4
SINGAPORE 1.2 3.0
SOUTH AFRICA 3.6 3.3
SPAIN - 0.3
SWITZERLAND 1.1 -
TURKEY - 0.5
UK 0.5 1.6
U.S. & OTHER 3.8 6.9
URUGUAY 0.4 -
VENEZUELA 4.8 5.8
3
<PAGE>
ALLOCATION OF NET ASSETS(6)
JUNE 30, 1996
FINANCE 25.5%
SERVICES 9.6
CONSUMER NON-DURABLES 7.8
MATERIALS/BASIC INDUSTRY 7.2
ENERGY 6.3
CONSUMER DURABLES 3.2
MULTI-INDUSTRY/MISC. 2.3
CAPITAL GOODS 0.8
FIXED INCOME INVESTMENTS 32.2
SHORT TERM & OTHER 5.1
G.T. GLOBAL DEVELOPING MARKETS FUND
<TABLE>
<CAPTION>
% OF
KEY EQUITY PORTFOLIO HOLDINGS(4) COUNTRY NET ASSETS
<S> <C> <C>
PEREGRINE INVESTMENT HOLDINGS LTD. A premier investment bank of Southeast Asia. The company has HONG KONG 3.0
underwriting, brokerage and merchant banking operations in several nations in the region.
BANCO LATINOAMERICANO DE EXPORTACIONES S.A. (BLADEX) This bank specializes in trade finance across PANAMA 3.0
Latin America and the Caribbean. Bladex makes mainly short-term, dollar-
denominated loans to banks in the region who loan funds to businesses in their respective countries.
DICKSON CONCEPTS INTERNATIONAL LTD. A wholesale and retail distributor of watches, writing instruments, HONG KONG 2.3
jewelry, lighters, clothing, leather goods and other merchandise. Sales in Hong Kong and Southeast Asia
compose the majority of earnings. In the UK, the company also owns Harvey Nichols, a high-end retailer.
COMPANHIA CERVEJARIA BRAHMA The largest brewery in Brazil, Companhia Cervejaria Brahma is benefiting BRAZIL 2.2
from strong consumption growth.
SPT TELECOM The main provider of telephone and telecommunications in the Czech Republic, SPT is owned CZECH REP 2.2
by the Czech Republic (15%) and by a joint venture between Dutch and Swiss phone companies (27%).
BANCO TOTTA E ACORES A commercial bank with offices in Portugal, the UK, Italy, Latin America and the PORTUGAL 2.2
Portugese-speaking countries of Africa.
ASHANTI GOLDFIELDS CO., Ltd. The company operates the Ashanti goldmine in Ghana. GHANA 1.9
UNIAO BANCOS BRASILEIRAS One of Brazil's largest commercial banks. BRAZIL 1.9
BANCO ITAU S.A. Brazil's second-largest private sector bank, Banco Itau has a net worth of approximately BRAZIL 1.8
US$3 billion and almost 1,000 branches.
SURAMERICANA DE SEGUROS S.A. A leading Colombian insurer. COLOMBIA 1.7
</TABLE>
(2) The J.P. Morgan Emerging Markets Brady Index (EMBI) is an arithmetic
average, weighted by market value, of Brady bonds from nine emerging bond
markets.
It includes the effect of reinvested dividends and is measured in U.S.
dollars.
(3) Morgan Stanley Emerging Market Free Index is an arithmetic average,
weighted by market value, of the performance of securities listed on the
exchanges of 22 emerging countries. It includes the effect of reinvested
dividends and is measured in U.S. dollars.
(4) There is no assurance the Fund will hold or continue to hold these or any
other securities mentioned in this report.
(5) The IFC Global Index is an arithmetic average, weighted by market value, of
the performance of securities listed on the exchanges of 27 emerging
countries.
It includes the effect of reinvested dividends and is measured in U.S.
dollars.
(6) Allocations will change based on current market conditions.
4
<PAGE>
G.T. GLOBAL
DEVELOPING
MARKETS
FUND, INC.
FINANCIAL
STATEMENTS
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.
REPORT OF
INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Directors of G.T. Global Developing Markets
Fund, Inc. ("Fund"):
We have audited the accompanying statement of assets and liabilities of G.T.
Global Developing Markets Fund, Inc., including the portfolio of investments, as
of June 30, 1996, the related statement of operations for the six months then
ended, the statements of changes in net assets for the six months then ended and
for the year ended December 31, 1995, and the financial highlights for the six
months ended June 30, 1996, for the year ended December 31, 1995, and for the
period from January 11, 1994 (commencement of operations) to December 31, 1994.
These financial statements and the financial highlights are the responsibility
of the Fund's management. Our responsibility is to express an opinion on these
financial statements and the financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of June
30, 1996, by correspondence with the custodians and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and the financial highlights referred
to above present fairly, in all material respects, the financial position of
G.T. Global Developing Markets Fund, Inc. as of June 30, 1996, the results of
its operations for the six months then ended, the changes in its net assets for
the six months then ended and for the year ended December 31, 1995, and the
financial highlights for the six months ended June 30, 1996, for the year ended
December 31, 1995, and for the period from January 11, 1994 (commencement of
operations) to December 31, 1994, in conformity with generally accepted
accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
AUGUST 16, 1996
F8
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.
PORTFOLIO OF INVESTMENTS
June 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET % OF NET
EQUITY INVESTMENTS COUNTRY SHARES VALUE ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (25.5%)
Peregrine Investment Holdings Ltd. ........................ HK 9,955,000 $ 14,339,933 3.0
INVESTMENT MANAGEMENT
Banco LatinoAmericano de Exportaciones S.A. (Bladex)
"E"{\/} .................................................. PAN 254,800 14,332,500 3.0
OTHER FINANCIAL
Banco Totta & Acores "B" - Registered ..................... PORT 531,300 10,405,191 2.2
BANKS-MONEY CENTER
Uniao Bancos Brasileiras "A" Preferred-/- ................. BRZL 334,200,000 9,051,597 1.9
BANKS-MONEY CENTER
Banco Itau S.A. Preferred ................................. BRZL 20,890,000 8,489,801 1.8
BANKS-REGIONAL
Suramericana de Seguros S.A. .............................. COL 464,609 8,275,589 1.7
INSURANCE - MULTI-LINE
Commercial Bank of Korea-/- ............................... KOR 900,280 8,214,639 1.7
BANKS-MONEY CENTER
Bank Gdanski S.A. - GDR{\/} ............................... POL 669,200 8,197,700 1.7
BANKS-REGIONAL
Banco Ganadero S.A. - ADR{\/} ............................. COL 402,500 7,848,750 1.6
BANKS-REGIONAL
Korea First Bank-/- ....................................... KOR 777,000 6,964,737 1.4
BANKS-REGIONAL
Ayala Land, Inc. "B" ...................................... PHIL 3,796,800 6,824,076 1.4
REAL ESTATE
Administradora de Fondos de Pensiones Provida S.A. -
ADR{\/} .................................................. CHLE 248,400 6,178,950 1.3
OTHER FINANCIAL
Malaysian Assurance Alliance Bhd. ......................... MAL 892,000 4,721,091 1.0
INSURANCE - MULTI-LINE
Banco de Colombia: ........................................ COL -- -- 0.8
BANKS-MONEY CENTER
144A GDR{.} {\/} ........................................ -- 357,200 3,036,200 --
Common .................................................. -- 2,365,000 897,933 --
Banco BHIF - ADR-/- {\/} .................................. CHLE 135,300 2,722,913 0.6
BANKS-REGIONAL
Banco Commercial S.A.: .................................... URGY -- -- 0.4
BANKS-REGIONAL
Reg. S GDR{c} {\/} ...................................... -- 64,300 1,157,400 --
144A ADR{.} {\/} ........................................ -- 56,325 1,013,850 --
Daewoo Securities Co.-/- .................................. KOR 3,969 92,496 --
SECURITIES BROKER
------------
122,765,346
------------
Services (9.6%)
Dickson Concepts International Ltd. ....................... HK 8,807,000 11,264,040 2.3
WHOLESALE & INTERNATIONAL TRADE
SPT Telecom-/- ............................................ CZCH 85,450 10,444,994 2.2
TELEPHONE NETWORKS
Philippine Long Distance Telephone Co. - ADR{\/} .......... PHIL 116,600 6,777,375 1.4
TELEPHONE - LONG DISTANCE
South China Morning Post (Holdings) Ltd. .................. HK 7,940,000 5,436,600 1.1
BROADCASTING & PUBLISHING
Amway Asia Pacific Ltd.{\/} ............................... HK 160,000 4,840,000 1.0
WHOLESALE & INTERNATIONAL TRADE
</TABLE>
The accompanying notes are an integral part of the financial statements.
F1
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.
<TABLE>
<CAPTION>
MARKET % OF NET
EQUITY INVESTMENTS COUNTRY SHARES VALUE ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (Continued)
Telecomunicacoes do Rio de Janeiro S.A. (Telerj)
Preferred-/- ............................................. BRZL 30,693,042 $ 3,454,840 0.7
TELEPHONE NETWORKS
Pakistan Telecommunications Co., Ltd. - GDR-/- {\/} ....... PAK 25,606 2,970,296 0.6
TELEPHONE NETWORKS
Sears Roebuck de Mexico, S.A. de C.V. "B1"-/- ............. MEX 609,800 1,602,535 0.3
RETAILERS-OTHER
------------
46,790,680
------------
Consumer Non-Durables (7.8%)
Companhia Cervejaria Brahma Preferred ..................... BRZL 17,550,000 10,471,611 2.2
BEVERAGES - ALCOHOLIC
Panamerican Beverages, Inc. "A"{\/} ....................... MEX 182,700 8,175,825 1.7
BEVERAGES - NON-ALCOHOLIC
South African Breweries Ltd. .............................. SAFR 263,400 7,729,159 1.6
BEVERAGES - ALCOHOLIC
Bavaria ................................................... COL 1,201,947 4,214,195 0.9
BEVERAGES - ALCOHOLIC
Companhia Tecidos Norte de Mina Preferred ................. BRZL 10,000,000 3,934,655 0.8
TEXTILES & APPAREL
Sudamtex de Venezuela - ADR{\/} ........................... VENZ 422,152 2,110,760 0.4
TEXTILES & APPAREL
JCT Limited - GDR-/- {\/} ................................. IND 124,000 403,000 0.1
TEXTILES & APPAREL
Noble China-/- {/\} ....................................... CHNA 150,000 362,691 0.1
BEVERAGES - ALCOHOLIC
------------
37,401,896
------------
Materials/Basic Industry (7.2%)
Ashanti Goldfields Co., Ltd. - GDR{\/} .................... GHNA 460,000 9,085,000 1.9
GOLD
Holderbank Financiere Glaris AG ........................... SWTZ 6,600 5,278,311 1.1
BUILDING MATERIALS & COMPONENTS
Oryx Gold Holdings Ltd. ................................... SAFR 2,235,600 4,958,817 1.0
GOLD
Anglo American Corporation of South Africa Ltd. ........... SAFR 74,900 4,750,474 1.0
GOLD
Gujarat Ambuja Cements - GDR{\/} .......................... IND 320,040 3,920,490 0.8
CEMENT
Paranapanema S.A. Min., Ind. E Construacao Preferred-/- ... BRZL 350,000,000 2,789,122 0.6
METALS - NON-FERROUS
Venezolana de Prerreducidos Caroni C.A. (Venprecar) -
GDR{\/} .................................................. VENZ 498,293 2,491,465 0.5
METALS - STEEL
Indo Gulf Fertilizer & Chemical - GDR{\/} ................. IND 1,030,000 1,339,000 0.3
CHEMICALS
------------
34,612,679
------------
Energy (6.3%)
Companhia Energetica de Minas Gerais (Cemig) - ADR{\/} .... BRZL 275,350 7,296,775 1.5
ELECTRICAL & GAS UTILITIES
C.A. La Electricidad de Caracas ........................... VENZ 8,733,335 7,269,857 1.5
ELECTRICAL & GAS UTILITIES
Empresa Nacional de Electricidad S.A. - ADR{\/} ........... CHLE 285,000 6,127,500 1.3
ELECTRICAL & GAS UTILITIES
</TABLE>
The accompanying notes are an integral part of the financial statements.
F2
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.
<TABLE>
<CAPTION>
MARKET % OF NET
EQUITY INVESTMENTS COUNTRY SHARES VALUE ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Energy (Continued)
Czeske Energeticke Zavody (CEZ AS)-/- ..................... CZCH 135,000 $ 5,377,801 1.1
ELECTRICAL & GAS UTILITIES
MOL Magyar Olaj-es Gazipari RT - GDR{\/} .................. HGRY 252,700 2,792,335 0.6
ENERGY SOURCES
LUKoil Holding - ADR{\/} .................................. RUS 38,400 1,660,800 0.3
GAS PRODUCTION & DISTRIBUTION
------------
30,525,068
------------
Consumer Durables (3.2%)
Johnson Electric Holdings Ltd. ............................ HK 3,500,000 7,867,709 1.6
AUTO PARTS
Singer Co. N.V.{\/} ....................................... HK 334,000 6,763,500 1.4
APPLIANCES & HOUSEHOLD
Tata Engineering and Locomotive Co., Ltd. - GDR{\/} ....... IND 48,000 864,000 0.2
AUTOMOBILES
------------
15,495,209
------------
Multi-Industry/Miscellaneous (2.3%)
Keppel Corp., Ltd. ........................................ SING 669,000 5,596,739 1.2
CONGLOMERATE
Grasim Industries Ltd. - GDR{\/} .......................... IND 157,000 2,865,250 0.6
MISCELLANEOUS
Mahindra & Mahindra Ltd. - GDR-/- {\/} .................... IND 146,666 1,576,660 0.3
MISCELLANEOUS
Peregrine Indian Smaller Companies Fund - 144A{.} -/-
{\/} ..................................................... UK 5,000 360,000 0.1
COUNTRY FUNDS
Mosenergo - 144A ADR{.} -/- {\/} .......................... RUS 10,000 265,000 0.1
MISCELLANEOUS
------------
10,663,649
------------
Capital Goods (0.8%)
Hindalco Industries Ltd. - 144A GDR{.} -/- {\/} ........... IND 105,000 3,937,500 0.8
INDUSTRIAL COMPONENTS
------------ -----
TOTAL EQUITY INVESTMENTS (cost $292,747,599) ................ 302,192,027 62.7
------------ -----
<CAPTION>
PRINCIPAL MARKET % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT VALUE ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Government & Government Agency Obligations (23.4%)
Argentina (4.8%)
Republic of Argentina:
Floating Rate Bond, 6.3125% due 3/31/05+ .............. USD 21,391,920 16,712,438 3.5
Discount Bond, 6.4375% due 3/31/23+ ................... USD 5,937,000 4,133,636 0.9
BOCON Pre 4, 5.42188% due 9/1/02+ ..................... USD 1,959,000 1,866,927 0.4
Brazil (3.4%)
Federal Republic of Brazil:
C Bond, 4.5% due 4/15/14 (Effective rate at period end
is 6.6678%, including "payment-in-kind" bonds.)[.]
++ ................................................... USD 15,325,044 9,491,949 2.0
Earned Interest Bond, 6.5% due 4/15/06+ ............... USD 5,450,000 4,371,935 0.9
Debt Conversion Bond Series L, 6.5625% due 4/15/12+ ... USD 3,866,000 2,631,296 0.5
Bulgaria (1.2%)
Bulgaria, Discount Bond Series A, 6.25% due 7/28/24 -
EURO+ .................................................. USD 10,830,000 5,618,063 1.2
</TABLE>
The accompanying notes are an integral part of the financial statements.
F3
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.
<TABLE>
<CAPTION>
PRINCIPAL MARKET % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT VALUE ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Government & Government Agency Obligations (Continued)
Colombia (0.1%)
Republic of Colombia, 8.7% due 2/15/16 .................. USD 800,000 $ 735,080 0.1
Costa Rica (0.1%)
Banco Central de Costa Rica, Principal Bond Series A,
6.25% due 5/21/10 ...................................... USD 900,000 648,000 0.1
Ecuador (1.7%)
Ecuador:
Past Due Interest Bond, 3% due 2/27/15 - Bearer
(Effective rate at period end is 4.3628%, including
"payment-in-kind" bonds).[.] + ....................... USD 12,639,977 5,624,790 1.2
Discount Bond, 6.0625% due 2/28/25 - EURO+ ............ USD 3,589,000 2,054,703 0.4
Past Due Interest Bond, 3% due 2/27/15 - Registered
(Effective rate at period end is 4.3628%, including
"payment-in-kind" bonds.)[.] + ....................... USD 1,301,588 579,206 0.1
Mexico (2.5%)
United Mexican States:
Discount Bond Series C, 6.35156% due 12/31/19+ +/+ .... USD 9,717,000 7,639,991 1.6
Global Bond, 11.5% due 5/15/26 ........................ USD 3,863,000 3,537,059 0.7
Petroleos Mexicanos (PEMEX), 6.53906% due 3/8/99+ ....... USD 1,000,000 972,500 0.2
Nigeria (3.0%)
Central Bank of Nigeria, Par Bond, 6.25% due 11/15/20++
+/+ .................................................... USD 27,250,000 14,517,794 3.0
Panama (2.1%)
Panama:
Interest Reduction Bond, When-issued - 3.5% due 7/17/14
- 144A{.} -/- ........................................ USD 11,525,000 6,425,188 1.3
Past Due Interest Bond, When-issued - Floating Rate,
due 7/17/16 - 144A{.} -/- ............................ USD 6,250,000 3,820,313 0.8
Philippines (0.4%)
Central Bank of the Philippines, Debt Conversion Bond
Series B, 6.4375% due 12/1/09+ ......................... USD 1,827,000 1,735,650 0.4
Poland (1.7%)
Poland:
Par Bond, 2.75% due 10/27/24 - EURO++ ................. USD 10,570,000 5,377,488 1.1
Past Due Interest Bond, 3.75% due 10/27/14 - EURO++ ... USD 3,512,000 2,704,240 0.6
Venezuela (2.4%)
Republic of Venezuela:
Debt Conversion Bond, 6.625% due 12/18/07+ ............ USD 6,500,000 4,594,688 0.9
Front Loaded Interest Reduction Bond Series A, 6.375%
due 3/31/07+ ......................................... USD 4,750,000 3,431,875 0.7
Discount Bond Series A, 6.375% due 3/31/20+ +/+ ....... USD 3,000,000 2,002,500 0.4
Front Loaded Interest Reduction Bond Series B, 6.5% due
3/31/07+ ............................................. USD 2,750,000 1,986,875 0.4
------------
Total Government & Government Agency Obligations (cost
$107,123,480) .............................................. 113,214,184
------------
Sovereign Debt (4.9%)
Morocco (1.8%)
Kingdom of Morocco, Tranche A Loan Agreement, 6.4375% due
1/1/09+ ................................................ USD 12,250,000 8,842,969 1.8
</TABLE>
The accompanying notes are an integral part of the financial statements.
F4
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.
<TABLE>
<CAPTION>
PRINCIPAL MARKET % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT VALUE ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Sovereign Debt (Continued)
Russia (3.1%)
Bank for Foreign Economic Affairs (Vnesheconombank) Loan
Agreement ** -/- ....................................... USD 22,635,000 $ 10,977,975 2.3
Bank for Foreign Economic Affairs (Vnesheconombank) Loan
Agreement ** -/- ....................................... DEM 10,417,000 3,680,760 0.8
------------
Total Sovereign Debt (cost $22,318,711) ..................... 23,501,704
------------
Corporate Bonds (3.5%)
Argentina (0.2%)
Industrias Metallurgicas Pescarmona S.A. (IMPSA), 11.75%
due 3/27/98 - 144A{.} .................................. USD 900,000 907,875 0.2
Colombia (0.4%)
Celcaribe S.A. Units, 13.5% due 3/15/04 - 144A++ {.}
-/- .................................................... USD 2,000,000 2,080,000 0.4
India (0.4%)
Reliance Industries Ltd., Convertible Bond, 3.5% due
11/03/99 ............................................... USD 1,690,000 1,736,475 0.4
Indonesia (1.2%)
PT Tjiwi Kimia, 13.25% due 8/1/01 ....................... USD 2,000,000 2,240,000 0.5
PT Polysindo EKA Perkasa, 13% due 6/15/01:
EURO .................................................. USD 1,380,000 1,514,550 0.3
DTC ................................................... USD 280,000 307,300 0.1
Asia Pulp & Paper International Finance Co., Ltd., 11.75%
due 10/1/05 ............................................ USD 545,000 559,988 0.1
Rapp International Finance, 11.5% due 12/15/00 .......... USD 545,000 559,988 0.1
PT Indah Kiat International Finance Series B, 11.875% due
6/15/02 ................................................ USD 387,000 410,220 0.1
Luxembourg (0.2%)
Millicom International Cellular, 13.5% due 6/1/06 -
144A++ {.} -/- ......................................... USD 1,500,000 791,250 0.2
Mexico (1.1%)
Banco Nacional de Comercio Exterior, S.N.C. (BNCE) Trust
Division, 11.25% due 5/30/06 - 144A{.} ................. USD 4,394,000 4,350,060 0.9
Bufete Industrial S.A., 11.375% due 7/15/99 - 144A{.} ... USD 940,000 944,700 0.2
------------
Total Corporate Bonds (cost $16,632,075) .................... 16,402,406
------------
Structured Notes (0.4%)
Argentina (0.4%)
Stripped Republic of Argentina Par Spread Linked Note, 6%
due 1/23/97 - 144A (Issued by Internationale Nederlanden
Capital Holdings Corp. The principal of the Note is
linked to the spread between the internal rate of return
of the Republic of Argentina Par Bond due 3/31/23, minus
the yield to maturity of U.S. Treasury Bond, 6.5% due
8/15/05. The initial spread was 8.9%). (cost
$1,870,000){.} ......................................... USD 1,870,000 1,941,808 0.4
------------ -----
TOTAL FIXED INCOME INVESTMENTS (cost $147,944,266) .......... 155,060,102 32.2
------------ -----
<CAPTION>
NO. OF MARKET % OF NET
WARRANTS (0.5%) COUNTRY WARRANTS VALUE ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Pan American Silver Corp. Special Warrants, expire
8/27/96(.) -/- ........................................... CAN 330,500 2,421,600 0.5
METALS - NON-FERROUS
</TABLE>
The accompanying notes are an integral part of the financial statements.
F5
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.
<TABLE>
<CAPTION>
NO. OF MARKET % OF NET
WARRANTS (0.5%) COUNTRY WARRANTS VALUE ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Peregrine Investment Holdings Ltd. Warrants, expire
5/15/98-/- ............................................... HK 995,500 $ 123,465 --
INVESTMENT MANAGEMENT
------------ -----
TOTAL WARRANTS (cost $2,882,267) ............................ 2,545,065 0.5
------------ -----
<CAPTION>
PRINCIPAL MARKET % OF NET
SHORT-TERM INVESTMENTS CURRENCY AMOUNT VALUE ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Treasury Bills (0.4%)
Poland (0.4%)
Polish Treasury Bill, effective yield 24.94%, due 7/31/96
(cost $2,039,403) ...................................... PLN 5,500,000 1,982,723 0.4
------------
Commercial Paper - Indexed (0.4%)
United Kingdom (0.4%)
National Westminster Bank PLC, Currency-linked CD,
14.0165% due 8/20/96 (cost $2,000,000) ................. USD 2,000,000 1,935,246 0.4
------------ -----
TOTAL SHORT-TERM INVESTMENTS (cost $4,039,403) .............. 3,917,969 0.8
------------ -----
<CAPTION>
MARKET % OF NET
REPURCHASE AGREEMENT VALUE ASSETS
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated June 28, 1996, with State Street Bank & Trust Co.,
due July 1, 1996, for an effective yield of 5.2%,
collateralized by $13,420,000 Federal Home Loan Bank, 6%
due 10/30/97 (market value of collateral is $13,527,584,
including accrued interest). (cost $13,257,743) .......... 13,257,743 2.8
------------ -----
TOTAL INVESTMENTS (cost $460,871,278) * ..................... 476,972,906 99.0
Other Assets and Liabilities ................................ 4,681,154 1.0
------------ -----
NET ASSETS .................................................. $481,654,060 100.0
------------ -----
------------ -----
</TABLE>
- --------------
{\/} U.S. currency denominated.
-/- Non-income producing security.
{.} Security exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers.
{/\} Security is denominated in CAD.
{c} Security issued under Regulation S. Rule 144A and additional
restrictions may apply in the resale of such securities.
+ The coupon rate shown on floating rate note represents the rate at
period end.
** Underlying loan agreement currently in default.
++ The coupon rate shown on step-up coupon bond represents the rate at
period end.
[.] Bond pays stated or additional interest with "payment-in-kind"
(PIK) bonds.
+/+ Issued with detachable warrants or value recovery rights. The
current market value of each warrant or right is zero.
(.) Restricted securities: At June 30, 1996, the Fund owned the
following restricted security constituting 0.5% of net assets which
may not be publicly sold without registration under the Securities
Act of 1933 (Note 1). Additional information on the restricted
security is as follows:
ACQUISITION NUMBER OF FAIR VALUE
DESCRIPTION DATE WARRANTS COST PER SHARE
- ------------------------------ ----------- --------- ---------- ----------
Pan American Silver Corp.
Special Warrants, expire
8/27/96...................... 05/28/96 330,500 $2,882,267 $7.33
* For Federal income tax purposes, cost is $461,312,073 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 48,920,479
Unrealized depreciation: (33,259,646)
-------------
Net unrealized appreciation: $ 15,660,833
-------------
-------------
</TABLE>
Abbreviations:
ADR--American Depository Receipt
GDR--Global Depository Receipt
The accompanying notes are an integral part of the financial statements.
F6
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.
The Fund's Portfolio of Investments at June 30, 1996, was concentrated in the
following countries:
<TABLE>
<CAPTION>
PERCENTAGE OF NET ASSETS {D}
-------------------------------------------
FIXED INCOME,
RIGHTS & SHORT-TERM
COUNTRY (COUNTRY CODE/CURRENCY CODE) EQUITY WARRANTS & OTHER TOTAL
- -------------------------------------- ------ ------------- ---------- -----
<S> <C> <C> <C> <C>
Argentina (ARG/ARS) .................. 5.4 5.4
Brazil (BRZL/BRL) .................... 9.5 3.4 12.9
Bulgaria (BUL/LEV) ................... 1.2 1.2
Canada (CAN/CAD) ..................... 0.5 0.5
Chile (CHLE/CLP) ..................... 3.2 3.2
China (CHNA/RMB) ..................... 0.1 0.1
Colombia (COL/COP) ................... 5.0 0.5 5.5
Costa Rica (CR/CRI) .................. 0.1 0.1
Czech Republic (CZCH/CSK) ............ 3.3 3.3
Ecuador (ECDR/ECS) ................... 1.7 1.7
Ghana (GHNA/GHC) ..................... 1.9 1.9
Hong Kong (HK/HKD) ................... 10.4 10.4
Hungary (HGRY/HUF) ................... 0.6 0.6
India (IND/INR) ...................... 3.1 0.4 3.5
Indonesia (INDO/IDR) ................. 1.2 1.2
Korea (KOR/KRW) ...................... 3.1 3.1
Luxembourg (LUX/LUF) ................. 0.2 0.2
Malaysia (MAL/MYR) ................... 1.0 1.0
Mexico (MEX/MXN) ..................... 2.0 3.6 5.6
Morocco (MOR/MAD) .................... 1.8 1.8
Nigeria (NGE/NEN) .................... 3.0 3.0
Pakistan (PAK/PKR) ................... 0.6 0.6
Panama (PAN/PND) ..................... 3.0 2.1 5.1
Philippines (PHIL/PHP) ............... 2.8 0.4 3.2
Poland (POL/PLZ) ..................... 1.7 1.7 0.4 3.8
Portugal (PORT/PTE) .................. 2.2 2.2
Russia (RUS/SUR) ..................... 0.4 3.1 3.5
Singapore (SING/SGD) ................. 1.2 1.2
South Africa (SAFR/ZAR) .............. 3.6 3.6
Switzerland (SWTZ/CHF) ............... 1.1 1.1
United Kingdom (UK/GBP) .............. 0.1 0.4 0.5
United States & Other (US/USD) ....... 3.8 3.8
Uruguay (URGY/UYP) ................... 0.4 0.4
Venezuela (VENZ/VEB) ................. 2.4 2.4 4.8
------ ----- ----- -----
Total ............................... 62.7 32.7 4.6 100.0
------ ----- ----- -----
------ ----- ----- -----
</TABLE>
- --------------
{d} Percentages indicated are based on net assets of $481,654,060.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
JUNE 30, 1996
<TABLE>
<CAPTION>
MARKET VALUE CONTRACT DELIVERY UNREALIZED
CONTRACTS TO SELL: (U.S. DOLLARS) PRICE DATE DEPRECIATION
- ---------------------------------------- -------------- ----------- -------- --------------
<S> <C> <C> <C> <C>
Deutsche Marks.......................... 3,199,289 1.52645 08/13/96 $ (21,982)
Deutsche Marks.......................... 745,401 1.52313 08/13/96 (3,508)
-------------- --------------
Total Contracts to Sell (Receivable
amount $3,919,200)................... 3,944,690 (25,490)
-------------- --------------
THE VALUE OF CONTRACTS TO SELL AS A
PERCENTAGE OF NET ASSETS IS 0.82%
Total Open Forward Foreign Currency
Contracts, Net....................... $ (25,490)
--------------
--------------
</TABLE>
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
F7
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.
STATEMENT OF ASSETS
AND LIABILITIES
June 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $460,871,278) (Note 1)............................ $476,972,906
U.S. currency.................................................................... $ 502 --
Foreign currencies (cost $179,114)............................................... 179,919 180,421
---------
Segregated cash (Note 1).................................................................... 8,900,000
Receivable for securities sold.............................................................. 14,096,583
Interest receivable......................................................................... 2,498,967
Dividends and dividend withholding tax reclaims receivable.................................. 725,424
Unamortized organizational costs (Note 1)................................................... 179,910
Miscellaneous receivable.................................................................... 1,358
Cash held as collateral for securities loaned (Note 1)...................................... 35,112,335
-----------
Total assets.............................................................................. 538,667,904
-----------
Liabilities:
Payable for securities purchased (Note 1)................................................... 20,873,932
Payable for investment management and administration fees (Note 2).......................... 634,695
Payable for organization expenses (Note 1).................................................. 79,786
Payable for professional fees............................................................... 59,669
Payable for custodian fees (Note 1)......................................................... 40,361
Payable for printing and postage expenses................................................... 27,737
Payable for open forward foreign currency contracts, net (Note 1)........................... 25,490
Payable for fund accounting fees (Note 2)................................................... 9,655
Payable for Directors' fees and expenses (Note 2)........................................... 9,244
Payable for registration and filing fees.................................................... 2,262
Payable for transfer agent fees............................................................. 1,587
Other accrued expenses...................................................................... 137,091
Collateral for securities loaned (Note 1)................................................... 35,112,335
-----------
Total liabilities......................................................................... 57,013,844
-----------
Net assets.................................................................................... $481,654,060
-----------
-----------
Net asset value per share ($481,654,060 DIVIDED BY 36,416,667 shares outstanding)............. $ 13.23
-----------
-----------
Net assets consist of:
Paid in capital (Note 4).................................................................... $545,109,494
Undistributed net investment income......................................................... 11,343,995
Accumulated net realized loss on investments and foreign currency transactions.............. (90,884,961)
Net unrealized depreciation on translation of assets and liabilities in foreign
currencies................................................................................. (16,096)
Net unrealized appreciation of investments.................................................. 16,101,628
-----------
Total -- representing net assets applicable to capital shares outstanding..................... $481,654,060
-----------
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F9
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.
STATEMENT OF OPERATIONS
Six months ended June 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Interest income............................................................................ $10,888,191
Dividend income (net of foreign withholding tax of $343,469)............................... 4,511,641
Other income............................................................................... 76,437
----------
Total investment income.................................................................. 15,476,269
----------
Expenses:
Investment management fees (Note 2)........................................................ 3,206,801
Administration fees (Note 2)............................................................... 572,628
Custodian fees (Note 1).................................................................... 174,332
Printing and postage expenses.............................................................. 32,760
Fund accounting fees (Note 2).............................................................. 57,416
Transfer agent fees........................................................................ 39,048
Audit fees................................................................................. 35,672
Amortization of organization costs (Note 1)................................................ 35,281
Directors' fees and expenses (Note 2)...................................................... 18,928
Legal fees................................................................................. 14,742
Registration and filing fees............................................................... 3,000
Other expenses............................................................................. 37,139
----------
Total expenses before reductions......................................................... 4,227,747
----------
Expense reductions (Notes 1 & 5)....................................................... (102,507)
----------
Total net expenses....................................................................... 4,125,240
----------
Net investment income........................................................................ 11,351,029
----------
Net realized and unrealized gain on investments and foreign currencies: (Note 1)
Net realized gain on investments............................................... $14,586,740
Net realized loss on foreign currency transactions............................. (828,604)
----------
Net realized gain during the period...................................................... 13,758,136
Net change in unrealized depreciation on translation of assets and liabilities
in foreign currencies......................................................... (14,519)
Net change in unrealized appreciation of investments........................... 34,211,894
----------
Net unrealized appreciation during the period............................................ 34,197,375
----------
Net realized and unrealized gain on investments and foreign currencies....................... 47,955,511
----------
Net increase in net assets resulting from operations......................................... $59,306,540
----------
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F10
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS YEAR ENDED
ENDED DECEMBER 31,
JUNE 30, 1996 1995
------------- -------------
Increase (Decrease) in net assets
Operations:
Net investment income..................................................... $11,351,029 $26,375,900
Net realized gain (loss) on investments and foreign currency
transactions............................................................. 13,758,136 (78,379,558)
Net change in unrealized depreciation on translation of assets and
liabilities in foreign currencies........................................ (14,519) (3,021)
Net change in unrealized appreciation of investments...................... 34,211,894 47,401,359
------------- -------------
Net increase (decrease) in net assets resulting from operations......... 59,306,540 (4,605,320)
------------- -------------
Distributions to shareholders: (Note 1)
From net investment income................................................ -- (26,292,834)
Capital share transactions: (Note 4)
Adjustment to estimate of initial offering expenses....................... -- 373,757
------------- -------------
Total increase (decrease) in net assets................................. 59,306,540 (30,524,397)
Net assets:
Beginning of period....................................................... 422,347,520 452,871,917
------------- -------------
End of period............................................................. $481,654,060* $422,347,520**
------------- -------------
------------- -------------
<FN>
- --------------
* Includes undistributed net investment income of $11,343,995.
* * Includes accumulated net investment loss of $7,034.
</TABLE>
The accompanying notes are an integral part of the financial statements.
F11
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.
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 and market price
data for the shares.
<TABLE>
<CAPTION>
JANUARY 11, 1994
(COMMENCEMENT
SIX MONTHS OF OPERATIONS)
ENDED YEAR ENDED TO
JUNE 30, DECEMBER 31, DECEMBER 31,
1996 1995 1994
----------- ------------ ----------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 11.60 $ 12.44 $ 15.00
----------- ------------ ----------------
Income from investment operations:
Net investment income................. 0.31 0.72 0.35
Net realized and unrealized gain
(loss) on investments................ 1.32 (0.84) (2.46)
----------- ------------ ----------------
Net increase (decrease) from
investment operations.............. 1.63 (0.12) (2.11)
----------- ------------ ----------------
Distributions to shareholders:
From net investment income............ 0.00 (0.72) (0.35)
From net realized gain on
investments.......................... 0.00 0.00 (0.10)
----------- ------------ ----------------
Total distributions................. 0.00 (0.72) (0.45)
----------- ------------ ----------------
Net asset value, end of period.......... $ 13.23 $ 11.60 $ 12.44
----------- ------------ ----------------
----------- ------------ ----------------
Market value, end of period............. $ 11.13 $ 9.75 $ 9.75
----------- ------------ ----------------
----------- ------------ ----------------
Total investment return (based on market
value)................................. 14.10%+ 6.60 % (32.16)%+
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 481,654 $ 422,348 $ 452,872
Ratio of net investment income to
average net assets..................... 4.96%++ 6.33 % 2.75 %++
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 1.80%++ 1.77 % 2.01 %++
Without expense reductions............ 1.85%++ 1.80 % 2.01 %++
Portfolio turnover rate................. 183%++ 75 % 56 %
Average commission rate per share paid
on portfolio transactions.............. $ 0.0033 N/A N/A
</TABLE>
- ----------------
+ Not annualized
++ Annualized
N/A Not applicable
The accompanying notes are an integral part of the financial statements.
F12
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.
NOTES TO
FINANCIAL STATEMENTS
June 30, 1996
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
G.T. Global Developing Markets 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 non-diversified, closed-end management investment
company. The following is a summary of significant accounting policies
consistently followed by the Fund 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
Equity securities are valued at the last sale price on the exchange on which
such securities are traded or on the principal over-the-counter market on which
such securities are traded, as of the close of business on the day the
securities are being valued, or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by LGT Asset Management, Inc.
("LGT") to be the primary market.
Fixed income investments are valued at the mean of representative quoted bid and
asked prices for securities or, if such prices are not available, at prices for
securities of comparative maturity, quality and type; however, when LGT, the
Fund's investment manager, deems it appropriate, prices obtained for the day of
valuation from a bond pricing service will be used. Short-term investments with
a maturity of 60 days or less are valued at amortized cost, adjusted for foreign
exchange translation and market fluctuation, if any.
Investments for which market quotations are not readily available (including
restricted securities which are subject to limitations on their sale) are valued
at fair value as determined in good faith by or under the direction of the
Fund's Board of Directors.
Portfolio securities which are primarily traded on foreign exchanges are
generally valued at the preceding closing values of such securities on their
respective exchanges, and those values are then translated into U.S. dollars at
the current exchange rates, except that when an occurrence subsequent to the
time a value was so established is likely to have materially changed such value,
then the fair value of those securities will be determined by consideration of
other factors by or under the direction of the Fund's Board of Directors.
(B) FOREIGN CURRENCY TRANSLATION
The accounting records of the Fund are maintained in U.S. dollars. The market
values of foreign securities, currency holdings, other assets and liabilities
are recorded in the books and records of the Fund after translation to U.S.
dollars based on the exchange rates on that day. The cost of each security is
determined using historical exchange rates. Income and withholding taxes are
translated at prevailing exchange rates when earned or incurred.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
existing from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign exchange gains and losses arise from sales and
maturities of short-term investments, forward foreign currency contracts, sales
of foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the differences between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains and losses arise from changes in the
value of assets and liabilities other than investments in securities at period
end, resulting from changes in exchange rates.
(C) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by the Fund, it is the Fund'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 Fund under each
agreement at its maturity. LGT is responsible for determining that the value of
these underlying securities remain at least equal to the resale price.
(D) FORWARD FOREIGN CURRENCY CONTRACTS
A forward foreign currency contract ("Forward Contract") is an agreement between
two parties to buy and sell a currency at a set price on a future date. The
market value of the Forward Contract fluctuates with changes in currency
exchange rates. The Forward Contract is marked-to-market daily and the change in
market value is recorded by the Fund as an unrealized gain or loss. When the
Forward Contract is closed, the Fund records a realized gain or loss equal to
the difference between the value at the time it was opened and the value at the
time it was closed. The Fund could be exposed to risk if a counterparty is
unable to meet the terms of a contract or if the value of the currency changes
unfavorably. The Fund may enter into Forward Contracts in connection with
planned purchases or sales of securities or to hedge against adverse
fluctuations in exchange rates between currencies.
(E) OPTION ACCOUNTING PRINCIPLES
When the Fund writes a call or put option, an amount equal to the premium
received is included in the Fund's "Statement of Assets and Liabilities" as an
asset and an equivalent liability. The amount of the liability is subsequently
marked-to-market to reflect the current market value of the option. The current
market value of an option listed on a traded exchange is valued at its last bid
price, or, in the case of an over-the-counter option, is valued at the average
of the last bid prices obtained from brokers, unless a quotation from only one
broker is available, in which case only that broker's price will be
F13
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.
used. If an option expires on its stipulated expiration date or if the Fund
enters into a closing purchase transaction, a gain or loss is realized without
regard to any unrealized gain or loss on the underlying security, and the
liability related to such option is extinguished. If a written call option is
exercised, a gain or loss is realized from the sale of the underlying security
and the proceeds of the sale are increased by the premium originally received.
If a written put option is exercised, the cost of the underlying security
purchased would be decreased by the premium originally received. The Fund can
write options only on a covered basis, which, for a call, requires that the Fund
hold the underlying security, and, for a put, requires the Fund to set aside
cash, U.S. government securities or other liquid, high grade debt securities in
an amount not less than the exercise price or otherwise provide adequate cover
at all times while the put option is outstanding. The Fund may use options to
manage its exposure to the stock and bond markets and to fluctuations in
currency values or interest rates.
The premium paid by the Fund for the purchase of a call or put option is
included in the Fund's "Statement of Assets and Liabilities" as an investment
and subsequently "marked-to-market" to reflect the current market value of the
option. If an option which the Fund has purchased expires on the stipulated
expiration date, the Fund realizes a loss in the amount of the cost of the
option. If the Fund enters into a closing sale transaction, the Fund realizes a
gain or loss, depending on whether proceeds from the closing sale transaction
are greater or less than the cost of the option. If the Fund exercises a call
option, the cost of the securities acquired by exercising the call is increased
by the premium paid to buy the call. If the Fund exercises a put option, it
realizes a gain or loss from the sale of the underlying security, and the
proceeds from such sale are decreased by the premium originally paid.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Fund may forego the
opportunity of profit if the market value of the underlying security or index
increases and the option is exercised. The risk in writing a put option is that
the Fund may incur a loss if the market value of the underlying security or
index decreases and the option is exercised. In addition, there is the risk the
Fund may not be able to enter into a closing transaction because of an illiquid
secondary market.
(F) FUTURES CONTRACTS
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract the
Fund is required to pledge to the broker an amount of cash or securities equal
to the minimum "initial margin" requirements of the exchange on which the
contract is traded. Pursuant to the contract, the Fund agrees to receive from or
pay to the broker an amount of cash equal to the daily fluctuation in value of
the contract. Such receipts or payments are known as "variation margin" and are
recorded by the Fund as unrealized gains or losses. When the contract is closed,
the Fund records a realized gain or loss equal to the difference between the
value of the contract at the time it was opened and the value at the time it was
closed. The potential risk to the Fund is that the change in value of the
underlying securities may not correlate to the change in value of the contracts.
The Fund may use futures contracts to manage its exposure to the stock and bond
markets and to fluctuations in currency values or interest rates.
(G) SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on a first-in,
first-out basis, unless otherwise specified. Dividends are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Where a high
level of uncertainty exists as to collection of income on securities, income is
recorded net of all withholding tax with any rebate recorded when received. The
Fund 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 Fund to subsequently invest at less advantageous prices.
(H) PORTFOLIO SECURITIES LOANED
At June 30, 1996, stocks with an aggregate value of approximately $33,397,375
were on loan to brokers. The loans were secured by cash collateral of
$35,112,335 received by the Fund. For international securities, cash collateral
is received by the Fund against loaned securities in an amount at least equal to
105% of the market value of the loaned securities at the inception of each loan.
This collateral must be maintained at not less than 103% of the market value of
the loaned securities during the period of the loan. For domestic securities,
cash collateral is received by the Fund against loaned securities in an amount
at least equal to 102% of the market value of the loaned securities at the
inception of each loan. This collateral must be maintained at not less than 100%
of the market value of the loaned securities during the period of each loan. For
the period ended June 30, 1996, the Fund received securities lending income of
$51,189 which was used to reduce the Fund's custodian fees.
(I) 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. The Fund currently has a capital loss carryforward of
$97,642,512 of which $19,638,152 expires in 2002 and $78,004,360 expires in
2003.
(J) DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders are recorded by the Fund on the ex-date. Income
and capital gain distributions are determined in accordance with Federal income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund and timing differences.
F14
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.
(K) DEFERRED ORGANIZATIONAL EXPENSES
Expenses incurred by the Fund in connection with its organization, its
registration with the Securities and Exchange Commission and with various states
aggregated $353,775. These expenses are being amortized on a straightline basis
over a five-period period.
(L) FOREIGN SECURITIES
There are certain additional considerations and risks associated with investing
in foreign securities and currency transactions that are not inherent in
investments of domestic origin. The Fund's investments in emerging market
countries may involve greater risks than investments in more developed markets
and the prices of such investments may be volatile. These risks of investing in
foreign and emerging markets may include foreign currency exchange rate
fluctuations, perceived credit risk, adverse political and economic developments
and possible adverse foreign government intervention.
(M) INDEXED SECURITIES
The Fund may invest in indexed securities whose value is linked either directly
or indirectly to changes in foreign currencies, interest rates, equities,
indices, or other reference instruments. Indexed securities may be more volatile
than the reference instrument itself, but any loss is limited to the amount of
the original investment.
(N) RESTRICTED SECURITIES
The Fund 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.
(O) SECURITIES PURCHASED ON A WHEN-ISSUED OR FORWARD COMMITMENT BASIS
The Fund may trade securities on a when-issued or forward commitment basis, with
payment and delivery scheduled for a future date. These transactions are subject
to market fluctuations and are subject to the risk that the value at delivery
may be more or less than the trade date purchase price. Although the Fund will
generally purchase these securities with the intention of acquiring such
securities, they may sell such securities before the settlement date. These
securities are identified on the accompanying Portfolio of Investments. The Fund
has set aside sufficient cash or liquid high grade debt securities as collateral
for these purchase commitments.
2. RELATED PARTIES
LGT is the Fund's investment manager and administrator. The Fund pays LGT
investment management fees, which are computed weekly and paid monthly, at the
annualized rate of 1.40% of the Fund's average weekly net assets. LGT also acts
as administrator of the Fund. The Fund pays LGT administration fees, which are
computed and paid monthly, at an annualized rate of 0.25% of the Fund's average
weekly net assets.
LGT is the pricing and accounting agent for the fund. The monthly fee for these
services to LGT is a percentage, not to exceed 0.03% annually, of the Fund's
average daily net assets. The annual fee rate is derived by applying 0.03% to
the first $5 billion of assets of all registered mutual funds advised by LGT and
0.02% to the assets in excess of $5 billion and allocating the result according
to the Fund's average daily net assets.
The Fund pays each of its Directors who is not an employee, officer or director
of LGT or any of its affiliated companies $5,000 per period plus $300 for each
meeting of the board attended by the Director.
3. PURCHASES AND SALES OF SECURITIES
For the period ended June 30, 1996, purchases and sales of investment securities
by the Fund, other than U.S. government obligations and short-term investments,
aggregated $392,912,501 and $396,062,280, respectively. There were no purchases
or sales of U.S. government obligations by the Fund for the period.
4. CAPITAL SHARES
At June 30, 1996, the Fund is authorized to issue 100 million shares of capital
stock, $0.001 par value, all of which is classified as Common Stock.
5. EXPENSE REDUCTIONS
LGT has directed certain portfolio trades to brokers who paid a portion of the
Fund's expenses. For the period ended June 30, 1996, the Fund's expenses were
reduced by $51,318 under these arrangements.
6. WRITTEN OPTIONS
The Fund's written options contract activity for the period ended June 30, 1996
was as follows:
COVERED CALL OPTIONS WRITTEN
<TABLE>
<CAPTION>
UNDERLYING
NOMINAL
AMOUNT PREMIUMS
------------- -----------
<S> <C> <C>
Options outstanding at December 31, 1995................................... 0 $ 0
Options written............................................................ 4,390,000 109,750
Options cancelled in closing purchase transactions (Loss of $153,650
realized)................................................................. (4,390,000) (109,750)
Options expired prior to exercise.......................................... 0 0
Options exercised.......................................................... 0 0
------------- -----------
Options outstanding at June 30, 1996....................................... 0 $ 0
------------- -----------
------------- -----------
</TABLE>
F15
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.
NOTES
- --------------------------------------------------------------------------------
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.
NOTES
- --------------------------------------------------------------------------------
<PAGE>
[LOGO]
GT Global, Inc.
Fifty California Street
27th Floor
San Francisco, California
94111-4624
DATED MATERIAL
PLEASE EXPEDITE
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.
DEVSR60838M
