<PAGE>
LGT ASSET MANAGEMENT
OVER 25 YEARS
OF INVESTING
WORLDWIDE
GT GLOBAL
JAPAN
GROWTH FUND
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 June 30, 1996;
these views and
portfolio holdings
may have changed.
</TABLE>
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
INVESTMENT OBJECTIVE
The GT Global Japan Growth Fund seeks long-term growth of capital by
investing in securities of issuers located in Japan.
PERFORMANCE SUMMARY
GT GLOBAL JAPAN
GROWTH FUND MSCI Japan
--------------- ----------
19-Jul-85 9,525 10,000
9,535 9,582
9,487 9,813
10,458 10,855
10,859 11,199
11,411 11,367
11,811 12,041
12,297 12,375
13,440 13,868
15,308 16,845
16,137 17,487
16,252 17,374
17,168 19,140
19,405 21,673
20,764 23,645
20,041 24,237
16,301 21,006
17,853 22,401
19,048 24,048
19,395 27,918
19,414 28,421
19,864 31,537
21,664 36,501
23,064 36,436
23,882 33,740
24,997 32,561
28,033 36,621
29,945 35,329
24,741 32,681
26,022 33,989
28,974 34,432
29,772 36,290
32,989 39,033
34,710 41,978
37,564 42,418
36,319 40,505
35,200 38,981
35,032 40,772
33,801 37,695
34,024 39,321
32,675 42,606
35,569 46,396
35,313 46,666
37,785 46,807
39,656 47,716
40,759 46,053
42,129 45,982
42,162 43,381
40,492 41,441
46,004 46,941
46,539 43,706
50,681 46,494
49,144 45,279
51,416 47,593
56,759 47,509
57,971 44,655
54,785 40,041
48,967 32,280
47,686 32,691
54,854 37,374
55,443 35,632
31-Jul-90 57,001 35,155
49,470 31,738
39,569 26,548
46,581 32,989
41,824 29,029
40,450 30,398
40,309 31,266
45,136 35,213
44,854 33,028
44,995 33,854
45,383 33,702
45,066 31,281
45,383 32,252
41,824 30,475
44,854 33,141
45,031 34,577
39,287 32,139
39,322 33,160
37,525 31,628
36,046 28,991
32,698 25,853
31,641 24,265
33,156 26,211
32,099 23,819
30,760 23,550
32,275 27,727
31,747 27,067
30,478 25,815
30,619 26,486
30,864 26,099
30,757 26,018
31,467 27,150
34,589 30,974
38,456 36,484
39,520 37,494
38,704 36,979
40,797 39,326
41,897 40,189
42,323 38,284
42,181 38,115
39,555 31,794
41,187 32,807
44,132 38,108
46,473 39,856
45,693 38,156
46,296 39,787
46,438 40,663
48,779 42,673
47,396 41,145
46,863 41,430
45,232 40,413
45,338 41,526
43,068 39,441
43,891 39,899
40,278 37,577
38,689 35,767
39,700 39,064
39,809 40,976
37,930 38,441
38,833 36,610
42,157 39,529
43,204 37,945
44,180 38,272
43,132 36,136
43,060 38,280
44,740 40,242
44,699 39,718
44,008 39,015
44,577 40,397
46,245 42,699
45,065 40,506
30-Jun-96 45,594 40,725
The chart above shows the performance of the GT Global Japan Growth Fund,
Class A shares, since the Fund's inception versus the MSCIJapan Index. The
chart assumes a hypothetical $10,000 initial investment in the Fund's Class A
shares and reflects all Fund expenses and the maximum 4.75% sales charge.
This represents a cumulative return of 355.94% and an average annual total
return of 14.86% for the Fund. A $10,000 investment in the Fund's Class B
shares at inception on April 1, 1993, would have been valued at $12,476 on
June 30, 1996. This figure reflects the applicable contingent deferred sales
charge (5% in the first year, decreasing to 0% after six years). A $10,000
investment in Advisor Class shares at inception on June 1, 1995, would have
been worth $12,061. The Fund is a professionally managed mutual fund while
the index is unmanaged, does not incur expenses and is not available for
investment.
AVERAGE ANNUAL TOTAL RETURNS(1)
JUNE 30, 1996
<TABLE>
<CAPTION>
SHARE CLASS WITHOUT SALES CHARGE(2) WITH SALES CHARGE
1-YEAR 5-YEAR 10-YEAR LOF 1-YEAR 5-YEAR 10-YEAR LOF
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS A(3) 17.41 0.23 10.26 15.37 11.83 -0.74 9.72 14.86
CLASS B(3) 16.57 N/A N/A 7.84 11.57 N/A N/A 7.05
ADVISOR CLASS(4) 17.80 N/A N/A 18.91 N/A N/A N/A N/A
</TABLE>
HISTORICAL PERFORMANCE(2)
ANNUAL TOTAL RETURNS
<TABLE>
<CAPTION>
1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS A 24.00(3) 61.27 52.11 21.88 60.73 -28.73 -2.79 -21.51 33.45 6.56 1.94
CLASS B N/A N/A N/A N/A N/A N/A N/A N/A 17.46 35.81 1.20
</TABLE>
(1)Figures assume reinvestment of all dividends and capital gain
distributions at net asset value.
(2)Performance data do not reflect the maximum 4.75% sales charge and the
contingent deferred sales charge (5% in the first year, decreasing to 0%
after six years) for Class A and Class B shares, respectively, which, if
included, would have reduced the performance quoted.
(3)The Fund began operations on July 19, 1985; Class B shares commenced on
April 1, 1993.
(4)The Fund began offering Advisor Class shares on June 1, 1995. Advisor
Class shares are not sold directly to the general public and are only
available through certain employee benefit plans, financial institutions
and other entities that have entered into specific agreements with
GT Global. Please see the ""Alternative Purchase Plan'' section in
the Fund's prospectus.
The above data represent past performance of the Fund's shares, which does
not guarantee future results. The investment return and principal value of an
investment in the Fund will fluctuate, so that an investor's shares, when
redeemed, may be worth more or less than their original cost.
1
<PAGE>
INTERVIEW WITH PORTFOLIO MANAGER MICHAEL LINDSELL
Q HOW DID THE FUND PERFORM?
A While the Fund's 1.91% total return for Class A shares (-2.93% taking
into account the maximum 4.75% sales charge) over the six months to June 30,
1996, was disappointing, the Fund's one-year total return was significantly
higher at 17.41% (excluding sales charge). Total return for Class B shares
was 1.58% (-3.42% with the maximum 5.0% contingent deferred sales charge).
Total return for the Morgan Stanley Capital International (MSCI) Japan Index(5)
over the same period was 1.20%. We are also pleased with the Fund's long-term
track record. While there has been some short-term volatility, since
inception, the Fund has outperformed the index.
Q HOW WOULD YOU DESCRIBE THE MARKET'S
PERFORMANCE AND JAPAN'S ECONOMIC RECOVERY?
A The market made steady progress in the first half of the year, driven by
continued expectations of sustainable economic recovery. However, in our
opinion it is expensive, especially with its low dividend yields and high
price-to-earnings ratios. We are also suspicious about the perceived economic
recovery. While first quarter GNP figures were very strong, we don't think
they are sustainable.
A number of reasons cause us to be somewhat wary. First, we believe the
numbers should be viewed in the context of extremely depressed demand a year
ago, and the contribution of February's leap year day should be taken into
account. Second, the trade balance continues to narrow, as import growth
outpaces exports and, finally, domestic prices continue to decline in spite
of the past 12 months of yen depreciation (and resulting import price
inflation).
These adjustment processes reflect the high level of prices in Japan compared
to the rest of the world and the relative weakness of underlying demand. In
fact, second quarter data released so far suggest the pace of growth has
moderated somewhat. We expect GDP growth will decelerate to rates more in
line with monetary conditions, roughly 2% real growth, which could disappoint
market expectations for a stronger economy. Hence, in our opinion, some
disappointments are likely on the economic front later this year,
particularly in light of today's excessive expectations.
Q WHAT FACTORS CONTRIBUTED TO THE FUND'S PERFORMANCE ?
A In general, large blue-chip companies performed best, and earnings
reports for year-end March 1996 helped support share price rises, especially
in the manufacturing sector where operating profits rose 18.4%. In addition,
a substantial hedge of our yen assets added significant value as the yen
continued to depreciate against the U.S. dollar.
Q COULD YOU NAME A FEW COMPANIES THAT HAD A
POSITIVE IMPACT ON THE FUND?
A There are a number of companies within the portfolio that stand out. One
example, Amway Japan, the cosmetics door-to-door retailer, is an exception to
the low returns to shareholders generated by many companies in Japan. Amway
enjoys a return-on-equity (ROE) of 30% and a dividend yield of 1.8%.
Moreover, it was one of the first companies to take advantage of the
regulation allowing share buybacks. In addition, the Fund's holdings in
Geomatec (a manufacturer of flat panel displays used in various electronic
products), Hosiden (consumer electronic parts maker) and Kentucky Fried
Chicken Japan enjoyed solid gains over the period.
Q WHAT SECTORS OR COMPANIES WERE A DISAPPOINTMENT?
A Industrial electronic stocks performed poorly in reaction to depressed
conditions in the semiconductor industry. Banks also suffered as new issues
(to bolster capital ratios) restrained share price performance. Other poor
performers included food and electric power companies. Small companies
rallied in April but then fell behind large stocks, causing small companies
to underperform over the six months. In particular, a few of the Fund's
holdings posted disappointing returns, including Aoyama Trading. Although we
believe Aoyama to be a fundamentally sound company, it suffered from coming
off a high base. In addition, Enomoto (electronic parts maker), Fast
Retailing (a designer and retailer of low-price casual clothes) and Yoshinoya
(food chain-store operator) performed poorly.
Q HOW HAVE THE FUND'S INVESTMENTS IN JAPANESE BONDS FARED?
A The Fund currently maintains an approximate 13% weighting in government
bonds because we believe their real returns should prove increasingly
valuable to investors in deflationary times. Meanwhile, The Bank of Japan has
been trying to reflate the economy by keeping short rates low and weakening
the yen. In the six months to the end of June, the yen depreciated 6% against
the U.S. dollar. At the same time, the government continues to run a very
large budget deficit. These factors, among others, have restrained bond
market performance in the last six months. However, as we believe for the
time being that the economy will continue to deflate, we will maintain our
position.
2
<PAGE>
YIELDS IN A DEFLATIONARY ENVIRONMENT
JAPANESE GOVERNMENT
10-YEAR BOND YIELD CPI Year-on-Year
------------------- ----------------
6/91 6.86 3.40
6.01 2.70
5.42 2.70
5.38 2.00
6/92 5.52 2.30
4.92 2.00
4.78 1.20
4.59 1.20
6/93 4.70 0.90
3.80 1.50
3.31 1.00
4.25 1.30
6/94 4.39 0.60
4.70 0.20
4.57 0.70
3.68 (0.40)
6/95 2.79 0.30
2.86 0.20
3.07 (0.30)
3.23 0.10
6/96 3.23 0.00
As the deflationary environment is prolonged, Japanese government bonds
continue to offer relatively attractive values.
Source: Bloomberg, August 12, 1996
Q COULD YOU DESCRIBE YOUR INVESTMENT STRATEGY?
A We continue to underweight equities relative to the index, based on our
belief that the current hope of sustainable economic recovery will prove
unfounded, that consumer prices (and asset prices) will continue to deflate
and that corporations will find it increasingly difficult to maintain
profitability. In this type of environment, we believe the equity market is
expensive by most measures.
While we find it increasingly difficult to identify undervalued shares in a
prohibitively valued market, we have identified selective
opportunities-companies we believe are superior to the average, but sell at
valuations that do not acknowledge the difference. For example, we have been
investing in companies found in four broad categories: niche growth,
deregulation, structural change and international growth.
Within niche growth, companies like Takeda are attractive. Deregulation would
include DDI (Japan's second largest provider of cellular services). Fast
Retailing, a company we expect to do well over the longer term despite its
poor performance over the last several months, would be an example of a
company benefiting from structural change in the retail industry. Finally,
while we have reduced our exposure to companies in the fourth category,
international growth (multinationals based in Japan that are benefitting from
worldwide growth), we currently intend to retain our holdings as we believe
these types of companies will do well over the longer term. So, despite the
currently overvalued environment, we are focusing on stocks we feel represent
good value and positive long-term changes in Japan.
Q WHAT IS YOUR OUTLOOK GOING FORWARD?
A The Japanese economy still faces many unresolved problems from the
tremendous decline in asset prices following the bubble economy of the 1980s.
These include an overhang of bad debts, severe distress in the financial
sector, a large overcapacity in the corporate sector and an overvalued
currency. In our opinion, authorities have done little to address these
problems. The recent focus on a weaker yen is an exception and we are
encouraged that authorities are advocating further yen weakness. However, if
the economy's perceived recovery proves unsustainable, as we expect, there is
a risk the market may fall because of many investors' reliance on the
opposite scenario.
On the other hand, if economic growth proves unsustainable and the market
corrects, policymakers may finally address some of the economy's deep-seated
problems. Only when authorities face up to these realities can we feel
assured of a sustainable recovery in both the market and the economy.
One change we expect will be important over the next several years is the way
institutions invest in the market. Previously, "relationship investing"
(cross-shareholdings within group companies) was a major factor determining
investor behavior and performance. However, as the economy has become
increasingly liberalized and more competitive, the strength of this
traditional business relationship has weakened. Recent examples of what this
means in practice included the Long Term Credit Bank, which announced it
would reduce the size of its cross-shareholdings, and several major life
insurance companies, which did not support the issuance of preferred shares
by the banking sector.
In the longer term, we believe an increasing emphasis on financial returns
should have a positive effect on our relative performance, as it should
benefit companies that generate good returns from their capital at the
expense of companies whose share prices are supported by asset values alone.
ABOUT THE PORTFOLIO MANAGER
MICHAEL LINDSELL - Chief investment officer, Japan, for LGT Asset Management
since 1992. Previously, Mr. Lindsell was director of Warburg Asset Management
from 1989 to 1992; senior fund manager at Scimitar Asset Management from 1985
to 1988; and fund manager, Lazard Brothers & Co. Ltd. from 1982 to 1985. He
received his B.Sc. from Bristol University.
(5) The MSCI Japan Index is an arithmetic average, weighted by market value,
of the performance of 317 securities listed on Japanese stock exchanges. It
includes the effect of reinvested dividends and is measured in U.S. dollars.
The index is not available for investment and does not incur sales charges
and professional management fees.
3
<PAGE>
ALLOCATION OF NET ASSETS(6)
JUNE 30, 1996
SERVICES 37.0%
TECHNOLOGY 11.9
CAPITAL GOODS 7.2
HEALTH CARE 7.0
CONSUMER NON-DURABLES 4.8
FINANCE 3.9
MATERIALS/BASIC INDUSTRY 1.6
FIXED INCOME 13.6
SHORT TERM & OTHER 13.0
<TABLE>
<CAPTION>
GT GLOBAL JAPAN GROWTH FUND % of
KEY PORTFOLIO HOLDINGS(7) Net Assets
<S> <C>
TAKEDA CHEMICAL INDUSTRIES A top pharmaceutical manufacturer, mostly 5.1
recognized for their vitamin tablet Alinamin, and a leader in antibiotics
since 1965. The company is also a front-runner in overseas operations in the
U.S. and other countries, with its Central Research Lab as an operations base.
DAINI DENDEN INC. (DDI) CORP. As Japan's second-largest provider of cellular 5.1
phone services, DDI has benefited from the liberalization of domestic
cellular services and cellular handset sales. The company also has more than
10% of the domestic long-distance market.
SEVEN-ELEVEN JAPAN LTD. Japan's largest convenience store operator, 4.4
Seven-Eleven belongs to the Ito-Yokado group. Seven-Eleven Japan also
owns Southland Corp., the operator of Seven-Eleven franchises in the U.S.
ITO-YOKADO CO., LTD. Ito Yokado operates one of the best-managed supermarket 4.2
chains in Japan. Despite a sluggish retail environment, Ito Yokado has
managed to grow sales and profits through competitive pricing, a strong
merchandising strategy, sound inventory and cost control.
AMWAY JAPAN LTD. A door-to-door marketer of detergents, cosmetics, 4.1
kitchenware and related products.
AOYAMA TRADING CO., LTD. Aoyama Trading is the largest suburban discount 3.8
chain store in Japan, specializing in men's discount suits. The company
is developing a casual wear line to complement its business clothing sales.
Generally, Aoyama sells lesser-known brand-name items.
AUTOBACS SEVEN CO., LTD. Autobacs Seven retails car accessories at over 250 3.7
wholly owned or franchised outlets in Japan.
MATSUSHITA KOTOBUKI ELECTRONICS LTD. Matsushita Kotobuki produces parts for 3.6
the PC industry, including disk drives and CD-ROMs.
MURATA MANUFACTURING CO., LTD. Manufacturer of a large range of electric 2.9
components for the semiconductor, industrial electronics and
telecommunications industry. They have production facilities throughout Asia.
</TABLE>
(6) Allocations will change based on current market conditions.
(7) There is no
assurance the Fund continues to hold these or any other securities
mentioned in this report.
4
<PAGE>
GT GLOBAL
JAPAN
GROWTH FUND
FINANCIAL
STATEMENTS
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
PORTFOLIO OF INVESTMENTS
June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET % OF NET
EQUITY INVESTMENTS SHARES VALUE ASSETS
- ------------------------------------------------------------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (37.0%)
DDI Corp. ................................................. 850 $ 7,435,947 5.1
WIRELESS COMMUNICATIONS
Seven-Eleven Japan Ltd. ................................... 100,000 6,396,413 4.4
RETAILERS-OTHER
Ito-Yokado Co., Ltd. ...................................... 100,000 6,048,682 4.2
RETAILERS-OTHER
Aoyama Trading Co., Ltd. .................................. 208,200 5,467,917 3.8
RETAILERS-APPAREL
Autobacs Seven Co., Ltd. .................................. 55,000 5,334,919 3.7
RETAILERS-OTHER
Southland Corp.{l} -/- {\/} ............................... 1,599,200 4,847,575 3.3
RETAILERS-OTHER
Fast Retailing Co., Ltd. .................................. 80,000 3,360,176 2.3
RETAILERS-APPAREL
Yoshinoya D&C Co., Ltd. ................................... 220 2,979,502 2.0
RESTAURANTS
Bunkyodo Co., Ltd. ........................................ 90,000 2,141,288 1.5
RETAILERS-OTHER
Blue Grass Co., Ltd. ...................................... 60,000 1,724,012 1.2
RETAILERS-APPAREL
Ten Allied Co. ............................................ 100,000 1,674,597 1.2
RESTAURANTS
Nissen Co. ................................................ 100,000 1,509,883 1.0
RETAILERS-OTHER
Kentucky Fried Chicken Japan .............................. 76,000 1,488,287 1.0
RESTAURANTS
Xebio Co., Ltd. ........................................... 37,000 1,391,563 1.0
RETAILERS-APPAREL
Nitori Co. ................................................ 54,400 1,219,619 0.8
RETAILERS-OTHER
Fujitsu Business Systems .................................. 28,000 776,354 0.5
BUSINESS & PUBLIC SERVICES
------------
53,796,734
------------
Technology (11.9%)
Matsushita-Kotobuki Electronics Ltd. ...................... 200,000 5,234,261 3.6
COMPUTERS & PERIPHERALS
Hosiden Electronics ....................................... 388,000 4,047,584 2.8
COMPUTERS & PERIPHERALS
Kyushu-Matsushita Electric Co., Ltd. ...................... 200,000 3,623,719 2.5
COMPUTERS & PERIPHERALS
Koei Co., Ltd. ............................................ 95,400 3,029,264 2.1
SOFTWARE
Geomatec Co., Ltd. ........................................ 29,000 1,300,329 0.9
COMPUTERS & PERIPHERALS
------------
17,235,157
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F1
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
<TABLE>
<CAPTION>
MARKET % OF NET
EQUITY INVESTMENTS SHARES VALUE ASSETS
- ------------------------------------------------------------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Capital Goods (7.2%)
Murata Manufacturing Co., Ltd. ............................ 110,000 $ 4,177,343 2.9
ELECTRICAL PLANT/EQUIPMENT
Higashi Nihon House ....................................... 152,000 2,670,571 1.8
CONSTRUCTION
Shima Seiki Manufacturing Ltd. ............................ 25,000 1,516,746 1.0
MACHINE TOOLS
Komori Corp. .............................................. 49,000 1,255,490 0.9
MACHINERY & ENGINEERING
Enomoto Co., Ltd. ......................................... 56,000 881,406 0.6
INDUSTRIAL COMPONENTS
Japan Foundation Engineering .............................. 990 19,025 --
CONSTRUCTION
NEC System Integration & Construction ..................... 660 16,669 --
CONSTRUCTION
------------
10,537,250
------------
Health Care (7.0%)
Takeda Chemical Industries ................................ 420,000 7,456,076 5.1
PHARMACEUTICALS
Olympus Optical Co., Ltd. ................................. 280,000 2,818,448 1.9
MEDICAL TECHNOLOGY & SUPPLIES
------------
10,274,524
------------
Consumer Non-Durables (4.8%)
Amway Japan Ltd. .......................................... 120,000 6,039,531 4.1
HOUSEHOLD PRODUCTS
Tsutsumi Jewelry Co., Ltd. ................................ 20,600 999,085 0.7
PERSONAL CARE/COSMETICS
------------
7,038,616
------------
Finance (3.9%)
Nichiei Co., Ltd. ......................................... 60,000 4,008,053 2.8
OTHER FINANCIAL
Diamond Lease Co., Ltd. ................................... 120,000 1,636,164 1.1
OTHER FINANCIAL
------------
5,644,217
------------
Materials/Basic Industry (1.6%)
Toyo Exterior ............................................. 100,000 2,342,606 1.6
BUILDING MATERIALS & COMPONENTS
------------ -----
TOTAL EQUITY INVESTMENTS (cost $106,316,392) ................ 106,869,104 73.4
------------ -----
<CAPTION>
PRINCIPAL MARKET % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT VALUE ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Government & Government Agency Obligations (12.7%)
Austria (3.8%)
Republic of Austria, 4.5% due 9/28/05{z} ................ JPY 550,000,000 5,565,177 3.8
Finland (2.2%)
Republic of Finland, 6% due 1/29/02{z} .................. JPY 300,000,000 3,212,619 2.2
</TABLE>
The accompanying notes are an integral part of the financial statements.
F2
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
<TABLE>
<CAPTION>
PRINCIPAL MARKET % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT VALUE ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Government & Government Agency Obligations (Continued)
Japan (5.3%)
Japanese Government Bond, 3.7% due 3/21/16{z} ........... JPY 844,000,000 $ 7,653,461 5.3
Supranational (1.4%)
International Bank of Reconstruction & Development, 4.75%
due 12/20/04{z} ........................................ JPY 205,000,000 2,116,407 1.4
------------
Total Government & Government Agency Obligations (cost
$19,384,070) ............................................... 18,547,664
------------
Corporate Bonds (0.9%)
Japan (0.9%)
Higashi Nihon House Co., Convertible Bond, 0.375% due
4/30/00 (cost $1,089,201) .............................. CHF 1,150,000 1,292,187 0.9
------------ -----
TOTAL FIXED INCOME INVESTMENTS (cost $20,473,271) ........... 19,839,851 13.6
------------ -----
<CAPTION>
NUMBER OF MARKET % OF NET
OPTIONS CURRENCY CONTRACTS VALUE ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Simex Nikkei Put Option, strike JPY21,000, expires 9/12/96
(cost $429,803)-/- ....................................... JPY 150 89,220 0.1
------------ -----
OPTIONS
<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 $6,830,000 Federal Home Loan Mortgage
Corp., 6.64% due 5/21/99 (market value of collateral is
$6,839,841, including accrued interest). (cost
$6,704,904) .............................................. 6,704,904 4.6
------------ -----
TOTAL INVESTMENTS (cost $133,924,370) * .................... 133,503,079 91.7
Other Assets and Liabilities ................................ 12,161,888 8.3
------------ -----
NET ASSETS .................................................. $145,664,967 100.0
------------ -----
------------ -----
</TABLE>
- --------------
{l} This is a U.S. security of which approximately 62.5% of its
outstanding stock is owned by Ito-Yokado Co., Ltd.
{\/} U.S. currency denominated.
-/- Non-income producing security.
{z} All or part of the Fund's holdings in this security is segregated
as collateral for written futures. See Note 1 of Notes To Financial
Statements.
* For Federal income tax purposes, cost is $135,123,948 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 10,347,415
Unrealized depreciation: (11,968,284)
-------------
Net unrealized depreciation: ($ 1,620,869)
-------------
-------------
</TABLE>
Currency Abbreviations:
CHF -- Swiss Francs
JPY -- Japanese Yen
The accompanying notes are an integral part of the financial statements.
F3
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
JUNE 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET VALUE CONTRACT DELIVERY UNREALIZED
CONTRACTS TO BUY: (U.S. DOLLARS) PRICE DATE APPRECIATION
- ---------------------------------------- -------------- ----------- -------- --------------
<S> <C> <C> <C> <C>
Japanese Yen............................ 1,841,428 108.87700 08/09/96 $ 4,493
-------------- --------------
Total Contracts to Buy (Payable amount
$1,836,935).......................... 1,841,428 4,493
-------------- --------------
THE VALUE OF CONTRACTS TO BUY AS
PERCENTAGE OF NET ASSETS IS 1.26%
<CAPTION>
CONTRACTS TO SELL:
- ----------------------------------------
<S> <C> <C> <C> <C>
Japanese Yen............................ 61,687,838 103.70000 08/09/96 2,921,613
Japanese Yen............................ 13,878,061 107.90000 09/12/96 23,700
-------------- --------------
Total Contracts to Sell (Receivable
amount $78,511,212).................. 75,565,899 2,945,313
-------------- --------------
THE VALUE OF CONTRACTS TO SELL AS A
PERCENTAGE OF NET ASSETS IS 51.88%
Total Open Forward Foreign Currency
Contracts, Net....................... $ 2,949,806
--------------
--------------
</TABLE>
- ----------------
See Note 1 to the financial statements.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
WRITTEN FUTURES CONTRACTS OUTSTANDING
JUNE 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
EXPIRATION NO. OF MARKET
DESCRIPTION DATE CONTRACTS CURRENCY VALUE
- ---------------------------------------- ---------- --------- -------- -----------
<S> <C> <C> <C> <C>
Simex Nikkei 225 Index Future (Face
$17,060,472)........................... 09/12/96 170 JPY $17,559,251
</TABLE>
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
F4
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
STATEMENT OF ASSETS
AND LIABILITIES
June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $133,924,370) (Note 1).......................... $ 133,503,079
U.S. currency................................................................. $ 534
Foreign currencies (cost $3,973,832).......................................... 3,953,708 3,954,242
----------
Receivable for open forward foreign currency contracts, net (Note 1)...................... 2,949,806
Receivable for Fund shares sold........................................................... 2,216,627
Receivable for securities sold............................................................ 1,627,330
Receivable for initial margin (Note 1).................................................... 1,592,154
Interest receivable....................................................................... 403,753
Dividends receivable...................................................................... 239,805
Miscellaneous receivable.................................................................. 19,490
Cash held as collateral for securities loaned (Note 1).................................... 11,056,875
--------------
Total assets............................................................................ 157,563,161
--------------
Liabilities:
Payable for Fund shares repurchased....................................................... 475,738
Payable for investment management and administration fees (Note 2)........................ 117,210
Payable for printing and postage expenses................................................. 86,985
Payable for service and distribution expenses (Note 2).................................... 67,080
Payable for transfer agent fees (Note 2).................................................. 36,999
Payable for custodian fees (Note 1)....................................................... 20,682
Payable for registration and filing fees.................................................. 6,102
Payable for professional fees............................................................. 4,839
Payable for Trustees' fees and expenses (Note 2).......................................... 4,105
Payable for fund accounting fees (Note 2)................................................. 2,963
Other accrued expenses.................................................................... 18,616
Collateral for securities loaned (Note 1)................................................. 11,056,875
--------------
Total liabilities....................................................................... 11,898,194
--------------
Net assets.................................................................................. $ 145,664,967
--------------
--------------
Class A:
Net asset value and redemption price per share ($94,937,585 DIVIDED BY 8,471,974 shares
outstanding)............................................................................... $ 11.21
--------------
--------------
Maximum offering price per share (100/95.25 of $11.21) *.................................... $ 11.77
--------------
--------------
Class B:+
Net asset value and offering price per share ($47,468,732 DIVIDED BY 4,334,061 shares
outstanding)............................................................................... $ 10.95
--------------
--------------
Advisor Class:
Net asset value, offering price per share, and redemption price per share ($3,258,650
DIVIDED BY 289,544 shares outstanding)..................................................... $ 11.25
--------------
--------------
Net assets consist of:
Paid in capital (Note 4).................................................................. $ 144,398,241
Accumulated net investment loss........................................................... (331,992)
Accumulated net realized loss on investments and foreign currency transactions............ (389,164)
Net unrealized appreciation on translation of assets and liabilities in foreign
currencies............................................................................... 2,907,952
Net unrealized depreciation of investments................................................ (920,070)
--------------
Total -- representing net assets applicable to capital shares outstanding................... $ 145,664,967
--------------
--------------
<FN>
- --------------
* On sales of $50,000 or more, the offering price is reduced.
+ Redemption price per share is equal to the net asset value per share less
any applicable contingent deferred sales charge.
</TABLE>
The accompanying notes are an integral part of the financial statements.
F5
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
STATEMENT OF OPERATIONS
Six months ended June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Interest income............................................................................ $ 891,690
Dividend income (net of foreign withholding tax of $68,315)................................ 387,117
------------
Total investment income.................................................................. 1,278,807
------------
Expenses:
Investment management and administration fees (Note 2)..................................... 768,787
Service and distribution expenses: (Note 2)
Class A..................................................................... $ 192,348
Class B..................................................................... 235,106 427,454
-----------
Transfer agent fees (Note 2)............................................................... 252,050
Printing and postage expenses.............................................................. 71,120
Custodian fees (Note 1).................................................................... 66,690
Registration and filing fees............................................................... 55,384
Audit fees................................................................................. 25,566
Fund accounting fees (Note 2).............................................................. 19,767
Trustees' fees and expenses (Note 2)....................................................... 7,280
Legal fees................................................................................. 4,914
Other expenses............................................................................. 4,318
------------
Total expenses before reductions......................................................... 1,703,330
------------
Expense reductions (Notes 1 & 5)....................................................... (92,531)
------------
Total net expenses....................................................................... 1,610,799
------------
Net investment loss.......................................................................... (331,992)
------------
Net realized and unrealized gain on investments and foreign currencies: (Note 1)
Net realized loss on investments.............................................. (4,163,765)
Net realized gain on foreign currency transactions............................ 5,961,127
-----------
Net realized gain during the period...................................................... 1,797,362
Net change in unrealized appreciation on translation of assets and liabilities
in foreign currencies........................................................ 325,208
Net change in unrealized depreciation of investments.......................... 1,265,873
-----------
Net unrealized appreciation during the period............................................ 1,591,081
------------
Net realized and unrealized gain on investments and foreign currencies....................... 3,388,443
------------
Net increase in net assets resulting from operations......................................... $ 3,056,451
------------
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F6
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1996 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1995
---------------- -------------------
<S> <C> <C>
Increase (Decrease) in net assets
Operations:
Net investment loss........................................................... $ (331,992) $ (662,252)
Net realized gain on investments and foreign currency transactions............ 1,797,362 14,964,910
Net change in unrealized appreciation on translation of assets and liabilities
in foreign currencies........................................................ 325,208 923,132
Net change in unrealized appreciation (depreciation) of investments........... 1,265,873 (11,851,499)
---------------- -------------------
Net increase in net assets resulting from operations........................ 3,056,451 3,374,291
---------------- -------------------
Class A:
Distributions to shareholders: (Note 1)
From net realized gain on investments......................................... -- (11,936,435)
Class B:
Distributions to shareholders: (Note 1)
From net realized gain on investments......................................... -- (4,652,476)
Advisor Class:
Distributions to shareholders: (Note 1)
From net realized gain on investments......................................... -- (58,144)
---------------- -------------------
Total distributions......................................................... -- (16,647,055)
---------------- -------------------
Capital share transactions: (Note 4)
Increase from capital shares sold and reinvested.............................. 328,603,146 565,596,580
Decrease from capital shares repurchased...................................... (338,931,552) (524,808,353)
---------------- -------------------
Net increase (decrease) from capital share transactions..................... (10,328,406) 40,788,227
---------------- -------------------
Total increase (decrease) in net assets......................................... (7,271,955) 27,515,463
Net assets:
Beginning of period........................................................... 152,936,922 125,421,459
---------------- -------------------
End of period *............................................................... $ 145,664,967 $ 152,936,922
---------------- -------------------
---------------- -------------------
*Includes accumulated net investment loss of.................................. $ (331,992) $ 0
---------------- -------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F7
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS A+
------------------------------------------------------------------------
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
1996 ----------------------------------------------------------
(UNAUDITED) 1995 (A) 1994 1993 1992 (A) 1991
------------ ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net asset value, beginning of
period....................... $ 11.00 $ 12.15 $ 11.61 $ 8.70 $ 11.16 $ 11.48
------------ ---------- ---------- ---------- ---------- ----------
Income from investment
operations:
Net investment income
(loss)..................... (0.01) (0.04) (0.04) (0.14) (0.00) * (0.09)
Net realized and unrealized
gain (loss) on
investments................ 0.22 0.26 0.79 3.05 (2.40) (0.23)
------------ ---------- ---------- ---------- ---------- ----------
Net increase (decrease)
from investment
operations............... 0.21 0.22 0.75 2.91 (2.40) (0.32)
------------ ---------- ---------- ---------- ---------- ----------
Distributions to shareholders:
From net realized gain on
investments................ -- (1.37) (0.21) -- (0.06) --
------------ ---------- ---------- ---------- ---------- ----------
Net asset value, end of
period....................... $ 11.21 $ 11.00 $ 12.15 $ 11.61 $ 8.70 $ 11.16
------------ ---------- ---------- ---------- ---------- ----------
------------ ---------- ---------- ---------- ---------- ----------
Total investment return (d)... 1.91 %(b) 1.94% 6.56% 33.5% (21.5)% (2.8)%
Ratios and supplemental data:
Net assets, end of period (in
000's)....................... $ 94,938 $ 111,105 $ 98,066 $ 88,487 $ 93,865 $ 61,519
Ratio of net investment income
(loss) to average net
assets....................... (0.23)%(c) (0.40)% (0.32)% (0.3)% --%* (1.5)%
Ratio of expenses to average
net assets:
With expense reductions (Notes
1 & 5)....................... 1.85 %(c) 1.99% 1.91% 2.1% 2.2%* 2.2%
Without expense reductions.... 1.97 %(c) 2.14% 2.03% --%** --%** --%**
Portfolio turnover rate++++... 27 %(c) 67% 49% 104% 115% 251%
Average commission rate paid
on portfolio
transactions++++............. $ 0.1103 N/A N/A N/A N/A N/A
</TABLE>
- ----------------
+ All capital shares issued and outstanding as of March 31, 1993 were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rate and average commission rate are calculated on
the basis of the Fund as a whole without distinguishing between the
classes of shares issued.
* Includes reimbursement by LGT Asset Management, Inc. of operating
expenses of $0.01. Without such reimbursement, the ratio of expenses
to average net assets would have been 2.3% and the ratio of net
investment loss to average net assets would have been (0.1)% (See Note
2).
* * Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
(a) These selected per share data were calculated based upon weighted
average shares outstanding during the period.
(b) Not annualized
(c) Annualized
(d) Total investment return does not include sales charges.
N/A Not applicable
The accompanying notes are an integral part of the financial statements.
F8
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS B++ ADVISOR CLASS+++
--------------------------------------------------- --------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED APRIL 1, 1993 ENDED JUNE 1, 1995
JUNE 30, DECEMBER 31, TO JUNE 30, TO
1996 ---------------------- DECEMBER 31, 1996 DECEMBER 31,
(UNAUDITED) 1995 (A) 1994 1993 (UNAUDITED) 1995 (A)
------------ ---------- ---------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net asset value, beginning of
period....................... $ 10.78 $ 12.02 $ 11.57 $ 9.85 $ 11.02 $ 10.50
------------ ---------- ---------- ------------- ------------ ------------
Income from investment
operations:
Net investment income
(loss)..................... (0.05) (0.12) (0.13) (0.18) 0.01 (0.00)
Net realized and unrealized
gain (loss) on
investments................ 0.22 0.25 0.79 1.90 0.22 1.89
------------ ---------- ---------- ------------- ------------ ------------
Net increase (decrease)
from investment
operations............... 0.17 0.13 0.66 1.72 0.23 1.89
------------ ---------- ---------- ------------- ------------ ------------
Distributions to shareholders:
From net realized gain on
investments................ -- (1.37) (0.21) -- -- (1.37)
------------ ---------- ---------- ------------- ------------ ------------
Net asset value, end of
period....................... $ 10.95 $ 10.78 $ 12.02 $ 11.57 $ 11.25 $ 11.02
------------ ---------- ---------- ------------- ------------ ------------
------------ ---------- ---------- ------------- ------------ ------------
Total investment return (d)... 1.58 %(b) 1.20% 5.81% 17.5%(b) 2.09 %(b) 18.14 %(b)
Ratios and supplemental data:
Net assets, end of period (in
000's)....................... $ 47,469 $ 41,274 $ 27,355 $ 3,699 $ 3,259 $ 558
Ratio of net investment income
(loss) to average net
assets....................... (0.88)%(c) (1.05)% (0.97)% (0.9)%(c) 0.12 %(c) (0.05)%(c)
Ratio of expenses to average
net assets:
With expense reductions (Notes
1 & 5)....................... 2.50 %(c) 2.64% 2.56% 2.7%(c) 1.50 %(c) 1.64 %(c)
Without expense reductions.... 2.62 %(c) 2.79% 2.68% --%** 1.62 %(c) 1.79 %(c)
Portfolio turnover rate++++... 27 %(c) 67% 49% 104% 27 %(c) 67 %
Average commission rate paid
on portfolio
transactions++++............. $ 0.1103 N/A N/A N/A $ 0.1103 N/A
</TABLE>
- ----------------
+ All capital shares issued and outstanding as of March 31, 1993 were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rate and average commission rate are calculated on
the basis of the Fund as a whole without distinguishing between the
classes of shares issued.
* Includes reimbursement by LGT Asset Management, Inc. of operating
expenses of $0.01. Without such reimbursement, the ratio of expenses
to average net assets would have been 2.3% and the ratio of net
investment loss to average net assets would have been (0.1)% (See Note
2).
* * Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
(a) These selected per share data were calculated based upon weighted
average shares outstanding during the period.
(b) Not annualized
(c) Annualized
(d) Total investment return does not include sales charges.
N/A Not applicable
The accompanying notes are an integral part of the financial statements.
F9
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
NOTES TO
FINANCIAL STATEMENTS
June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
GT Global Japan Growth Fund ("Fund"), is a separate series of GT Global Growth
Series ("Company"). The Company is organized as a Massachusetts business trust
and is registered under the Investment Company Act of 1940, as amended ("1940
Act"), as a diversified, open-end management investment company. The Company has
eight series of shares in operation, each series corresponding to a distinct
portfolio of investments.
The Fund offers Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. Investment
income, realized and unrealized capital gains and losses, and the common
expenses of the Fund are allocated on a pro rata basis to each Class based on
the relative net assets of each Class to the total net assets of the Fund. Each
Class of shares differs in its respective distribution expenses, and may differ
in its transfer agent, registration, and certain other class-specific fees and
expenses.
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
The Fund calculates the net asset value of and completes orders to purchase,
exchange or repurchase Fund shares on each business day, with the exception of
those days on which the New York Stock Exchange is closed.
Equity securities are valued at the last sale price on the exchange on which
such securities are traded or on the principal over-the-counter market in which
such securities are traded, as of the close of business on the day the
securities are being valued or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by LGT Asset Management, Inc.
("LGT") to be the primary market.
Fixed income investments are valued at the mean of representative quoted bid and
ask prices for such investments or, if such prices are not available, at prices
for investments of comparative maturity, quality and type. However, when LGT
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
Company's Board of Trustees.
Portfolio securities which are primarily traded on foreign exchanges are
generally valued at the preceding closing values of such securities on their
respective exchanges, and those values are then translated into U.S. dollars at
the current exchange rates, except that when an occurrence subsequent to the
time a value was so established is likely to have materially changed such value,
then the fair value of those securities will be determined by consideration of
other factors by or under the direction of the Company's Board of Trustees.
(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
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign exchange gains and losses arise from sales and
maturities of short-term securities, forward foreign currency contracts, sales
of foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the differences between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
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 remains 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
F10
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
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 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. At June 30,
1996, the Fund had segregated securities valued at $17,695,264 and cash of
$1,592,154 to cover margin requirements on open futures contracts.
(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 its collection, 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 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 $10,476,253 were on loan to
brokers. The loans were secured by cash collateral of $11,056,875, 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 fees of
$49,760 which were used to reduce custodian fees.
F11
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
(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 for excise tax on
income and capital gains.
(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.
(K) FOREIGN SECURITIES
There are certain additional considerations and risks associated with investing
in foreign securities and currency transactions that are not inherent in
investments of domestic origin. These risks of investing in foreign markets may
include foreign currency exchange rate fluctuations, perceived credit risk,
adverse political and economic developments and possible adverse foreign
government intervention.
(L) RESTRICTED SECURITIES
The Fund is permitted to invest in privately placed restricted securities. These
securities may by 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.
(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.
2. RELATED PARTIES
LGT is the Fund's investment manager and administrator. The Fund pays investment
management and administration fees to LGT at the following annualized rates:
0.975% on the first $500 million of average daily net assets of the Fund; 0.95%
on the next $500 million; 0.925% of the next $500 million and 0.90% on amounts
thereafter. These fees are computed daily and paid monthly, and are subject to
reduction in any period to the extent that the Fund's expenses (exclusive of
brokerage commissions, taxes, interest, distribution-related expenses and
extraordinary expenses) exceed the most stringent limits prescribed by the laws
or regulations of any state in which the Fund's shares are offered for sale,
based on the average net asset value of the Fund.
GT Global, Inc. ("GT Global"), an affiliate of LGT, serves as the Fund's
distributor. The Fund offers Class A, Class B, and Advisor Class shares for
purchase.
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with the schedule included in the Fund's current
prospectus. GT Global collects the sales charges imposed on sales of Class A
shares, and reallows a portion of such charges to dealers through which the
sales are made. For the period ended June 30, 1996, GT Global retained $40,371
of such sales charges. Purchases of Class A shares exceeding $500,000 may be
subject to a contingent deferred sales charge ("CDSC") upon redemption, in
accordance with the Fund's current prospectus. GT Global collected such CDSCs in
the amount of $5,355 for the period ended June 30, 1996. GT Global also makes
ongoing shareholder servicing and trail commission payments to dealers whose
clients hold Class A shares.
Class B shares are not subject to initial sales charges. When Class B shares are
sold, GT Global from its own resources pays commissions to dealers through which
the sales are made. Certain redemptions of Class B shares made within six years
of purchase are subject to CDSCs, in accordance with the Fund's current
prospectus. During the period ended June 30, 1996, GT Global collected such
CDSCs in the amount of $124,537. In addition, GT Global makes ongoing
shareholder servicing and trail commission payments to dealers whose clients
hold Class B shares.
Pursuant to Rule 12b-1 under the 1940 Act, the Company's Board of Trustees has
adopted separate distribution plans with respect to the Fund's Class A shares
("Class A Plan") and Class B shares ("Class B Plan"), pursuant to which the Fund
reimburses GT Global for a portion of its shareholder servicing and distribution
expenses. Under the Class A Plan, the Fund may pay GT Global a service fee at
the annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class A shares for GT Global's expenditures incurred in servicing and
maintaining shareholder accounts, and may pay GT Global a distribution fee at
the annualized rate of up to 0.35% of the average daily net assets of the Fund's
Class A shares, less any amounts paid by the Fund as the aforementioned service
fee, for its expenditures incurred in providing services as distributor. All
expenses for which GT Global is reimbursed under the Class A Plan will have been
incurred within one year of such reimbursement.
Pursuant to the Fund's Class B Plan, the Fund may pay GT Global a service fee at
the annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class B shares for its expenditures incurred in servicing and maintaining
shareholder accounts, and may pay GT Global a distribution fee at the annualized
rate of up to 0.75% of the average daily net assets of the Fund's Class B shares
for GT Global's expenditures incurred in providing services as distributor.
Expenses incurred under the Class B Plan in excess of 1.00% annually may be
carried forward for reimbursement in subsequent years as long as that Plan
continues in effect.
LGT and GT Global have voluntarily undertaken to limit the Fund's expenses
(exclusive of brokerage commissions, taxes, interest, and extraordinary items)
to the maximum annual level of 2.25%, 2.90%, and 1.90% of the average daily net
assets of the Fund's Class A, Class B, and Advisor Class shares, respectively.
If necessary, this limitation will be effected by waivers by LGT of investment
F12
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
management and administration fees, waivers by GT Global of payments under the
Class A Plan and/or Class B Plan and/or reimbursements by LGT or GT Global of
portions of the Fund's other operating expenses.
GT Global Investor Services, Inc. ("GT Services"), an affiliate of LGT and GT
Global, is the transfer agent of the Fund. 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 is also reimbursed by the Funds for its
out-of-pocket expenses for such items as postage, forms, telephone charges,
stationery and office supplies.
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 Company pays each of its Trustees who is not an employee, officer or
director of LGT, GT Global or GT Services $5,000 per year plus $300 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, 1996, purchases and sales of investment securities
by the Fund, other than U.S. government obligations and short-term investments,
aggregated $17,864,744 and $20,672,741, respectively. There were no purchases or
sales of U.S. government obligations by the Fund during the period.
4. CAPITAL SHARES
At June 30, 1996, there were an unlimited number of shares of beneficial
interest authorized, at no par value. Transactions in capital shares of the Fund
were as follows:
CAPITAL SHARE TRANSACTIONS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1996 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1995
------------------------ ------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------- ---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Shares sold...................................................... 25,031,733 $275,426,720 42,162,424 $483,616,630
Shares issued in connection with reinvestment of distributions... -- -- 899,831 9,789,980
---------- ------------ ---------- ------------
25,031,733 275,426,720 43,062,255 493,406,610
Share repurchased................................................ (26,662,083) (293,927,149) (41,032,648) (470,692,845)
---------- ------------ ---------- ------------
Net increase (decrease).......................................... (1,630,350) $(18,500,429) 2,029,607 $ 22,713,765
---------- ------------ ---------- ------------
---------- ------------ ---------- ------------
SIX MONTHS ENDED
JUNE 30, 1996 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1995
------------------------ ------------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------- ---------- ------------ ---------- ------------
Shares sold...................................................... 4,526,591 $ 48,628,657 5,971,262 $ 67,899,245
Shares issued in connection with reinvestment of distributions... -- -- 340,110 3,629,261
---------- ------------ ---------- ------------
4,526,591 48,628,657 6,311,372 71,528,506
Share repurchased................................................ (4,020,558) (43,123,699) (4,758,650) (53,997,274)
---------- ------------ ---------- ------------
Net increase..................................................... 506,033 $ 5,504,958 1,552,722 $ 17,531,232
---------- ------------ ---------- ------------
---------- ------------ ---------- ------------
JUNE 1, 1995
SIX MONTHS ENDED (COMMENCEMENT OF SALE
JUNE 30, 1996 OF SHARES) TO
(UNAUDITED) DECEMBER 31, 1995
------------------------ ------------------------
ADVISOR CLASS SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------- ---------- ------------ ---------- ------------
Shares sold...................................................... 408,147 $ 4,547,769 55,192 $ 604,443
Shares issued in connection with reinvestment of distributions... -- -- 5,231 57,021
---------- ------------ ---------- ------------
408,147 4,547,769 60,423 661,464
Share repurchased................................................ (169,215) (1,880,704) (9,811) (118,234)
---------- ------------ ---------- ------------
Net increase..................................................... 238,932 $ 2,667,065 50,612 $ 543,230
---------- ------------ ---------- ------------
---------- ------------ ---------- ------------
</TABLE>
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 $42,771 under these arrangements.
F13
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
NOTES
- --------------------------------------------------------------------------------
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
GT GLOBAL MUTUAL FUNDS
GT GLOBAL OFFERS A BROAD RANGE OF MUTUAL FUNDS TO COMPLEMENT MANY INVESTORS'
PORTFOLIOS. FOR MORE INFORMATION AND A PROSPECTUS ON ANY OF THE GT GLOBAL
MUTUAL FUNDS, PLEASE CONTACT YOUR INVESTMENT COUNSELOR OR CALL GT GLOBAL
DIRECTLY AT 1-800-824-1580. THE PROSPECTUS CONTAINS MORE COMPLETE
INFORMATION, INCLUDING CHARGES, EXPENSES AND RISKS. 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 THEME FUNDS
GT GLOBAL HEALTH CARE FUND
Invests in growing health care industries worldwide
GT GLOBAL TELECOMMUNICATIONS FUND
Invests in companies worldwide that develop, manufacture, or sell
telecommunications services or equipment
GT GLOBAL INFRASTRUCTURE FUND
Seeks companies that build, improve, or maintain a country's infrastructure
GT GLOBAL FINANCIAL SERVICES FUND
Focuses on the worldwide opportunities from the demand for financial services
and products
GT GLOBAL NATURAL RESOURCES FUND
Concentrates on companies that own, explore, or develop natural resources
GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
Invests in companies that manufacture, market, retail, or distribute consumer
products or services
/ / REGIONALLY DIVERSIFIED FUNDS
GT GLOBAL NEW PACIFIC GROWTH FUND
Offers access to the emerging and established markets of the Pacific Rim
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 GROWTH FUND
Concentrates on small and medium-sized companies in the U.S.
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
Invests in equity securities of small U.S. companies
GT GLOBAL AMERICA VALUE FUND
Concentrates on large cap equity securities of 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 bonds 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
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 JAPAN GROWTH FUND
JAPSR60827M
