<PAGE>
LGT ASSET MANAGEMENT
A PIONEER IN
GLOBAL
INVESTING
GT GLOBAL
JAPAN
GROWTH FUND
ANNUAL REPORT
DECEMBER 31, 1995
[LOGO]
<PAGE>
TABLE
OF CONTENTS
<TABLE>
<S> <C>
Report from the Fund
Managers............... 1
Report of Independent
Accountants............ F-1
Financial Statements... F-2
</TABLE>
REPORT FROM THE FUND MANAGERS
The GT Global Japan Growth Fund seeks long-term growth of capital by investing
in securities of issuers located in Japan.
PERFORMANCE REVIEW
The Fund's total return for the 12 months ended December 31, 1995, was 1.94% for
Class A shares and total return for Class B shares was 1.20%, placing it in the
top quartile of Japan funds for the year, as ranked by Lipper.(1) Total return
for the Morgan Stanley Capital International (MSCI) Japan Index(2) over the same
period was 0.86%.
The Fund outperformed the index primarily as a result of the foreign currency
contracts it held to help protect the value of shareholder's investments in yen
assets. While the Fund's performance was adversely affected by the dollar's
depreciation over the first three months of the year, when the dollar ultimately
strengthened against yen, the Fund accrued gains from these hedging contracts;
since April 1995, the Fund's yen exposure was targeted to be no more than 30%.
Finally, the Fund's Japanese bond investments also contributed substantially to
return. For additional performance information, please see page 6.
MARKET REVIEW
Japanese economic policy since 1990 has been deflationary; while unfriendly to
equities, it has been highly beneficial to bonds with Japanese long bonds
continuing their stellar performance. This year, long bonds returned 19.08% in
yen terms. Over three years the return was 44.17% and over five years it was
63.56%.
The year ended roughly where it began for the Japanese stock market, the first
half of 1995 proving the most difficult. Following the Bank of Japan's cut in
interest rates in early July, the market rallied, recovering most of the ground
it lost in the first half of the year. The market's momentum was sustained by
further rate cuts in September, a large fiscal stimulus package in the autumn
and the perception that the government was moving closer to a solution to the
housing loan problem in December.
- --------------
(1) The Fund's Class A shares were ranked in the top quartile out of 12 Japan
Funds for total return, by Lipper Analytical Services, Inc. for the one year
period ending December 31, 1995. Different classes of shares are offered and
their performance will vary. Lipper ranked the Fund #2 of 4 for 5 years; #1
of 2 for 10 years. These rankings do not include the effect of applicable
sales charges. Past performance does not indicate future results.
(2) 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.
1
<PAGE>
Japanese technology shares led the list of market gainers, rallying largely in
response to the performance of U.S. technology stocks; they were followed by a
broader selection of companies including financials and cyclicals. Banks
performed well, albeit after a period of sustained underperformance. We think
their improved performance was due to the belief that a decision on how to
allocate losses relating to the jusen (housing loan companies) would precipitate
a recovery in their balance sheets. Increased financial disclosure and the
formation of a Japanese Resolution Trust Corporation (RTC) were seen as other
factors supporting this point of view.
In addition, many of the retail and manufacturing stocks that performed poorly
in 1994 and early 1995, rose strongly with the market from July on. Notable
examples include Aoyama Trading,(3) Fast Retailing and Nichiei.
PORTFOLIO STRATEGY
Over the second half of 1995, holdings of Innotech and Riso Kagaku were sold off
and small holdings of Geomatec, Komori, Fujitsu Business System and Diamond
Lease were purchased. The only substantial new holding is Higashi Nihon House, a
home builder based in northeastern Japan.
Despite the policy moves by the Bank of Japan, we still believe authorities are
too complacent regarding the risks to the economy posed by deflation and a
financial system burdened by excessive bad debts. As a result, we maintained a
relatively low weighting in equities throughout the second half of the year.
OUTLOOK
We are impatient for a change in government policy that we think will solidify a
sustainable recovery in the economy and in corporate profits. Although we have
identified stocks and areas of the market where we want to increase weightings,
share prices need to fall first. In the meantime, we expect the economy to
worsen, profits to disappoint and the market to be vulnerable to further falls
as investors become disillusioned with current policies -- as we already are.
When this occurs, we think that it may also provoke a catalyst for more
substantial change on the policy front, which may give us the opportunity we
have been waiting for to become fully invested.
<TABLE>
<CAPTION>
Nikkei 225 Index Japanese Long Bond Yen/U.S. $ Rate
<S> <C> <C> <C>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
12/30/94 100 100 100
01/31/95 94.5581577 100.42 99.97
02/28/95 86.4640954 102.28 97.09
03/31/95 81.8329776 108.66 86.91
04/28/95 85.2137849 110.54 84.68
05/31/95 78.2676151 117.03 84.97
06/30/95 73.6060761 119.49 84.99
07/31/95 84.5582084 117.95 88.81
08/31/95 91.8577708 115.33 97.87
09/29/95 90.8229437 120.36 100.14
10/31/95 89.5122978 119.16 102.39
11/30/95 95.0377983 119.82 102.47
12/29/95 100.735686 119.12 103.94
</TABLE>
Assuming a baseline of 100, once again, in 1995 Japanese long bonds outperformed
Japanese stocks, returning 19.12% versus a weak 1.48% for the Nikkei. The
dollar, which declined in value over the first part of the year, began
strengthening in July.
Source: Bloomberg, February 15, 1996
- --------------
(3) There can be no assurance the Fund held, holds, or will hold these or any
other securities mentioned in this report.
2
<PAGE>
Our view on the Japanese market is that monetary policy is accommodative, but
not stimulative. The Bank of Japan, in our opinion, needs to abandon its policy
of targeting an interest rate level and begin intervening in the money markets
by buying government securities until such time as banks begin to expand their
balance sheets. We think that this would cause interest rates to fall to
whatever levels are needed. If this occurred, we believe it is likely the yen
would fall further. With a continued fall in the value of the yen, we expect
costs of materials could rise to a level that might trigger an overdue
restructuring of industry. This would force companies to tackle bloated costs,
notably labor, general expenses and depreciation, and to reorientate their
businesses into core areas while selling unwanted assets.
We believe that falling asset prices and a falling currency would narrow the
price differential between Japan and the rest of the world, and deflation would
abate. If that happens, the amount of bad debts could ultimately be eliminated
and a general economic recovery could begin.
The remaining question is how long will it take before economic recovery is
fully underway? We believe it is only a matter of time before monetary
conditions support a recovery, and think that 1996 should be the last year of
sub-par returns for the stock market. While profits are likely to continue to
disappoint over the short-term, we believe selective opportunities exist for the
long-term investor.
CHRISTIAN WIGNALL MICHAEL LINDSELL
CHIEF INVESTMENT OFFICER PORTFOLIO MANAGER
GLOBAL EQUITIES TOKYO
SAN FRANCISCO
JANUARY 8, 1996
GT GLOBAL JAPAN GROWTH FUND
3
<PAGE>
KEY PORTFOLIO HOLDINGS*
TAKEDA CHEMICAL INDUSTRIES
Takeda is Japan's largest pharmaceutical company. In the late 1980s, the company
changed its strategy from depending on selling foreign companies' products to
developing its own. Research & Development as a percentage of sales has risen
significantly since then, and the company now has a profile of high-margin, in-
house developed drugs from which there is potential to increase future sales and
margins.
AOYAMA TRADING CO., LTD.
Aoyama has a 23% share of the Japanese men's suit market. The company is able to
use its buying power to provide good quality suits at reasonable prices to its
customers. The suits are largely imported; inventory control is tight. Although
sales are likely to grow only marginally this year, we believe the company has
recovered well from the poor market conditions in 1994 and profits, in our
opinion, should recover considerably. We believe the stock is relatively cheap,
trading at 15 times March 1996 earnings.
DAINI DENDEN INC. (DDI)
As Japan's second-largest provider of cellular phone services, DDI has benefited
from the liberalization of domestic cellular services and cellular hand set
sales. The company also has more than 10% of the domestic long-distance market,
which we believe will show respectable growth when the Japanese economy
eventually recovers and Japanese consumers gradually increase their spending. We
expect the market for cellular phone services to continue to grow at a healthy
pace for the rest of the decade.
ITO-YOKADO CO., LTD.
Ito-Yokado operates one of the best-managed supermarket chains in Japan. Despite
a sluggish retail environment, the company has managed to grow sales and profits
through competitive pricing, a strong merchandising strategy, sound inventory
and cost control.
MATSUSHITA-KOTOBUKI ELECTRONICS, LTD.
Matsushita-Kotobuki produces parts for the PC industry, including disk drives
and CD-ROMs. Strong sales of PCs in the U.S. have led to strong company sales
despite the strong yen, which caused selling prices to decline in yen terms. The
company is transferring the manufacturing of its low margin, low-growth
- ------------------
* There can be no assurance the Fund will continue to hold these securities.
4
<PAGE>
business -- VCR manufacturing -- to overseas locations where labor costs and
capital inputs are lower.
NICHIEI CO., LTD.
Nichiei is a financial services company providing short-term financing to small
businesses in Japan that do not have property to use as collateral for bank
loans. Loans are restricted in size and backed by third-party guarantees. Most
loans are repaid in four months, making cash flow the most important
consideration to monitor. Margins are high, and may fall, but we expect this
possibility to be offset by the company's growth potential. Bad loans represent
a minimal proportion of the total, as credit checks are stringent. Profit growth
has mirrored sales growth with a low valuation of 20 times earnings.
AUTOBACS SEVEN CO., LTD.
Autobacs Seven retails car accessories at over 250 wholly owned or franchised
outlets in Japan. There are few organized competitors in the industry so
Autobacs is able to offer products at reasonable prices using the economies of
scale of its rapidly growing business. Margins continue to rise as a result of
strong cost control, good merchandising and sound management of inventory.
MURATA MANUFACTURING CO., LTD.
Murata manufactures a large range of electric components for the semiconductor,
industrial electronics and telecommunication industry. We think Murata's
technology is preeminent, their components highly sophisticated and their
margins greater than their competitors'. They have production facilities in Asia
and Japan and have benefited from the strong demand for components in the
semiconductor and telecommunication industries.
KOEI CO., LTD.
Koei produces game software for companies such as, Sony, Nintendo and Sega, and
has a 14% share in the PC game software market. The company's margins are high,
its cash flow strong, and its management has aggressive plans for expanding a
variety of software businesses. The company is cash rich and profits seem to be
stabilizing at a time when demand is relatively weak.
5
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
PORTFOLIO SUMMARY
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
GT GLOBAL JAPAN GROWTH FUND MSCI JAPAN
<S> <C> <C>
19-Jul-85 9525 10,000
31-Jul-85 9,535 9582
31-Aug-85 9,487 9,813
30-Sep-85 10,458 10,855
31-Oct-85 10,859 11,199
30-Nov-85 11,411 11,367
31-Dec-85 11,811 12,041
31-Jan-86 12,297 12,375
28-Feb-86 13,440 13,868
31-Mar-86 15,308 16,845
30-Apr-86 16,137 17,487
31-May-86 16,252 17,374
30-Jun-86 17,168 19,140
31-Jul-86 19,405 21,673
31-Aug-86 20,764 23,645
30-Sep-86 20,041 24,237
31-Oct-86 16,301 21,006
30-Nov-86 17,853 22,401
31-Dec-86 19,048 24,048
31-Jan-87 19,395 27,918
28-Feb-87 19,414 28,421
31-Mar-87 19,864 31,537
30-Apr-87 21,664 36,501
31-May-87 23,064 36,436
30-Jun-87 23,882 33,740
31-Jul-87 24,997 32,561
31-Aug-87 28,033 36,621
30-Sep-87 29,945 35,329
31-Oct-87 24,741 32,681
30-Nov-87 26,022 33,989
31-Dec-87 28,974 34,432
31-Jan-88 29,772 36,290
29-Feb-88 32,989 39,033
31-Mar-88 34,710 41,978
30-Apr-88 37,564 42,418
31-May-88 36,319 40,505
30-Jun-88 35,200 38,981
31-Jul-88 35,032 40,772
31-Aug-88 33,801 37,695
30-Sep-88 34,024 39,321
31-Oct-88 32,675 42,606
30-Nov-88 35,569 46,396
31-Dec-88 35,313 46,666
31-Jan-89 37,785 46,807
28-Feb-89 39,656 47,716
31-Mar-89 40,759 46,053
30-Apr-89 42,129 45,982
31-May-89 42,162 43,381
30-Jun-89 40,492 41,441
31-Jul-89 46,004 46,941
31-Aug-89 46,539 43,706
30-Sep-89 50,681 46,494
31-Oct-89 49,144 45,279
30-Nov-89 51,416 47,593
31-Dec-89 56,759 47,509
31-Jan-90 57,971 44,655
28-Feb-90 54,785 40,041
31-Mar-90 48,967 32,280
30-Apr-90 47,686 32,691
31-May-90 54,854 37,374
30-Jun-90 55,443 35,632
31-Jul-90 57,001 35,155
31-Aug-90 49,470 31,738
30-Sep-90 39,569 26,548
31-Oct-90 46,581 32,989
30-Nov-90 41,824 29,029
31-Dec-90 40,450 30,398
31-Jan-91 40,309 31,266
28-Feb-91 45,136 35,213
31-Mar-91 44,854 33,028
30-Apr-91 44,995 33,854
31-May-91 45,383 33,702
30-Jun-91 45,066 31,281
31-Jul-91 45,383 32,252
31-Aug-91 41,824 30,475
30-Sep-91 44,854 33,141
31-Oct-91 45,031 34,577
30-Nov-91 39,287 32,139
31-Dec-91 39,322 33,160
31-Jan-92 37,525 31,628
29-Feb-92 36,046 28,991
31-Mar-92 32,698 25,853
30-Apr-92 31,641 24,265
31-May-92 33,156 26,211
30-Jun-92 32,099 23,819
31-Jul-92 30,760 23,550
31-Aug-92 32,275 27,727
30-Sep-92 31,747 27,067
31-Oct-92 30,478 25,815
30-Nov-92 30,619 26,486
31-Dec-92 30,864 26,099
31-Jan-93 30,757 26,018
28-Feb-93 31,467 27,150
31-Mar-93 34,589 30,974
30-Apr-93 38,456 36,484
31-May-93 39,520 37,494
30-Jun-93 38,704 36,979
31-Jul-93 40,797 39,326
31-Aug-93 41,897 40,189
30-Sep-93 42,323 38,284
31-Oct-93 42,181 38,115
30-Nov-93 39,555 31,794
31-Dec-93 41,187 32,807
31-Jan-94 44,132 38,108
28-Feb-94 46,473 39,856
31-Mar-94 45,693 38,156
30-Apr-94 46,296 39,787
31-May-94 46,438 40,663
30-Jun-94 48,779 42,673
31-Jul-94 47,396 41,145
31-Aug-94 46,863 41,430
30-Sep-94 45,232 40,413
31-Oct-94 45,338 41,526
30-Nov-94 43,068 39,441
31-Dec-94 43,891 39,899
31-Jan-95 40,278 37,577
28-Feb-95 38,689 35,767
31-Mar-95 39,700 39,064
30-Apr-95 39,809 40,976
31-May-95 37,930 38,441
30-Jun-95 38,833 36,610
31-Jul-95 42,157 39,529
31-Aug-95 43,204 37,945
30-Sep-95 44,180 38,272
31-Oct-95 43,132 36,136
30-Nov-95 43,060 38,280
31-Dec-95 44,740 40,242
</TABLE>
THE CHART AT RIGHT SHOWS THE PERFORMANCE OF THE GT GLOBAL JAPAN GROWTH FUND
CLASS A SHARES SINCE THE FUND'S INCEPTION VERSUS THE MSCI JAPAN INDEX. THIS
REPRESENTS A CUMULATIVE RETURN OF 260.81% FOR THE 10 YEARS ENDING DECEMBER 31,
1995 AND AN AVERAGE ANNUAL TOTAL RETURN OF 13.69%. 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. INVESTORS SHOULD
NOTE THAT THE FUND IS A PROFESSIONALLY MANAGED MUTUAL FUND WHILE THE INDEX IS
UNMANAGED, DOES NOT INCUR EXPENSES AND IS NOT AVAILABLE FOR INVESTMENT.
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS.
AVERAGE ANNUAL TOTAL RETURNS+
DECEMBER 31, 1995
<TABLE>
<CAPTION>
SHARE WITHOUT SALES CHARGE WITH SALES CHARGE++
10-YEAR/ 10-YEAR/
LIFE OF LIFE OF
CLASS 1-YEAR 5-YEAR FUND 1-YEAR 5-YEAR FUND
<S> <C> <C> <C> <C> <C> <C>
CLASS A* 1.94 2.04 14.25 -2.91 1.05 13.69
CLASS B** 1.20 N/A 8.69 -3.29 N/A 7.74
ADV. CLASS*** N/A N/A 18.14 N/A N/A N/A
<FN>
* The Fund began operations on July 19, 1985.
** The Fund began offering Class B shares on April 1, 1993.
*** 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.
+ Figures assume reinvestment of all dividends and capital gains distributions
at net asset value.
++ The performance of Class A shares reflects the effects of the maximum 4.75%
sales charge. Class B share performance reflects the applicable contingent
deferred sales charge
(5.00% for the first year, decreasing to 0% after six years).
</TABLE>
THE DATA ABOVE 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.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
SECTOR ALLOCATION OF NET ASSETS AS OF DECEMBER 31, 1995
<S> <C>
SERVICES 34.1%
TECHNOLOGY 12.1%
CAPITAL GOODS 7.8%
HEALTH CARE 6.7%
FINANCE 4.4%
CONSUMER NON-DURABLES 3.0%
MATERIALS/BASIC NEEDS 2.4%
CONSUMER DURABLES 1.0%
FIXED INCOME OPTIONS 13.8%
SHORT-TERM & OTHER 14.7%
</TABLE>
ALLOCATIONS WILL CHANGE BASED ON CURRENT MARKET CONDITIONS.
6
<PAGE>
GT GLOBAL
JAPAN
GROWTH FUND
FINANCIAL
STATEMENTS
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
REPORT OF
INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
GT Global Growth Series:
We have audited the accompanying statement of assets and liabilities of GT
Global Japan Growth Fund, a series of shares of beneficial interest of GT Global
Growth Series, including the schedule of portfolio investments, as of December
31, 1995, the related statement of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period then
ended, and the financial highlights for each of the four years in the period
then ended. 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 financial highlights based on our
audits. The financial highlights for the year ended December 31, 1991 were
audited by other auditors whose report dated January 31, 1992 expressed an
unqualified opinion on such financial highlights.
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 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
December 31, 1995 by correspondence with the custodian 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 GT
Global Japan Growth Fund, as of December 31, 1995, the results of its operations
for the year then ended, the changes in its net assets for each of the two years
in the period then ended, and the financial highlights for each of the four
years in the period then ended, in conformity with generally accepted accounting
principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
FEBRUARY 12, 1996
F-1
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
PORTFOLIO OF INVESTMENTS
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Shares Value Assets {d}
- ---------------------------------------------------------------------- ----------- ------------ -------------
<S> <C> <C> <C>
Services (34.1%)
Aoyama Trading Co., Ltd. ........................................... 200,000 $ 6,395,349 4.2
RETAILERS-APPAREL
DDI Corp. ......................................................... 800 6,201,550 4.1
WIRELESS COMMUNICATIONS
Ito-Yokado Co., Ltd. ............................................... 100,000 6,162,791 4.0
RETAILERS-OTHER
Seven-Eleven Japan Ltd. ............................................ 80,000 5,643,411 3.7
RETAILERS-OTHER
Autobacs Seven Co., Ltd. ........................................... 55,000 4,572,674 3.0
RETAILERS-OTHER
Fast Retailing Co., Ltd. ........................................... 83,000 4,125,872 2.7
RETAILERS-APPAREL
Southland Corp.{l} -/- {\/} ....................................... 1,175,000 3,892,188 2.5
RETAILERS-OTHER
Yoshinoya D&C Co., Ltd. ........................................... 220 3,837,209 2.5
RESTAURANTS
Kentucky Fried Chicken Japan ....................................... 157,000 2,586,240 1.7
RESTAURANTS
Bunkyodo Co., Ltd. ................................................ 104,000 2,368,217 1.5
RETAILERS-OTHER
Ten Allied Co. ..................................................... 110,000 1,641,473 1.1
RESTAURANTS
Xebio Co., Ltd. .................................................... 37,000 1,308,624 0.9
RETAILERS-APPAREL
Nitori Co. ......................................................... 46,000 1,292,636 0.8
RETAILERS-OTHER
Nissha Printing Co. ................................................ 50,000 741,279 0.5
BROADCASTING & PUBLISHING
Fujitsu Business Systems ........................................... 28,000 737,984 0.5
WHOLESALE & INTERNATIONAL TRADE
Blue Grass Co., Ltd. ............................................... 21,000 559,595 0.4
RETAILERS-APPAREL
------------
52,067,092
------------
Technology (12.1%)
Matsushita-Kotobuki Electronics Ltd. ............................... 220,000 5,585,271 3.6
COMPUTERS & PERIPHERALS
Koei Co., Ltd. ..................................................... 124,900 4,332,771 2.8
SOFTWARE
Kyushu-Matsushita Electric Co., Ltd. .............................. 219,000 3,777,326 2.5
COMPUTERS & PERIPHERALS
Hosiden Electronics ............................................... 313,000 2,699,322 1.8
COMPUTERS & PERIPHERALS
Nippon Densan ...................................................... 32,000 1,159,690 0.8
COMPUTERS & PERIPHERALS
Geomatec Co., Ltd. ................................................. 26,700 965,029 0.6
COMPUTERS & PERIPHERALS
------------
18,519,409
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-2
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Shares Value Assets {d}
- ---------------------------------------------------------------------- ----------- ------------ -------------
<S> <C> <C> <C>
Capital Goods (7.8%)
Murata Manufacturing Co., Ltd. ..................................... 120,000 $ 4,418,605 2.9
ELECTRICAL PLANT/EQUIPMENT
Higashi Nihon House ................................................ 152,000 2,503,876 1.6
CONSTRUCTION
Enomoto Co., Ltd. .................................................. 93,000 1,991,570 1.3
INDUSTRIAL COMPONENTS
Shima Seiki Manufacturing Ltd. ..................................... 31,000 1,787,306 1.2
MACHINE TOOLS
Komori Corp. ....................................................... 49,000 1,234,496 0.8
MACHINERY & ENGINEERING
Japan Foundation Engineering ...................................... 900 18,837 --
CONSTRUCTION
NEC System Integration & Construction .............................. 600 14,709 --
CONSTRUCTION
------------
11,969,399
------------
Health Care (6.7%)
Takeda Chemical Industries ......................................... 450,000 7,412,791 4.8
PHARMACEUTICALS
Olympus Optical Co., Ltd. .......................................... 300,000 2,906,977 1.9
MEDICAL TECHNOLOGY & SUPPLIES
------------
10,319,768
------------
Finance (4.4%)
Nichiei Co., Ltd. .................................................. 68,000 5,073,643 3.3
INVESTMENT MANAGEMENT
Diamond Lease Co., Ltd. ........................................... 120,000 1,627,907 1.1
OTHER FINANCIAL
------------
6,701,550
------------
Consumer Non-Durables (3.0%)
Amway Japan Ltd. ................................................... 72,000 3,041,860 2.0
HOUSEHOLD PRODUCTS
Tsutsumi Jewelry Co., Ltd. ......................................... 30,600 1,532,965 1.0
PERSONAL CARE/COSMETICS
------------
4,574,825
------------
Materials/Basic Industry (2.4%)
Toyo Exterior ...................................................... 150,000 3,691,860 2.4
------------
BUILDING MATERIALS & COMPONENTS
Consumer Durables (1.0%)
NGK Spark Plug Co., Ltd. ........................................... 125,000 1,574,612 1.0
AUTO PARTS
------------ -----
TOTAL EQUITY INVESTMENTS (cost $110,025,119) ......................... 109,418,515 71.5
------------ -----
<CAPTION>
Principal Market % of Net
Fixed Income Investments Amount + Value Assets {d}
- ---------------------------------------------------------------------- ----------- ------------ -------------
<S> <C> <C> <C>
Government & Government Agency Obligations (11.5%)
Austria (3.9%)
Republic of Austria, 4.5% due 9/28/05 ........................... 550,000,000 5,917,030 3.9
Finland (2.2%)
Republic of Finland, 6% due 1/29/02 .............................. 300,000,000 3,445,494 2.2
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-3
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
<TABLE>
<CAPTION>
Principal Market % of Net
Fixed Income Investments Amount + Value Assets {d}
- ---------------------------------------------------------------------- ----------- ------------ -------------
<S> <C> <C> <C>
Government & Government Agency Obligations (Continued)
Japan (5.4%)
Japanese Government, 3.7% due 9/21/15 ............................ 847,000,000 $ 8,235,434 5.4
------------
Total Government & Government Agency Obligations (cost
$17,791,469) ........................................................ 17,597,958
------------
Supranational Bond (1.5%)
International Bank of Reconstruction & Development, 4.75% due
12/20/04 (cost $2,500,085) ....................................... 205,000,000 2,257,582 1.5
------------
Corporate Bond (0.8%)
Japan (0.8%)
Higashi Nihon House Co., Convertible Bond, 0.375% due 4/30/00
(cost $1,089,201) .............................................. 1,150,000++ 1,197,397 0.8
------------ -----
TOTAL FIXED INCOME INVESTMENTS (cost $21,380,755) .................... 21,052,937 13.8
------------ -----
<CAPTION>
Number of Market % of Net
Options Contracts Value Assets {d}
- ---------------------------------------------------------------------- ----------- ------------ -------------
<S> <C> <C> <C>
Simex Nikkei Put Option, strike JPY17,500, expires 3/8/96
(cost $573,992)-/- ................................................ 190 36,822 --
------------ -----
<CAPTION>
Market % of Net
Repurchase Agreement Value Assets {d}
- ---------------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C>
Dated December 29, 1995, with State Street Bank & Trust Company, due
January 2, 1996, for an effective yield of 5.55%, collateralized by
$8,345,000 U.S. Treasury Bonds, 10.375% due 11/15/12 (market value
of collateral is $11,624,212, including accrued interest).
(cost $11,393,267) ............................................... 11,393,267 7.5
------------ -----
TOTAL INVESTMENTS (cost $143,373,133)* ............................... 141,901,541 92.8
Other Assets and Liabilities ......................................... 11,035,381 7.2
------------ -----
NET ASSETS ........................................................... $152,936,922 100.0
------------ -----
------------ -----
</TABLE>
- ----------------
{d} Percentages indicated are based on net assets of $152,936,922.
{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.
+ All principal amounts are denominated in Japanese Yen unless
otherwise noted.
++ Principal amount is denominated in Swiss Francs.
* For Federal income tax purposes, cost is $144,572,711 and
appreciation (depreciation) is as follows:
Unrealized appreciation: $ 9,794,892
Unrealized depreciation: (12,466,062)
-------------
Net unrealized depreciation: $ (2,671,170)
-------------
-------------
The accompanying notes are an integral part of the financial statements.
F-4
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
DECEMBER 31, 1995
<TABLE>
<CAPTION>
Market Value
(U.S. Contract Delivery Unrealized
Contracts to Sell: Dollars) Price Date Appreciation
- ------------------------------------------------------------------------------ ------------- ----------- --------- ------------
<S> <C> <C> <C> <C>
Japanese Yen.................................................................. 65,354,736 99.00000 02/14/96 $2,302,532
Japanese Yen.................................................................. 14,951,320 100.04700 03/12/96 307,728
------------- ------------
Total Contracts to Sell (Receivable amount $82,916,316)..................... 80,306,056 2,610,260
------------- ------------
-------------
THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF NET ASSETS IS 52.51%
Total Open Forward Foreign Currency Contracts, Net.......................... $2,610,260
------------
------------
</TABLE>
- ----------------
See Note 1 to the financial statements.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
WRITTEN FUTURES CONTRACTS OUTSTANDING
DECEMBER 31, 1995
<TABLE>
<CAPTION>
Expiration No. of Market
Description Date Contracts Currency Value
- ---------------------------------------------------------------------------------- ---------- --------- -------- -----------
<S> <C> <C> <C> <C>
Simex Nikkei 225 Index Future (Face $15,643,207).................................. 03/08/96 170 JPY $16,357,558
-----------
-----------
</TABLE>
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
F-5
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
STATEMENT OF ASSETS
AND LIABILITIES
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $143,373,133)
(Note 1)................................................. $141,901,541
U.S. currency.............................. $ 859 --
Foreign currencies (cost $3,533,198)....... 3,518,195 3,519,054
----------
Receivable for Fund shares sold........................... 6,124,238
Receivable for open forward foreign currency contracts,
net (Note 1)............................................. 2,610,260
Initial margin for futures (Note 1)....................... 1,592,154
Interest receivable....................................... 389,602
Receivable for securities sold............................ 246,471
Dividends receivable...................................... 59,853
Receivable for variation margin (Note 1).................. 52,703
Cash held as collateral for securities loaned (Note 1).... 23,154,700
------------
Total assets............................................ 179,650,576
------------
Liabilities:
Payable for Fund shares repurchased....................... 2,543,999
Payable for securities purchased.......................... 653,139
Payable for investment management and administration fees
(Note 2)................................................. 120,095
Payable for printing and postage expenses................. 71,892
Payable for service and distribution expenses (Note 2).... 65,169
Payable for transfer agent fees (Note 2).................. 48,290
Payable for professional fees............................. 16,109
Payable for registration and filing fees.................. 8,324
Payable for custodian fees (Note 1)....................... 8,289
Payable for fund accounting fees (Note 2)................. 3,072
Payable for Trustees' fees and expenses (Note 2).......... 2,335
Other accrued expenses.................................... 18,241
Collateral for securities loaned (Note 1)................. 23,154,700
------------
Total liabilities....................................... 26,713,654
------------
Net assets.................................................. $152,936,922
------------
------------
Class A:
Net asset value and redemption price per share
($111,104,963 DIVIDED BY 10,102,324 shares outstanding).... $ 11.00
------------
------------
Maximum offering price per share
(100/95.25 of $11.00) *.................................... $ 11.55
------------
------------
Class B:+
Net asset value and offering price per share
($41,273,965 DIVIDED BY 3,828,028 shares outstanding)...... $ 10.78
------------
------------
Advisor Class:
Net asset value, offering price per share, and redemption
price per share
($557,994 DIVIDED BY 50,612 shares outstanding)............ $ 11.02
------------
------------
Net assets consist of:
Paid in capital (Note 4).................................. $154,726,647
Accumulated net realized loss on investments and foreign
currency transactions.................................... (2,186,526)
Net unrealized appreciation on translation of assets and
liabilities in foreign currencies........................ 2,582,744
Net unrealized depreciation of investments................ (2,185,943)
------------
Total -- representing net assets applicable to capital
shares outstanding......................................... $152,936,922
------------
------------
<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.
F-6
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
STATEMENT OF OPERATIONS
Year ended December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Interest income............................................. $ 1,384,777
Dividend income (net of foreign withholding tax of
$89,093)................................................... 518,977
------------
Total investment income................................... 1,903,754
------------
Expenses:
Investment management and administration fees (Note 2)...... 1,167,576
Service and distribution expenses: (Note 2)
Class A.................................. $ 317,310
Class B.................................. 288,296 605,606
------------
Transfer agent fees (Note 2)................................ 478,638
Printing and postage expenses............................... 189,345
Custodian fees (Note 1)..................................... 121,916
Registration and filing fees................................ 58,000
Audit fees.................................................. 42,500
Fund accounting fees (Note 2)............................... 30,103
Legal fees.................................................. 29,668
Trustees' fees and expenses (Note 2)........................ 12,600
Insurance expenses.......................................... 10,284
------------
Total expenses before reductions.......................... 2,746,236
------------
Expense reductions (Notes 1 & 5)........................ (180,230)
------------
Total net expenses........................................ 2,566,006
------------
Net investment loss........................................... (662,252)
------------
Net realized and unrealized gain (loss) on
investments and foreign currencies: (Note 1)
Net realized gain on investments........... 9,581,492
Net realized gain on foreign currency
transactions.............................. 5,383,418
------------
Net realized gain during the year......................... 14,964,910
Net change in unrealized appreciation on
translation of assets and liabilities in
foreign currencies........................ 923,132
Net change in unrealized depreciation of
investments............................... (11,851,499)
------------
Net unrealized depreciation during the year............... (10,928,367)
------------
Net realized and unrealized gain on investments and foreign
currencies................................................... 4,036,543
------------
Net increase in net assets resulting from operations.......... $ 3,374,291
------------
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-7
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1995 DECEMBER 31, 1994
----------------- -----------------
<S> <C> <C>
Increase in net assets
Operations:
Net investment loss........................ $ (662,252) $ (577,388)
Net realized gain on investments and
foreign currency transactions............. 14,964,910 8,729,650
Net change in unrealized appreciation
(depreciation) on translation of assets
and liabilities in foreign currencies..... 923,132 (528,496)
Net change in unrealized depreciation of
investments............................... (11,851,499) (3,251,782)
----------------- -----------------
Net increase in net assets resulting from
operations.............................. 3,374,291 4,371,984
----------------- -----------------
Class A:
Distributions to shareholders: (Note 1)
From net realized gain on investments...... (11,936,435) (1,687,150)
Class B:
Distributions to shareholders: (Note 1)
From net realized gain on investments...... (4,652,476) (462,102)
Advisor Class:
Distributions to shareholders: (Note 1)
From net realized gain on investments...... (58,144) --
----------------- -----------------
Total distributions...................... (16,647,055) (2,149,252)
----------------- -----------------
Capital share transactions: (Note 4)
Increase from capital shares sold and
reinvested................................ 565,596,580 422,096,027
Decrease from capital shares repurchased... (524,808,353) (391,082,829)
----------------- -----------------
Net increase from capital share
transactions............................ 40,788,227 31,013,198
----------------- -----------------
Total increase in net assets................. 27,515,463 33,235,930
Net assets:
Beginning of year.......................... 125,421,459 92,185,529
----------------- -----------------
End of year................................ $ 152,936,922 $ 125,421,459
----------------- -----------------
----------------- -----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-8
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS A+
-----------------------------------------------------------
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------
1995 (A) 1994 1993 1992 (A) 1991
----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 12.15 $ 11.61 $ 8.70 $ 11.16 $ 11.48
----------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment loss................... (0.04) (0.04) (0.14) (0.00)* (0.09)
Net realized and unrealized gain
(loss) on investments................ 0.26 0.79 3.05 (2.40) (0.23)
----------- ---------- ---------- ---------- ----------
Net increase (decrease) from
investment operations.............. 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.......... $ 11.00 $ 12.15 $ 11.61 $ 8.70 $ 11.16
----------- ---------- ---------- ---------- ----------
----------- ---------- ---------- ---------- ----------
Total investment return (d)............. 1.94% 6.56% 33.5% (21.5)% (2.8)%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 111,105 $ 98,066 $ 88,487 $ 93,865 $ 61,519
Ratio of net investment loss to average
net assets............................. (0.40)% (0.32)% (0.3)% (0.0)%* (1.5)%
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)..................................... 1.99% 1.91% 2.1% 2.2%* 2.2%
Without expense reductions............ 2.14% 2.03% --%** --%** --%**
Portfolio turnover rate++++............. 67% 49% 104% 115% 251%
</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 is 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.
The accompanying notes are an integral part of the financial statements.
F-9
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
FINANCIAL HIGHLIGHTS (CONT'D)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each 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+++
--------------
YEAR ENDED DECEMBER APRIL 1, 1993 JUNE 1, 1995
31, TO TO
---------------------- DECEMBER 31, DECEMBER 31,
1995 (A) 1994 1993 1995 (A)
---------- ---------- -------------- --------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 12.02 $ 11.57 $ 9.85 $ 10.50
---------- ---------- ------- -------
Income from investment operations:
Net investment loss................... (0.12) (0.13) (0.18) (0.00)
Net realized and unrealized gain
(loss) on investments................ 0.25 0.79 1.90 1.89
---------- ---------- ------- -------
Net increase (decrease) from
investment operations.............. 0.13 0.66 1.72 1.89
---------- ---------- ------- -------
Distributions to shareholders:
From net realized gain on
investments.......................... (1.37) (0.21) -- (1.37)
---------- ---------- ------- -------
Net asset value, end of period.......... $ 10.78 $ 12.02 $ 11.57 $ 11.02
---------- ---------- ------- -------
---------- ---------- ------- -------
Total investment return (d)............. 1.20% 5.81% 17.5 %(b) 18.14 %(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 41,274 $ 27,355 $ 3,699 $ 558
Ratio of net investment loss to average
net assets............................. (1.05)% (0.97)% (0.9)%(c) (0.05)%(c)
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)..................................... 2.64% 2.56% 2.7 %(c) 1.64 %(c)
Without expense reductions............ 2.79% 2.68% -- %** 1.79 %(c)
Portfolio turnover rate++++............. 67% 49% 104 % 67 %
</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 is 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.
The accompanying notes are an integral part of the financial statements.
F-10
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
NOTES TO
FINANCIAL STATEMENTS
December 31, 1995
- --------------------------------------------------------------------------------
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. The Fund
commenced sale of Advisor Class shares on June 1, 1995. 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,
therefore, 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", formerly known as G.T. Capital Management, Inc.) 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.
F-11
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
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 year
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 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 securitiy 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
F-12
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
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 December 31, 1995, the
Fund had segregated securities valued at $16,481,637 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 December 31, 1995, stocks with an aggregate value of $21,264,947 were on loan
to brokers. The loans were secured by cash collateral of $23,154,700, 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 year ended December 31, 1995, the Fund received securities lending fees of
$93,026 which were used to reduce 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 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 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.
(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
F-13
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
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 year 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", formerly known as G.T. Global Financial Services,
Inc.), 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 year ended December 31, 1995, GT Global retained $78,489
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 CDSCs in the
amount of $39,752 for the year ended December 31, 1995. 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 year ended December 31, 1995, GT Global collected CDSCs
in the amount of $173,962. 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
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 also is reimbursed by the Funds for its
out-of-pocket expenses for such items as postage, forms, telephone charges,
stationary and office supplies.
Effective July 1, 1995, LGT has assumed the role of 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% of the first $5 billion of assets of all
registered mutual funds advised by LGT ("GT Funds")
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<PAGE>
GT GLOBAL JAPAN GROWTH FUND
and 0.02% to the assets in excess of $5 billion and dividing the result by the
aggregated assets of the GT Funds. For the period ended December 31, 1995, the
Fund paid fund accounting fees of $14,483 to LGT.
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 year ended December 31, 1995, purchases and sales of investment
securities by the Fund, other than U.S. government obligations and short-term
investments, aggregated $85,047,455 and $74,594,151, respectively. There were no
purchases or sales of U.S. government obligations by the Fund during the year.
4. CAPITAL SHARES
At December 31, 1995, 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>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1995 DECEMBER 31, 1994
-------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
CLASS A
Shares sold............................................................... 42,162,424 $ 483,616,630 26,403,403 $ 337,405,704
Shares issued in connection with reinvestment of distributions............ 899,831 9,789,980 119,477 1,396,969
----------- ------------- ----------- -------------
43,062,255 493,406,610 26,522,880 338,802,673
Shares repurchased........................................................ (41,032,648) (470,692,845) (26,071,333) (332,875,892)
----------- ------------- ----------- -------------
Net increase.............................................................. 2,029,607 $ 22,713,765 451,547 $ 5,926,781
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1995 DECEMBER 31, 1994
-------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
CLASS B
Shares sold............................................................... 5,971,262 $ 67,899,245 6,416,496 $ 82,933,091
Shares issued in connection with reinvestment of distributions............ 340,110 3,629,261 31,084 360,263
----------- ------------- ----------- -------------
6,311,372 71,528,506 6,447,580 83,293,354
Shares repurchased........................................................ (4,758,650) (53,997,274) (4,491,860) (58,206,937)
----------- ------------- ----------- -------------
Net increase.............................................................. 1,552,722 $ 17,531,232 1,955,720 $ 25,086,417
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
</TABLE>
<TABLE>
<CAPTION>
JUNE 1, 1995
(COMMENCEMENT OF
SALE OF SHARES)
TO DECEMBER 31, 1995
--------------------------
ADVISOR CLASS SHARES AMOUNT
----------- -------------
<S> <C> <C>
Shares sold............................................................... 55,192 $ 604,443
Shares issued in connection with reinvestment of distributions............ 5,231 57,021
----------- -------------
60,423 661,464
Shares repurchased........................................................ (9,811) (118,234)
----------- -------------
Net increase.............................................................. 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 year ended December 31, 1995, the Fund's expenses were
reduced by $87,204 under these arrangements.
- --------------
FEDERAL TAX INFORMATION (UNAUDITED):
Pursuant to Section 852 of the Internal Revenue Code, the Fund designates
$9,469,767 as capital gain dividends for the fiscal year ended December 31,
1995.
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<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
