<PAGE>
LGT ASSET MANAGEMENT
A PIONEER IN
GLOBAL
INVESTING
GT GLOBAL
EUROPE
GROWTH FUND
ANNUAL REPORT
DECEMBER 31, 1995
[LOGO]
<PAGE>
TABLE
OF CONTENTS
<TABLE>
<S> <C>
Report from the Fund
Managers and Key
Portfolio Holdings..... 1
Report of Independent
Accountants............ F-1
Financial Statements... F-2
</TABLE>
REPORT FROM THE FUND MANAGERS
The GT Global Europe Growth Fund seeks long-term capital growth by investing in
the equity securities of European countries. While the Fund has the ability to
invest in companies from western and eastern Europe, for the 12-month period,
the Fund focused primarily on western European companies.
PERFORMANCE REVIEW
The Fund's total return for the 12 months ended December 31, 1995, was 9.86% for
Class A shares; total return for Class B shares was 9.20%. Total return for the
Morgan Stanley Capital International (MSCI) Europe Index(1) over the same period
was 22.13%. The index is not available for investment and does not include the
effects of sales charges and management fees. For additional performance
information, please see page 6.
In early 1995, the Fund implemented a number of changes. Most significantly, we
were pleased to introduce a new portfolio manager who has since restructured the
portfolio, focusing on what we believe to be quality companies with strong
earnings potential, competitive positions, strong cash flows and companies which
we expect to yield excess returns. We believe that the Fund's overall stronger
performance over the last six months of the year reflects these positive
changes.
We take a long-term view and do not try to anticipate short-term sector
rotations. In the second quarter of 1995, we expected much weaker European
economies. As a result, we reduced the Fund's exposure to cyclical companies;
however, we underestimated the flight to defensive earnings (companies which
generally have provided more stable returns than growth companies) and were
underweighted in these types of companies relative to our other holdings. While
this limited our participation in the powerful liquidity rally that resulted in
Switzerland being the best-performing market in U.S. dollar terms in 1995,
according to the MSCI Europe Index, we believe our approach will yield better
long-term returns.
The Fund's 1995 performance was also adversely affected by its bias toward
technology stocks, where the Fund's exposure was increased mid-year after a
significant correction in that industry group. Looking ahead, however, we expect
the underperformance of this asset class to correct itself in 1996.
- --------------
(1) The MSCI Europe Index is an arithmetic average, weighted by market value, of
the performance of 591 securities listed on 14 major European stock
exchanges. It includes the effect of reinvested dividends and is measured in
U.S. dollars.
1
<PAGE>
Finally, we believe in the value of protecting the Fund from currency
fluctuations by maintaining a defensive hedging strategy, as provided for in the
prospectus. At the beginning of 1995, we expected the dollar, after a five year
period of weakness, to rebound in the first quarter and therefore employed
foreign currency hedges. We prematurely anticipated the dollar's strengthening,
which meant that the Fund did not participate in the gains that resulted from a
weaker dollar. Toward the end of the year and early 1996, the dollar began to
recover, helping the Fund to regain some of the losses.
MARKET REVIEW
The year ended with a significant round of interest rate cuts across Europe on
the back of lower than expected European growth and inflation. For the past six
years, European stock markets have been handicapped by tight monetary
conditions, which impeded a strong equity bull market or a sustained economic
recovery. However, with the interest rate cuts we anticipate in 1996, in our
opinion, monetary conditions may finally ease to a point where they may begin
stimulating the economy. French bank rates reached their lowest level in 23
years, while the Swiss National Bank lowered its intervention rate to 1.5%.
Although the 1995 interest rate cuts provided support to both stock and bond
markets across Europe, bonds generally tended to outperform equities, which were
hampered by corporate earnings downgrades. European bond markets performed well
in this strong disinflationary environment, providing a return of 25.51% in
dollar terms.
Although 1995 was a disappointing year in the UK for corporate profits, consumer
demand and economic growth (which fell below 2%), stocks performed well, with a
total return in excess of 20%, according to the MSCI national index. A series of
unexpected takeover bids provided stimulus to the weak environment.
Consumer demand across other parts of Europe was inhibited by the loss of job
security, higher taxes to meet stringent Maastricht criteria and cuts in social
security provisions. Against this background, companies that could provide
visible earnings growth were rewarded. Blue-chip companies tended to outperform
their less liquid peers, and economically sensitive shares reflected
disappointing volume growth and downward pressure on commodity prices.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
CLOSING VALUES
DATE GERMANY 10 YEAR UK 10 YEAR
<S> <C> <C>
6-Jan 7.691 8.654
13-Jan 7.512 8.598
20-Jan 7.514 8.648
27-Jan 7.405 8.569
3-Feb 7.413 8.563
10-Feb 7.407 8.59
17-Feb 7.404 8.617
24-Feb 7.413 8.659
3-Mar 7.404 8.6
10-Mar 7.36 8.634
17-Mar 7.154 8.472
24-Mar 7.148 8.403
31-Mar 7.189 8.498
7-Apr 7.08 8.368
14-Apr 7.061 8.307
21-Apr 7.089 8.338
28-Apr 7.039 8.43
5-May 6.945 8.271
12-May 6.899 8.173
19-May 6.867 8.093
26-May 6.699 7.93
2-Jun 6.542 7.707
9-Jun 6.739 8.116
16-Jun 6.791 8.183
23-Jun 6.757 8.145
30-Jun 6.94 8.45
7-Jul 6.732 8.115
14-Jul 6.755 8.203
21-Jul 6.867 8.317
28-Jul 6.789 8.229
4-Aug 6.675 8.048
11-Aug 6.692 8.073
18-Aug 6.762 8.131
25-Aug 6.69 8.03
1-Sep 6.679 7.934
8-Sep 6.614 7.887
15-Sep 6.488 7.82
22-Sep 6.569 7.986
29-Sep 6.603 8.119
6-Oct 6.579 8.05
13-Oct 6.541 8.065
20-Oct 6.521 8.147
27-Oct 6.499 8.086
10-Nov 6.366 7.861
17-Nov 6.326 7.73
24-Nov 6.254 7.618
1-Dec 6.11 7.518
8-Dec 6.074 7.462
15-Dec 6.016 7.382
22-Dec 6.084 7.521
29-Dec 6.031 7.415
</TABLE>
German and UK long bond yields declined in 1995 in response to generally weaker
economic growth and lower inflation expectations. We believe yields may decline
further in 1996, although not to the extent they did in the past year.
Source: Bloomberg
2
<PAGE>
PORTFOLIO STRATEGY
The Fund decreased its cyclical exposure in the first half of 1995, selling off
paper, chemical and car stocks. Relative to its other holdings, the Fund was
overweighted in the UK where, despite stretched valuations and sluggish economic
growth, the stock market touched new highs. In addition, the Fund's bias toward
growth stocks led to a relatively overweighted position in technology-related
companies. Unfortunately, many of these companies had a volatile year as earlier
gains unwound in the second half. The Fund, however, benefited from its holdings
in companies with strong earnings, such as Wolters Kluwer*, a Dutch legal
publisher, and Elsevier, also a Dutch publisher, which are among the top 10
holdings in the portfolio.
OUTLOOK
Looking forward, we believe the downward shift in the European yield curve could
provide a favorable environment for bond and equity markets. Although there is
still a risk of earnings disappointment, we think that markets may be driven
higher by a possible drop in both short- and long-term rates. Whereas in 1995, a
clear investor bias existed toward defensive earnings, as consumer confidence
begins to recover we expect 1996 to have the potential to include a broader
group of winners. Within the portfolio, we continue to favor companies with
structural growth prospects, such as Hoganas, a powder metal producer, and De
Rigo, a sunglasses manufacturer. We also favor companies undergoing structural
change such as Gehe, the German pharmaceuticals wholesaler.
CHRISTIAN WIGNALL ANNA POWELL
CHIEF INVESTMENT OFFICER PORTFOLIO MANAGER
GLOBAL EQUITIES INVESTMENTS LONDON
SAN FRANCISCO
JANUARY 15, 1996
- --------------
* The Fund may or may not continue to hold these or any other securities
mentioned in this report.
G.T. GLOBAL EUROPE GROWTH FUND
3
<PAGE>
KEY PORTFOLIO HOLDINGS*
CANAL PLUS FRANCE
Canal Plus is a French pay-TV station. We believe the company stands to benefit
from an improvement in profitability of overseas earnings, notably in its
start-up operations in Poland and Germany.
CIBA GEIGY AG-REGISTERED SWITZERLAND
This Swiss pharmaceutical company is rated low by investors because they
perceive it as a chemicals company. We believe a restructuring of assets within
the group could lead to improved returns on investment of the group's capital.
NATUZZI INDUSTRIE SPA ITALY
Natuzzi is a world leader in leather furniture, with efficient production
capacity in Italy. We think the Company has the potential to gain market share,
which may enable it to increase profits over the foreseeable future.
REUTERS HOLDINGS PLC UK
The company has a unique franchise as a provider of information to the financial
services sector, which we feel can be exploited through the addition of further
services.
ELSEVIER NV NETHERLANDS
This Dutch publishing company focuses on the scientific, professional and
business markets. It has enjoyed strong growth from geographical expansion and
from electronic publishing. Elsevier recently acquired LEXIS-NEXIS, the on-line
legal and business information service company, which we expect to enhance its
earnings growth.
GEHE AG GERMANY
A German pharmaceutical wholesaler, Gehe is a beneficiary of the sector's
consolidation in Europe. The company has enhanced its financial returns by
restructuring acquired companies.
WOLTERS KLUWER CVA NETHERLANDS
Wolters Kluwer, a Dutch legal publisher, has strong market share in Europe and
recently acquired CCH, a tax and business law publisher, providing a foothold in
the North American market. The company's growth is driven by new market and
product development.
CARREFOUR SUPERMARCHE FRANCE
Carrefour operates "hypermarkets" (large supermarkets) across France, southern
Europe, the Americas and Asia. Recently, it has increased profit contributions
from fast-developing markets such as Spain, Brazil and Taiwan. Through other
subsidiaries, the company retails office supplies and offers insurance,
automobile loans and credit cards.
B.A.T. INDUSTRIES PLC UK
BAT is a holding company that, through its eight principal operating companies,
manufactures tobacco products and provides financial and insurance services. BAT
operates in over 80 countries globally. Its tobacco businesses are highly cash
generative and continue to grow throughout the former communist bloc. BAT also
has a strong franchise in financial services through Eagle Star and Allied
Dunbar.
OLIVETTI GROUP ITALY
Olivetti is an Italian office equipment producer with a significant interest in
Omnitel, the second mobile telecommunication licensee in Italy. The company's
new divisional management is restructuring its PC activity, leading us to
anticipate a reduction in losses in this area over the short term.
- ------------------
* There can be no assurance the Fund will continue to hold these securities.
4
<PAGE>
GT GLOBAL EUROPE GROWTH FUND
PORTFOLIO SUMMARY
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
GT GLOBAL EUROPE GROWTH FUND MSCI EUROPE
<S> <C> <C>
19-Jul-85 9525 10,000
31-Jul-85 9,535 10,191
31-Aug-85 9,563 10,717
30-Sep-85 10,068 10,897
31-Oct-85 10,954 12,111
30-Nov-85 11,763 13,063
31-Dec-85 12,992 13,637
31-Jan-86 12,897 13,902
28-Feb-86 13,907 15,559
31-Mar-86 15,059 16,837
30-Apr-86 16,116 18,408
31-May-86 14,621 16,786
30-Jun-86 15,288 17,524
31-Jul-86 15,859 17,380
31-Aug-86 17,278 19,328
30-Sep-86 16,659 18,110
31-Oct-86 16,678 18,227
30-Nov-86 17,831 19,210
31-Dec-86 18,317 19,700
31-Jan-87 19,421 20,577
28-Feb-87 20,498 21,319
31-Mar-87 21,210 22,379
30-Apr-87 22,050 23,263
31-May-87 22,373 23,141
30-Jun-87 22,778 23,809
31-Jul-87 24,175 24,617
31-Aug-87 25,187 24,829
30-Sep-87 26,077 24,999
31-Oct-87 19,560 20,254
30-Nov-87 18,643 19,371
31-Dec-87 19,523 20,507
31-Jan-88 18,945 19,674
29-Feb-88 19,775 20,840
31-Mar-88 19,913 21,422
30-Apr-88 20,077 21,829
31-May-88 19,737 21,430
30-Jun-88 20,139 21,222
31-Jul-88 19,901 21,278
31-Aug-88 19,285 20,320
30-Sep-88 20,224 21,433
31-Oct-88 21,437 23,428
30-Nov-88 21,315 23,725
31-Dec-88 21,692 23,860
31-Jan-89 22,962 24,734
28-Feb-89 22,655 24,462
31-Mar-89 23,199 24,648
30-Apr-89 24,426 25,341
31-May-89 24,161 24,052
30-Jun-89 24,984 25,053
31-Jul-89 26,742 28,012
31-Aug-89 27,342 27,671
30-Sep-89 28,374 28,156
31-Oct-89 26,226 26,320
30-Nov-89 27,956 27,792
31-Dec-89 30,522 30,793
31-Jan-90 30,355 30,722
28-Feb-90 29,853 29,997
31-Mar-90 31,164 30,432
30-Apr-90 30,271 29,636
31-May-90 31,555 32,061
30-Jun-90 32,392 33,200
31-Jul-90 33,815 34,612
31-Aug-90 29,490 31,192
30-Sep-90 25,668 27,532
31-Oct-90 27,035 29,866
30-Nov-90 26,505 30,179
31-Dec-90 26,031 29,756
31-Jan-91 26,533 30,771
28-Feb-91 28,542 33,477
31-Mar-91 27,760 31,245
30-Apr-91 27,286 30,929
31-May-91 27,732 31,854
30-Jun-91 26,282 29,191
31-Jul-91 27,230 31,226
31-Aug-91 27,230 31,808
30-Sep-91 27,147 32,774
31-Oct-91 26,114 32,098
30-Nov-91 25,110 31,357
31-Dec-91 27,157 33,821
31-Jan-92 27,044 33,824
29-Feb-92 27,242 33,969
31-Mar-92 26,647 32,793
30-Apr-92 27,695 34,615
31-May-92 28,601 36,599
30-Jun-92 27,723 35,931
31-Jul-92 26,506 34,662
31-Aug-92 26,279 34,564
30-Sep-92 24,410 34,008
31-Oct-92 23,079 31,648
30-Nov-92 23,759 31,646
31-Dec-92 24,099 32,385
31-Jan-93 24,127 32,452
28-Feb-93 24,495 32,836
31-Mar-93 25,373 34,537
30-Apr-93 26,109 35,312
31-May-93 26,534 35,704
30-Jun-93 26,647 35,194
31-Jul-93 27,355 35,326
31-Aug-93 29,592 38,437
30-Sep-93 28,459 38,330
31-Oct-93 29,592 39,938
30-Nov-93 28,771 39,088
31-Dec-93 30,923 42,034
31-Jan-94 33,062 44,186
28-Feb-94 31,465 42,633
31-Mar-94 30,010 41,439
30-Apr-94 31,151 43,168
31-May-94 29,496 41,345
30-Jun-94 28,983 40,925
31-Jul-94 30,837 43,083
31-Aug-94 31,322 44,463
30-Sep-94 29,867 42,714
31-Oct-94 30,723 44,589
30-Nov-94 29,325 42,895
31-Dec-94 29,129 43,153
31-Jan-95 28,432 42,830
28-Feb-95 28,490 43,815
31-Mar-95 27,851 45,865
30-Apr-95 29,100 47,349
31-May-95 29,738 48,335
30-Jun-95 30,261 48,808
31-Jul-95 31,975 51,370
31-Aug-95 31,103 49,401
30-Sep-95 32,149 50,911
31-Oct-95 31,800 50,689
30-Nov-95 31,626 51,067
31-Dec-95 31,999 52,703
</TABLE>
THE CHART AT RIGHT SHOWS THE PERFORMANCE OF THE GT GLOBAL EUROPE GROWTH FUND
CLASS A SHARES SINCE THE FUND'S INCEPTION, VERSUS THE MSCI EUROPE INDEX. THIS
REPRESENTS A CUMULATIVE RETURN OF 134.60% FOR THE 10 YEARS ENDING DECEMBER 31,
1995, AND AN AVERAGE ANNUAL TOTAL RETURN OF 8.90%. 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* 9.86% 4.22% 9.43% 4.64% 3.21% 8.90%
CLASS B** 9.20% N/A 7.88% 4.20% N/A 6.91%
ADV. CLASS*** N/A N/A 7.75% 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% in 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
<S> <C>
AS OF DECEMBER 31, 1995
Services 34.9%
Finance 15.3%
Consumer Non-Durables 11.2%
Capital Goods 8.6%
Health Care 8.0%
Technology 5.9%
Consumer Durables 5.5%
Materials/Basic Industries 4.9%
Multi Industry/Miscellaneous 1.4%
Options & Other 4.3%
GEOGRAPHIC ALLOCATION OF NET ASSETS
AS OF DECEMBER 31, 1995
U.K. 31.2%
France 16.1%
Italy 11.2%
Netherlands 10.4%
Sweden 7.8%
Germany 7.5%
Switzerland 5.6%
Spain 2.3%
Finland 1.9%
Norway 1.7%
Austria 1.6%
Other 2.7%
</TABLE>
ALLOCATIONS WILL CHANGE BASED ON CURRENT MARKET CONDITIONS.
6
<PAGE>
GT GLOBAL
EUROPE
GROWTH FUND
FINANCIAL
STATEMENTS
<PAGE>
GT GLOBAL EUROPE GROWTH FUND
REPORT OF
INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
G.T. Global Growth Series:
We have audited the accompanying statement of assets and liabilities of GT
Global Europe Growth Fund, one of the funds organized as a series of G.T. 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 the financial highlights based on our
audits. The financial highlights for the years 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 the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
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 Europe 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 EUROPE GROWTH FUND
PORTFOLIO OF INVESTMENTS
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets {d}
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (34.9%)
Canal Plus ................................................ FR 105,100 $ 19,732,447 3.5
BROADCASTING & PUBLISHING
Reuters Holdings PLC ..................................... UK 1,813,500 16,597,706 3.0
BROADCASTING & PUBLISHING
Elsevier N.V. ............................................. NETH 1,235,000 16,501,623 3.0
BROADCASTING & PUBLISHING
Wolters Kluwer CVA ........................................ NETH 168,745 15,993,688 2.9
BROADCASTING & PUBLISHING
Carrefour Supermarche ..................................... FR 25,780 15,664,665 2.8
RETAILERS-FOOD
Compass Group PLC ......................................... UK 1,773,544 13,464,726 2.4
RESTAURANTS
EMAP PLC ................................................. UK 1,593,000 13,231,719 2.4
BROADCASTING & PUBLISHING
Verenigde Nederlandse Uitgevbedri Verigd Bezit (VNU) ...... NETH 85,000 11,691,746 2.1
BROADCASTING & PUBLISHING
Telecom Italia Mobile S.p.A. .............................. ITLY 6,574,000 11,571,899 2.1
TELEPHONE NETWORKS
Pearson PLC ............................................... UK 1,000,000 9,680,174 1.7
BROADCASTING & PUBLISHING
Tesco PLC ................................................. UK 1,981,200 9,135,482 1.6
RETAILERS-FOOD
British Airport Authority PLC ............................ UK 1,155,400 8,700,029 1.6
TRANSPORTATION - AIRLINES
Prosegur, Compania de Seguridad S.A. - Registered ......... SPN 309,393 7,680,601 1.4
BUSINESS & PUBLIC SERVICES
Hornbach Holding AG Preferred ............................. GER 79,461 6,816,168 1.2
RETAILERS-OTHER
Granada Group PLC ......................................... UK 451,600 4,522,310 0.8
LEISURE & TOURISM
Dixons Group PLC .......................................... UK 533,900 3,701,077 0.7
RETAILERS-APPAREL
But S.A. .................................................. FR 66,345 3,595,751 0.6
RETAILERS-OTHER
Storli AS Series A ........................................ NOR 189,000 2,838,376 0.5
TRANSPORTATION - SHIPPING
Cortefiel S.A. ........................................... SPN 75,774 1,987,310 0.4
RETAILERS-APPAREL
Silja Oy AB "A"-/- ........................................ FIN 290,000 887,421 0.2
TRANSPORTATION - SHIPPING
------------
193,994,918
------------
Finance (15.3%)
Baloise Holdings Ltd. - Registered ........................ SWTZ 6,903 14,375,011 2.6
INSURANCE - MULTI-LINE
Cetelem Group ............................................. FR 64,400 12,104,223 2.2
CONSUMER FINANCE
M & G Group PLC ........................................... UK 600,000 11,727,993 2.1
INVESTMENT MANAGEMENT
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-2
<PAGE>
GT GLOBAL EUROPE GROWTH FUND
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets {d}
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (Continued)
Mercury Asset Management Group PLC ........................ UK 842,656 $ 11,375,398 2.0
INVESTMENT MANAGEMENT
Singer & Friedlander Group PLC ........................... UK 6,250,000 10,528,256 1.9
BANKS-REGIONAL
Barclays PLC ............................................. UK 800,000 9,178,699 1.6
BANKS-MONEY CENTER
Invesco PLC ............................................... UK 2,000,000 7,871,449 1.4
INVESTMENT MANAGEMENT
National Westminster Bank PLC ............................. UK 566,750 5,706,216 1.0
BANKS-MONEY CENTER
Banco Ambrosiano Veneto S.p.A. ............................ ITLY 1,192,000 1,535,687 0.3
BANKS-MONEY CENTER
UNI Storebrand AS "A"-/- .................................. NOR 194,100 1,073,935 0.2
INSURANCE - MULTI-LINE
------------
85,476,867
------------
Consumer Non-Durables (11.2%)
Industrie Natuzzi S.p.A. - ADR{\/} ........................ ITLY 368,500 16,720,688 3.0
HOUSEHOLD PRODUCTS
B.A.T. Industries PLC ..................................... UK 1,654,000 14,572,970 2.6
TOBACCO
Adidas AG-/- .............................................. GER 170,000 8,998,535 1.6
TEXTILES & APPAREL
Polygram .................................................. NETH 152,200 8,096,553 1.5
RECREATION
Gucci Group - NY Registered Shares{\/} .................... ITLY 146,100 5,679,638 1.0
TEXTILES & APPAREL
Nutricia Vereenigde Bedrijven N.V. ........................ NETH 62,600 5,073,352 0.9
FOOD
De Rigo S.p.A. - ADR{\/} .................................. ITLY 152,900 3,478,475 0.6
TEXTILES & APPAREL
------------
62,620,211
------------
Capital Goods (8.6%)
Olivetti Group-/- ......................................... ITLY 17,750,000 14,379,180 2.6
OFFICE EQUIPMENT
L.M. Ericsson Telephone Co. ............................... SWDN 699,600 13,704,212 2.5
TELECOM EQUIPMENT
SGS-Thomson Microelectronics N.V. - ADR-/- {\/} ........... FR 302,380 12,170,795 2.2
ELECTRICAL PLANT/EQUIPMENT
Nokia AB "A" .............................................. FIN 182,400 7,050,411 1.3
TELECOM EQUIPMENT
------------
47,304,598
------------
Health Care (8.0%)
Ciba-Geigy AG - Registered ................................ SWTZ 19,284 16,983,306 3.0
PHARMACEUTICALS
Gehe AG: .................................................. GER -- -- 3.0
PHARMACEUTICALS
Common ................................................. -- 26,000 13,236,627 --
New-/- .................................................. -- 6,500 3,263,826 --
Medeva PLC ................................................ UK 2,725,000 11,422,916 2.0
PHARMACEUTICALS
------------
44,906,675
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-3
<PAGE>
GT GLOBAL EUROPE GROWTH FUND
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets {d}
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Technology (5.9%)
SAP AG .................................................... GER 60,180 $ 9,338,204 1.7
COMPUTERS & PERIPHERALS
Austria Mikro Systeme International AG .................... ASTRI 56,088 9,101,219 1.6
SEMICONDUCTORS
Group Axime-/- ............................................ FR 83,170 6,412,740 1.2
COMPUTERS & PERIPHERALS
Nera AS ................................................... NOR 167,000 5,438,364 1.0
TELECOM TECHNOLOGY
Benefon Oy-/- ............................................. FIN 96,200 2,390,447 0.4
TELECOM TECHNOLOGY
------------
32,680,974
------------
Consumer Durables (5.5%)
Autoliv AB ................................................ SWDN 244,750 14,309,199 2.6
AUTO PARTS
Hoganas AB "B" ........................................... SWDN 419,900 12,274,633 2.2
AUTO PARTS
Moulinex-/- .............................................. FR 171,800 2,354,147 0.4
APPLIANCES & HOUSEHOLD
Bertrand Faure S.A. ....................................... FR 72,713 1,858,907 0.3
AUTO PARTS
------------
30,796,886
------------
Materials/Basic Industry (4.9%)
Pilkington PLC: ........................................... UK -- -- 2.4
BUILDING MATERIALS & COMPONENTS
Common ................................................. -- 3,305,700 10,367,201 --
New ..................................................... -- 826,425 2,591,800 --
Groupe Poliet ............................................. FR 106,200 8,640,221 1.5
BUILDING MATERIALS & COMPONENTS
Svedala Industri "AB" - Free .............................. SWDN 112,800 2,906,472 0.5
BUILDING MATERIALS & COMPONENTS
Construcciones y Auxiliar de Ferrocarriles S.A. .......... SPN 73,300 2,599,505 0.5
BUILDING MATERIALS & COMPONENTS
------------
27,105,199
------------
Multi Industry/Miscellaneous (1.4%)
Assystem-/- ............................................... FR 109,810 7,997,411 1.4
MULTI-INDUSTRY
------------
TOTAL EQUITY INVESTMENTS (cost $467,934,875) ................ 532,883,739 95.7
------------ -----
<CAPTION>
Number
of Market % of Net
Options (1.6%) Currency Contracts Value Assets {d}
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Italian Government Bond Call Option, strike 95.48, expires
8/16/96 (cost $6,292,936) ............................... ITL 2,820,000 8,967,066 1.6
------------ -----
TOTAL INVESTMENTS (cost $474,227,811) * ..................... 541,850,805 97.3
Other Assets and Liabilities ................................ 15,266,328 2.7
------------ -----
NET ASSETS .................................................. $557,117,133 100.0
------------ -----
------------ -----
</TABLE>
- ----------------
{d} Percentages indicated are based on net assets of $557,117,133.
{\/} U.S. currency denominated.
-/- Non-income producing security.
The accompanying notes are an integral part of the financial statements.
F-4
<PAGE>
GT GLOBAL EUROPE GROWTH FUND
<TABLE>
<C> <S>
* For Federal income tax purposes, cost is $476,575,883 and
appreciation (depreciation) is as follows:
Unrealized appreciation: $ 91,445,368
Unrealized depreciation: (26,170,446)
-------------
Net unrealized appreciation: $ 65,274,922
-------------
-------------
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at December 31, 1995, was concentrated in
the following countries:
<TABLE>
<CAPTION>
Percentage of Net Assets
{d}
---------------------------
Short-Term
Country(Country Code/Currency Code) Equity & Other Total
- -------------------------------------- ------ ---------- -----
<S> <C> <C> <C>
Austria (ASTRI/ATS) .................. 1.6 1.6
Finland (FIN/FIM) .................... 1.9 1.9
France (FR/FRF) ...................... 16.1 16.1
Germany (GER/DEM) .................... 7.5 7.5
Italy (ITLY/ITL) ..................... 9.6 1.6 11.2
Netherlands (NETH/NLG) ............... 10.4 10.4
Norway (NOR/NOK) ..................... 1.7 1.7
Spain (SPN/ESP) ...................... 2.3 2.3
Sweden (SWDN/SEK) .................... 7.8 7.8
Switzerland (SWTZ/CHF) ............... 5.6 5.6
United Kingdom (UK/GBP) .............. 31.2 31.2
Other ................................ 2.7 2.7
------ --- -----
Total ............................... 95.7 4.3 100.0
------ --- -----
------ --- -----
<FN>
- ----------------
{d} Percentages indicated are based on net assets of $557,117,133.
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
DECEMBER 31, 1995
<TABLE>
<CAPTION>
Market Value Unrealized
(U.S. Contract Delivery Appreciation
Contracts to Sell: Dollars) Price Date (Depreciation)
- ------------------------------------------------------------------------------- ------------- --------- --------- -------------
<S> <C> <C> <C> <C>
French Francs.................................................................. 1,821,779 4.91125 02/06/96 $ (9,613)
French Francs.................................................................. 27,749,739 4.88280 02/16/96 10,338
German Deutsche Marks.......................................................... 8,948,223 1.42738 02/29/96 12,250
German Deutsche Marks.......................................................... 9,584,884 1.42738 02/29/96 13,120
Netherland Guilders............................................................ 18,185,097 1.58000 02/15/96 194,650
------------- -------------
Total Contracts to Sell (Payable amount $66,068,977)......................... 66,289,722 220,745
------------- -------------
THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF NET ASSETS IS 11.90%
Total Open Forward Foreign Currency Contracts................................ $ 220,745
-------------
-------------
</TABLE>
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
F-5
<PAGE>
GT GLOBAL EUROPE GROWTH FUND
STATEMENT OF ASSETS
AND LIABILITIES
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Assets:
Investments in securities, at value (cost
$474,227,811) (Note 1)........................... $ 541,850,805
Receivable for Fund shares sold................... 17,989,829
Receivable for securities sold.................... 8,702,672
Dividends and dividend withholding tax reclaims
receivable....................................... 2,180,254
Receivable for open forward foreign currency
contracts (Note 1)............................... 220,745
Cash held as collateral for securities loaned
(Note 1)......................................... 14,090,397
-------------
Total assets.................................... 585,034,702
-------------
Liabilities:
Due to custodian.................................. 5,483,690
Payable for Fund shares repurchased............... 4,899,387
Payable for securities purchased.................. 2,339,273
Payable for investment management and
administration fees (Note 2)..................... 450,920
Payable for service and distribution expenses
(Note 2)......................................... 206,038
Payable for printing and postage expenses......... 178,273
Payable for transfer agent fees (Note 2).......... 176,652
Payable for professional fees..................... 32,619
Payable for custodian fees (Note 1)............... 26,203
Payable for registration and filing fees.......... 13,005
Payable for fund accounting fees (Note 2)......... 11,818
Payable for Trustees' fees and expenses (Note
2)............................................... 3,764
Other accrued expenses............................ 5,530
Collateral for securities loaned (Note 1)......... 14,090,397
-------------
Total liabilities............................... 27,917,569
-------------
Net assets.......................................... $ 557,117,133
-------------
-------------
Class A:
Net asset value and redemption price per share
($483,374,580 DIVIDED BY 44,432,429 shares
outstanding)....................................... $ 10.88
-------------
-------------
Maximum offering price per share
(100/95.25 of $10.88) *............................ $ 11.42
-------------
-------------
Class B:+
Net asset value and offering price per share
($73,024,567 DIVIDED BY 6,752,818 shares
outstanding)....................................... $ 10.81
-------------
-------------
Advisor Class:
Net asset value, offering price per share, and
redemption price per share
($717,986 DIVIDED BY 66,156 shares outstanding).... $ 10.85
-------------
-------------
Net assets consist of:
Paid in capital (Note 4).......................... $ 671,459,517
Undistributed net investment income............... 285,680
Accumulated net realized loss on investments and
foreign currency transactions.................... (182,501,560)
Net unrealized appreciation on translation of
assets and liabilities in foreign currencies..... 250,502
Net unrealized appreciation of investments........ 67,622,994
-------------
Total -- representing net assets applicable to
capital shares outstanding......................... $ 557,117,133
-------------
-------------
<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 EUROPE GROWTH FUND
STATEMENT OF OPERATIONS
Year ended December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Dividend income (net of foreign withholding tax of
$2,103,218)................................................ $13,275,187
Interest income............................................. 748,304
-----------
Total investment income................................... 14,023,491
-----------
Expenses:
Investment management and administration fees (Note 2)...... 6,161,265
Transfer agent fees (Note 2)................................ 2,415,470
Service and distribution expenses: (Note 2)
Class A.................................. $ 1,952,376
Class B.................................. 771,586 2,723,962
------------
Custodian fees (Note 1)..................................... 523,522
Fund accounting fees (Note 2)............................... 159,169
Printing and postage expenses............................... 334,627
Audit fees.................................................. 51,625
Legal fees.................................................. 28,348
Registration and filing fees................................ 70,375
Trustees' fees and expenses (Note 2)........................ 26,289
Insurance expenses.......................................... 1,298
Other expenses.............................................. 10,001
-----------
Total expenses before reductions.......................... 12,505,951
-----------
Expense reductions (Notes 1 & 5)........................ (391,842)
-----------
Total net expenses........................................ 12,114,109
-----------
Net investment income......................................... 1,909,382
-----------
Net realized and unrealized gain on
investments and foreign currencies: (Note 1)
Net realized gain on investments........... 66,927,280
Net realized loss on foreign currency
transactions.............................. (40,617,970)
------------
Net realized gain during the year......................... 26,309,310
Net change in unrealized appreciation on
translation of assets and liabilities in
foreign currencies........................ (158,136)
Net change in unrealized appreciation of
investments............................... 32,353,329
------------
Net unrealized appreciation during the year............... 32,195,193
-----------
Net realized and unrealized gain on investments and foreign
currencies................................................... 58,504,503
-----------
Net increase in net assets resulting from operations.......... $60,413,885
-----------
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-7
<PAGE>
GT GLOBAL EUROPE GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1995 DECEMBER 31, 1994
----------------- -----------------
<S> <C> <C>
Decrease in net assets
Operations:
Net investment income...................... $ 1,909,382 $ 4,829,645
Net realized gain on investments and
foreign currency transactions............. 26,309,310 45,153,682
Net change in unrealized depreciation on
translation of assets and liabilities in
foreign currencies........................ (158,136) (6,292,249)
Net change in unrealized appreciation
(depreciation) of investments............. 32,353,329 (91,044,462)
----------------- -----------------
Net increase (decrease) in net assets
resulting from operations............... 60,413,885 (47,353,384)
----------------- -----------------
Class A:
Distributions to shareholders: (Note 1)
From net investment income................. (4,239,316) (3,125,751)
From net realized gain on investments...... (1,762,043) --
In excess of net investment income......... -- (8,333,619)
Class B:
Distributions to shareholders: (Note 1)
From net investment income................. (173,659) --
From net realized gain on investments...... (269,455) --
In excess of net investment income......... -- (1,040,571)
Advisor Class:
Distributions to shareholders: (Note 1)
From net investment income................. (9,151) --
From net realized gain on investments...... (2,596) --
----------------- -----------------
Total distributions...................... (6,456,220) (12,499,941)
----------------- -----------------
Capital share transactions: (Note 4)
Increase from capital shares sold and
reinvested................................ 1,608,239,408 1,287,884,918
Decrease from capital shares repurchased... (1,832,994,490) (1,388,865,472)
----------------- -----------------
Net decrease from capital share
transactions............................ (224,755,082) (100,980,554)
----------------- -----------------
Total decrease in net assets................. (170,797,417) (160,833,879)
Net assets:
Beginning of year.......................... 727,914,550 888,748,429
----------------- -----------------
End of year................................ $ 557,117,133 $ 727,914,550
----------------- -----------------
----------------- -----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-8
<PAGE>
GT GLOBAL EUROPE 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 (A) 1993 (A) 1992 (A) 1991
----------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 10.03 $ 10.84 $ 8.51 $ 9.59 $ 9.33
----------- ----------- ----------- ----------- ------------
Income from investment operations:
Net investment income................. 0.04 0.06 0.05 0.11** 0.21
Net realized and unrealized gain
(loss) on investments................ 0.95 (0.69) 2.36 (1.19) 0.19
----------- ----------- ----------- ----------- ------------
Net increase (decrease) from
investment operations.............. 0.99 (0.63) 2.41 (1.08) 0.40
----------- ----------- ----------- ----------- ------------
Distributions to shareholders:
From net investment income............ (0.10) (0.05) (0.06) -- (0.14)
From net realized gain on
investments.......................... (0.04) -- -- -- --
In excess of net investment income.... -- -- (0.02) -- --
In excess of net realized gain on
investments.......................... -- (0.13) -- -- --
----------- ----------- ----------- ----------- ------------
Total distributions................. (0.14) (0.18) (0.08) -- (0.14)
----------- ----------- ----------- ----------- ------------
Net asset value, end of period.......... $ 10.88 $ 10.03 $ 10.84 $ 8.51 $ 9.59
----------- ----------- ----------- ----------- ------------
----------- ----------- ----------- ----------- ------------
Total investment return(d).............. 9.86% (5.8)% 28.3% (11.3)% 4.3%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 483,375 $ 646,313 $ 854,701 $ 781,607 $ 1,211,709
Ratio of net investment income (loss) to
average net assets..................... 0.38% 0.61% 0.6% 1.2%** 1.7%
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 1.83% 1.73% 1.9% 2.0%** 1.8%
Without expense reductions............ 1.89% 1.81% --%* --%* --%*
Portfolio turnover rate++++............. 108% 91% 67% 65% 55%
</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.
* Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions,
if any.
* * Includes reimbursement by G.T. Capital Management, Inc. of Fund Class
A operating expenses of less than one cent per share. Without such
reimbursement, the ratio of expenses to average net assets would have
been 2.1% and the ratio of net investment income to average net assets
would have been 1.2% (See Note 2).
(a) Calculated based upon weighted average shares outstanding during the
period.
(b) Annualized.
(c) Not 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 EUROPE 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 (A) 1993 (A) 1995 (A)
---------- ---------- ------------- --------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 9.97 $ 10.79 $ 9.02 $ 10.24
---------- ---------- ------------- -------
Income from investment operations:
Net investment income................. (0.03) -- -- 0.08
Net realized and unrealized gain
(loss) on investments................ 0.94 (0.69) 1.85 0.71
---------- ---------- ------------- -------
Net increase (decrease) from
investment operations.............. 0.91 (0.69) 1.85 0.79
---------- ---------- ------------- -------
Distributions to shareholders:
From net investment income............ (0.03) -- (0.06) (0.14)
From net realized gain on
investments.......................... (0.04) -- -- (0.04)
In excess of net investment income.... -- -- (0.02) 0.00
In excess of net realized gain on
investments.......................... -- (0.13) -- 0.00
---------- ---------- ------------- -------
Total distributions................. (0.07) (0.13) (0.08) (0.18)
---------- ---------- ------------- -------
Net asset value, end of period.......... $ 10.81 $ 9.97 $ 10.79 $ 10.85
---------- ---------- ------------- -------
---------- ---------- ------------- -------
Total investment return(d).............. 9.20% (6.38)% 20.5 %(c) 7.75 %(c)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 73,025 $ 81,602 $ 34,048 $ 718
Ratio of net investment income (loss) to
average net assets..................... (0.27)% (0.04)% (0.1)%(b) 0.73 %(b)
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 2.48% 2.38% 2.6 %(b) 1.48 %(b)
Without expense reductions............ 2.54% 2.46% -- %* 1.54 %(b)
Portfolio turnover rate++++............. 108% 91% 67 % 108 %
</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.
* Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions,
if any.
* * Includes reimbursement by G.T. Capital Management, Inc. of Fund Class
A operating expenses of less than one cent per share. Without such
reimbursement, the ratio of expenses to average net assets would have
been 2.1% and the ratio of net investment income to average net assets
would have been 1.2% (See Note 2).
(a) Calculated based upon weighted average shares outstanding during the
period.
(b) Annualized.
(c) Not 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 EUROPE GROWTH FUND
NOTES TO
FINANCIAL STATEMENTS
December 31, 1995
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
GT Global Europe 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 from
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.
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
F-11
<PAGE>
GT GLOBAL EUROPE GROWTH FUND
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 or 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 the 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 market 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
F-12
<PAGE>
GT GLOBAL EUROPE GROWTH FUND
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 market
and to fluctuations in currency values or interest rates.
(G) SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on a first-in,
first-out basis, unless otherwise specified. Dividends are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Where a high
level of uncertainty exists as to 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 than advantageous prices.
(H) PORTFOLIO SECURITIES LOANED
At December 31, 1995, securities with an aggregate value of $13,284,677 were on
loan to brokers. The loans were secured by cash collateral of $14,090,397,
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 the loan. For
the year ended December 31, 1995, the Fund earned securities lending fees of
$212,235 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, or unrealized appreciation of securities held, and excise tax on income
and capital gains. The Fund currently has a capital loss carryforward of
$180,151,215 of which $22,772,831 expires in 1999, $152,895,949 expires in 2000,
and $4,482,435 expires in 2001.
(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 of 0.975% on the first $500 million of
average daily net assets of the Fund; 0.95% on the next $500 million; 0.925% on
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
F-13
<PAGE>
GT GLOBAL EUROPE GROWTH FUND
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 total 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 $51,964
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 $23,179 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. For the year ended December 31, 1995, GT Global collected CDSCs in
the amount of $487,140. 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 GT Global's 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 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 0.75% 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 rate 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 Fund for its
out-of-pocket expenses for such items as postage, forms, telephone charges,
stationery 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% to the first $5 billion of assets of all
registered mutual funds advised by LGT ("GT Funds") and 0.02% to the assets in
excess of $5 billion and dividing the result by the aggregate assets of the GT
Funds. For the period ended December 31, 1995, the Fund paid fund accounting
fees of $62,660 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.
F-14
<PAGE>
GT GLOBAL EUROPE GROWTH FUND
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 $658,547,113 and $920,403,071, 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
----------------------------- -----------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
------------ --------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold......................................................... 148,571,806 $ 1,551,431,041 109,168,643 $ 1,160,153,253
Shares issued in connection with reinvestment of distributions...... 415,180 4,458,262 874,425 8,526,677
------------ --------------- ------------ ---------------
148,986,986 1,555,889,303 110,043,068 1,168,679,930
Shares repurchased.................................................. (169,021,976) (1,766,588,469) (124,431,789) (1,325,037,548)
------------ --------------- ------------ ---------------
Net decrease........................................................ (20,034,990) $ (210,699,166) (14,388,721) $ (156,357,618)
------------ --------------- ------------ ---------------
------------ --------------- ------------ ---------------
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1995 DECEMBER 31, 1994
----------------------------- -----------------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
------------ --------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold......................................................... 4,792,541 $ 50,660,689 10,710,316 $ 118,315,558
Shares issued in connection with reinvestment of distributions...... 35,327 377,127 91,703 889,430
------------ --------------- ------------ ---------------
4,827,868 51,037,816 10,802,019 119,204,988
Shares repurchased.................................................. (6,262,885) (65,780,212) (5,769,922) (63,827,924)
------------ --------------- ------------ ---------------
Net increase (decrease)............................................. (1,435,017) $ (14,742,396) 5,032,097 $ 55,377,064
------------ --------------- ------------ ---------------
------------ --------------- ------------ ---------------
</TABLE>
<TABLE>
<CAPTION>
JUNE 1, 1995
(COMMENCEMENT OF
SALE OF SHARES)
TO DECEMBER 31, 1995
-----------------------------
ADVISOR CLASS SHARES AMOUNT
------------ ---------------
<S> <C> <C>
Shares sold......................................................... 122,102 $ 1,300,674
Shares issued in connection with reinvestment of distributions...... 1,098 11,615
------------ ---------------
123,200 1,312,289
Shares repurchased.................................................. (57,044) (625,809)
------------ ---------------
Net increase........................................................ 66,156 $ 686,480
------------ ---------------
------------ ---------------
</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 $179,607 under these arrangements.
- --------------
FEDERAL TAX INFORMATION (UNAUDITED):
For its fiscal year ended December 31, 1995, the total amount of income received
by the Fund from sources within foreign countries and possessions of the United
States was approximately $0.305 per share (representing an approximate total of
$15,459,700). The total amount of taxes paid by the Fund to such countries was
approximately $0.0415 per share (representing an approximate total of
$2,103,218).
F-15
<PAGE>
GT GLOBAL EUROPE GROWTH FUND
NOTES
- --------------------------------------------------------------------------------
<PAGE>
GT GLOBAL EUROPE 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
