<PAGE>
CHANCELLOR LGT
ASSET MANAGEMENT
OVER 25 YEARS
OF INVESTING
WORLDWIDE
GT GLOBAL
EUROPE
GROWTH FUND
ANNUAL REPORT
DECEMBER 31, 1996
[LOGO]
<PAGE>
TABLE
OF CONTENTS
<TABLE>
<S> <C>
Message from the
President............ 1
Report from the Fund
Managers and Key
Portfolio Holdings... 2
Report of Independent
Accountants.......... F-1
Financial
Statements........... F2
Portfolio holdings'
and views of the
Funds' managers
described in this
annual report are as
of the date of the
interview, unless
otherwise noted, and
are subject to
change.
</TABLE>
<PAGE>
GT GLOBAL EUROPE GROWTH FUND
MESSAGE FROM THE PRESIDENT
Dear Investor,
Fiscal 1996 has been a year of economic strengthening, and the GT Global
Funds have benefited from low inflation and low interest rates worldwide.
We're proud of their performance over the past year and remain enthusiastic
about their long-term potential.
Consistent, above-average performance of GT Global Funds is our priority. To
that end, we enhanced the breadth and depth of our investment capabilities
this fall when Liechtenstein Global Trust (LGT), the parent company of GT
Global, acquired a premier institutional money manager, Chancellor Capital
Management. On October 31, 1996, Chancellor merged with LGT Asset Management,
the Funds' advisor, and the combined entity is now known as Chancellor LGT
Asset Management. This acquisition increased assets entrusted to LGT to over
$80 billion.
We are confident about the partnership's success because both firms share a
commitment to providing investors around the world with solutions to their
investment needs through combined, top-notch expertise. Individual investors
now have access to the same high-quality management services enjoyed by over
320 institutional investors, including some of the country's largest
organizations.
Chancellor's strengths--disciplined U.S. equity and fixed income processes
and professionals, coupled with proven fundamental and quantitative
investment capabilities--represent an ideal complement to LGT's advantages as
an experienced global investment manager with an extensive global
infrastructure. Chancellor LGT Asset Management's global investment team
includes 12 economists, 98 portfolio managers, 72 analysts and 19 traders
located in nine regional offices.
Warren Shaw, LGT's new Global Chief Investment Officer, has been the
principal architect of Chancellor's investment policies, with excellent
results. The disciplined, repeatable process he created leverages the
effectiveness of a strong investment team approach.
As always, we appreciate your continued confidence. Should you or your
adviser have any questions regarding GT Global Funds, please call us at
800-824-1580. One of our registered representatives will be happy to assist
you.
Sincerely,
/s/WILLIAM J. GUILFOYLE
William J. Guilfoyle
President
GT Global Mutual Funds
1
<PAGE>
INVESTMENT OBJECTIVE
AND CURRENT STRATEGY
The GT Global Europe
Growth Fund seeks
long-term capital growth
by investing primarily in
the equity securities of
issuers from European
countries. Over the long
term, we tend to favor
growth-oriented
companies increasing
their share of market
capitalization.
GT GLOBAL EUROPE GROWTH FUND
PERFORMANCE SUMMARY
GT GLOBAL
EUROPE GROWTH MSCI Europe
FUND CLASS A Index
7/19/85 9525 10000
9534.53 10191
9563.1 10717.1
10067.9 10897.2
10953.8 12111
11763.4 13062.8
12992.1 13636.7
12896.9 13901.6
13906.5 15558.5
15059 16837.1
16116.3 18407.8
14620.9 16786.4
15287.6 17523.7
15859.1 17379.9
17278.3 19328.1
16659.2 18110.1
16678.3 18226.9
17830.8 19209.7
18316.6 19699.8
19421.5 20576.8
20497.8 21318.7
21209.8 22379.5
22049.7 23263.2
22373.5 23141.3
22778.2 23808.5
24174.7 24616.5
25186.6 24829.3
26077.1 24999
19560.3 20254.3
18643.5 19370.9
19523.5 20506.7
18945.2 19673.6
19774.9 20839.5
19913.2 21422
20076.6 21829.2
19737.2 21430.3
20139.5 21222.2
19900.6 21277.8
19284.6 20320.1
20224.1 21432.8
21436.8 23427.5
21315.5 23725.3
21692.1 23859.9
22961.6 24733.8
22654.7 24461.7
23198.7 24647.9
24426.3 25341.1
24161.3 24052.4
24984.3 25053
26742 28011.5
27341.9 27670.7
28374.2 28156.3
26225.9 26320.5
27955.7 27791.6
30522.4 30793.5
30355 30722
29852.8 29997.3
31164.1 30432.4
30271.3 29636
31554.7 32061.1
32391.7 33199.7
33814.6 34612.3
29490.1 31192.3
25667.9 27531.9
27035 29866.3
26504.9 30178.9
26030.6 29756
26532.8 30771.2
28541.5 33477.1
10/31/90 27760.3 31245
27286 30928.8
27732.5 31854.2
26281.7 29191.5
27230.2 31226.3
27230.2 31808
27146.5 32774.4
26114.2 32098.1
25109.9 31356.7
27156.8 33820.8
27043.6 33824.2
27241.8 33969.2
26647.1 32792.8
27694.9 34615.3
28601.1 36599.3
27723.2 35931.4
26505.5 34662.1
26279 34564.3
24410 34007.6
23079.1 31648.4
23758.7 31646
24098.5 32384.9
24126.8 32452.1
24495 32835.7
25372.8 34537.2
26109.1 35311.7
26533.9 35703.9
26647.1 35194
27355.1 35325.9
29592.2 38437.4
28459.5 38329.8
29592.2 39938.3
28771 39087.7
30922.8 42033.7
33062.3 44185.8
31464.8 42632.9
30009.9 41438.8
31151 43167.5
29496.4 41345.4
28983 40924.7
30837.2 43083
31322.1 44463.1
29867.3 42714
30723.1 44589.2
29325.3 42895
29128.6 43152.9
28431.6 42829.5
28489.7 43815.2
27850.8 45865.2
29099.6 47348.9
29738.5 48335.3
30261.2 48808.3
31974.7 51370.1
31103.4 49401.2
32148.9 50911.1
31800.4 50688.6
31626.2 51066.6
31999.5 52702.7
32117.1 53064.4
33440.6 54049.4
34470 54714.5
34911.2 55128.8
35911.2 55573.3
36528.8 56204.1
34293.5 55519.6
35499.4 57186.7
36146.4 58409.2
36411.2 59784.8
37764.1 62833.6
12/31/96 38273.7 64070.1
The chart above 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 282.74% and an average annual total return
of 12.43% for the Fund. 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. A $10,000 investment in the Fund's Class B
shares at inception on April 1, 1993, would have been valued at $14,333 on
December 31, 1996. This figure reflects all Fund expenses and the applicable
contingent deferred sales charge (5% in the first year, decreasing to 0%
after six years), assuming a complete redemption at the end of the period. A
$10,000 investment in Advisor Class shares at inception on June 1, 1995,
would have been worth $12,953 on December 31, 1996.
AVERAGE ANNUAL TOTAL RETURNS %(1)
DECEMBER 31, 1996
<TABLE>
<CAPTION>
Share Class Without Sales Charge(2) With Sales Charge
1-Year 5-Year 10-Year LOF 1-Year 5-Year 10-Year LOF
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class A(3) 19.61 7.10 7.65 12.91 13.93 6.07 7.13 12.43
Class B(3) 18.79 N/A N/A 10.68 13.79 N/A N/A 10.07
Advisor Class(4) 20.21 N/A N/A 17.72 N/A N/A N/A N/A
</TABLE>
HISTORICAL PERFORMANCE(2)
ANNUAL TOTAL RETURNS % (LAST 10 YEARS)
<TABLE>
<CAPTION>
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class A 6.59(3) 11.11 40.71 -14.72 4.33 -11.26 28.32 -5.80 9.86 19.61
Class B N/A N/A N/A N/A N/A N/A 20.50(3) -6.38 9.20 18.79
</TABLE>
(1) Figures assume reinvestment of all dividends and capital gain
distributions at net asset value.
(2) This performance data do not reflect the maximum 4.75% sales charge and
the contingent deferred sales charge (5% in the first year, decreasing
to 0% after six years) for Class A and Class B shares, respectively, which
if included, would have reduced performance quoted.
(3) The Fund began operations on July 19, 1985; Class B shares commenced on
April 1, 1993.
(4) The Fund began offering Advisor Class shares on June 1, 1995. Advisor
Class shares are not sold directly to the general public and are only
available through certain employee benefit plans, financial institutions
and other entities that have entered into specific agreements with GT
Global. Please see the ""Alternative Purchase Plan'' section in the Fund's
prospectus.
The above data represent past performance of the Fund's shares, which does
not guarantee future results. The investment return and principal value of an
investment in the Fund will fluctuate, so that an investor's shares, when
redeemed, may be worth more or less than their original cost.
2
<PAGE>
INTERVIEW WITH PORTFOLIO MANAGER JANUARY, 1997
ANNA POWELL
Q HOW DID THE FUND PERFORM?
A The Fund enjoyed a strong year, returning a total of 19.61% for Class A
shares (13.93% including the maximum 4.75% sales charge) over the 12-month
period to December 31, 1996; total return for Class B shares was 18.79%
(13.79% including the effect of the 5% maximum contingent deferred sales
charge). The Morgan Stanley Capital International (MSCI) Europe Index(5)
returned 21.57% over the same period.
Q HOW WOULD YOU CHARACTERIZE THE GENERAL INVESTMENT ENVIRONMENT OVER THE
REPORTING PERIOD?
A European equity markets have made solid progress in 1996, largely
reflecting the rise in bond prices. The environment was supportive as
inflation remained benign. Peripheral bond markets benefited, in particular,
from a convergence of yields towards the level of German bonds, in the
expectation of monetary union taking place.
Q WHAT FACTORS HAVE HAD THE MOST IMPACT ON THE FUND'S PERFORMANCE?
A Over the period, the Fund's overweighted position in France, underweighted
exposure to Switzerland and securities selection in Germany benefited the
Fund relative to the index. Meanwhile, the Fund's over-exposure to Italy and
security selection in Austria hindered returns. In terms of sectors, consumer
and services companies were strong contributors to performance as they
comprised companies with a visible earnings outlook that benefited from
strong demand.
Q WHICH OF THE FUND'S HOLDINGS WERE THE MOST NOTABLE CONTRIBUTORS TO
PERFORMANCE?
A Companies that performed well include Carrefour, the French hypermarket
retailer, which benefited from its exposure to emerging markets; Dassault
Systmes, the world leader in computer-assisted design software, which enjoyed
a rerating subsequent to its introduction to the market; and Gucci, the
Italian luxury goods company, whose growth prospects were recognized by the
market.
Q IN THE PAST SIX MONTHS YOU FURTHER INCREASED THE FUND'S EXPOSURE TO THE
SERVICES SECTOR WHILE REDUCING EXPOSURE TO CONSUMER NON-DURABLES. WHAT IS
YOUR REASONING BEHIND THIS SHIFT?
A We believe the services sector will continue to benefit from strong secular
demand as companies require greater cost flexibility and outsource more
functions to third parties. An example is the Finnish consulting company TT
Tieto, a recent addition to the Fund. Tieto has a strong position within its
domestic market and is a clear beneficiary of companies' outsourcing their
computing requirements. The Fund's exposure to consumer non-durables was
decreased with the sale of Adidas, where we believed growth prospects had
been taken into account in the valuation.
Q THE PAST YEAR IN EUROPE HAS BEEN DESCRIBED AS A "GOLDILOCKS
SCENARIO"--NOT TOO HOT, NOT TOO COLD. WILL 1997 SEE A CONTINUATION OF THIS
FAVORABLE ENVIRONMENT?
A We expect positive returns from European equities in 1997. Valuation levels
are currently supportive despite our belief that long bond yields will rise
over the year. The upturn in economic growth rates and the focus on
controlling costs should have a beneficial impact on corporate profitability.
Q WHERE DO YOU EXPECT TO FIND OPPORTUNITIES OVER THE NEXT 6-12 MONTHS?
A We believe the greatest appreciation potential resides with medium-sized
companies, which have lagged the recent rise in markets and are typically
more sensitive to an improvement in domestic economies.
CONTINUED P.4
EUROPEAN OPPORTUNITIES
SHAREHOLDER VALUE UNLEASHED
Managements of European companies are, finally, giving due priority to the
needs and rights of shareholders. We believe this fundamental shift in
corporate culture represents a major opportunity for global interests.
Corporate reform has involved:
- Divestiture of non-core operations
- Reduction in manning levels
- Introduction of schemes to provide
incentives to management
- Easing of legal restrictions on hostile takeovers
and share buybacks
(5) The MSCI Europe index is an arithmetic average, weighted by market value,
of the performance of 573 securities listed on 14 major European stock
exchanges. It includes the effect of reinvested dividends and is measured in
U.S. dollars.
The index is unmanaged, not available for direct investment and does not
include the effects of sales charges and professional management fees.
3
<PAGE>
INTERVIEW WITH THE PORTFOLIO MANAGER CONTINUED
From a sectoral perspective, we anticipate the Fund's focus on services,
consumer goods and health care will prove rewarding over the long term.
We also believe there may be additional opportunities from identifying
European companies that are genuinely undergoing structural change and
improving profitability -- along the lines of what German chemical shares
experienced in 1996.
Q WHAT DO YOU SEE HAPPENING IN THE EASTERN EUROPEAN MARKETS? WHAT TYPE OF
EXPOSURE DOES THE FUND HAVE IN THIS REGION OR OTHER LESS DEVELOPED EUROPEAN
MARKETS?
A We think this region has significant long-term potential, as trend economic
growth rates are superior to the more developed European countries, although
over the short term many of these markets may be vulnerable to relatively
greater volatility. The Fund's exposure to this region is likely to increase
in the medium term. Over the past year, the Fund made an investment in a
company with Russian interests --Nearmedic, a manufacturer of test systems
for the diagnosis of infectious diseases--and good long-term growth
prospects. The Fund also has indirect exposure to eastern Europe through its
holdings in Finland, which have substantial trading links with the Baltic
States and Russia.
Additionally, the Fund has made a recent investment in Portugal through
Telecel, the mobile telephone operator that benefits from a duopolistic
position in a rapidly growing market.
Q HOW DO YOU APPROACH INVESTING IN EUROPE?
A Believing stock selection is the key contributor to performance, we look
closely at a company's shareholder structure and are attracted to companies
that pay attention to minority interests. We also look for companies with
good business franchises. Other important characteristics include:
- Increasing demand for the company's products
- Companies operating in niche businesses with
high barriers to entry
- Low-cost producers with clean balance sheets
and defendable profit margins
- Experienced management with strong
track records
- Reasonable market valuations
In general, we feel it necessary to search out individual companies doing
more than simply effecting cosmetic changes or talking about cash flow and
return on investment. We look for companies actually cutting back on capital
expenditures, selling off unprofitable assets and changing their way of
working.
ABOUT THE PORTFOLIO MANAGER
ANNA POWELL - Portfolio Manager for Chancellor LGT Asset Management since
1995. Previously, Ms. Powell was a Portfolio Manager of European equities for
Robert Fleming and European equity analyst for Charterhouse Bank Ltd. She
received her B.A. from Durham University.
GEOGRAPHIC ALLOCATION OF NET ASSETS %
DECEMBER 31, 1996
UK 18.9
France 14.0
Germany 13.7
Italy 12.3
Netherlands 11.1
Sweden 10.3
Switzerland 6.6
Finland 4.4
Denmark 3.8
Spain 2.4
Portugal 1.1
Austria 0.7
U.S. & Other 0.7
SECTOR ALLOCATION OF NET ASSETS %
DECEMBER 31, 1996
Services 36.1
Health Care 12.6
Consumer Non-Durables 10.6
Materials/Basic Industry 10.3
Finance 7.7
Technology 6.0
Capital Goods 5.4
Multi-Industry/Misc. 5.0
Consumer Durables 2.7
Energy 1.9
Short Term & Other 1.7
Allocations will change based on current market conditions.
4
<PAGE>
<TABLE>
<CAPTION>
GT GLOBAL EUROPE GROWTH FUND % of
KEY PORTFOLIO HOLDINGS(6) Country Net Assets
<S> <C> <C>
REED INTERNATIONAL, PLC An international publishing group and holding company UK 5.8
with a 52.9% interest in Reed Elsevier. The group publishes scientific,
professional, business-to-busi-ness and consumer information and trade books.
ASTRA AB Develops, manufactures and markets pharmaceuticals. The company Sweden 5.5
makes agents for gastrointestinal diseases, including Losec, an ulcer agent.
Astra also produces agents for respiratory diseases, cardiovascular
preparations, anesthetics, agents for nervous system disor-ders and
anti-infective agents. The company markets its products in both Sweden and
abroad.
KONINKLIJKE AHOLD N.V. An international retailing organization focusing on Netherlands 5.3
distributing and selling food products. The company operates its supermarket,
Albert Heijn, in the Netherlands, while in the U.S. its supermarket chains
are: Foodtown, Finast, Tops, BI-LO, Giant and Edwards. Ahold also operates
specialty stores, institutional food supply, food production, and wholesaling
divisions.
SGL CARBON AG Principal products are graphite electrodes for the recycling of Germany 4.3
steel in arc furnaces, high-purity graphite for the semiconductor industry
and specialty graphite for a broad spectrum of applications, as well as
graphite foils, carbon fibers and process equipment. The company also
manufactures auto parts such as bearings and brushes for motors.
ADECCO S.A. A personnel and temporary employment company, the firm also Switzerland 3.8
offers permanent placement services for professionals and specialists in a
wide range of business sectors. Adecco S.A. conducts its placement services
internationally.
TELEFONAKTIEBOLAGET LM ERICSSON A telecommunications company that produces Sweden 3.7
and installs public telecommunications, business telecommunications, cable
and network systems, defense systems, radio communications and components.
The company markets its equipment in over 100 countries.
SCHERING AG Manufactures and markets pharmaceuticals. The company focuses its Germany 3.1
activities on diagnostics and fertility control, as well as hormone therapy,
therapeutics and dermatology.
GUCCI GROUP NV Designs, produces and distributes personal luxury accessories Italy 3.1
and apparel. The company directly operates 63 stores in major markets
throughout the world, which offer exclusively Gucci products.
COMPTOIRS MODERNES Operates a chain of STOC supermarkets, Carrefour France 2.8
hypermarkets and COMOD supermarket, grocery and department stores in France
and Spain.
VALEO S.A. Manufactures automobile components sold to manufacturers and to France 2.7
the spare parts market. Its products are sold within France and in other
European countries, North America and South America.
</TABLE>
(6) There can be no assurance the Fund will continue to hold these securities.
5
<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
GT 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 GT Global
Growth Series, including the schedule of portfolio investments, as of December
31, 1996, 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 five 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.
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, 1996 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, 1996, 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 five years
in the period then ended, in conformity with generally accepted accounting
principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
FEBRUARY 14, 1997
F1
<PAGE>
GT GLOBAL EUROPE GROWTH FUND
PORTFOLIO OF INVESTMENTS
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (36.1%)
Reed International PLC .................................... UK 1,661,000 $ 31,428,168 5.8
BUSINESS & PUBLIC SERVICES
Koninklijke Ahold N.V. .................................... NETH 463,790 29,020,463 5.3
RETAILERS-FOOD
Adecco S.A.: .............................................. SWTZ -- -- 3.8
CONSUMER SERVICES
Common-/- ............................................... -- 69,306 17,567,332 --
Bearer-/- ............................................... -- 12,320 3,093,812 --
Comptoirs Modernes ........................................ FR 28,620 15,470,270 2.8
RETAILERS-FOOD
Reuters Holdings PLC ...................................... UK 1,041,500 13,402,179 2.5
BROADCASTING & PUBLISHING
Sol Melia S.A.-/- ......................................... SPN 366,400 13,130,086 2.4
LEISURE & TOURISM
Stet Societa' Finanziaria Telefonica S.p.A. ............... ITLY 2,820,800 12,834,173 2.4
TELEPHONE NETWORKS
EMAP PLC .................................................. UK 993,000 12,523,022 2.3
BROADCASTING & PUBLISHING
Sodexho S.A. .............................................. FR 21,970 12,257,394 2.3
RESTAURANTS
VNU (Verenigde Nederlandse Uitgeversbedrijven Verenigd
Bezit) ................................................... NETH 520,000 10,876,014 2.0
BROADCASTING & PUBLISHING
Kuoni Reisen Holdings "B" - Registered .................... SWTZ 3,920 9,521,674 1.8
LEISURE & TOURISM
Falck AS .................................................. DEN 21,200 6,337,495 1.2
CONSUMER SERVICES
Telecel - Comunicacaoes Pessoais, S.A.-/- ................. PORT 96,380 6,155,884 1.1
WIRELESS COMMUNICATIONS
Kobenhavns Lufthavne AS ................................... DEN 22,911 2,334,879 0.4
TRANSPORTATION - AIRLINES
------------
195,952,845
------------
Health Care (12.6%)
Astra AB "A" Free ......................................... SWDN 608,700 30,110,663 5.5
PHARMACEUTICALS
Schering AG ............................................... GER 201,430 17,012,846 3.1
PHARMACEUTICALS
OY Tamro AB ............................................... FIN 1,784,900 11,879,922 2.2
PHARMACEUTICALS
M.L. Laboratories PLC-/- .................................. UK 1,738,907 6,074,264 1.1
PHARMACEUTICALS
Nearmedic Ltd.-/- ......................................... ASTRI 25,584 3,663,636 0.7
PHARMACEUTICALS
------------
68,741,331
------------
Consumer Non-Durables (10.6%)
Gucci Group - NY Registered Shares{\/} .................... ITLY 260,550 16,642,631 3.1
TEXTILES & APPAREL
Parmalat Finanziaria S.p.A. ............................... ITLY 8,706,000 13,331,960 2.5
FOOD
</TABLE>
The accompanying notes are an integral part of the financial statements.
F2
<PAGE>
GT GLOBAL EUROPE GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Consumer Non-Durables (Continued)
Polygram .................................................. NETH 219,300 $ 11,180,997 2.1
RECREATION
Vendex International N.V. ................................. NETH 215,739 9,237,029 1.7
OTHER CONSUMER GOODS
De Rigo S.p.A. - ADR-/- {\/} .............................. ITLY 407,150 3,715,244 0.7
TEXTILES & APPAREL
Industrie Natuzzi S.p.A. - ADR{\/} ........................ ITLY 72,500 1,667,500 0.3
HOUSEHOLD PRODUCTS
Luxottica Group S.p.A. - ADR{\/} .......................... ITLY 16,700 868,400 0.2
OTHER CONSUMER GOODS
------------
56,643,761
------------
Materials/Basic Industry (10.3%)
SGL Carbon AG ............................................. GER 184,700 23,297,659 4.3
METALS - NON-FERROUS
Bayer AG .................................................. GER 279,300 11,404,447 2.1
CHEMICALS
Degussa AG ................................................ GER 20,000 9,057,217 1.7
MISC. MATERIALS & COMMODITIES
Saes Getters S.p.A.: ...................................... ITLY -- -- 1.2
CHEMICALS
ADR-/- {\/} ............................................. -- 405,600 4,917,900 --
di Risp ................................................. -- 153,900 1,881,339 --
Castorama Dubois Investisse ............................... FR 31,949 5,507,810 1.0
BUILDING MATERIALS & COMPONENTS
------------
56,066,372
------------
Finance (7.7%)
3I Group PLC .............................................. UK 1,730,000 14,426,541 2.7
INVESTMENT MANAGEMENT
Unidanmark AS "A" ......................................... DEN 235,100 12,179,278 2.2
BANKS-REGIONAL
M & G Group PLC ........................................... UK 600,000 11,352,740 2.1
INVESTMENT MANAGEMENT
Invesco PLC ............................................... UK 744,800 3,303,137 0.6
INVESTMENT MANAGEMENT
Invesco Funding LLC - F/P-/- .............................. UK 148,960 660,627 0.1
OTHER FINANCIAL
------------
41,922,323
------------
Technology (6.0%)
TT Tieto Oy "B" ........................................... FIN 147,400 12,215,204 2.2
SOFTWARE
Dassault Systemes S.A.-/- ................................. FR 235,600 10,883,992 2.0
COMPUTERS & PERIPHERALS
Group Axime-/- ............................................ FR 83,170 9,633,591 1.8
COMPUTERS & PERIPHERALS
------------
32,732,787
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F3
<PAGE>
GT GLOBAL EUROPE GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Capital Goods (5.4%)
Telefonaktiebolaget LM Ericsson "B" ....................... SWDN 649,600 $ 20,119,426 3.7
TELECOM EQUIPMENT
Premier Farnell PLC ....................................... UK 707,558 9,098,905 1.7
INDUSTRIAL COMPONENTS
------------
29,218,331
------------
Multi-Industry/Miscellaneous (5.0%)
Gehe AG ................................................... GER 210,000 13,449,285 2.5
MULTI-INDUSTRY
Assystem .................................................. FR 97,897 7,484,018 1.4
MULTI-INDUSTRY
Pricer AB-/- .............................................. SWDN 241,228 5,948,728 1.1
MISCELLANEOUS
------------
26,882,031
------------
Consumer Durables (2.7%)
Valeo S.A. ................................................ FR 235,571 14,552,649 2.7
------------
AUTO PARTS
Energy (1.9%)
Ente Nazionale Idrocarburi (ENI) S.p.A. ................... ITLY 2,054,800 10,583,237 1.9
OIL
------------ -----
TOTAL EQUITY INVESTMENTS (cost $442,040,217) ................ 533,295,667 98.3
------------ -----
<CAPTION>
NO. OF VALUE % OF NET
WARRANTS COUNTRY WARRANTS (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Sandoz AG Warrants (Issuer: Barclays de Zoete Wedd), expire
9/26/97 (cost $5,206,856)-/- ............................. SWTZ 205,700 5,265,490 1.0
------------ -----
PHARMACEUTICALS
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated December 31, 1996, with State Street Bank & Trust
Co., due Jan-
uary 2, 1997, for an effective yield of 6.25%,
collateralized by $5,575,000 U.S. Treasury Notes, 6.125%
due 3/31/98 (market value of collateral is $5,692,733,
including accrued interest). (cost $5,576,968) .......... 5,576,968 1.0
------------ -----
TOTAL INVESTMENTS (cost $452,824,041) * .................... 544,138,125 100.3
Other Assets and Liabilities ................................ (1,837,959) (0.3)
------------ -----
NET ASSETS .................................................. $542,300,166 100.0
------------ -----
------------ -----
</TABLE>
- --------------
{\/} U.S. currency denominated.
-/- Non-income producing security.
* For Federal income tax purposes, cost is $455,367,626 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 103,578,152
Unrealized depreciation: (14,807,653)
-------------
Net unrealized appreciation: $ 88,770,499
-------------
-------------
</TABLE>
Abbreviation:
ADR--American Depository Receipt
The accompanying notes are an integral part of the financial statements.
F4
<PAGE>
GT GLOBAL EUROPE GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1996
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at December 31, 1996, was concentrated in
the following countries:
<TABLE>
<CAPTION>
PERCENTAGE OF NET ASSETS {D}
-------------------------------------------
FIXED INCOME,
RIGHTS & SHORT-TERM
COUNTRY (COUNTRY CODE/CURRENCY CODE) EQUITY WARRANTS & OTHER TOTAL
- -------------------------------------- ------ ------------- ---------- -----
<S> <C> <C> <C> <C>
Austria (ASTRI/ATS) .................. 0.7 0.7
Denmark (DEN/DKK) .................... 3.8 3.8
Finland (FIN/FIM) .................... 4.4 4.4
France (FR/FRF) ...................... 14.0 14.0
Germany (GER/DEM) .................... 13.7 13.7
Italy (ITLY/ITL) ..................... 12.3 12.3
Netherlands (NETH/NLG) ............... 11.1 11.1
Portugal (PORT/PTE) .................. 1.1 1.1
Spain (SPN/ESP) ...................... 2.4 2.4
Sweden (SWDN/SEK) .................... 10.3 10.3
Switzerland (SWTZ/CHF) ............... 5.6 1.0 6.6
United Kingdom (UK/GBP) .............. 18.9 18.9
United States & Other (US/USD) ....... 0.7 0.7
------ --- --- -----
Total ............................... 98.3 1.0 0.7 100.0
------ --- --- -----
------ --- --- -----
</TABLE>
- --------------
{d} Percentages indicated are based on net assets of $542,300,166.
The accompanying notes are an integral part of the financial statements.
F5
<PAGE>
GT GLOBAL EUROPE GROWTH FUND
STATEMENT OF ASSETS
AND LIABILITIES
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $452,824,041) (Note 1).......................... $ 544,138,125
U.S. currency................................................................. $ 520
Foreign currencies (cost $4,175,779).......................................... 4,084,658 4,085,178
----------
Receivable for securities sold............................................................ 29,744,338
Dividends and dividend withholding tax reclaims receivable................................ 584,065
Receivable for Fund shares sold........................................................... 377,792
Miscellaneous receivable.................................................................. 151,536
Cash held as collateral for securities loaned (Note 1).................................... 41,594,267
-------------
Total assets............................................................................ 620,675,301
-------------
Liabilities:
Payable for Fund shares repurchased....................................................... 20,846,830
Payable for securities purchased.......................................................... 14,915,226
Payable for investment management and administration fees (Note 2)........................ 463,933
Payable for service and distribution expenses (Note 2).................................... 213,794
Payable for transfer agent fees (Note 2).................................................. 141,484
Payable for printing and postage expenses................................................. 121,788
Payable for professional fees............................................................. 42,166
Payable for fund accounting fees (Note 2)................................................. 11,144
Payable for Trustees' fees and expenses (Note 2).......................................... 10,851
Payable for custodian fees (Note 1)....................................................... 7,799
Payable for registration and filing fees.................................................. 3,958
Other accrued expenses.................................................................... 1,895
Collateral for securities loaned (Note 1)................................................. 41,594,267
-------------
Total liabilities....................................................................... 78,375,135
-------------
Net assets.................................................................................. $ 542,300,166
-------------
-------------
Class A:
Net asset value and redemption price per share ($453,792,288 DIVIDED BY 35,218,353 shares
outstanding)............................................................................... $ 12.89
-------------
-------------
Maximum offering price per share (100/95.25 of $12.89) *.................................... $ 13.53
-------------
-------------
Class B:+
Net asset value and offering price per share ($87,091,501 DIVIDED BY 6,840,010 shares
outstanding)............................................................................... $ 12.73
-------------
-------------
Advisor Class:
Net asset value, offering price per share, and redemption price per share ($1,416,377
DIVIDED BY 109,635 shares outstanding)..................................................... $ 12.92
-------------
-------------
Net assets consist of:
Paid in capital (Note 4).................................................................. $ 553,764,310
Accumulated net realized loss on investments and foreign currency transactions............ (102,810,111)
Net unrealized appreciation on translation of assets and liabilities in foreign
currencies............................................................................... 31,883
Net unrealized appreciation of investments................................................ 91,314,084
-------------
Total -- representing net assets applicable to capital shares outstanding................... $ 542,300,166
-------------
-------------
<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.
F6
<PAGE>
GT GLOBAL EUROPE GROWTH FUND
STATEMENT OF OPERATIONS
Year ended December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Dividend income (net of foreign withholding tax of $1,282,376)............................. $ 7,537,412
Interest income............................................................................ 1,133,425
Other income............................................................................... 35,493
------------
Total investment income.................................................................. 8,706,330
------------
Expenses:
Investment management and administration fees (Note 2)..................................... 5,416,280
Service and distribution expenses: (Note 2)
Class A..................................................................... $ 1,666,909
Class B..................................................................... 783,175 2,450,084
-----------
Transfer agent fees (Note 2)............................................................... 1,866,185
Custodian fees (Note 1).................................................................... 428,461
Printing and postage expenses.............................................................. 149,243
Fund accounting fees (Note 2).............................................................. 139,442
Registration and filing fees............................................................... 115,952
Audit fees................................................................................. 60,756
Trustees' fees and expenses (Note 2)....................................................... 20,130
Legal fees................................................................................. 11,713
Other expenses (Note 1).................................................................... 319,077
------------
Total expenses before reductions......................................................... 10,977,323
------------
Expense reductions (Notes 1 & 5)....................................................... (332,508)
------------
Total net expenses....................................................................... 10,644,815
------------
Net investment loss.......................................................................... (1,938,485)
------------
Net realized and unrealized gain on investments and foreign currencies: (Note 1)
Net realized gain on investments.............................................. 84,393,603
Net realized gain on foreign currency transactions............................ 2,147,797
-----------
Net realized gain during the year........................................................ 86,541,400
Net change in unrealized appreciation on translation of assets and liabilities
in foreign currencies........................................................ (218,619)
Net change in unrealized appreciation of investments.......................... 23,691,090
-----------
Net unrealized appreciation during the year.............................................. 23,472,471
------------
Net realized and unrealized gain on investments and foreign currencies....................... 110,013,871
------------
Net increase in net assets resulting from operations......................................... $108,075,386
------------
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F7
<PAGE>
GT GLOBAL EUROPE GROWTH FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1996 1995
-------------- ---------------
<S> <C> <C>
Decrease in net assets
Operations:
Net investment income (loss)........................................... $ (1,938,485) $ 1,909,382
Net realized gain on investments and foreign currency transactions..... 86,541,400 26,309,310
Net change in unrealized appreciation on translation of assets and
liabilities in foreign currencies..................................... (218,619) (158,136)
Net change in unrealized appreciation of investments................... 23,691,090 32,353,329
-------------- ---------------
Net increase in net assets resulting from operations................. 108,075,386 60,413,885
-------------- ---------------
Class A:
Distributions to shareholders: (Note 1)
From net investment income............................................. -- (4,239,316)
From net realized gain on investments.................................. (4,360,146) (1,762,043)
Class B:
Distributions to shareholders: (Note 1)
From net investment income............................................. -- (173,659)
From net realized gain on investments.................................. (815,186) (269,455)
Advisor Class: (Note 1)
Distributions to shareholders:
From net investment income............................................. -- (9,151)
From net realized gain on investments.................................. (29,590) (2,596)
-------------- ---------------
Total distributions.................................................. (5,204,922) (6,456,220)
-------------- ---------------
Capital share transactions: (Note 4)
Increase from capital shares sold and reinvested....................... 3,224,591,371 1,608,239,408
Decrease from capital shares repurchased............................... (3,342,278,802) (1,832,994,490)
-------------- ---------------
Net decrease from capital share transactions......................... (117,687,431) (224,755,082)
-------------- ---------------
Total decrease in net assets............................................. (14,816,967) (170,797,417)
Net assets:
Beginning of year...................................................... 557,117,133 727,914,550
-------------- ---------------
End of year*........................................................... $ 542,300,166 $ 557,117,133
-------------- ---------------
-------------- ---------------
- --------------
*Includes undistributed net investment income of....................... $ 0 $ 285,680
-------------- ---------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F8
<PAGE>
GT GLOBAL EUROPE GROWTH FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS A+
----------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------
1996 (A) 1995 (A) 1994 (A) 1993 (A) 1992 (A)
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 10.88 $ 10.03 $ 10.84 $ 8.51 $ 9.59
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income (loss).......... (0.03) 0.04 0.06 0.05 0.11**
Net realized and unrealized gain
(loss) on investments................ 2.16 0.95 (0.69) 2.36 (1.19)
---------- ---------- ---------- ---------- ----------
Net increase (decrease) from
investment operations.............. 2.13 0.99 (0.63) 2.41 (1.08)
---------- ---------- ---------- ---------- ----------
Distributions to shareholders:
From net investment income............ -- (0.10) (0.05) (0.06) --
From net realized gain on
investments.......................... (0.12) (0.04) -- -- --
In excess of net investment income.... -- -- -- (0.02) --
In excess of net realized gain on
investments.......................... -- -- (0.13) -- --
---------- ---------- ---------- ---------- ----------
Total distributions................. (0.12) (0.14) (0.18) (0.08) --
---------- ---------- ---------- ---------- ----------
Net asset value, end of period.......... $ 12.89 $ 10.88 $ 10.03 $ 10.84 $ 8.51
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Total investment return (d)............. 19.61% 9.86% (5.8)% 28.3% (11.3)%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 453,792 $ 483,375 $ 646,313 $ 854,701 $ 781,607
Ratio of net investment income (loss) to
average net assets..................... (0.26)% 0.38% 0.61% 0.6% 1.2%**
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 1.82% 1.83% 1.73% 1.9% 2.0%**
Without expense reductions............ 1.88% 1.89% 1.81% --* --*
Portfolio turnover rate++++............. 123% 108% 91% 67% 65%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0277 N/A N/A N/A N/A
</TABLE>
- ----------------
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rate and average commission rate are calculated on
the basis of the Fund as a whole without distinguishing between the
classes of shares issued.
* Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
* * Includes reimbursement by Chancellor LGT Asset 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%.
(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.
N/A Not applicable.
The accompanying notes are an integral part of the financial statements.
F9
<PAGE>
GT GLOBAL EUROPE GROWTH FUND
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS B++ ADVISOR CLASS+++
------------------------------------------------- ---------------------------
APRIL 1, 1993 YEAR JUNE 1, 1995
YEAR ENDED DECEMBER 31, TO ENDED TO
---------------------------------- DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 (A) 1995 (A) 1994 (A) 1993 (A) 1996 (A) 1995 (A)
---------- ---------- ---------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 10.81 $ 9.97 $ 10.79 $ 9.02 $ 10.85 $ 10.24
---------- ---------- ---------- ------------- ------------ -------------
Income from investment operations:
Net investment income (loss).......... (0.11) (0.03) -- -- 0.01 0.08
Net realized and unrealized gain
(loss) on investments................ 2.15 0.94 (0.69) 1.85 2.18 0.71
---------- ---------- ---------- ------------- ------------ -------------
Net increase (decrease) from
investment operations.............. 2.04 0.91 (0.69) 1.85 2.19 0.79
---------- ---------- ---------- ------------- ------------ -------------
Distributions to shareholders:
From net investment income............ -- (0.03) -- (0.06) -- (0.14)
From net realized gain on
investments.......................... (0.12) (0.04) -- -- (0.12) (0.04)
In excess of net investment income.... -- -- -- (0.02) -- --
In excess of net realized gain on
investments.......................... -- -- (0.13) -- -- --
---------- ---------- ---------- ------------- ------------ -------------
Total distributions................. (0.12) (0.07) (0.13) (0.08) (0.12) (0.18)
---------- ---------- ---------- ------------- ------------ -------------
Net asset value, end of period.......... $ 12.73 $ 10.81 $ 9.97 $ 10.79 $ 12.92 $ 10.85
---------- ---------- ---------- ------------- ------------ -------------
---------- ---------- ---------- ------------- ------------ -------------
Total investment return (d)............. 18.79% 9.20% (6.38)% 20.5%(c) 20.21 % 7.75%(c)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 87,092 $ 73,025 $ 81,602 $ 34,048 $ 1,416 $ 718
Ratio of net investment income (loss) to
average net assets..................... (0.91)% (0.27)% (0.04)% (0.1)%(b) 0.09 % 0.73%(b)
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 2.47% 2.48% 2.38% 2.6%(b) 1.47 % 1.48%(b)
Without expense reductions............ 2.53% 2.54% 2.46% --* 1.53 % 1.54%(b)
Portfolio turnover rate++++............. 123% 108% 91% 67% 123 % 108%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0277 N/A N/A N/A $ 0.0277 N/A
</TABLE>
- ----------------
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rate and average commission rate are calculated on
the basis of the Fund as a whole without distinguishing between the
classes of shares issued.
* Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
* * Includes reimbursement by Chancellor LGT Asset 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%.
(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.
N/A Not applicable.
The accompanying notes are an integral part of the financial statements.
F10
<PAGE>
GT GLOBAL EUROPE GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
- --------------------------------------------------------------------------------
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 an open-end management investment company. The Company has eight
diversified series of shares in operation, each series corresponding to a
distinct portfolio of investments.
The Fund offers Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. Investment
income, realized and unrealized capital gains and losses, and the common
expenses of the Fund are allocated on a pro rata basis to each class based on
the relative net assets of each class to the total net assets of the Fund. Each
class of shares differs in its respective distribution expenses, and may differ
in its transfer agent, registration, and certain other class-specific fees and
expenses.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of the financial statements. The
policies are in conformity with generally accepted accounting principles, and
therefore the financial statements may include certain estimates from
management.
(A) PORTFOLIO VALUATION
The Fund calculates the net asset value of Fund shares 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 Chancellor LGT Asset
Management, Inc. (the "Manager") to be the primary market.
Fixed income investments are valued at the mean of representative quoted bid and
asked prices for such investments or, if such prices are not available, at
prices for investments of comparative maturity, quality and type; however, when
the Manager deems it appropriate, prices obtained for the day of valuation from
a bond pricing service will be used. Short-term investments with a maturity of
60 days or less are valued to amortized cost, adjusted for foreign exchange
translation and market fluctuation, if any.
Investments for which market quotations are not readily available (including
restricted securities which are subject to limitations on their sale) are valued
at fair value as determined in good faith by or under the direction of the
Fund's Board of Trustees.
Portfolio securities which are primarily traded on foreign exchanges are
generally valued at the preceding closing values of such securities on their
respective exchanges, and those values are then translated into U.S. dollars at
the current exchange rates, except that when an occurrence subsequent to the
time a value was so established is likely to have materially changed such value,
then the fair value of those securities will be determined by consideration of
other factors by or under the direction of the Company's Board of Trustees.
(B) FOREIGN CURRENCY TRANSLATION
The accounting records of the Fund are maintained in U.S. dollars. The market
values of foreign securities, currency holdings, other assets and liabilities
are recorded in the books and records of the Fund after translation to U.S.
dollars based on the exchange rates on that day. The cost of each security is
determined using historical exchange rates. Income and withholding taxes are
translated at prevailing exchange rates when earned or incurred.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign exchange gains and losses arise from sales and
maturities of short-term securities, forward foreign currency contracts, sales
of foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the differences between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains 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, U.S. 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.
(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
F11
<PAGE>
GT GLOBAL EUROPE GROWTH FUND
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
market-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 on 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 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
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 then 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, 1996, stocks with an aggregate value of approximately
$39,888,283 were on loan to brokers. The loans were secured by cash collateral
of $41,594,267, received by the Fund. 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 the year ended December 31, 1996,
the Fund received securities lending fees of $170,632 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, or excise tax on income
and capital gains. The Fund currently has a capital loss carryforward of
$100,715,450, of which $96,233,015 expires in 2000 and $4,482,435 expires in
2001.
F12
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GT GLOBAL EUROPE GROWTH FUND
(J) DISTRIBUTION TO SHAREHOLDERS
Distribution 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. The Fund's investments in emerging market
countries may involve greater risks than investments in more developed markets,
and the prices of such investments may be volatile. These risks of investing in
foreign and emerging markets may include foreign currency exchange rate
fluctuations, perceived credit risk, adverse political and economic developments
and possible adverse foreign government intervention.
(L) RESTRICTED SECURITIES
The Fund is permitted to invest in privately placed restrictions 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.
(N) LINE OF CREDIT
The Fund, along with certain other funds advised by the Manager, has a line of
credit with the Bank of Boston. The arrangement with the bank allows all
specified funds to borrow an aggregate maximum amount of $100,000,000.
2. RELATED PARTIES
Chancellor LGT Asset Management is the Fund's investment manager and
administrator. On October 31, 1996, Chancellor Capital Management, Inc. merged
with LGT Asset Management, Inc., and the surviving entity was renamed Chancellor
LGT Asset Management, Inc. The Fund pays investment management and
administration fees at the following annualized rates: 0.975% on the first $500
million of the 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 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., an affiliate of the Manager, 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, 1996, GT Global retained $39,684
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 $5,089 for the year ended December 31, 1996. GT Global also makes
ongoing shareholder servicing and trail commission payments to dealers whose
clients hold Class A shares.
Class B shares are not subject to initial sales charges. When Class B shares are
sold, GT Global from its own resources pays commissions to dealers through which
the sales are made. Certain redemptions of Class B shares made within six years
of purchase are subject to CDSC's, in accordance with the Fund's current
prospectus. During the year ended December 31, 1996, GT Global collected CDSC's
in the amount of $377,041. 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 its expenditures incurred in servicing and maintaining
shareholder accounts, and may pay GT Global a distribution fee at the annualized
rate of up to 0.35% 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 its 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.
F13
<PAGE>
GT GLOBAL EUROPE GROWTH FUND
The Manager 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%, and 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 the
Manager 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
the Manager or GT Global of portions of the Fund's other operating expenses.
GT Global Investor Services, Inc. ("GT Services"), an affiliate of the Manager
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.
The Manager is the pricing and accounting agent for the Fund. The monthly fee
for these services to the Manager 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 the Manager and 0.02% to the assets in excess of $5 billion and
allocating the result according to the Fund's average daily net assets.
The Company pays each of its Trustees who is not an employee, officer or
director of GT Capital, 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, 1996, purchases and sales of investment
securities by the Fund, other than U.S. government obligations and short-term
investments, aggregated $648,654,686 and $748,627,276, respectively. There were
no purchases or sales of U.S. government obligations by the Fund during the
period.
4. CAPITAL SHARES
At December 31, 1996, there were an unlimited number of shares of beneficial
interest authorized, at no par value. Transactions in capital shares of the Fund
were as follows:
CAPITAL SHARE TRANSACTIONS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1996 DECEMBER 31, 1995
---------------------------- -----------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 247,661,557 $2,968,073,960 148,571,806 $ 1,551,431,041
Shares issued in connection with
reinvestment of distributions......... 261,336 3,297,924 415,180 4,458,262
------------ -------------- ------------ ---------------
247,922,893 2,971,371,884 148,986,986 1,555,889,303
Shares repurchased...................... (257,136,969) (3,090,222,730) (169,021,976) (1,766,588,469)
------------ -------------- ------------ ---------------
Net decrease............................ (9,214,076) $ (118,850,846) (20,034,990) $ (210,699,166)
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1996 DECEMBER 31, 1995
---------------------------- -----------------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 15,643,994 $ 188,596,754 4,792,541 $ 50,660,689
Shares issued in connection with
reinvestment of distributions......... 53,171 663,732 35,327 377,127
------------ -------------- ------------ ---------------
15,697,165 189,260,486 4,827,868 51,037,816
Shares repurchased...................... (15,609,973) (188,238,304) (6,262,885) (65,780,212)
------------ -------------- ------------ ---------------
Net increase (decrease)................. 87,192 $ 1,022,182 (1,435,017) $ (14,742,396)
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
<CAPTION>
JUNE 1, 1995
YEAR ENDED (COMMENCEMENT OF SALE OF
DECEMBER 31, 1996 SHARES) TO DECEMBER 31, 1995
---------------------------- -----------------------------
ADVISOR CLASS SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ------------ -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 5,230,224 $ 63,929,457 122,102 $ 1,300,674
Shares issued in connection with
reinvestment of distributions......... 2,336 29,544 1,098 11,615
------------ -------------- ------------ ---------------
5,232,560 63,959,001 123,200 1,312,289
Shares repurchased...................... (5,189,081) (63,817,768) (57,044) (625,809)
------------ -------------- ------------ ---------------
Net increase............................ 43,479 $ 141,233 66,156 $ 686,480
------------ -------------- ------------ ---------------
------------ -------------- ------------ ---------------
</TABLE>
F14
<PAGE>
GT GLOBAL EUROPE GROWTH FUND
5. EXPENSE REDUCTIONS
The Manager has directed certain portfolio trades to brokers who paid a portion
of the Fund's expenses. For the year ended December 31, 1996, the Fund's
expenses were reduced by $161,876 under these arrangements.
- --------------
FEDERAL TAX INFORMATION (UNAUDITED):
For its fiscal year ended December 31, 1996, the total amount of income received
by the Fund from sources within foreign countries and possessions of the United
States was approximately $.19 per share (representing an approximate total of
$8,299,061). The total amount of taxes paid by the Fund to such countries was
approximately $.03 per share (representing an approximate total of $1,282,376).
F15
<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,
excluding Japan
GT GLOBAL EUROPE GROWTH FUND
Focuses on investment opportunities in the new, unified Europe
GT GLOBAL LATIN AMERICA GROWTH FUND
Invests in the emerging markets of Latin America
/ / SINGLE COUNTRY FUNDS
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
Invests in equity securities of small U.S. companies
GT GLOBAL AMERICA MID CAP GROWTH FUND
Concentrates on medium-sized companies in the U.S.
GT GLOBAL AMERICA VALUE FUND
Concentrates on large cap equity securities of U.S. companies believed to be
undervalued
GT GLOBAL JAPAN GROWTH FUND
Provides U.S. investors with direct access to the Japanese market
GROWTH AND INCOME FUND
GT GLOBAL GROWTH & INCOME FUND
Invests in blue-chip stocks and government bonds from around the world
INCOME FUNDS
GT GLOBAL GOVERNMENT INCOME FUND
Earns monthly income from global government securities
GT GLOBAL STRATEGIC INCOME FUND
Allocates its assets among debt securities from the U.S., developed foreign
countries and emerging markets
GT GLOBAL HIGH INCOME FUND
Invests in debt securities in emerging markets
MONEY MARKET FUND
GT GLOBAL DOLLAR FUND
Invests in high quality, U.S. dollar-denominated money market securities
worldwide for stability and preservation of capital
[LOGO]
THIS REPORT MUST BE ACCOMPANIED OR PRECEDED BY A CURRENT PROSPECTUS.
<PAGE>
[LOGO]
GT Global, Inc.
Fifty California Street
27th Floor
San Francisco, California
94111-4624
DATED MATERIAL
PLEASE EXPEDITE
GT GLOBAL EUROPE GROWTH FUND
EURAR702M
