<PAGE>
CHANCELLOR LGT
ASSET MANAGEMENT
OVER 25 YEARS
OF INVESTING
WORLDWIDE
GT GLOBAL
JAPAN
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.......... F1
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 JAPAN 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
The GT Global Japan
Growth Fund seeks
long-term growth of
capital by investing in
securities of issuers
located in Japan.
GT GLOBAL JAPAN GROWTH FUND
PERFORMANCE SUMMARY
GT GLOBAL
JAPAN GROWTH MSCI Japan
FUND CLASS A Index
7/19/85 9525 10000
9534.53 9582
9486.9 9813.14
10458.5 10855.5
10858.5 11199
11411 11367.2
11811 12040.7
12296.8 12375.2
13439.8 13867.6
15307.7 16844.6
16136.7 17487.3
16252.4 17373.7
17168.1 19140.2
19404.5 21672.8
20763.7 23645.4
20040.7 24237.3
16300.6 21006
17852.5 22400.6
19047.9 24048.1
19394.9 27918.2
19414.2 28420.9
19864.3 31536.8
21663.7 36500.8
23064.3 36436.5
23882.2 33740
24996.5 32561
28032.9 36621.4
29944.7 35329
24740.9 32680.6
26022.1 33988.9
28974.1 34432.4
29771.5 36289.7
32989.3 39033.3
34710.2 41978
37564.2 42418
36319 40505.2
35199.8 38981.5
35031.9 40771.8
33800.8 37695
34023.8 39321.4
32675.2 42606.1
35569.1 46396
35313.2 46665.8
37785.4 46807.2
39656.3 47715.9
40758.8 46052.9
42128.6 45981.6
42162 43380.6
40491.5 41440.7
46004 46941.3
46538.5 43705.6
50681.2 46494.5
49144.4 45279.3
51416.2 47592.6
56758.7 47509.1
57970.7 44654.8
54784.8 40041.4
48966.9 32280.4
47685.6 32691.1
54854 37373.5
55442.7 35632.5
57001.1 35155.4
49470.2 31738.5
39569.1 26548.4
46580.9 32989.1
41824.2 29029.2
40450 30397.7
40309.1 31266
45136.3 35213.1
10/31/90 44854.4 33027.5
44995.4 33854
45382.9 33702.5
45065.8 31281.1
45382.9 32252.2
41824.2 30474.8
44854.4 33140.5
45030.6 34576.6
39287.2 32138.9
39322.5 33159.8
37525.5 31627.8
36045.6 28991.3
32698.3 25852.6
31641.2 24265.2
33156.3 26210.7
32099.3 23818.6
30760.3 23550.4
32275.4 27727.2
31746.9 27067.2
30478.5 25814.7
30619.4 26486.1
30863.9 26099.1
30757.4 26018.4
31467 27149.6
34588.8 30973.8
38455.7 36484.1
39519.9 37494.1
38704 36979.2
40797.1 39326.4
41896.8 40189.3
42322.5 38284
42180.6 38114.8
39555.4 31793.8
41187.3 32806.7
44131.8 38108.2
46473.2 39855.6
45692.7 38155.6
46295.8 39786.9
46437.7 40662.6
48779.1 42673.1
47395.6 41145.4
46863.4 41430.5
45231.5 40412.7
45338 41525.9
43067.5 39441.2
43890.7 39898.8
40278.3 37576.9
38688.8 35767.2
39700.3 39064.1
39808.7 40976.3
37930.2 38440.8
38833.3 36609.7
42156.8 39529.2
43204.3 37945.1
44179.7 38272.1
43132.1 36136.3
43059.9 38280.1
44740 40242
44699.3 39717.9
44007.9 39015.5
44577.3 40397.1
46244.9 42698.7
45065.4 40505.9
45594.2 40724.8
44821.4 38905.8
43438.5 37171.6
43641.9 38464
42218.3 35887.8
41892.9 36576.8
12/31/96 41417.6 34052.9
The chart above shows the performance of the GT Global Japan Growth Fund,
Class A shares, since the Fund's inception versus the MSCI Japan Index. This
represents a cumulative return of 314.18% and an average annual total return
of 13.21% 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 $11,276 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 $10,971 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) -7.43 1.04 8.08 13.69 -11.82 0.06 7.55 13.21
CLASS B(3) -8.05 N/A N/A 3.95 -12.45 N/A N/A 3.25
ADVISOR CLASS(4) -7.14 N/A N/A 6.01 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 52.11(3) 21.88 60.73 -28.73 -2.79 -21.51 33.45 6.56 1.94 -7.43
CLASS B N/A N/A N/A N/A N/A N/A 17.46(3) 5.81 1.2 -8.05
</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
ANDREW CALLENDER
Q HOW DID THE FUND PERFORM?
A The Japanese market continued to struggle
through its prolonged economic downturn. As a
result, the Fund's total returns over the past 12
months to December 31, 1996, were disappointing,
declining by 7.43% for Class A shares (-11.82%
taking into account the maximum 4.75% sales
charge); total return for Class B shares was -8.05%
(-12.45% with the maximum 5.0% contingent
deferred sales charge). Meanwhile, the Morgan Stanley
Capital International (MSCI) Japan Index(5) suffered
even more, returning -15.38% over the same period.
Q COULD YOU DESCRIBE THE GENERAL ECONOMIC AND
FINANCIAL ENVIRONMENT?
A The transitional period Japan entered into in the
early 1990s continued in 1996, with sluggish
economic growth and deflation persisting throughout
the year. Japanese banks have yet to overcome the bad
debt crisis precipitated by a collapse in property and
stock prices. The fragile financial system has not only
depressed consumer confidence, but could also worsen
as declining share prices erode the value of banks'
stock portfolios. This is problematic as these portfolios
provide a means of writing off bad loans and keeping
capital adequacy rates up to international standards.
In addition, businesses have had difficulties coping
with slow growth, and company profits have proved
unsustainable with the drop-off in consumer demand
in the second half of the year. Meanwhile, although a
weaker yen has been a boom for exports, it's becoming
less of a positive factor as many companies have
moved production overseas. We expect the weakening
yen will damage profit margins, apart from exporters,
as input costs rise in a deflationary environment.
Q WHAT WAS YOUR INVESTMENT STRATEGY?
A Generally, we've felt that market valuations have
been excessively high. Our strategy for stock selection
has therefore been to focus on a smaller number of
companies with good valuations and growth
prospects. With respect to the Fund's bond position,
interest rates have been persistently low. We have little
reason to believe they will fall any further, particularly
now that the yen has depreciated beyond Y110/US$1.00.
Accordingly, we have cut back the Fund's position in
bonds and anticipate selling it off entirely in the near
future, unless conditions change. We also continued
our low exposure to the yen (40%).
While there was little change among the Fund's top 10
holdings, we have been buying Southland (the largest
convenience store operator in the U.S., which sells
under the Seven-Eleven name) due to a fall in its price
and a stable company outlook.
Q COULD YOU PROVIDE SOME SPECIFICS ON THE
FUND'S PERFORMANCE?
A Overall, the Fund's investment strategy in a down
market proved helpful. While the market plummeted
and the yen weakened, the Fund's forward currency
contracts, in addition to its focus on stock selection,
added some value relative to the index. Companies
that performed well during the period include Takeda
Chemical, Nichiei, and Matsushita-Kotobuki. A
number of the Fund's smaller holdings, however,
performed poorly. These include Blue Grass, Ten
Allied and Bunkyodo.
Q WHAT IS YOUR OUTLOOK GOING FORWARD?
A We expect the volatility and weakness in the
market to continue. In fact, during the first week of
trading this year, the stock market experienced a sharp
drop of 10%, with banks and construction sectors
experiencing the biggest losses. The TOPIX Banking
Index decreased 14% during the first week of trading.
In an environment where value is scarce, stocks we
find attractive include selected companies with
reasonable valuations that dominate their
international markets, as well as domestic growth
companies that can exploit structural changes in the
economy, such as deregulation (retail and telecommu-
nications) or the rapidly aging population.
ABOUT THE PORTFOLIO MANAGER
ANDREW CALLENDER - Head of Investment in Japan. Mr.
Callender joined LGT's office in Hong Kong in 1987.
He subsequently worked in our Tokyo and Singapore
offices before returning to Tokyo to assume his current
responsibilities. Mr. Callender received his M.A. from
Oxford University.
(5) The MSCI Japan Index is an arithmetic average, weighted by market
value, of the performance of 309 securities listed on Japanese 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>
ALLOCATION OF NET ASSETS %
DECEMBER 31, 1996
Services 36.6
Health Care 9.6
Technology 9.2
Capital Goods 9.2
Finance 6.9
Consumer Non-Durables 5.3
Materials/Basic Industry 2.4
Fixed Income 8.0
Short Term & Other 12.8
Allocations will change based on current market conditions.
<TABLE>
<CAPTION>
GT GLOBAL JAPAN GROWTH FUND % of
KEY PORTFOLIO HOLDINGS(6) Net Assets
<S> <S>
TAKEDA CHEMICAL INDUSTRIES A top pharmaceutical manufacturer, most 5.9
recognized for its vitamin tablet Alinamin, and a leader in
antibiotics since 1965. Takeda is also a front runner in overseas
operations in the U.S. and other countries, with its Central
Research Lab as an operations base.
SOUTHLAND CORP. A convenience store chain with company-operated, 5.7
franchised and licensed locations worldwide. The company conducts
business principally under the Seven-Eleven name. Its activities
also include the operation of High's Dairy Stores, Quik Marts and
Super 7 high-volume gasoline outlets and mini-convenience stores.
AOYAMA TRADING CO., LTD. The largest suburban discount chain store 4.9
in Japan, specializing in men's discount suits. The company is
developing a casual wear line to complement its business clothing
sales. Generally, Aoyama sells lesser-known brand-name items.
AMWAY JAPAN LTD. Door-to-door marketer of detergents, cosmetics, 4.8
kitchenware and related products.
NICHIEI CO., LTD. A financial services company providing short-term 4.6
financing to small and medium-sized businesses in Japan that do not
have property to use as collateral for bank loans. Loans are
restricted in size and backed by third-party guarantees. The
company is actively seeking to expand business in the regional
areas.
ITO-YOKADO CO., LTD. Operates one of the best-managed supermarket 4.5
chains in Japan. Despite a sluggish retail environment, Ito Yokado
has managed to grow sales and profits through competitive pricing,
a strong merchandising strategy, sound inventory and cost control.
DAINI DENDEN INC. (DDI) CORP. Japan's second-largest provider of 4.5
cellular phone services, DDI has benefited from the liberalization
of domestic cellular services and cellular handset sales. The
company also has more than 10% of the domestic long-distance market.
MATSUSHITA-KOTOBUKI ELECTRONICS LTD. Producer of parts for the PC 4.3
industry, including disk drives and CD-ROMs.
MURATA MANUFACTURING CO., LTD. Manufacturer of a large range of 4.0
electric components for the semi-conductor, industrial electronics
and telecommunications industry. They have production facilities
throughout Asia.
SEVEN-ELEVEN JAPAN LTD. Japan's largest convenience store operator, 3.0
Seven-Eleven belongs to the Ito-Yokado group. Seven-Eleven Japan
also owns Southland Corp., the operator of Seven-Eleven franchises
in the U.S.
</TABLE>
(6) There can be no assurance the Fund will continue to hold these
securities.
4
<PAGE>
GT GLOBAL
JAPAN
GROWTH FUND
FINANCIAL
STATEMENTS
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
GT Global Growth Series:
We have audited the accompanying statement of assets and liabilities of GT
Global Japan Growth Fund, a series of shares of beneficial interest of GT Global
Growth Series, including the schedule of portfolio investments, as of December
31, 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 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 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 Japan 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 JAPAN GROWTH FUND
PORTFOLIO OF INVESTMENTS
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
% OF NET
EQUITY INVESTMENTS SHARES VALUE ASSETS
- ---------------------------------------------------------------------- ----------- ------------ -------------
<S> <C> <C> <C>
Services (36.6%)
Southland Corp.{l} -/- {\/} ........................................ 1,848,200 $ 5,486,841 5.7
RETAILERS-OTHER
Aoyama Trading Co., Ltd. ........................................... 175,200 4,661,507 4.9
RETAILERS-APPAREL
Ito-Yokado Co., Ltd. ............................................... 100,000 4,353,836 4.5
RETAILERS-OTHER
DDI Corp. .......................................................... 650 4,301,140 4.5
WIRELESS COMMUNICATIONS
Seven-Eleven Japan Ltd. ............................................ 50,000 2,928,473 3.0
RETAILERS-OTHER
Autobacs Seven Co., Ltd. ........................................... 40,000 2,829,993 2.9
RETAILERS-OTHER
Yoshinoya D&C Co., Ltd. ............................................ 200 2,453,352 2.6
RESTAURANTS
Fast Retailing Co., Ltd. ........................................... 90,000 2,309,088 2.4
RETAILERS-APPAREL
Nissen Co. ......................................................... 273,000 1,910,245 2.0
RETAILERS-OTHER
Nitori Co. ......................................................... 59,400 1,031,393 1.1
RETAILERS-OTHER
Xebio Co., Ltd. .................................................... 25,000 745,076 0.8
RETAILERS-APPAREL
Blue Grass Co., Ltd. ............................................... 44,000 710,781 0.7
RETAILERS-APPAREL
Ten Allied Co. ..................................................... 65,000 634,502 0.7
RESTAURANTS
Bunkyodo Co., Ltd. ................................................. 35,000 489,806 0.5
RETAILERS-OTHER
Fujitsu Business Systems ........................................... 15,000 327,833 0.3
BUSINESS & PUBLIC SERVICES
------------
35,173,866
------------
Health Care (9.6%)
Takeda Chemical Industries ......................................... 270,000 5,667,761 5.9
PHARMACEUTICALS
Olympus Optical Co., Ltd. .......................................... 230,000 2,185,556 2.3
MEDICAL TECHNOLOGY & SUPPLIES
Taisho Pharmaceuticals ............................................. 55,000 1,297,080 1.4
PHARMACEUTICALS
------------
9,150,397
------------
Technology (9.2%)
Matsushita-Kotobuki Electronics Ltd. ............................... 160,000 4,174,153 4.3
COMPUTERS & PERIPHERALS
Koei Co., Ltd. ..................................................... 87,400 1,676,123 1.7
SOFTWARE
Hosiden Electronics-/- ............................................. 223,000 1,581,574 1.6
COMPUTERS & PERIPHERALS
Kyushu-Matsushita Electric Co., Ltd. ............................... 65,000 842,260 0.9
COMPUTERS & PERIPHERALS
</TABLE>
The accompanying notes are an integral part of the financial statements.
F2
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
% OF NET
EQUITY INVESTMENTS SHARES VALUE ASSETS
- ---------------------------------------------------------------------- ----------- ------------ -------------
<S> <C> <C> <C>
Technology (Continued)
Geomatec Co., Ltd. ................................................. 25,000 $ 645,733 0.7
COMPUTERS & PERIPHERALS
------------
8,919,843
------------
Capital Goods (9.2%)
Murata Manufacturing Co., Ltd. ..................................... 115,000 3,824,724 4.0
ELECTRICAL PLANT/EQUIPMENT
Higashi Nihon House ................................................ 152,000 1,956,462 2.0
CONSTRUCTION
Canon, Inc. ........................................................ 55,000 1,216,310 1.3
OFFICE EQUIPMENT
Shima Seiki Manufacturing Ltd. ..................................... 20,000 932,965 1.0
MACHINE TOOLS
Komori Corp. ....................................................... 40,000 850,035 0.9
MACHINERY & ENGINEERING
NEC System Integration & Construction .............................. 60 1,197 --
CONSTRUCTION
Japan Foundation Engineering ....................................... 90 1,174 --
CONSTRUCTION
------------
8,782,867
------------
Finance (6.9%)
Nichiei Co., Ltd. .................................................. 60,000 4,431,583 4.6
OTHER FINANCIAL
Diamond Lease Co., Ltd. ............................................ 175,000 2,222,270 2.3
OTHER FINANCIAL
------------
6,653,853
------------
Consumer Non-Durables (5.3%)
Amway Japan Ltd.{z} ................................................ 145,000 4,659,641 4.8
HOUSEHOLD PRODUCTS
Tsutsumi Jewelry Co., Ltd. ......................................... 20,600 510,729 0.5
PERSONAL CARE/COSMETICS
------------
5,170,370
------------
Materials/Basic Industry (2.4%)
Toyo Exterior ...................................................... 80,000 1,188,666 1.2
BUILDING MATERIALS & COMPONENTS
Gakken ............................................................. 200,000 1,131,652 1.2
PAPER/PACKAGING
------------
2,320,318
------------ -----
TOTAL EQUITY INVESTMENTS (cost $90,397,106) .......................... 76,171,514 79.2
------------ -----
</TABLE>
The accompanying notes are an integral part of the financial statements.
F3
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1996
<TABLE>
<CAPTION>
PRINCIPAL % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT VALUE ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C>
Government & Government Agency Obligations (7.0%)
Austria (3.5%)
Republic of Austria, 4.5% due 9/28/05{z} ................ JPY 340,000,000 $ 3,362,846 3.5
Japan (3.5%)
Japanese Government Bond, 3.8% due 9/20/16{z} ........... JPY 375,000,000 3,400,462 3.5
------------
Total Government & Government Agency Obligations (cost
$7,210,305) ................................................ 6,763,308
------------
Corporate Bonds (1.0%)
Japan (1.0%)
Higashi Nihon House Co., Convertible Bond, 0.375% due
4/30/00 (cost $1,089,201) .............................. CHF 1,150,000 906,764 1.0
------------ -----
TOTAL FIXED INCOME INVESTMENTS (cost $8,299,506) ............ 7,670,072 8.0
------------ -----
<CAPTION>
NUMBER OF % OF NET
OPTIONS CURRENCY CONTRACTS VALUE ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C>
Simex Nikkei Put Options, strike JPY20,500, expire 3/14/97
(cost $325,798)-/- ....................................... JPY 140 834,485 0.9
------------ -----
INDEX OPTIONS
<CAPTION>
% OF NET
REPURCHASE AGREEMENT VALUE ASSETS
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C>
Dated December 31, 1996, with State Street Bank & Trust
Co., due January 2, 1997, for an effective yield of 6.25%,
collateralized by $380,000 U.S. Treasury Notes, 6.125% due
3/31/98 (market value of collateral is $388,025, including
accrued interest). (cost $376,066) ....................... 376,066 0.4
------------ -----
TOTAL INVESTMENTS (cost $99,398,476) * ..................... 85,052,137 88.5
Other Assets and Liabilities ................................ 11,062,550 11.5
------------ -----
NET ASSETS .................................................. $ 96,114,687 100.0
------------ -----
------------ -----
</TABLE>
- --------------
{z} Security is segregated as collateral for written futures. See Note
1 of Notes to Financial Statements.
{l} This is a U.S. security of which approximately 62.5% of its
outstanding stock is owned by Ito-Yokado Co., Ltd.
{\/} U.S. currency denominated.
-/- Non-income producing security.
* For Federal income tax purposes, cost is $100,530,250 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 4,077,832
Unrealized depreciation: (19,555,945)
-------------
Net unrealized depreciation: $ (15,478,113)
-------------
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F4
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
PORTFOLIO OF INVESTMENTS (cont'd)
December 31, 1996
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
DECEMBER 31, 1996
<TABLE>
<CAPTION>
UNREALIZED
MARKET VALUE CONTRACT DELIVERY APPRECIATION
CONTRACTS TO BUY: (U.S. DOLLARS) PRICE DATE (DEPRECIATION)
- ---------------------------------------- -------------- ----------- -------- --------------
<S> <C> <C> <C> <C>
Japanese Yen............................ 1,738,446 113.34500 02/12/97 $ (26,078)
-------------- --------------
Total Contracts to Buy (Payable amount
$1,764,524).......................... 1,738,446 (26,078)
-------------- --------------
THE VALUE OF CONTRACTS TO BUY AS
PERCENTAGE OF NET ASSETS IS 1.81%.
<CAPTION>
CONTRACTS TO SELL:
- ----------------------------------------
<S> <C> <C> <C> <C>
Japanese Yen............................ 9,561,451 110.40000 02/12/97 402,317
Japanese Yen............................ 44,330,362 110.40000 02/12/97 1,865,290
-------------- --------------
Total Contracts to Sell (Receivable
amount $56,159,420).................. 53,891,813 2,267,607
-------------- --------------
THE VALUE OF CONTRACTS TO SELL AS A
PERCENTAGE OF NET ASSETS IS 56.07%.
Total Open Forward Foreign Currency
Contracts, Net....................... $ 2,241,529
--------------
--------------
</TABLE>
- ----------------
See Note 1 to the financial statements.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
WRITTEN FUTURES CONTRACTS OUTSTANDING
DECEMBER 31, 1996
<TABLE>
<CAPTION>
EXPIRATION NO. OF MARKET
DESCRIPTION DATE CONTRACTS CURRENCY VALUE
- ---------------------------------------- ---------- --------- -------- -----------
<S> <C> <C> <C> <C>
Simex Nikkei 225 Index Future (Face
$13,432,632)........................... 03/15/97 150 JPY $12,533,474
</TABLE>
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
F5
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
STATEMENT OF ASSETS
AND LIABILITIES
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $99,398,476) (Note 1)....... $ 85,052,137
U.S. currency............................................. $ 810
Foreign currencies (cost $7,317,540)...................... 7,202,621 7,203,431
----------
Receivable for securities sold........................................ 2,922,583
Receivable for open forward foreign currency contracts, net (Note
1)................................................................... 2,241,529
Receivable for initial margin (Note 1)................................ 1,405,431
Interest receivable................................................... 87,851
Receivable for Fund shares sold....................................... 63,925
Dividends receivable.................................................. 50,940
Cash held as collateral for securities loaned (Note 1)................ 5,979,995
------------
Total assets........................................................ 105,007,822
------------
Liabilities:
Payable for loan outstanding (Note 1)................................. 2,000,000
Payable for Fund shares repurchased................................... 634,140
Payable for investment management and administration fees (Note 2).... 83,572
Payable for service and distribution expenses (Note 2)................ 48,382
Payable for transfer agent fees (Note 2).............................. 47,598
Payable for printing and postage expenses............................. 44,043
Payable for professional fees......................................... 23,272
Payable for custodian fees............................................ 10,360
Payable for registration and filing fees.............................. 8,995
Payable for Trustees' fees and expenses (Note 2)...................... 3,985
Payable for fund accounting fees (Note 2)............................. 1,952
Other accrued expenses................................................ 6,841
Collateral for securities loaned (Note 1)............................. 5,979,995
------------
Total liabilities................................................... 8,893,135
------------
Net assets.............................................................. $ 96,114,687
------------
------------
Class A:
Net asset value and redemption price per share ($63,584,967 DIVIDED BY
6,517,910 shares outstanding).......................................... $ 9.76
------------
------------
Maximum offering price per share (100/95.25 of $9.76) *................. $ 10.25
------------
------------
Class B:+
Net asset value and offering price per share ($32,116,485 DIVIDED BY
3,382,968 shares outstanding).......................................... $ 9.49
------------
------------
Advisor Class:
Net asset value, offering price per share, and redemption price per
share ($413,235 DIVIDED BY 42,104 shares outstanding).................. $ 9.81
------------
------------
Net assets consist of:
Paid in capital (Note 4).............................................. $110,959,451
Accumulated net realized loss on investments and foreign currency
transactions......................................................... (3,515,352)
Net unrealized appreciation on translation of assets and liabilities
in foreign currencies................................................ 2,117,769
Net unrealized depreciation of investments............................ (13,447,181)
------------
Total -- representing net assets applicable to capital shares
outstanding............................................................ $ 96,114,687
------------
------------
<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 JAPAN GROWTH FUND
STATEMENT OF OPERATIONS
Year ended December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Interest income......................................................... $ 1,356,810
Dividend income (net of foreign withholding tax of $116,158)............ 663,718
Other income............................................................ 2,221
------------
Total investment income............................................... 2,022,749
------------
Expenses:
Investment management and administration fees (Note 2).................. 1,367,702
Service and distribution expenses: (Note 2)
Class A................................................. $ 334,198
Class B................................................. 439,916 774,114
------------
Transfer agent fees (Note 2)............................................ 486,650
Custodian fees (Note 1)................................................. 109,903
Registration and filing fees............................................ 75,992
Printing and postage expenses........................................... 71,503
Audit fees.............................................................. 53,358
Fund accounting fees (Note 2)........................................... 35,119
Trustees' fees and expenses (Note 2).................................... 14,640
Legal fees.............................................................. 11,882
Other expenses.......................................................... 7,446
------------
Total expenses before reductions...................................... 3,008,309
------------
Expense reductions (Notes 1 & 5).................................... (144,104)
------------
Total net expenses.................................................... 2,864,205
------------
Net investment loss....................................................... (841,456)
------------
Net realized and unrealized gain (loss) on investments and
foreign currencies: (Note 1)
Net realized loss on investments.......................... (8,109,001)
Net realized gain on foreign currency transactions........ 11,961,938
------------
Net realized gain during the year..................................... 3,852,937
Net change in unrealized appreciation on translation of
assets and liabilities in foreign currencies............. (464,975)
Net change in unrealized depreciation of investments...... (11,261,238)
------------
Net unrealized depreciation during the year........................... (11,726,213)
------------
Net realized and unrealized loss on investments and foreign currencies.... (7,873,276)
------------
Net decrease in net assets resulting from operations...................... $ (8,714,732)
------------
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F7
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1996 DECEMBER 31, 1995
----------------- -----------------
<S> <C> <C>
Increase (Decrease) in net assets
Operations:
Net investment loss....................................... $ (841,456) $ (662,252)
Net realized gain on investments and foreign currency
transactions............................................. 3,852,937 14,964,910
Net change in unrealized appreciation (depreciation) on
translation of assets and liabilities in foreign
currencies............................................... (464,975) 923,132
Net change in unrealized depreciation of investments...... (11,261,238) (11,851,499)
----------------- -----------------
Net increase (decrease) in net assets resulting from
operations............................................. (8,714,732) 3,374,291
----------------- -----------------
Class A:
Distributions to shareholders: (Note 1)
From net realized gain on investments..................... (2,883,812) (11,936,435)
Class B:
Distributions to shareholders: (Note 1)
From net realized gain on investments..................... (1,472,016) (4,652,476)
Advisor Class:
Distributions to shareholders: (Note 1)
From net realized gain on investments..................... (18,593) (58,144)
----------------- -----------------
Total distributions..................................... (4,374,421) (16,647,055)
----------------- -----------------
Capital share transactions: (Note 4)
Increase from capital shares sold and reinvested.......... 510,718,392 565,596,580
Decrease from capital shares repurchased.................. (554,451,474) (524,808,353)
----------------- -----------------
Net increase (decrease) from capital share
transactions........................................... (43,733,082) 40,788,227
----------------- -----------------
Total increase (decrease) in net assets..................... (56,822,235) 27,515,463
Net assets:
Beginning of year......................................... 152,936,922 125,421,459
----------------- -----------------
End of year*.............................................. $ 96,114,687 $ 152,936,922
----------------- -----------------
----------------- -----------------
--------------
*Includes undistributed net investment income of......... $ 0 $ 0
----------------- -----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F8
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS A+
----------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------
1996 (A) 1995 (A) 1994 1993 1992 (A)
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 11.00 $ 12.15 $ 11.61 $ 8.70 $ 11.16
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment loss................... (0.04) (0.04) (0.04) (0.14) (0.00) *
Net realized and unrealized gain
(loss) on investments................ (0.77) 0.26 0.79 3.05 (2.40)
---------- ---------- ---------- ---------- ----------
Net increase (decrease) from
investment operations.............. (0.81) 0.22 0.75 2.91 (2.40)
---------- ---------- ---------- ---------- ----------
Distributions to shareholders:
From net realized gain on
investments.......................... (0.43) (1.37) (0.21) -- (0.06)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period.......... $ 9.76 $ 11.00 $ 12.15 $ 11.61 $ 8.70
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Total investment return (d)............. (7.43)% 1.94% 6.56% 33.45% (21.5)%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 63,585 $ 111,105 $ 98,066 $ 88,487 $ 93,865
Ratio of net investment loss to average
net assets............................. (0.40)% (0.40)% (0.32)% (0.3)% (0.0)%*
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 1.84% 1.99% 1.91% 2.1% 2.2%*
Without expense reductions............ 1.94% 2.14% 2.03% --%** --%**
Portfolio turnover rate++++............. 31% 67% 49% 104% 115%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0971 N/A N/A N/A N/A
</TABLE>
- ----------------
+ All capital shares issued and outstanding as of March 31, 1993 were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rate and average commission rate are calculated on
the basis of the Fund as a whole without distinguishing between the
classes of shares issued.
* Includes reimbursement by Chancellor LGT Asset Management, Inc. of
operating expenses of $0.01. Without such reimbursement, the ratio of
expenses to average net assets would have been 2.3% and the ratio of
net investment loss to average net assets would have been (0.1)% (See
Note 2).
* * Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
(a) These selected per share data were calculated based upon average
shares outstanding during the period.
(b) Not annualized
(c) Annualized
(d) Total investment return does not include sales charges.
N/A Not applicable
The accompanying notes are an integral part of the financial statements.
F9
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
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 JUNE 1, 1995
YEAR ENDED DECEMBER 31, TO YEAR ENDED TO
---------------------------------- DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 (A) 1995 (A) 1994 1993 1996 (A) 1995 (A)
---------- ---------- ---------- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 10.78 $ 12.02 $ 11.57 $ 9.85 $ 11.02 $ 10.50
---------- ---------- ---------- ------------- ------------- ------------
Income from investment operations:
Net investment loss................... (0.11) (0.12) (0.13) (0.18) (0.01) (0.00)
Net realized and unrealized gain
(loss) on investments................ (0.75) 0.25 0.79 1.90 (0.77) 1.89
---------- ---------- ---------- ------------- ------------- ------------
Net increase (decrease) from
investment operations.............. (0.86) 0.13 0.66 1.72 (0.78) 1.89
---------- ---------- ---------- ------------- ------------- ------------
Distributions to shareholders:
From net realized gain on
investments.......................... (0.43) (1.37) (0.21) -- (0.43) (1.37)
---------- ---------- ---------- ------------- ------------- ------------
Net asset value, end of period.......... $ 9.49 $ 10.78 $ 12.02 $ 11.57 $ 9.81 $ 11.02
---------- ---------- ---------- ------------- ------------- ------------
---------- ---------- ---------- ------------- ------------- ------------
Total investment return (d)............. (8.05)% 1.20% 5.81% 17.46%(b) (7.14)% 18.14 %(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 32,116 $ 41,274 $ 27,355 $ 3,699 $ 413 $ 558
Ratio of net investment loss to average
net assets............................. (1.05)% (1.05)% (0.97)% (0.9)%(c) (0.05)% (0.05)%(c)
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 2.49% 2.64% 2.56% 2.7%(c) 1.49% 1.64 %(c)
Without expense reductions............ 2.59% 2.79% 2.68% --%** 1.59% 1.79 %(c)
Portfolio turnover rate++++............. 31% 67% 49% 104% 31% 67 %
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0971 N/A N/A N/A $ 0.0971 N/A
</TABLE>
- ----------------
+ All capital shares issued and outstanding as of March 31, 1993 were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rate and average commission rate are calculated on
the basis of the Fund as a whole without distinguishing between the
classes of shares issued.
* Includes reimbursement by Chancellor LGT Asset Management, Inc. of
operating expenses of $0.01. Without such reimbursement, the ratio of
expenses to average net assets would have been 2.3% and the ratio of
net investment loss to average net assets would have been (0.1)% (See
Note 2).
* * Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
(a) These selected per share data were calculated based upon average
shares outstanding during the period.
(b) Not annualized
(c) Annualized
(d) Total investment return does not include sales charges.
N/A Not applicable
The accompanying notes are an integral part of the financial statements.
F10
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
GT Global Japan Growth Fund ("Fund"), is a separate series of GT Global Growth
Series ("Company"). The Company is organized as a Massachusetts business trust
and is registered under the Investment Company Act of 1940, as amended ("1940
Act"), as 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
the financial statements may include certain estimates made by management.
(A) PORTFOLIO VALUATION
The Fund calculates the net asset value of and completes orders to purchase,
exchange or repurchase Fund shares on each business day, with the exception of
those days on which the New York Stock Exchange is closed.
Equity securities are valued at the last sale price on the exchange on which
such securities are traded or on the principal over-the-counter market in which
such securities are traded, as of the close of business on the day the
securities are being valued or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by 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
ask 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 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 to the preceding closing values of such securities on their
respective exchanges, and those values are then translated into U.S. dollars at
the current exchange rates, except that when an occurrence subsequent to the
time a value was so established is likely to have materially changed such value,
then the fair value of those securities will be determined by consideration of
other factors by or under the direction of the Company's Board of Trustees.
(B) FOREIGN CURRENCY TRANSLATION
The accounting records of the Fund are maintained in U.S. dollars. The market
values of foreign securities, currency holdings, other assets and liabilities
are recorded in the books and records of the Fund after translation to U.S.
dollars based on the exchange rates on that day. The cost of each security is
determined using historical exchange rates. Income and withholding taxes are
translated at prevailing exchange rates when earned or incurred.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign exchange gains and losses arise from sales and
maturities of short-term securities, forward foreign currency contracts, sales
of foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the differences between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains and losses arise from changes in the
value of assets and liabilities other than investments in securities at 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.
(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 JAPAN 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
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 securities in an amount not less than the exercise
price or otherwise provide adequate cover at all times while the put option is
outstanding. The Fund may use options to manage its exposure to the stock and
bond markets and to fluctuations in currency values or interest rates.
The premium paid by the Fund for the purchase of a call or put option is
included in the Fund's "Statement of Assets and Liabilities" as an investment
and subsequently "marked-to-market" to reflect the current market value of the
option. If an option which the Fund has purchased expires on the stipulated
expiration date, the Fund realizes a loss in the amount of the cost of the
option. If the Fund enters into a closing sale transaction, the Fund realizes a
gain or loss, depending on whether proceeds from the closing sale transaction
are greater or less than the cost of the option. If the Fund exercises a call
option, the cost of the securities acquired by exercising the call is increased
by the premium paid to buy the call. If the Fund exercises a put option, it
realizes a gain or loss from the sale of the underlying security, and the
proceeds from such sale are decreased by the premium originally paid.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Fund may forego the
opportunity of profit if the market value of the underlying security or index
increases and the option is exercised. The risk in writing a put option is that
the Fund may incur a loss if the market value of the underlying security or
index decreases and the option is exercised. In addition, there is the risk the
Fund may not be able to enter into a closing transaction because of an illiquid
secondary market.
(F) FUTURES CONTRACTS
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract the
Fund is required to pledge to the broker an amount of cash or securities equal
to the minimum "initial margin" requirements of the exchange on which the
contract is traded. Pursuant to the contract, the Fund agrees to receive from or
pay to the broker an amount of cash equal to the daily fluctuation in value of
the contract. Such receipts or payments are known as "variation margin" and are
recorded by the Fund as unrealized gains or losses. When the contract is closed,
the Fund records a realized gain or loss equal to the difference between the
value of the contract at the time it was opened and the value at the time it was
closed. The potential risk to the Fund is that the change in value of the
underlying securities may not correlate to the change in value of the contracts.
The Fund may use futures contracts to manage its exposure to the stock and bond
markets and to fluctuations in currency values or interest rates. At December
31, 1996, the Fund had segregated securities valued at $11,422,949 and cash of
$1,405,431 to cover margin requirements on open futures contracts.
(G) SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on a first-in,
first-out basis, unless otherwise specified. Dividends are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Where a high
level of uncertainty exists as to its collection, income is recorded net of all
withholding tax with any rebate recorded when received. The Fund may trade
securities on other than normal settlement terms. This may increase the risk if
the other party to the transaction fails to deliver and causes the Fund to
subsequently invest at less advantageous prices.
(H) PORTFOLIO SECURITIES LOANED
At December 31, 1996, stocks with an aggregate value of $5,699,560 were on loan
to brokers. The loans were secured by cash collateral of $5,979,995, received by
the Fund. For international securities, cash collateral is received by the Fund
against loaned securities in an amount at least equal to 105% of the market
value of the loaned securities at the inception of each loan. This collateral
must be maintained at not less than 103% of the market value of the loaned
securities during the period of the loan. For domestic securities, cash
collateral is received by the Fund against loaned securities in an amount at
least equal to 102% of the market value of the loaned securities at the
inception of each loan. This collateral must be maintained at not less than 100%
of the market value of the loaned securities during the period of each loan. For
the year ended December 31, 1996, the Fund received securities lending fees of
$89,879 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
F12
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
Code of 1986, as amended ("Code"). It is also the intention of the Fund to make
distributions sufficient to avoid imposition of any excise tax under Section
4982 of the Code. Therefore, no provision has been made for Federal taxes on
income, capital gains, and unrealized appreciation of securities held, or for
excise tax on income and capital gains.
(J) DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders are recorded by the Fund on the ex-date. Income
and capital gain distributions are determined in accordance with Federal income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund and timing differences.
(K) FOREIGN SECURITIES
There are certain additional considerations and risks associated with investing
in foreign securities and currency transactions that are not inherent in
investments of domestic origin. These risks of investing in foreign markets may
include foreign currency exchange rate fluctuations, perceived credit risk,
adverse political and economic developments and possible adverse foreign
government intervention.
(L) RESTRICTED SECURITIES
The Fund is permitted to invest in privately placed restricted securities. These
securities may by resold in transactions exempt from registration or to the
public if the securities are registered. Disposal of these securities may
involve time-consuming negotiations and expense, and prompt sale at an
acceptable price may be difficult.
(M) INDEXED SECURITIES
The Fund may invest in indexed securities whose value is linked either directly
or indirectly to changes in foreign currencies, interest rates, equities,
indices, or other reference instruments. Indexed securities may be more volatile
than the reference instrument itself, but any loss is limited to the amount of
the original investment.
(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. On
December 31, 1996, the Fund borrowed $2,000,000 at a money market rate.
For the year ended December 31, 1996, the weighted average outstanding daily
balance of bank loans (based on the number of days the loans were outstanding)
was $2,000,000 with a weighted average interest rate of 8%. Interest incurred on
this loan for the year ended December 31, 1996 was $444.
2. RELATED PARTIES
Chancellor LGT Asset Management, Inc. 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 to the Manager at the following annualized rates: 0.975% on
the first $500 million of average daily net assets of the Fund; 0.95% on the
next $500 million; 0.925% of the next $500 million and 0.90% on amounts
thereafter. These fees are computed daily and paid monthly, and are subject to
reduction in any period to the extent that the Fund's expenses (exclusive of
brokerage commissions, taxes, interest, distribution-related expenses and
extraordinary expenses) exceed the most stringent limits prescribed by the laws
or regulations of any state in which the Fund's shares are offered for sale,
based on the average net asset value of the Fund.
GT Global, Inc. ("GT Global"), an affiliate of 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 $47,700
of such sales charges. Purchases of Class A shares exceeding $500,000 may be
subject to a contingent deferred sales charge ("CDSC") upon redemption, in
accordance with the Fund's current prospectus. GT Global collected such CDSCs in
the amount of $18,349 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 CDSCs, in accordance with the Fund's current
prospectus. During the year ended December 31, 1996, GT Global collected such
CDSCs in the amount of $330,744. In addition, GT Global makes ongoing
shareholder servicing and trail commission payments to dealers whose clients
hold Class B shares.
Pursuant to Rule 12b-1 under the 1940 Act, the Company's Board of Trustees has
adopted separate distribution plans with respect to the Fund's Class A shares
("Class A Plan") and Class B shares ("Class B Plan"), pursuant to which the Fund
reimburses GT Global for a portion of its shareholder servicing and distribution
expenses. Under the Class A Plan, the Fund may pay GT Global a service fee at
the annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class A shares for GT Global's expenditures incurred in servicing and
maintaining shareholder accounts, and may pay GT Global a distribution fee at
the annualized rate of up to 0.35% of the average daily net assets of the Fund's
Class A shares, less any amounts paid by the Fund as the aforementioned service
fee, for its expenditures incurred in providing services as distributor. All
expenses for which GT Global is reimbursed under the Class A Plan will have been
incurred within one year of such reimbursement.
Pursuant to the Fund's Class B Plan, the Fund may pay GT Global a service fee at
the annualized rate of up to 0.25% of the average daily
F13
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
net assets of the Fund's Class B shares for its expenditures incurred in
servicing and maintaining shareholder accounts, and may pay GT Global a
distribution fee at the annualized rate of up to 0.75% of the average daily net
assets of the Fund's Class B shares for GT Global's expenditures incurred in
providing services as distributor. Expenses incurred under the Class B Plan in
excess of 1.00% annually may be carried forward for reimbursement in subsequent
years as long as that Plan continues in effect.
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%, 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 is also reimbursed by the
Funds 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 the Manager, 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 $36,975,149 and $63,613,560, respectively. There were no
purchases or sales of U.S. government obligations by the Fund during the year.
F14
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
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................................................. 39,042,903 $423,073,924 42,162,424 $ 483,616,630
Shares issued in connection with reinvestment of
distributions............................................. 225,741 2,221,785 899,831 9,789,980
----------- ------------ ------------- -------------
39,268,644 425,295,709 43,062,255 493,406,610
Shares repurchased.......................................... (42,853,058) (464,603,203) (41,032,648) (470,692,845)
----------- ------------ ------------- -------------
Net increase (decrease)..................................... (3,584,414) $(39,307,494) 2,029,607 $ 22,713,765
----------- ------------ ------------- -------------
----------- ------------ ------------- -------------
YEAR ENDED YEAR ENDED
DECEMBER 31, 1996 DECEMBER 31, 1995
------------------------- ----------------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------ ----------- ------------ ------------- -------------
Shares sold................................................. 7,303,169 $ 77,038,650 5,971,262 $ 67,899,245
Shares issued in connection with reinvestment of
distributions............................................. 111,715 1,070,181 340,110 3,629,261
----------- ------------ ------------- -------------
7,414,884 78,108,831 6,311,372 71,528,506
Shares repurchased.......................................... (7,859,944) (82,438,811) (4,758,650) (53,997,274)
----------- ------------ ------------- -------------
Net increase (decrease)..................................... (445,060) $ (4,329,980) 1,552,722 $ 17,531,232
----------- ------------ ------------- -------------
----------- ------------ ------------- -------------
JUNE 1, 1995
(COMMENCEMENT OF SALE OF
YEAR ENDED SHARES)
DECEMBER 31, 1996 TO DECEMBER 31, 1995
------------------------- ----------------------------
ADVISOR CLASS SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------ ----------- ------------ ------------- -------------
Shares sold................................................. 666,196 $ 7,296,458 55,192 $ 604,443
Shares issued in connection with reinvestment of
distributions............................................. 1,759 17,394 5,231 57,021
----------- ------------ ------------- -------------
667,955 7,313,852 60,423 661,464
Shares repurchased.......................................... (676,463) (7,409,460) (9,811) (118,234)
----------- ------------ ------------- -------------
Net increase (decrease)..................................... (8,508) $ (95,608) 50,612 $ 543,230
----------- ------------ ------------- -------------
----------- ------------ ------------- -------------
</TABLE>
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 $54,225 under these arrangements.
- --------------
FEDERAL TAX INFORMATION (UNAUDITED):
Pursuant to section 852 of the Internal Revenue Code, the GT Global Japan Growth
Fund designates $3,387,112 as a capital gain dividend for the fiscal year ended
December 31, 1996.
F15
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
NOTES
- --------------------------------------------------------------------------------
<PAGE>
GT GLOBAL JAPAN GROWTH FUND
GT GLOBAL MUTUAL FUNDS
GT GLOBAL OFFERS A BROAD RANGE OF MUTUAL FUNDS TO COMPLEMENT MANY INVESTORS'
PORTFOLIOS. FOR MORE INFORMATION AND A PROSPECTUS ON ANY OF THE GT GLOBAL
MUTUAL FUNDS, PLEASE CONTACT YOUR INVESTMENT COUNSELOR OR CALL GT GLOBAL
DIRECTLY AT 1-800-824-1580. THE PROSPECTUS CONTAINS MORE COMPLETE
INFORMATION, INCLUDING CHARGES, EXPENSES AND RISKS. INVESTORS SHOULD READ
THE PROSPECTUS CAREFULLY BEFORE INVESTING.
GROWTH FUNDS
/ / GLOBALLY DIVERSIFIED FUNDS
GT GLOBAL WORLDWIDE GROWTH FUND
Invests around the world, including the U.S.
GT GLOBAL INTERNATIONAL GROWTH FUND
Provides portfolio diversity by investing outside the U.S.
GT GLOBAL EMERGING MARKETS FUND
Gives access to the growth potential of developing economies
/ / GLOBAL THEME FUNDS
GT GLOBAL HEALTH CARE FUND
Invests in growing health care industries worldwide
GT GLOBAL TELECOMMUNICATIONS FUND
Invests in companies worldwide that develop, manufacture, or sell
telecommunications services or equipment
GT GLOBAL INFRASTRUCTURE FUND
Seeks companies that build, improve, or maintain a country's infrastructure
GT GLOBAL FINANCIAL SERVICES FUND
Focuses on the worldwide opportunities from the demand for financial services
and products
GT GLOBAL NATURAL RESOURCES FUND
Concentrates on companies that own, explore, or develop natural resources
GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
Invests in companies that manufacture, market, retail, or distribute consumer
products or services
/ / REGIONALLY DIVERSIFIED FUNDS
GT GLOBAL NEW PACIFIC GROWTH FUND
Offers access to the emerging and established markets of the Pacific Rim,
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 JAPAN GROWTH FUND
JAPAR702M
