<PAGE>
LGT ASSET MANAGEMENT
OVER 25 YEARS
OF INVESTING
WORLDWIDE
GT GLOBAL
STRATEGIC
INCOME FUND
SEMIANNUAL REPORT
APRIL 30, 1996
[LOGO]
<PAGE>
TABLE
OF CONTENTS
<TABLE>
<S> <C>
Report from the Fund
Managers and Key
Portfolio Holdings... 1
Report of Independent
Accountants.......... F1
Financial
Statements........... F2
</TABLE>
<PAGE>
GT GLOBAL STRATEGIC INCOME FUND
PORTFOLIO SUMMARY
INVESTMENT OBJECTIVE
The Fund primarily seeks high current income and, secondarily, capital
appreciation. It invests mainly in debt securities of issuers in the U.S.,
developed foreign countries and emerging markets. The Fund selects debt
securities from those issued by governments, their agencies and
instrumentalities, central banks, commercial banks and other corporate
entities.
PERFORMANCE SUMMARY
GT Global Strategic Income Fund
JP Morgan Global Govt Bond Index
Salomon World Govt Bond Index
GT GLOBAL STRATEGIC JP Morgan Global Salomon World
INCOME FUND Govt Bond Index Govt Bond Index
------------------- ---------------- ---------------
3.29.88 9525 10000 10000
9525 10021 10027
9542 9975 9978
9525 9868 9884
9425 9780 9669
9346 9704 9610
9279 9635 9502
9414 9875 9748
9705 10264 10198
9713 10353 10353
9636 10292 10248
9592 10190 10099
9416 10173 10106
9461 10087 9965
9630 10254 10097
9755 10143 9884
10043 10374 10082
10389 10787 10542
10134 10468 10188
10116 10633 10380
10366 10770 10467
10440 10866 10563
10616 10992 10692
10247 10829 10552
10172 10712 10389
10200 10646 10286
10103 10605 10254
10190 10944 10596
10443 11142 10790
10846 11470 11127
10629 11381 11040
10677 11487 11163
11229 11942 11662
11429 12151 11856
11506 12286 11973
11772 12565 12272
11721 12575 12276
11429 12182 11831
11597 12329 12013
11545 12340 11997
11229 12176 11872
11446 12433 12126
11683 12691 12361
12239 13155 12845
12095 13284 12980
12239 13501 13182
13322 14183 13868
8.31.91 13027 13905 13622
12856 13864 13546
12494 13737 13403
12401 13851 13497
12864 14244 13912
13110 14633 14301
13334 14955 14635
13686 15353 15045
13572 15338 15195
13440 14955 14782
13237 14690 14547
13490 14829 14634
13666 15080 14888
14210 15323 15181
14735 15558 15414
15096 15842 15739
15435 15943 15897
16127 15955 15863
16694 15962 15908
17293 16435 16387
17427 16608 16581
18410 16600 16553
18357 16479 16434
19419 16647 16574
19589 16804 16708
17588 16620 16598
15893 16543 16575
15603 16531 16594
16129 16394 16448
15880 16589 16685
16034 16744 16818
16280 16701 16760
16483 16785 16881
16489 17036 17152
16292 16821 16916
15370 16860 16963
15017 17201 17319
14986 17644 17762
15020 18542 18817
15743 18838 19164
16424 19364 19705
16424 19484 19821
16423 19577 19867
16439 19033 19185
16830 19461 19613
16993 19651 19759
17408 19871 19983
17991 20117 20192
18743 19910 19943
18036 19794 19841
18187 19764 19813
4.30.96 18579 19691 19734
The chart above shows the performance of the GT Global Strategic Income Fund,
Class A shares, since the Fund's inception versus the various indices shown
above. This represents a cumulative return of 85.79% and an average annual
total return of 7.95% 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 10/22/92 would have been valued at
$13,100 on 4/30/96. This figure reflects the maximum applicable contingent
deferred sales charge (5% in the first year, decreasing to 0% after six
years). A $10,000 investment in Advisor Class shares at inception on 6/1/95
would have been worth $11,358. Investors should note that the Fund is a
professionally managed mutual fund while the indices are unmanaged, do not
incur expenses and are not available for investment.
AVERAGE ANNUAL TOTAL RETURNS+
APRIL 30, 1996
SHARE CLASS WITHOUT SALES CHARGE++ WITH SALES CHARGE
---------------------------- ----------------------------
1 YEAR 5 YEAR LIFE OF FUND 1 YEAR 5 YEAR LIFE OF FUND
------ ------ ------------ ------ ------ ------------
CLASS A* 18.01 9.88 8.61 12.41 8.82 7.95
CLASS B* 17.11 N/A 8.63 12.11 N/A 7.97
ADVISOR CLASS** N/A N/A 13.58 N/A N/A N/A
HISTORICAL PERFORMANCE++
ANNUAL RETURNS
1988 1989 1990 1991 1992 1993 1994 1995
---- ---- ---- ---- ---- ---- ---- ----
CLASS A 1.16* 10.17 8.39 15.78 1.27 43.95 -20.85 17.06
CLASS B N/A N/A N/A N/A -.69* 43.10 -21.29 16.28
* The Fund began operations on March 29, 1988; Class B shares commenced
on October 22, 1992.
** The Fund began offering Advisor Class shares on June 1, 1995. Advisor
Class shares are not sold directly to the general public and are only
available through certain employee benefit plans, financial institutions
and other entities that have entered into specific agreements with GT
Global. Please see the "Alternative Purchase Plan" section in the
Fund's prospectus.
+ Figures assume reinvestment of all dividends and capital gain
distributions at net asset value.
++ The above 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.
The above data represent past performance of the Fund's shares, which
does not guarantee future results. The investment return and principal
value of an investment in the Fund will fluctuate, so that an investor's
shares, when redeemed, may be worth more or less than their original cost.
1
<PAGE>
INTERVIEW WITH THE PORTFOLIO MANAGERS RALF LOCHMULLER AND SIMON NOCERA
Q HOW DID THE FUND PERFORM?
A For the six months ended April 30, 1996, the Fund's total return was 9.33%
for Class A shares (4.14% including the maximum 4.75% sales charge) and 8.86%
for Class B shares (3.86% including the maximum 5% contingent deferred sales
charge). Total return over the same investment period was 0.20% for the J.P.
Morgan Global Government Bond1 Index and 21.34% for the J.P. Morgan Emerging
Markets Brady Bond Index (EMBI).(2)
Q WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE?
A Global bond markets rallied strongly throughout most of 1995 due to
weakening economic growth. However, at the start of 1996 concerns about
stronger economic growth in the three core markets - the U.S., Germany and
Japan - caused global bond yields to rise sharply. The largest increase in
yields was in the U.S., where stronger employment raised investors' fears
about wage inflation.
The increase in foreign bond yields was generally less than U.S. yields. More
importantly, though, the Japanese yen and the core European currencies
weakened significantly against the dollar. Hence, the returns of some of the
major bond markets in U.S. dollar terms were very poor.
The environment for the higher-yielding markets was much more friendly.
Moderate inflation rates and low economic activities, as well as an increased
investor appetite for yield, led to strong outperformance by higher-yielding
European markets, such as Italy and Spain, and emerging markets. The Fund
benefited from its roughly 45% exposure to these markets over the period.
Q SINCE THE FUND'S LARGEST INVESTMENT IN ANY ONE
ASSET CLASS WAS IN U.S. TREASURIES, WHAT KIND OF
IMPACT HAVE THE RECENT CORRECTIONS HAD ON THE
FUND'S PERFORMANCE?
A Fortunately, we were able to reduce the negative influence of the increase
in U.S. yields somewhat by decreasing the interest sensitivity of the U.S.
weighting. We did so by switching from longer to shorter duration bonds. The
Fund was also more than compensated by the positive performance of
higher-yielding assets.
Q HOW DID THE CORRECTIONS AFFECT THE EMERGING FIXED
INCOME PORTION OF THE PORTFOLIO?
A The February correction in U.S. treasuries of roughly 150 basis points
(100 bps equal 1%) interrupted the rally in emerging fixed income markets.
Another correction took place in March but, once again, emerging fixed income
markets recovered and recouped most of their March losses, despite U.S.
treasuries' increases in yield. We believe this recovery reflects increasing
recognition of the outstanding value in emerging fixed income markets. The
Fund's performance followed these developments quite closely and enjoyed
increasing returns until mid-February, when gains were reversed due to the
rise in U.S. yields. We believe that investors began to refocus on emerging
market fundamentals and recognize the value to be found in these markets, and
that this positively affected the Fund's performance, which began to
strengthen again beginning mid-March.
Q EMERGING MARKETS COMPOSED SOME 45% OF THE
FUND'S ASSET ALLOCATION DURING THE PERIOD. HOW
WOULD YOU CHARACTERIZE THE PERFORMANCE OF THESE
FIXED INCOME MARKETS?
A Overall, emerging fixed income markets have done very well. After the
Mexican peso devaluation in December 1994, the gradual return to stability
prompted investors to move into higher-yielding markets against a backdrop of
stable and rallying U.S. treasuries. Then, toward the end of 1995, a major
rally in emerging fixed income markets occurred, based, we believe, primarily
on improved emerging market fundamentals; from November 1995 to mid-February
1996, emerging fixed income markets, based on the J.P. Morgan EMBI rose close
to 25%.
As the effects of the Mexican crisis were absorbed, emerging market
fundamentals, in our opinion, have been significantly improved by strict
adherence to critical reform programs. The two economies which suffered the
most, Mexico and Argentina, seem to be demonstrating positive signs of
economic growth. Elsewhere, while some uncertainties remain about Brazil's
commitment to reform, we believe most of the bad news has already been priced
into the market. As a result, with a fairly large spread, many investors are
returning. Finally, a significant event for the emerging fixed income markets
was the rerating of Polish bonds to investment grade - a first for Brady
bonds.
Q ABOUT A FIFTH OF THE FUND'S ASSETS ARE INVESTED IN
CORE EUROPEAN MARKETS. WHAT IS DRIVING BOND
MARKETS IN THIS REGION?
A The fundamental situation in Europe is different than in the U.S. In the
U.S. there are clear signs of improvement in economic activity, whereas the
European economies are still weak, with low inflation and tight fiscal
policy, creating a bond- friendly environment. However, we believe the most
important development is the strong political momentum behind the European
Monetary Union, which has increased investors' appetites for risk, leading
them to favor European high yielders such as Italy and Spain.
Q HAS YOUR STRATEGY CHANGED SINCE LAST OCTOBER?
A The Fund's underlying exposure, which is underweighted in the U.S. against
the European market, remains in place. However, in comparison to last
October, we are positioned more defensively with regard to interest rate risk
and have reduced maturities in the U.S. and Japan.
CONTINUED P.3
2
<PAGE>
INTERVIEW WITH THE PORTFOLIO MANAGERS CONTINUED
Across emerging debt markets, we decreased our allocations to South Africa
and Bulgaria, and have been increasing our exposure to Russia over the last
month, primarily as a result of stronger fundamentals. Regardless of how
strong the Russian informal economy is, statistics on the official economy
indicate the picture is much improved. Expectations are that GDP will be flat
to a possible increase of up to 3%, compared to a contraction of 5% in 1995.
Inflation is coming down, the ruble is stable, and a fairly successful fiscal
program has been implemented, supported by a stronger monetary policy. The
economy seems to have bottomed and is actually beginning to rise and we
believe policies are being implemented in a much more efficient way.
Moreover, Russia's external credit indicators are better than those of some
other markets.
Based on where Russia is trading now, the implied spread over U.S. treasuries
is 2400 bps, while Bulgaria (a country with negative economic growth) is
trading at 1400 bps. Given that type of value, we have raised our Russian
debt position from 5% to approximately 10% over the last month.
We also increased our allocation to Brazilian debt. Despite Brazil's slow
progress toward political and economic reform, we believe it is poised for
outperformance compared to other Latin American countries, particularly since
the market has already priced in much of the bad news. We believe the key is
that a long-term sustainable growth rate does not necessarily need to be
achieved overnight; the government has other options and means at its
disposal. So, given progress made toward privatization and the decline in
inflation, which means real interest rates are coming down (thereby lessening
the government's burden to service their ballooning debt), we feel the fiscal
situation is going to improve. In our opinion, Brazil will continue to grow
and maintain low inflation, making it an attractive country for fixed income
investments.
Q WHAT'S YOUR LONG-TERM OUTLOOK?
A We anticipate U.S. economic growth to demonstrate strong results over the
second quarter, leading us to expect some further weakness in U.S. treasuries
in the short term. However, we think that much of the bad news is already
priced in, so a further back-up in yields should be rather limited. Longer
term, we believe 7% nominal yields for U.S. treasuries presents fair value,
assuming an inflation rate of 3.25%, leading to attractive real yields of
3.75%. Nevertheless, in our opinion, more attractive opportunities exist
elsewhere. In the developed markets, the UK, Italy and Denmark offer value
and improving fundamentals. In the emerging markets, as we mentioned, we are
positive on the opportunities for Russian and Brazilian debt.
ABOUT THE PORTFOLIO MANAGERS
RALF LOCHMULLER - Chief Investment Officer of Core Market Debt for LGT Asset
Management since 1996; Previously, he was head of Portfolio Management for a
subsidiary of Liechtenstein Global Trust and also held a number of positions
of increasing responsibility for LGT Asset Management since 1988. Prior to
working for LGT Asset Management, Mr. Lochmuller was a head of the German
fixed income securities trading desk at Chase Bank in Frankfurt and a bond
trader at Westfalenbank AG.
SIMON NOCERA - Chief Investment Officer of Emerging Market Debt for LGT Asset
Management since 1996; Portfolio Manager and Economist since 1992. Previous
to working for LGT Asset Management, Mr. Nocera was Senior Vice President,
and Director of Global Fixed Income Research for the Putnam Companies from
1991-1992 and Economist for the International Monetary Fund from 1986-1991.
(1) The J.P. Morgan Global Government Bond Index is an arithmetic
average, weighted by market value, of government bonds from 13 major bond
markets. It includes the effect of reinvested coupons and is measured in
U.S. dollars. The Fund has changed benchmarks from indices provided by
Salomon Brothers to indices provided by J.P. Morgan. Because the J.P.
Morgan indices use weightings based on liquidity, we consider them a
better reflection of the investment opportunities.
(2) The J.P. Morgan EMBI (Brady) is an arithmetic average, weighted by
market value, of Brady bonds from nine emerging bond markets. It includes
the effect of reinvested coupons and is measured in U.S. dollars.
The indices are not available for investment and do not incur sales charges
and professional management fees.
3
<PAGE>
ASSET ALLOCATION
STRUCTURED NOTES 0.6%
CORPORATE BONDS 2.4%
SOVEREIGN DEBT 5.6%
SHORT-TERM & OTHER 10.7%
GOVERNMENT & GOV'T AGENCY OBLIGATIONS 80.7%
Allocations will change based on current market conditions.
GEOGRAPHIC ALLOCATION OF NET ASSETS
APRIL 30, 1996 APRIL 30, 1995
-------------- --------------
ARGENTINA 6.0% 6.4%
AUSTRALIA 0.7% 4.5%
BRAZIL 4.0% 4.3%
BULGARIA 1.4% 3.7%
CANADA 1.8% -
COLOMBIA 0.2% -
COSTA RICA 1.3% 0.8%
DENMARK 0.8% 5.0%
ECUADOR 2.8% 2.0%
FRANCE 3.1% 4.6%
GERMANY 4.5% 8.5%
HONK KONG - 0.1%
INDONESIA 1.5% -
IRELAND - 2.7%
ITALY 5.6% 7.2%
MEXICO 7.3% 1.2%
MOROCCO 2.5% 4.2%
NEW ZEALAND 1.0% 3.5%
NIGERIA 2.7% 2.9%
PANAMA 2.1% -
PHILIPPINES 2.5% -
POLAND 3.7% 3.4%
RUSSIA 4.1% 0.8%
SPAIN 5.4% 6.5%
SWEDEN 1.3% 1.6%
SUPRANATIONAL - 4.6%
THAILAND 0.2% -
UNITED KINGDOM 5.5% 4.9%
UNITED STATES & OTHER 24.6% 15.2%
URUGUAY 0.2% 0.1%
VENEZUELA 3.2% 1.3%
4
<PAGE>
GT GLOBAL
STRATEGIC
INCOME FUND
FINANCIAL
STATEMENTS
<PAGE>
GT GLOBAL STRATEGIC INCOME FUND
REPORT OF
INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders of the GT Global Strategic Income Fund and Board of
Directors of G.T. Investment Funds, Inc.:
We have audited the accompanying statement of assets and liabilities of GT
Global Strategic Income Fund, one of the funds organized as a series of G.T.
Investment Funds, Inc., including the portfolio of investments, as of April 30,
1996, the related statement of operations for the six months then ended, the
statements of changes in net assets for the six months then ended and for the
year ended October 31, 1995, and the financial highlights for the six months
ended April 30, 1996 and for each of the five years in the period ended October
31, 1995. 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 April
30, 1996 by correspondence with the custodians 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 Strategic Income Fund as of April 30, 1996, the results of its operations
for the six months then ended, the changes in its net assets for the six months
then ended and for the year ended October 31, 1995, and the financial highlights
for the six months ended April 30, 1996 and for each of the five years in the
period ended October 31, 1995, in conformity with generally accepted accounting
principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
JUNE 14, 1996
F1
<PAGE>
GT GLOBAL STRATEGIC INCOME FUND
PORTFOLIO OF INVESTMENTS
April 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT VALUE ASSETS
- ---------------------------------------------------------- -------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Government & Government Agency Obligations (80.7%)
Argentina (5.1%)
Republic of Argentina:
Floating Rate Bond, 6.3125% due 3/31/05+ ........... USD 17,622,000 $ 13,480,830 2.6
Par Bond, 5.25% due 3/31/23++ ...................... USD 11,100,000 6,049,500 1.2
BOCON Pre 4, 5.42188% due 9/1/02+ .................. USD 4,920,000 4,468,590 0.9
Discount Bond, 6.5625% due 3/31/23+ ................ USD 2,725,000 1,887,063 0.4
Australia (0.7%)
Australian Government, 9.75% due 3/15/02 ............. AUD 4,497,000 3,721,832 0.7
Brazil (3.5%)
Federal Republic of Brazil:
Earned Interest Bond, 6.5% due 4/15/06+ ............ USD 11,575,000 8,804,234 1.7
Discount Bond, 6.5% due 4/15/24+ ................... USD 9,065,000 6,141,538 1.2
C Bond, 4.5% due 4/15/14 (Effective rate at period
end is 6.6044%, including "payment-in-kind"
bonds.)[.] ++ ..................................... USD 5,474,931 3,291,802 0.6
Bulgaria (1.4%)
Bulgaria:
Discount Bond Series A, 6.25% due 7/28/24 -
Euro+ ............................................. USD 6,970,000 3,502,425 0.7
Past Due Interest Bond (IAB), 6.25% due 7/28/11 -
Euro+ ............................................. USD 7,583,000 3,412,350 0.7
Past Due Interest Bond (IAB), 6.25% due 7/28/11 -
144A+ {.} ......................................... USD 446,554 200,949 --
Canada (1.8%)
Canadian Government:
8.75% due 12/1/05 .................................. CAD 7,000,000 5,468,155 1.1
8% due 11/1/98 ..................................... CAD 4,500,000 3,427,147 0.7
Colombia (0.2%)
Republic of Colombia, 8.7% due 2/15/16 ............... USD 1,100,000 1,013,045 0.2
Costa Rica (1.3%)
Banco Central de Costa Rica:
Principal Bond Series A, 6.25% due 5/21/10 ......... USD 6,300,000 4,189,500 0.8
Interest Bond Series A, 6.09375% due 5/21/05
(effective maturity date 2/21/04)+ ................ USD 3,116,824 2,789,557 0.5
Denmark (0.8%)
Kingdom of Denmark, 7% due 12/15/04 .................. DKK 23,000,000 3,895,007 0.8
Ecuador (2.8%)
Ecuador:
Past Due Interest Bond, 3% due 2/27/15 - Euro
(Effective rate at period end is 4.34%, including
"payment-in-kind" bonds.)[.] + .................... USD 22,617,426 9,889,745 1.9
Past Due Interest Bond, 3% due 2/27/15 - 144A
(Effective rate at period end is 4.34%, including
"payment-in-kind" bonds.)[.] + {.} ................ USD 10,183,621 4,455,334 0.9
France (3.1%)
France O.A.T., 7.25% due 4/25/06 ..................... FRF 77,550,000 15,921,278 3.1
Germany (4.5%)
Deutschland Republic, 6.25% due 1/4/24 ............... DEM 31,300,000 18,335,896 3.6
Treuhandanstalt, 7.125% due 1/29/03 .................. DEM 6,500,000 4,544,180 0.9
</TABLE>
The accompanying notes are an integral part of the financial statements.
F2
<PAGE>
GT GLOBAL STRATEGIC INCOME FUND
<TABLE>
<CAPTION>
PRINCIPAL MARKET % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT VALUE ASSETS
- ---------------------------------------------------------- -------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Government & Government Agency Obligations (Continued)
Italy (5.6%)
Italian Buoni Poliennali del Tesoro (BTPS), 10.5% due
11/1/00 ............................................. ITL 23,400,000,000 $ 15,777,386 3.1
Republic of Italy, 5.125% due 7/29/03 ................ JPY 1,194,000,000 12,615,688 2.5
Mexico (7.3%)
United Mexican States:
Discount Bond Series C, 6.60938% due 12/31/19+
+/+ ............................................... USD 31,800,000 25,459,875 5.0
Par Bond Series A, 6.25% due 12/31/19+/+ ........... USD 12,000,000 7,920,000 1.5
Par Bond 6.63% due 12/31/19+/+ ..................... FRF 23,500,000 2,774,606 0.5
Par Bond Series B, 6.25% due 12/31/19+/+ ........... USD 2,650,000 1,749,000 0.3
New Zealand (1.0%)
New Zealand Government Bond, 8% due 2/15/01 .......... NZD 8,000,000 5,309,133 1.0
Nigeria (2.7%)
Central Bank of Nigeria, Par Bond, 6.25% due
11/15/20++ +/+ ...................................... USD 26,000,000 13,633,750 2.7
Panama (2.1%)
Panama:
Interest Reduction Bond, When-issued - 3.5% in the
first year of issue, due
6/30/14 - 144A{.} -/- ............................. USD 12,205,000 6,392,369 1.2
Interest Reduction Bond, When-issued - Floating
Rate, due 6/30/16 - 144A{.} -/- ................... USD 8,900,000 4,839,375 0.9
Philippines (2.4%)
Central Bank of the Philippines, Par Bond Series B,
6.25% due 12/1/17++ ................................. USD 15,600,000 12,343,500 2.4
Poland (3.2%)
Poland:
Discount Bond, 6.4375% due 10/27/24 - Euro+ ........ USD 11,000,000 10,223,125 2.0
Past Due Interest Bond, 3.75% due 10/27/14 -
Euro++ ............................................ USD 8,190,000 6,280,706 1.2
Russia (1.0%)
Ministry Finance of Russia, 3% due 5/14/99 ........... USD 7,400,000 5,184,625 1.0
Spain (5.4%)
Kingdom of Spain:
5.75% due 3/23/02 {z} .............................. JPY 1,325,000,000 14,506,029 2.8
10.1% due 2/28/01 .................................. ESP 1,620,000,000 13,525,694 2.6
Sweden (1.3%)
Swedish Government, 13% due 6/15/01 .................. SEK 37,000,000 6,690,822 1.3
United Kingdom (4.9%)
United Kingdom Treasury:
7% due 11/6/01 ..................................... GBP 12,400,000 18,183,553 3.5
7.5% due 12/7/06 ................................... GBP 5,100,000 7,375,677 1.4
United States (15.4%)
United States Treasury Note, 6.875% due
3/31/00 {j} ......................................... USD 66,200,000 67,358,500 13.1
United States Treasury Bond, 6.875% due 8/15/25 ...... USD 12,000,000 11,831,250 2.3
Uruguay (0.2%)
Banco Central del Uruguay, Par Bond Series A, 6.75%
due 2/18/21+/+ ...................................... USD 1,370,000 952,150 0.2
</TABLE>
The accompanying notes are an integral part of the financial statements.
F3
<PAGE>
GT GLOBAL STRATEGIC INCOME FUND
<TABLE>
<CAPTION>
PRINCIPAL MARKET % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT VALUE ASSETS
- ---------------------------------------------------------- -------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Government & Government Agency Obligations (Continued)
Venezuela (3.0%)
Republic of Venezuela:
Debt Conversion Bond, 6.5625% due 12/18/07+ ........ USD 19,750,000 $ 12,936,250 2.5
Discount Bond Series B, 6.5625% due 3/31/20+ +/+ ... USD 2,500,000 1,596,875 0.3
Discount Bond Series A, 6.375% due 3/31/20+ +/+ .... USD 2,000,000 1,277,500 0.2
------------
Total Government & Government Agency Obligations (cost
$415,132,620) ........................................... 415,627,395
------------
Sovereign Debt (5.6%)
Morocco (2.5%)
Kingdom of Morocco, Tranche A Loan Agreement, 6.5938%
due 1/1/09+ ......................................... USD 17,660,000 12,693,125 2.5
Russia (3.1%)
Bank for Foreign Economic Affairs (Vnesheconombank)
Loan Agreement ** -/- ............................... USD 38,955,000 15,752,428 3.1
------------
Total Sovereign Debt (cost $27,727,882) .................. 28,445,553
------------
Corporate Bonds (2.4%)
Argentina (0.3%)
Industrias Metallurgicas Pescarmona S.A. (IMPSA),
11.75% due 3/27/98 - 144A{.} ........................ USD 1,500,000 1,507,500 0.3
Brazil (0.5%)
Banco BCN - BCN Leasing, 11% due 6/9/97 - 144A{.} .... USD 2,500,000 2,525,000 0.5
Indonesia (1.5%)
PT Tjiwi Kimia, 13.25% due 8/1/01 .................... USD 2,770,000 3,040,075 0.6
PT Polysindo EKA Perksada, 13% due 6/15/01 ........... USD 1,700,000 1,797,750 0.4
PT Indah Kiat International Finance, Series B, 11.875%
due 6/15/02 ......................................... USD 1,284,000 1,319,310 0.3
Rapp International Finance, 13.25% due 12/15/05 ...... USD 850,000 857,438 0.2
Philippines (0.1%)
Philippine Long Distance Telephone Co., 10.625% due
6/2/04 .............................................. USD 700,000 763,000 0.1
------------
Total Corporate Bonds (cost $11,903,424) ................. 11,810,073
------------
Structured Notes (0.6%)
Argentina (0.6%)
Stripped Republic of Argentina Par Spread Linked Note,
6% due 1/23/97 -144A (Issued by Internationale
Nederlanden Capital Holdings Corp. The principal of
the Note is linked to the spread between the internal
rate of return of the Republic of Argentina Par Bond
due 3/21/23, minus the yield to maturity of U.S.
Treasury Bond, 6.5% due 8/15/05. The initial spread
was 8.9%.)
(cost $2,795,000) {.} ............................... USD 2,795,000 2,891,875 0.6
------------ -----
TOTAL FIXED INCOME INVESTMENTS (cost $457,558,926) ....... 458,774,896 89.3
------------ -----
</TABLE>
The accompanying notes are an integral part of the financial statements.
F4
<PAGE>
GT GLOBAL STRATEGIC INCOME FUND
<TABLE>
<CAPTION>
UNDERLYING
NOMINAL MARKET % OF NET
OPTIONS CURRENCY AMOUNT VALUE ASSETS
- ---------------------------------------------------------- -------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Republic of Brazil Par Bond Call Option, strike 56.9375,
expires 5/6/96 ........................................ USD 5,000,000 -- --
GOVERNMENT & GOVERNMENT AGENCY OBLIGATIONS
Republic of Venezuela Debt Conversion Bond Call Option,
strike 64, expires 6/17/96 ............................ USD 36,000,000 $ 1,056,960 0.2
GOVERNMENT & GOVERNMENT AGENCY OBLIGATIONS
------------ -----
TOTAL OPTIONS (cost $1,048,000) .......................... 1,056,960 0.2
------------ -----
<CAPTION>
PRINCIPAL MARKET % OF NET
SHORT-TERM INVESTMENTS CURRENCY AMOUNT VALUE ASSETS
- ---------------------------------------------------------- -------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Commercial Paper - Indexed (0.6%)
United Kingdom (0.6%)
National Westminster Bank PLC, Currency-linked CD,
14.0165% due 8/20/96 (cost $3,500,000) .............. USD 3,500,000 3,310,713 0.6
------------
Treasury Bills (0.5%)
Poland (0.5%)
Treasury Bill, effective yield 22.45%, due 7/31/96
(cost $2,549,227) ................................... PLZ 7,100,000 2,529,609 0.5
------------
Commercial Paper - Discounted (0.2%)
Thailand (0.2%)
Multi Credit Corp. (Bill of Exchange), effective yield
9.2% due 7/18/96 (cost $776,234) .................... THB 20,000,000 776,816 0.2
------------ -----
TOTAL SHORT-TERM INVESTMENTS (cost $6,825,461) ........... 6,617,138 1.3
------------ -----
<CAPTION>
MARKET % OF NET
REPURCHASE AGREEMENT VALUE ASSETS
- ---------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated April 30, 1996, with State Street Bank & Trust
Company, due May 1, 1996, for an effective yield of
5.3% collateralized by $49,885,000 U.S. Treasury Notes,
6.625% due 3/31/97 (market value of collateral is
$50,584,604, including accrued interest). (cost
$49,599,301) ......................................... 49,599,301 9.7
------------ -----
TOTAL INVESTMENTS (cost $515,031,688) * .................. 516,048,295 100.5
Other Assets and Liabilities ............................. (2,436,964) (0.5)
------------ -----
NET ASSETS ............................................... $513,611,331 100.0
------------ -----
------------ -----
</TABLE>
- --------------
+ The coupon rate shown on floating rate note represents the rate at
period end.
-/- Non-income producing security.
** Underlying loan agreement currently in default.
{.} Security exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers.
++ The coupon rate shown on step-up coupon bond represents the rate at
period end.
[.] Bond pays stated or additional interest with "payment-in-kind"
(PIK) bonds.
+/+ Issued with detachable warrants or value recovery rights. The
current market value of each warrant or right is zero.
{j} Security is segregated as collateral for when-issued securities and
written futures held by the Fund. See Note 1 of Notes to Financial
Statements.
{z} Security is segregated as collateral for Japanese Yen forward
contracts opened in connection with planned purchases of
securities. See Note 1 of Notes to Financial Statements.
* For Federal income tax purposes, cost is $517,732,143 and
appreciation (depreciation) is as follows:
Unrealized appreciation: $ 8,859,467
Unrealized depreciation: (10,543,315)
-------------
Net unrealized depreciation: $ (1,683,848)
-------------
-------------
The accompanying notes are an integral part of the financial statements.
F5
<PAGE>
GT GLOBAL STRATEGIC INCOME FUND
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
APRIL 30, 1996
<TABLE>
<CAPTION>
UNREALIZED
MARKET VALUE CONTRACT DELIVERY APPRECIATION
CONTRACTS TO BUY: (U.S. DOLLARS) PRICE DATE (DEPRECIATION)
- ---------------------------------------- -------------- ----------- -------- --------------
<S> <C> <C> <C> <C>
Deutsche Marks.......................... 5,228,413 1.48038 05/13/96 $ (175,623)
Deutsche Marks.......................... 9,868,842 1.50818 05/13/96 (143,441)
Deutsche Marks.......................... 2,692,633 1.46772 05/13/96 (114,442)
Deutsche Marks.......................... 2,222,076 1.47230 05/13/96 (87,236)
Deutsche Marks.......................... 6,289,467 1.51434 05/13/96 (65,460)
French Francs........................... 3,266,565 5.03910 06/04/96 (77,286)
Japanese Yen............................ 5,770,105 104.83100 06/18/96 46,607
Japanese Yen............................ 6,145,162 105.00200 06/18/96 59,564
New Zealand Dollars..................... 102,842 1.46929 05/28/96 752
Spanish Pesetas......................... 12,557,609 124.51300 05/07/96 (265,952)
Spanish Pesetas......................... 3,303,185 123.12700 05/07/96 (107,927)
-------------- --------------
Total Contracts to Buy (Payable amount
$58,377,343)......................... 57,446,899 (930,444)
-------------- --------------
THE VALUE OF CONTRACTS TO BUY AS A
PERCENTAGE OF NET ASSETS IS 11.18%
<CAPTION>
CONTRACTS TO SELL:
- ----------------------------------------
<S> <C> <C> <C> <C>
Deutsche Marks.......................... 326,776 1.46950 05/13/96 13,476
Deutsche Marks.......................... 4,058,556 1.47145 05/13/96 161,771
Deutsche Marks.......................... 11,419,847 1.50284 05/13/96 207,153
Deutsche Marks.......................... 15,097,255 1.47159 05/13/96 600,273
Deutsche Marks.......................... 5,711,512 1.51963 07/31/96 5,998
French Francs........................... 16,090,498 5.03050 06/04/96 408,854
New Zealand Dollars..................... 11,819,982 1.49076 05/28/96 (255,390)
Spanish Pesetas......................... 2,785,686 125.66000 05/07/96 33,031
Spanish Pesetas......................... 3,303,185 124.92000 05/07/96 58,967
Spanish Pesetas......................... 4,718,836 125.23500 05/07/96 72,157
Spanish Pesetas......................... 5,053,087 123.12700 05/07/96 165,102
-------------- --------------
Total Contracts to Sell (Receivable
amount $81,856,612).................. 80,385,220 1,471,392
-------------- --------------
THE VALUE OF CONTRACTS TO SELL AS A
PERCENTAGE OF NET ASSETS IS 15.65%
Total Open Forward Foreign Currency
Contracts, Net....................... $ 540,948
--------------
--------------
</TABLE>
- ----------------
See Note 1 to the financial statements.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
WRITTEN FUTURES CONTRACTS OUTSTANDING
APRIL 30, 1996
<TABLE>
<CAPTION>
EXPIRATION NO. OF MARKET
DESCRIPTION DATE CONTRACTS CURRENCY VALUE
- ---------------------------------------- ---------- --------- -------- -----------
<S> <C> <C> <C> <C>
U.S. Treasury 10-Year Note Futures (face
$13,089,500)........................... 6/19/96 122 USD $13,115,000
</TABLE>
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
F6
<PAGE>
GT GLOBAL STRATEGIC INCOME FUND
STATEMENT OF ASSETS
AND LIABILITIES
April 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $515,031,688) (Note 1)........................... $516,048,295
U.S. currency................................................................... $ 206
Foreign currencies (cost $486,550).............................................. 466,070 466,276
---------
Receivable for securities sold............................................................. 33,675,719
Interest and interest withholding tax reclaims receivable.................................. 11,656,860
Receivable for open forward foreign currency contracts, net (Note 1)....................... 540,948
Receivable for Fund shares sold............................................................ 284,779
Receivable for initial & variation margin (Note 1)......................................... 204,352
Cash held as collateral for securities loaned (Note 1)..................................... 28,358,199
------------
Total assets............................................................................. 591,235,428
------------
Liabilities:
Payable for securities purchased........................................................... 46,252,570
Payable for Fund shares repurchased........................................................ 1,467,690
Payable for forward foreign currency contracts -- closed (Note 1).......................... 569,653
Payable for service and distribution expenses (Note 2)..................................... 331,645
Payable for investment management and administration fees (Note 2)......................... 306,904
Payable for printing and postage expenses.................................................. 134,119
Payable for transfer agent fees (Note 2)................................................... 96,715
Payable for professional fees.............................................................. 40,268
Payable for custodian fees (Note 1)........................................................ 25,505
Payable for registration and filing fees................................................... 19,995
Payable for fund accounting fees (Note 2).................................................. 10,504
Payable for Directors' fees and expenses (Note 2).......................................... 1,588
Other accrued expenses..................................................................... 8,742
Collateral for securities loaned (Note 1).................................................. 28,358,199
------------
Total liabilities........................................................................ 77,624,097
------------
Net assets................................................................................... $513,611,331
------------
------------
Class A:
Net asset value and redemption price per share ($171,221,529 DIVIDED BY 15,786,930 shares
outstanding)................................................................................ $ 10.85
------------
------------
Maximum offering price per share (100/95.25 of $10.85) *..................................... $ 11.39
------------
------------
Class B:+
Net asset value and offering price per share ($341,923,844 DIVIDED BY 31,507,228 shares
outstanding)................................................................................ $ 10.85
------------
------------
Advisor Class:
Net asset value, offering price per share, and redemption price per share ($465,958 DIVIDED
BY 42,923 shares outstanding)............................................................... $ 10.86
------------
------------
Net assets consist of:
Paid in capital (Note 4)................................................................... $638,028,919
Undistributed net investment income........................................................ 3,220,531
Accumulated net realized loss on investments and foreign currency transactions............. (129,057,438)
Net unrealized appreciation on translation of assets and liabilities in foreign
currencies................................................................................ 428,212
Net unrealized appreciation of investments................................................. 991,107
------------
Total -- representing net assets applicable to capital shares outstanding.................... $513,611,331
------------
------------
<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.
F7
<PAGE>
GT GLOBAL STRATEGIC INCOME FUND
STATEMENT OF OPERATIONS
Six months ended April 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Interest income................................................................................................ $28,068,435
-----------
Total investment income...................................................................................... 28,068,435
-----------
Expenses:
Service and distribution expenses: (Note 2)
Class A......................................................................................... $ 318,142
Class B......................................................................................... 1,775,314 2,093,456
-----------
Investment management and administration fees (Note 2)......................................................... 1,943,830
Transfer agent fees (Note 2)................................................................................... 538,174
Custodian fees (Note 1)........................................................................................ 149,320
Printing and postage expenses.................................................................................. 83,662
Fund accounting fees (Note 2).................................................................................. 67,463
Audit fees..................................................................................................... 25,298
Registration and filing fees................................................................................... 25,298
Legal fees..................................................................................................... 13,650
Directors' fees and expenses (Note 2).......................................................................... 5,824
Other expenses................................................................................................. 6,732
-----------
Total expenses before reductions............................................................................. 4,952,707
-----------
Expense reductions (Note 1)................................................................................ (40,498)
-----------
Total net expenses........................................................................................... 4,912,209
-----------
Net investment income............................................................................................ 23,156,226
-----------
Net realized and unrealized gain (loss) on investments and foreign currencies: (Note 1)
Net realized gain on investments.................................................................. 28,566,378
Net realized loss on foreign currency transactions................................................ (4,632,685)
-----------
Net realized gain during the period.......................................................................... 23,933,693
Net change in unrealized appreciation on translation of assets and liabilities in foreign
currencies....................................................................................... 3,223,990
Net change in unrealized appreciation of investments.............................................. (3,419,228)
-----------
Net unrealized depreciation during the period................................................................ (195,238)
-----------
Net realized and unrealized gain on investments and foreign currencies........................................... 23,738,455
-----------
Net increase in net assets resulting from operations............................................................. $46,894,681
-----------
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F8
<PAGE>
GT GLOBAL STRATEGIC INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1996 OCTOBER 31, 1995
---------------- ----------------
<S> <C> <C>
Decrease in net assets
Operations:
Net investment income................................................................... $ 23,156,226 $ 54,919,073
Net realized gain (loss) on investments and foreign currency transactions............... 23,933,693 (82,675,607)
Net change in unrealized appreciation (depreciation) on translation of assets and
liabilities in foreign currencies...................................................... 3,223,990 (3,747,114)
Net change in unrealized appreciation (depreciation) of investments..................... (3,419,228) 35,939,954
---------------- ----------------
Net increase in net assets resulting from operations.................................. 46,894,681 4,436,306
---------------- ----------------
Class A:
Distributions to shareholders: (Note 1)
From net investment income.............................................................. (7,144,941) (16,844,112)
Return of capital....................................................................... -- (852,171)
Class B:
Distributions to shareholders: (Note 1)
From net investment income.............................................................. (12,690,211) (27,777,018)
Return of capital....................................................................... -- (1,405,284)
Advisor Class:
Distributions to shareholders: (Note 1)
From net investment income.............................................................. (32,374) (14,952)
From net realized gain on investments................................................... -- (756)
---------------- ----------------
Total distributions................................................................... (19,867,526) (46,894,293)
---------------- ----------------
Capital share transactions: (Note 4)
Increase from capital shares sold and reinvested........................................ 102,027,248 194,343,201
Decrease from capital shares repurchased................................................ (161,902,671) (339,216,716)
---------------- ----------------
Net decrease from capital share transactions.......................................... (59,875,423) (144,873,515)
---------------- ----------------
Total decrease in net assets.............................................................. (32,848,268) (187,331,502)
Net assets:
Beginning of period..................................................................... 546,459,599 733,791,101
---------------- ----------------
End of period........................................................................... $ 513,611,331* $ 546,459,599**
---------------- ----------------
---------------- ----------------
<FN>
- --------------
* Includes undistributed net investment income of $3,220,531.
** Includes accumulated net investment loss of $68,169.
</TABLE>
The accompanying notes are an integral part of the financial statements.
F9
<PAGE>
GT GLOBAL STRATEGIC INCOME FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS A+
-----------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED OCTOBER 31,
APRIL 30, ----------------------------------------------------------
1996 (E) 1995 (E) 1994 1993 (E) 1992 1991
----------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net asset value, beginning of
period....................... $ 10.32 $ 10.88 $ 13.61 $ 11.25 $ 10.91 $ 11.20
----------- ---------- ---------- ---------- ---------- ----------
Income from investment
operations:
Net investment income....... 0.48 0.97 0.79 0.96 0.86 0.84* *
Net realized and unrealized
gain (loss) on
investments................ 0.47 (0.69) (2.14) 2.85 0.31 (0.02)
----------- ---------- ---------- ---------- ---------- ----------
Net increase (decrease)
from investment
operations............... 0.95 0.28 (1.35) 3.81 1.17 0.82
----------- ---------- ---------- ---------- ---------- ----------
Distributions to shareholders:
From net investment
income..................... (0.42) (0.80) (0.79) (0.96) (0.83) (0.60)
From net realized gain on
investments................ -- -- (0.38) (0.37) -- (0.51)
Return of capital........... -- (0.04) (0.21) -- -- --
From sources other than net
investment income.......... -- -- -- (0.12) -- --
----------- ---------- ---------- ---------- ---------- ----------
Total distributions....... (0.42) (0.84) (1.38) (1.45) (0.83) (1.11)
----------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of
period....................... $ 10.85 $ 10.32 $ 10.88 $ 13.61 $ 11.25 $ 10.91
----------- ---------- ---------- ---------- ---------- ----------
----------- ---------- ---------- ---------- ---------- ----------
Total investment return (c)... 9.33%(b) 3.06% (10.44)% 37.0% 11.1% 7.7%
Ratios and supplemental data:
Net assets, end of period (in
000's)....................... $ 171,222 $ 188,165 $ 275,241 $ 287,870 $ 83,849 $ 55,967
Ratio of net investment income
to average net assets........ 9.04%(a) 9.64% 6.74% 7.2% 7.6% 7.2%**
Ratio of expenses to average
net assets:
With expense reductions
(Note 1)................... 1.40%(a) 1.42% 1.40% 1.7% 1.8% 1.9%**
Without expense
reductions................. 1.41%(a) 1.45% --%* --%* --%* --%*
Ratio of interest expenses to
average net assets........... N/A N/A 0.10% N/A N/A N/A
Portfolio turnover rate++++... 183%(a) 238% 583% 310% 418% 630%
</TABLE>
- ----------------
+ All capital shares issued and outstanding as of October 21, 1992, were
reclassified as Class A shares.
++ Commencing October 22, 1992, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
(a) Annualized
(b) Not Annualized
(c) Total investment return does not include sales charges.
(d) Ratios are not meaningful due to the short period of operation of
Class B shares.
(e) These selected per share data were calculated based upon weighted
average shares outstanding during the period.
* Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
* * Includes reimbursement by LGT Asset Management, Inc. of Fund operating
expenses of $0.01 for the year ended October 31, 1991. Without such
reimbursement, the expense ratio would have been 1.92% and the ratio
of net investment income to average net assets would have been 7.16%
for the year ended October 31, 1991 (See Note 2).
The accompanying notes are an integral part of the financial statements.
F10
<PAGE>
GT GLOBAL STRATEGIC INCOME FUND
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS B++ ADVISOR CLASS+++
------------------------------------------------------------- -------------------------
SIX MONTHS OCTOBER 22, SIX MONTHS JUNE 1,
ENDED YEAR ENDED OCTOBER 31, 1992 TO ENDED 1995 TO
APRIL 30, ---------------------------------- OCTOBER 31, APRIL 30, OCTOBER 31,
1996 (E) 1995 (E) 1994 1993 (E) 1992 1996 (E) 1995 (E)
----------- ---------- ---------- ---------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating
Performance:
Net asset value, beginning of
period....................... $ 10.33 $ 10.88 $ 13.60 $ 11.24 $ 11.36 $ 10.33 $ 10.32
----------- ---------- ---------- ---------- ------------ ----------- ------------
Income from investment
operations:
Net investment income....... 0.45 0.91 0.73 0.89 0.01 0.52 0.41
Net realized and unrealized
gain (loss) on
investments................ 0.45 (0.69) (2.14) 2.85 (0.13) 0.45 (0.04)
----------- ---------- ---------- ---------- ------------ ----------- ------------
Net increase (decrease)
from investment
operations............... 0.90 0.22 (1.41) 3.74 (0.12) 0.97 0.37
----------- ---------- ---------- ---------- ------------ ----------- ------------
Distributions to shareholders:
From net investment
income..................... (0.38) (0.73) (0.72) (0.89) -- (0.44) (0.34)
From net realized gain on
investments................ -- -- (0.38) (0.37) -- -- --
Return of capital........... -- (0.04) (0.21) -- -- -- (0.02)
From sources other than net
investment income.......... -- -- -- (0.12) -- -- --
----------- ---------- ---------- ---------- ------------ ----------- ------------
Total distributions....... (0.38) (0.77) (1.31) (1.38) -- (0.44) (0.36)
----------- ---------- ---------- ---------- ------------ ----------- ------------
Net asset value, end of
period....................... $ 10.85 $ 10.33 $ 10.88 $ 13.60 $ 11.24 $ 10.86 $ 10.33
----------- ---------- ---------- ---------- ------------ ----------- ------------
----------- ---------- ---------- ---------- ------------ ----------- ------------
Total investment return (c)... 8.86%(b) 2.48% (11.02)% 36.2% (1.1)%(b) 9.51%(b) 3.72 %(b)
Ratios and supplemental data:
Net assets, end of period (in
000's)....................... $ 341,924 $ 357,852 $ 458,550 $ 310,431 $ 533 $ 466 $ 443
Ratio of net investment income
to average net assets........ 8.39%(a) 8.99% 6.09% 6.5% N/A(d) 9.39%(a) 9.99 %(a)
Ratio of expenses to average
net assets:
With expense reductions
(Note 1)................... 2.05%(a) 2.07% 2.05% 2.4% N/A(d) 1.05%(a) 1.07 %(a)
Without expense
reductions................. 2.06%(a) 2.10% --%* --%* -- %* 1.06%(a) 1.10 %(a)
Ratio of interest expenses to
average net assets........... N/A N/A 0.10% N/A N/A N/A N/A
Portfolio turnover rate++++... 183%(a) 238% 583% 310% 418 % 183%(a) 238 %
</TABLE>
- ----------------
+ All capital shares issued and outstanding as of October 21, 1992, were
reclassified as Class A shares.
++ Commencing October 22, 1992, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
(a) Annualized
(b) Not Annualized
(c) Total investment return does not include sales charges.
(d) Ratios are not meaningful due to the short period of operation of
Class B shares.
(e) These selected per share data were calculated based upon weighted
average shares outstanding during the period.
* Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
* * Includes reimbursement by LGT Asset Management, Inc. of Fund operating
expenses of $0.01 for the year ended October 31, 1991. Without such
reimbursement, the expense ratio would have been 1.92% and the ratio
of net investment income to average net assets would have been 7.16%
for the year ended October 31, 1991 (See Note 2).
The accompanying notes are an integral part of the financial statements.
F11
<PAGE>
GT GLOBAL STRATEGIC INCOME FUND
NOTES TO
FINANCIAL STATEMENTS
April 30, 1996
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
GT Global Strategic Income Fund ("Fund") is a separate series of G.T. Investment
Funds, Inc. ("Company"). The Company is organized as a Maryland corporation and
is registered under the Investment Company Act of 1940, as amended ("1940 Act"),
as a non-diversified, open-end management investment company. The Company has
twelve 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 service and 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 in the principal over-the-counter market in which
such securities are traded, as of the close of business on the day the
securities are being valued, or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by LGT Asset Management, Inc.
("LGT") to be the primary market.
Fixed income investments are valued at the mean of representative quoted bid and
ask prices for such investments or, if such prices are not available, at prices
for investments of comparative maturity, quality and type; however, when LGT
deems it appropriate, prices obtained for the day of valuation from a bond
pricing service will be used. Short-term investments with a maturity of 60 days
or less are valued at amortized cost adjusted for foreign exchange translation
and market fluctuation, if any.
Investments for which market quotations are not readily available (including
restricted securities which are subject to limitations on their sale) are valued
at fair value as determined in good faith by or under the direction of the
Company's Board of Directors.
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 Directors.
(B) FOREIGN CURRENCY TRANSLATION
The accounting records of the Fund are maintained in U.S. dollars. The market
values of foreign securities, currency holdings, and 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 or 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 difference 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 period
end, resulting from changes in exchange rates.
(C) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by the Fund, it is the Fund's
policy to always receive, as collateral, United States government securities or
other high quality debt securities of which the value, including accrued
interest, is at least equal to the amount to be repaid to the Fund under each
agreement at its maturity.
(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
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GT GLOBAL STRATEGIC INCOME FUND
equal to the difference between the value at the time it was opened and the
value at the time it was closed. Forward Contracts involve market risk in excess
of the amount shown in the Fund's "Statement of Assets and Liabilities." The
Fund could be exposed to risk if a counterparty is unable to meet the terms of
the contract or if the value of the currency changes unfavorably. The Fund may
enter into Forward Contracts in connection with planned purchases or sales of
securities, or to hedge against adverse fluctuations in exchange rates between
currencies. At April 30, 1996, the Fund had segregated securities valued at
$14,506,029 to cover Forward Contracts in connection with planned purchases of
securities.
(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 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 portfolio hold the
underlying security and, for a put, requires the Fund to set aside cash, U.S.
government securities, or other liquid, high-grade debt securities in an amount
not less than the exercise price or otherwise provide adequate cover at all
times while the put option is outstanding. The Fund may use options to manage
its exposure to the bond 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 bond market and
to fluctuations in currency values or interest rates. At April 30, 1996, the
Fund had segregated cash of $204,352 and securities valued at $13,736,250 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 April 30, 1996, stocks with an aggregate value of approximately $25,901,358
were on loan to brokers. The loans were secured by cash collateral of
$28,358,199 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
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GT GLOBAL STRATEGIC INCOME FUND
must be maintained at not less than 100% of the market value of the loaned
securities during the period of each loan. For the period ended April 30, 1996,
the Fund received fees of $40,498 which were used to reduce the Fund's custodian
fees.
(I) TAXES
It is the policy of the Fund to meet the requirements for qualification as a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended ("Code"). It is also the intention of the Fund to make distributions
sufficient to avoid imposition of any excise tax under Section 4982 of the Code.
Therefore, no provision has been made for Federal taxes on income, capital
gains, or unrealized appreciation of securities held, and excise tax on income
and capital gains. The Fund currently has a capital loss carryforward of
$151,873,284, of which $77,456,193 expires in 2002 and $74,417,091 expires in
2003.
(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. 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) INDEXED SECURITIES
The Fund may invest in indexed securities whose value is linked either directly
or indirectly to changes in foreign currences, 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.
(M) RESTRICTED SECURITIES
The Fund is permitted to invest in privately placed restricted securities. These
securities may be resold in transactions exempt from registration or to the
public if the securities are registered. Disposal of these securities may
involve time-consuming negotiations and expense, and prompt sale at an
acceptable price may be difficult.
(N) SECURITIES PURCHASED ON A WHEN-ISSUED OR FORWARD COMMITMENT BASIS
The Fund may trade securities on a when-issued or forward commitment basis, with
payment and delivery scheduled for a future date. These transactions are subject
to market fluctuations and are subject to the risk that the value at delivery
may be more or less than the trade date purchase price. Although the Fund will
generally purchase these securities with the intention of acquiring such
securities, they may sell such securities before the settlement date. These
securities are identified on the accompanying Portfolio of Investments. The Fund
has set aside liquid high grade debt securities valued at $11,090,750 as
collateral for these purchase commitments.
2. RELATED PARTIES
LGT is the Fund's investment manager and administrator. The Fund pays investment
management and administration fees to LGT at the annualized rate of 0.725% on
the first $500 million of average daily net assets of the Fund; 0.70% on the
next $1 billion; 0.675% on the next $1 billion and 0.65% 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. ("GT Global"), an affiliate of LGT, serves as the Fund's
distributor. The Fund offers Class A, Class B, and Advisor Class shares for
purchase.
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with the schedule included in the Fund's current
prospectus. GT Global collects the sales charges imposed on sales of Class A
shares, and reallows a portion of such charges to dealers through which the
sales are made. For the period ended April 30, 1996, GT Global retained $13,582
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 $10,099 for the period ended April 30, 1996. GT Global also makes
ongoing shareholder servicing and trail commission payments to dealers whose
clients hold Class A shares.
Class B shares are not subject to initial sales charges. When Class B shares are
sold, GT Global from its own resources pays commissions to dealers through which
the sales are made. Certain redemptions of Class B shares made within six years
of purchase are subject to CDSCs, in accordance with the Fund's current
prospectus. For the period ended April 30, 1996, GT Global collected CDSCs in
the amount of $972,300. 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 Directors has
adopted separate plans of distribution 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
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GT GLOBAL STRATEGIC INCOME FUND
GT Global a distribution fee at the annualized rate of up to 0.35% of the
average daily net assets of the Fund's Class A shares, less any amounts paid by
the Fund as the aforementioned service fee, for GT Global's expenditures
incurred in providing services as distributor. All expenses for which GT Global
is reimbursed under the Class A Plan will have been incurred within one year of
such reimbursement.
Pursuant to the Fund's Class B Plan, the Fund may pay GT Global a service fee at
the annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class B shares for GT Global's expenditures incurred in servicing and
maintaining shareholder accounts, and may pay GT Global a distribution fee at
the annualized rate of up to 0.75% of the average daily net assets of the Fund's
Class B shares for GT Global's expenditures incurred in providing services as
distributor. Expenses incurred under the Class B Plan in excess of 1.00%
annually may be carried forward for reimbursement in subsequent years as long as
that Plan continues in effect.
LGT and GT Global voluntarily have undertaken to limit the Fund's expenses
(exclusive of brokerage commissions, taxes, interest, and extraordinary
expenses) to the maximum annual rate of 1.85%, 2.50%, and 1.50% of the average
daily net assets of the Fund's Class A, Class B, and Advisor Class shares,
respectively. If necessary, this limitation will be effected by waivers by LGT
of investment management and administration fees, waivers by GT Global of
payments under the Class A Plan and/or Class B Plan and/or reimbursements by LGT
or GT Global of portions of the Fund's other operating expenses.
GT Global Investor Services, Inc. ("GT Services"), an affiliate of LGT and GT
Global, is the transfer agent of the Fund.
LGT is the pricing and accounting agent for the Fund. The monthly fee for these
services to LGT is a percentage, not to exceed 0.03% annually, of the Fund's
average daily net assets. The annual fee rate is derived by applying 0.03% to
the first $5 billion of assets of all registered mutual funds advised by LGT and
0.02% to the assets in excess of $5 billion and allocating the result according
to the Fund's average daily net assets.
The Company pays each of its Directors who is not an employee, officer or
director of LGT, GT Global or GT Services $5,000 per year plus $300 for each
meeting of the board or any committee thereof attended by the Director.
3. PURCHASES AND SALES OF SECURITIES
For the period ended April 30, 1996, purchases and sales of investment
securities by the Fund, other than U.S. government obligations and short-term
investments, aggregated $409,124,947 and $496,043,748, respectively. Purchases
and sales of U.S. government obligations by the Fund aggregated $54,898,219 and
$68,274,336, respectively.
4. CAPITAL SHARES
At April 30, 1996, there were 6,000,000,000 shares of the Company's common stock
authorized, at $0.0001 par value. Of this amount, 200,000,000 were classified as
shares of the Fund; 400,000,000 were classified as shares of GT Global
Government Income Fund; 200,000,000 were classified as shares of GT Global
Health Care Fund; 200,000,000 were classified as shares of GT Global Emerging
Markets Fund; 200,000,000 were classified as shares of GT Global Currency Fund
(inactive); 200,000,000 were classified as shares of GT Global Growth & Income
Fund; 200,000,000 were classified as shares of GT Global Small Companies Fund
(inactive); 200,000,000 were classified as shares of GT Global Latin America
Growth Fund; 400,000,000 were classified as shares of GT Global
Telecommunications Fund; 200,000,000 were classified as shares of GT Global High
Income Fund; 200,000,000 were classified as shares of GT Global Financial
Services Fund; 200,000,000 were classified as shares of GT Global Natural
Resources Fund; 200,000,000 were classified as shares of GT Global
Infrastructure Fund; and 200,000,000 were classified as shares of GT Global
Consumer Products and Services Fund. The shares of each of the foregoing series
of the Company were divided equally into two classes, designated Class A and
Class B common stock. With respect to the issuance of Advisor Class shares,
100,000,000 shares were classified as shares of each of the fourteen series of
the Company and designated as Advisor Class common stock. 1,400,000,000 shares
remain unclassified. Transactions in capital shares of the Fund were as follows:
F15
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GT GLOBAL STRATEGIC INCOME FUND
CAPITAL SHARE TRANSACTIONS
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1996 OCTOBER 31, 1995
----------------------------------- -----------------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- --------------- ------------------ --------------- ------------------
<S> <C> <C> <C> <C>
Shares sold............................. 3,024,133 $ 32,602,294 10,413,395 $ 105,118,727
Shares issued in connection with
reinvestment of distributions......... 438,218 4,687,502 1,180,205 11,913,775
--------------- ------------------ --------------- ------------------
3,462,351 37,289,796 11,593,600 117,032,502
Shares repurchased...................... (5,900,884) (63,414,587) (18,672,585) (187,700,412)
--------------- ------------------ --------------- ------------------
Net decrease............................ (2,438,533) $ (26,124,791) (7,078,985) $ (70,667,910)
--------------- ------------------ --------------- ------------------
--------------- ------------------ --------------- ------------------
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1996 OCTOBER 31, 1995
----------------------------------- -----------------------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- --------------- ------------------ --------------- ------------------
<S> <C> <C> <C> <C>
Shares sold............................. 5,029,792 $ 54,749,547 5,950,544 $ 60,333,373
Shares issued in connection with
reinvestment of distributions......... 650,584 6,963,751 1,633,228 16,496,489
--------------- ------------------ --------------- ------------------
5,680,376 61,713,298 7,583,772 76,829,862
Shares repurchased...................... (8,820,451) (95,487,885) (15,079,063) (151,484,130)
--------------- ------------------ --------------- ------------------
Net decrease............................ (3,140,075) $ (33,774,587) (7,495,291) $ (74,654,268)
--------------- ------------------ --------------- ------------------
--------------- ------------------ --------------- ------------------
<CAPTION>
JUNE 1, 1995
SIX MONTHS ENDED (COMMENCEMENT OF SALE OF SHARES) TO
APRIL 30, 1996 OCTOBER 31, 1995
----------------------------------- -----------------------------------
ADVISOR CLASS SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- --------------- ------------------ --------------- ------------------
<S> <C> <C> <C> <C>
Shares sold............................. 277,578 $ 2,999,253 44,461 $ 465,129
Shares issued in connection with
reinvestment of distributions......... 2,308 24,901 1,535 15,708
--------------- ------------------ --------------- ------------------
279,886 3,024,154 45,996 480,837
Shares repurchased...................... (279,844) (3,000,199) (3,115) (32,174)
--------------- ------------------ --------------- ------------------
Net increase............................ 42 $ 23,955 42,881 $ 448,663
--------------- ------------------ --------------- ------------------
--------------- ------------------ --------------- ------------------
</TABLE>
F16
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GT GLOBAL STRATEGIC INCOME FUND
NOTES
- --------------------------------------------------------------------------------
<PAGE>
GT GLOBAL STRATEGIC INCOME FUND
NOTES
- --------------------------------------------------------------------------------
<PAGE>
GT GLOBAL STRATEGIC INCOME FUND
NOTES
- --------------------------------------------------------------------------------
<PAGE>
GT GLOBAL STRATEGIC INCOME 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 CONSUMER PRODUCTS AND SERVICES FUND
Invests in companies that manufacture, market, retail, or distribute consumer
products or services
GT GLOBAL FINANCIAL SERVICES FUND
Focuses on the worldwide opportunities from the demand for financial services
and products
GT GLOBAL HEALTH CARE FUND
Invests in growing health care industries worldwide
GT GLOBAL INFRASTRUCTURE FUND
Seeks companies that build, improve or maintain a country's infrastructure
GT GLOBAL NATURAL RESOURCES FUND
Concentrates on companies that own, explore or develop natural resources
GT GLOBAL TELECOMMUNICATIONS FUND
Invests in companies worldwide that develop, manufacture or sell
telecommunications services or equipment
/ / 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 GROWTH FUND
Concentrates on small and medium-sized companies in the U.S.
GT GLOBAL AMERICA VALUE FUND
Concentrates on equity securities of large cap 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 STRATEGIC INCOME FUND
STRSAR606042M
