<PAGE>
CHANCELLOR LGT
ASSET MANAGEMENT
OVER 25 YEARS
OF INVESTING
WORLDWIDE
GT GLOBAL
EMERGING
MARKETS
FUND
ANNUAL REPORT
OCTOBER 31, 1996
[LOGO]
<PAGE>
TABLE
OF CONTENTS
<TABLE>
<S> <C>
Message from the
Chairman............. 1
Report from the Fund
Managers and Key
Portfolio Holdings... 2
Report of Independent
Accountants.......... F1
Financial
Statements........... F2
The views of the Fund's manage-
ment and portfolio holdings
described in this report are as
of October 31, 1996; these views
and portfolio holdings may have
changed.
</TABLE>
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
MESSAGE FROM THE CHAIRMAN
Dear Investor,
While fiscal 1996 has been a difficult year for the Fund, we remain enthusiastic
about the long-term potential of the markets in which the Fund invests.
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, Chancellor merged with LGT Asset Management, the Funds' advisor,
and the combined entities are 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
will 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 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 and 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,
David A. Minella
CHAIRMAN
GT GLOBAL MUTUAL FUNDS
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
INVESTMENT OBJECTIVE
The GT Global Emerging Markets Fund seeks long-term growth of capital. The Fund
primarily invests in equity securities of companies located in emerging markets,
which generally include every country except the U.S., Canada, Japan, Australia,
New Zealand and most of the countries of western Europe.
Performance Summary
GT Global MSCI Emerging
Emerging Markets Fund Markets Global Index IFC Global Composite
5/18/92 9525 10000 10000
5/31/92 9550 9974 9845
6/30/92 9358 9273 9470
7/31/92 9333 9063 9068
8/31/92 9100 8680 8886
9/30/92 8942 8500 8689
10/31/92 9258 9033 9129
11/30/92 9075 9091 9080
12/31/92 9034 9181 9167
1/31/93 9269 9136 9105
2/28/93 9529 9573 9537
3/31/93 9630 10019 9729
4/30/93 9915 10171 9902
5/31/93 10159 10311 9979
6/30/93 10176 10402 10195
7/31/93 10386 10530 10340
8/31/93 10956 11065 10812
9/30/93 11150 11420 11170
10/31/93 12107 12295 12038
11/30/93 12736 12992 12875
12/31/93 14857 15494 15354
1/31/94 15556 15922 15811
2/28/94 15053 15436 15272
3/31/94 13739 14153 14003
4/30/94 13270 14241 14082
5/31/94 13526 14689 14453
6/30/94 12945 14390 14187
7/31/94 13858 15353 15087
8/31/94 15787 16931 16730
9/30/94 16197 17390 17254
10/31/94 16051 16966 16889
11/30/94 15522 16172 16166
12/31/94 14299 15329 15273
1/31/95 12809 13649 13537
2/28/95 11988 13407 13367
3/31/95 12139 13595 13313
4/30/95 12711 13873 13523
5/31/95 13130 14361 14034
6/30/95 12934 14325 14007
7/31/95 13344 14543 14273
8/31/95 13077 14061 13718
9/30/95 12898 14216 13801
10/31/95 12354 13744 13394
11/30/95 11791 13400 13013
12/31/95 12318 13919 13391
1/31/96 13282 14551 14083
2/29/96 13237 14366 13994
3/31/96 13318 14569 14216
4/30/96 13612 15612 15273
5/31/96 13630 15310 14979
6/30/96 13371 15511 15198
7/31/96 12675 14458 14250
8/31/96 13014 14777 14567
9/30/96 13112 14905 14697
10/31/96 12728 14483 14359
The chart above shows the performance of the GT Global Emerging Markets Fund,
Class A shares, since the Fund's inception, versus the various indices shown
above. This represents a cumulative return of 27.28% and an average annual total
return of 5.56% 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 $12,692 on October 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 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 $9,769
on October 31, 1996.
AVERAGE ANNUAL TOTAL RETURNS%(1)
October 31, 1996
<TABLE>
<CAPTION>
Share Class Without Sales Charge(2) With Sales Charge
1-Year Life of Fund 1-Year Life of Fund
<S> <C> <C> <C> <C>
Class A(3) 2.96 6.72 -1.93 5.56
Class B(3) 2.49 7.58 -2.51 6.88
Advisor Class(4) 3.6 -1.63 N/A N/A
</TABLE>
HISTORICAL PERFORMANCE%(2)
Annual Returns (per calendar year)
1992 1993 1994 1995
Class A -5.16(3) 64.46 -3.75 -13.86
Class B N/A 53.92(3) -4.28 -14.34
(1) Figures assume reinvestment of all dividends and capital gain distributions
at net asset value.
(2) This performance data does 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 May 18, 1992; 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
JIM BOGIN
Q HOW HAS THE FUND PERFORMED?
A For the 12 months ended October 31, 1996, the Fund's total return was 2.96%
for Class A shares (-1.93% including the maximum 4.75% sales charge) and 2.49%
for Class B shares (-2.51% including the maximum 5% contingent deferred sales
charge). Total return for the International Financial Corp. (IFC) Global
Composite Index was 7.20%, while the total return for the Morgan Stanley Capital
International (MSCI) Emerging Markets Index was 5.38% for the period(5). The IFC
Index is substantially similar to the MSCI Index, except that it is concentrated
in larger companies than the MSCI Index.
Relative to the MSCI Emerging Markets Global Index, the Fund has done well by
being underweighted in South Korea and Israel and overweighted in Zimbabwe and
Hong Kong. However, ultimately the Fund suffered primarily as a result of its
country selection in Asia, and particularly from having no exposure to Taiwan,
the region's top performing market.
Q WHICH MARKETS AND COMPANIES BENEFITED THE FUND OVER THE PERIOD?
A In general, the Fund was helped by general strength in Latin America.
Kimberly-Clark de Mexico, the country's largest producer of toilet tissue,
notebooks and feminine hygiene products, and the Fund's main holding in Mexico,
enjoyed healthy returns.
The Fund also benefited from its holdings in Brazil, where the overall market
ended well for the year, but individual results were very mixed. Brazilian state
companies continue to be a focus of market attention, in the hope of
privatization and reform. The real economy has been somewhat weak, so profit
growth in most of the private sector is weak. We have increased our weighting in
Petrobras, the large state oil company-and a world leader in deep offshore
drilling-and we continue to own banks and Brahma, the beer company, as well as
holdings in the electric sector.
Q WHAT ACCOUNTS FOR THE DIVERGENT RETURNS ACROSS THE ASIAN MARKETS?
A Performance has varied a great deal by market. Hong Kong, the Philippines, and
Malaysia have done very well; Thailand, India and South Korea have had a
miserable year. Strengthening Hong Kong property values and the downward trend
in Chinese inflation, coupled with relaxation measures on the part of
authorities, have had a positive impact on Hong Kong companies. The improvement
in liquidity has driven the earnings acceleration of Hong Kong-listed companies
that derive an increasingly large proportion of their earnings from China. The
Philippine market has strengthened as investors have focused on the positive
aspects of the Ramos administration's economic reforms, and the Malaysian market
outperformed other regional markets largely as a result of improving trade
figures and continued news of corporate restructurings. Despite this good news,
the Fund has lowered its exposure to the Malaysian market. We feel that
valuations are high in most sectors. Meanwhile, the Thai market suffered on the
back of political instability and concerns over the health of its banking and
finance industry. South Korea has been particularly hard hit in the downturn in
demand for electronics and disappointing trade figures. Finally, the Indian
market felt the weight of a continued foreign selloff of shares.
Q THE FUND HAS A HEAVY EMPHASIS IN HONG KONG. WHAT IS YOUR VIEW ON THE HANDOVER
BACK TO THE CHINESE IN 1997?
A The handover has been so well publicized that, in our opinion, it will be a
relatively unexciting event in the stock market. There are fears that Hong Kong
will become less efficient and more corrupt. Whether or not that occurs,
currently we are still finding very attractive companies there and maintain our
weighting. The Chinese have a strong interest in seeing that the transition
progresses smoothly.
Q WHAT TYPES OF COMPANIES DO YOU LOOK FOR?
A In general, we are expanding the Fund's focus on individual stocks. We plan to
increase the average size of the holdings, while reducing the actual number of
securities.
Specifically, we look for growth at a reasonable price on a stock-by-stock basis
and lean toward stocks with healthy financials (not too much debt). We also like
a company with a strong niche or product; something that makes it more
attractive than others and will promote its future prosperity. Fallen angels-
good companies with suffering stock prices due to temporary fundamental
problems-additionally present attractive buying opportunities.
Q WHAT SPECIFIC INDUSTRIES OR SECTORS DO YOU FIND ATTRACTIVE?
A We find attractively priced banks all over the world and own large positions
in HSBC, the Hong Kong-based bank, Bladex, a Panamanian trade bank doing
business throughout Latin America, two banks in Portugal, two in Greece, and the
State Bank of India, in addition to a
Continued p.4
(5) The MSCI Emerging Markets Global and IFC Global Composite Indices are
arithmetic averages, weighted by market value, of the performance of securities
listed on the exchanges of 26 and 31 countries, respectively. They include the
effect of reinvested dividends and are measured in U.S. dollars.
The indices are unmanaged, not available for direct investment and do not incur
sales charges and professional management fees.
3
<PAGE>
INTERVIEW WITH THE PORTFOLIO MANAGER CONTINUED
number of Brazilian banks. The Fund has good exposure to beer and soft drinks
through its holdings of Brahma in Brazil, Delta in Zimbabwe and Panamerican
Beverages in Mexico (the Coca-Cola bottler with exposure to Mexico, Brazil,
Colombia, and Costa Rica).
Q WHAT POTENTIAL RISKS CONCERN YOU?
A There is always the concern that an eventual fall of the U.S. market could
impact about half of our markets unfavorably, but we believe due to our
diversity and exposure to 20 markets or more, we are not overexposed to any one
equity market.
Q WHERE DO YOU EXPECT TO FIND OPPORTUNITIES IN THE NEXT 6-12 MONTHS?
A Emerging markets have been weak over the past couple of years, due mainly to
sluggish exports in Asia and the devalued Mexican peso. India and Korea, in
particular, have fallen for political and economic reasons, to a point where
their markets are looking like bargains. We believe they will pick up
eventually.
ALLOCATION OF NET ASSETS
Capital Goods 4.1%
Multi Industry/Misc. 4.8%
Services 5.0%
Consumer Non-Durables 9.1%
Materials/Basic Industry 13.8%
Energy 16.4%
Finance 28.2%
Other 18.6%
Allocations will change based on current market conditions.
A complete listing may be found in the Financial Statements section of this
report.
ABOUT THE PORTFOLIO MANAGERS
JONATHAN CHEW - Portfolio Manager for Chancellor LGT Asset Management since
1990; Portfolio Manager for LGT Asset Management (Hong Kong) since 1988.
Previously, Mr. Chew was an Investment Analyst for T.C. Coombs from 1979-1988.
He received his B.Sc. from Loughborough University.
JAMES M. BOGIN - Portfolio Manager for Chancellor LGT Asset Management since
1993. Previous to working for LGT Asset Management, Mr. Bogin was a Fund Manager
for Nomura Investment Management from 1989-1993. He received his B.A. from
Harvard College.
JOHN R. LEGAT - Portfolio Manager for Chancellor LGT Asset Management since
1983. He received his B.A. from Portsmouth Polytechnic in the UK.
GEOGRAPHIC ALLOCATION OF NET ASSETS %
October 31, 1996 October 31, 1995
Argentina 0.3 1.5
Australia - 0.3
Bolivia - 1.8
Brazil 11.6 6.5
Chile 0.9 2.2
Colombia 0.8 0.4
Czech Republic 3.0 1.8
Ghana 0.5 -
Greece 3.2 2.1
Hong Kong 12.4 8.6
Hungary 0.2 -
India 5.2 7.5
Indonesia 0.6 -
Israel 6.0 -
Korea 5.2 14.1
Malaysia 3.2 6.5
Mexico 8.2 10.9
Pakistan 0.6 1.7
Panama 3.3 0.1
Peru - 0.5
Philippines 0.6 0.1
Poland 1.2 -
Portugal 1.8 -
Russia 2.4 -
Singapore - 1.1
South Africa 4.8 18.9
Thailand 1.8 8.3
Turkey 2.1 2.0
United Kingdom - 0.1
United States & Other 16.0 1.1
Venezuela 1.6 0.8
Zimbabwe 2.5 1.1
4
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
<TABLE>
<CAPTION>
% of
KEY PORTFOLIO HOLDINGS(6) Country Net Assets
<S> <C> <C>
BANCO LATINOAMERICANO DE EXPORTACIONES S.A. A specialized multinational bank Panama 3.3
established to finance Latin American and Caribbean foreign trade.
KIMBERLY-CLARK DE MEXICO, S.A. DE C.V. The largest manufacturer of diapers, Mexico 3.3
tissue paper, notebooks and paper in Mexico. The company's management is
conservative and has concentrated on lowering costs every year to retain its
competitive position in the marketplace.
GENERAL MINING UNION CORP. (GENCOR) A diversified international holding company South Africa 3.3
for a group of companies with interests in natural resources.
COMPANHIA ENERGETICA DE MINAS GERAIS (CEMIG) Provides electrical utility services Brazil 3.1
for industrial, residential and rural customers.
HSBC HOLDINGS PLC The holding company for the HSBC Group. The Group is an Hong Kong 2.8
international banking and financial services organization with operations in the
Asia-Pacific region, Europe, the Middle East and the Americas. Services provided
include retail and corporate banking, capital markets and treasury services,
private and investment banking and insurance.
DELTA CORP A brewing conglomerate, which is the country's largest company. Zimbabwe 2.5
TEVA PHARMACEUTICAL INDUSTRIES LTD. Develops, refines and manufactures Israel 2.4
pharmaceuticals and preservatives used in the production of food. The company
also manufactures and sells bulk pharmaceutical chemicals, hospital supplies and
veterinary products. Teva sells its products worldwide.
COMPANHIA CERVEJARIA BRAHMA The largest brewery in Brazil. The company also Brazil 2.4
produces and distributes soft drinks.
BERJAYA SPORTS TOTO BHD. Berjaya Sports Toto Bhd is involved in investment Malaysia 2.2
holding and in the provision of management services. Through subsidiaries, the
company operates Toto betting and has operations in investment holding, property
development and provision of computer services.
ECI TELECOMMUNICATIONS LTD. The worldwide leader in digital circuit multiplication Israel 2.1
equipment (DCME) products which, when attached to various telecom transmission
cables, increase carrying capacity. ECI is also a leader in the development of
products for the SDH fiberoptic environment that multiplex, monitor and manage
high-speed digital transmission of voice and data.
</TABLE>
(6) There is no assurance the Fund will continue to hold these or any other
securities mentioned in this report
5
<PAGE>
GT GLOBAL
EMERGING
MARKETS
FUND
FINANCIAL
STATEMENTS
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
ANNUAL REPORT
To the Shareholders of GT Global Emerging Markets Fund and Board of Directors of
G.T. Investment Funds, Inc.:
We have audited the accompanying statement of assets and liabilities of GT
Global Emerging Markets Fund, one of the funds organized as a series of G.T.
Investment Funds, Inc., including the portfolio of investments, as of October
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 four years in the period
then ended and for the period from May 18, 1992 (commencement of operations) to
October 31, 1992. 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
October 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 Emerging Markets Fund as of October 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 four years in the period then ended and for the period from May 18, 1992
(commencement of operations) to October 31, 1992, in conformity with generally
accepted accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
DECEMBER 13, 1996
F1
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
PORTFOLIO OF INVESTMENTS
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
% OF NET
EQUITY INVESTMENTS COUNTRY SHARES VALUE ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (28.2%)
Banco LatinoAmericano de Exportaciones S.A. (Bladex)
"E"{\/} .................................................. PAN 282,600 $ 14,765,850 3.3
OTHER FINANCIAL
HSBC Holdings PLC ......................................... HK 600,000 12,222,409 2.8
BANKS-MONEY CENTER
State Bank of India Ltd.-/- ............................... IND 1,455,650 9,451,474 2.1
BANKS-REGIONAL
Uniao Bancos Brasileiras "A" Preferred-/- ................. BRZL 331,440,000 9,195,016 2.1
BANKS-MONEY CENTER
Peregrine Investment Holdings Ltd. ........................ HK 5,000,000 8,051,269 1.8
INVESTMENT MANAGEMENT
National Mutual Asia-/- ................................... HK 9,500,000 7,986,601 1.8
INSURANCE-BROKER
Tai Cheug Holdings Co., Ltd. .............................. HK 9,000,000 7,333,445 1.7
REAL ESTATE
Alpha Credit Bank-/- ...................................... GREC 101,660 6,496,666 1.5
BANKS-REGIONAL
Ergo Bank S.A. ............................................ GREC 100,230 5,884,852 1.3
BANKS-REGIONAL
Banco Bradesco S.A. Preferred-/- .......................... BRZL 655,789,125 5,592,050 1.3
BANKS-MONEY CENTER
Bank Gdanski S.A. - GDR{\/} ............................... POL 337,600 5,148,400 1.2
BANKS-REGIONAL
Kookmin Bank-/- ........................................... KOR 249,835 4,982,753 1.1
BANKS-MONEY CENTER
Industrial Finance Corporation of Thailand - Foreign-/- ... THAI 1,435,200 4,222,832 1.0
BANKS-MONEY CENTER
Cho Hung Bank ............................................. KOR 378,660 4,113,102 0.9
BANKS-REGIONAL
Commercial Bank of Korea-/- ............................... KOR 403,350 3,475,467 0.8
BANKS-MONEY CENTER
Korea Exchange Bank ....................................... KOR 341,345 3,443,587 0.8
BANKS-MONEY CENTER
Banco Totta & Acores "B" - Registered-/- .................. PORT 168,400 3,058,716 0.7
BANKS-MONEY CENTER
Banco Ganadero S.A. - ADR{\/} ............................. COL 150,000 2,962,500 0.7
BANKS-REGIONAL
Ayala Land, Inc. "B" ...................................... PHIL 2,680,000 2,859,756 0.6
REAL ESTATE
PSIL Bangkok Bank Co., Ltd. (Entitlement
Certificates){\/} ........................................ THAI 236,000 1,767,640 0.4
OTHER FINANCIAL
Shinhan Bank .............................................. KOR 49,510 986,925 0.2
BANKS-REGIONAL
Finance One Co., Ltd. - Foreign ........................... THAI 126,100 356,187 0.1
SECURITIES BROKER
Housing Development Finance Corp.-/- ...................... IND 272 17,954 --
OTHER FINANCIAL
HDFC Bank Ltd. - Subscription Shares-/- ................... IND 500 532 --
BANKS-MONEY CENTER
------------
124,375,983
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F2
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
% OF NET
EQUITY INVESTMENTS COUNTRY SHARES VALUE ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Energy (16.4%)
Companhia Energetica de Minas Gerais (CEMIG): ............. BRZL -- $ -- 3.1
ELECTRICAL & GAS UTILITIES
Preferred-/- ............................................ -- 235,000,000 7,480,288 --
ADR-/- {\/} ............................................. -- 199,300 6,228,125 --
Petroleo Brasileiro S.A. (Petrobras) Preferred-/- ......... BRZL 73,100,000 9,463,935 2.1
OIL
China Light & Power Co., Ltd. ............................. HK 1,700,000 7,893,478 1.8
ELECTRICAL & GAS UTILITIES
Benton Oil & Gas Co.-/- ................................... US 313,100 7,670,950 1.7
OIL
Czeske Energeticke Zavody (CEZ AS)-/- ..................... CZCH 204,860 7,313,436 1.6
ELECTRICAL & GAS UTILITIES
C.A. La Electricidad de Caracas-/- ........................ VENZ 6,318,778 6,936,554 1.6
ELECTRICAL & GAS UTILITIES
Sasol Ltd. ................................................ SAFR 557,700 6,809,197 1.5
ENERGY SOURCES
Empresa Nacional de Electricidad S.A. - ADR{\/} ........... CHLE 220,800 4,057,200 0.9
ELECTRICAL & GAS UTILITIES
LUKoil Holding - ADR-/- {\/} .............................. RUS 91,000 3,503,500 0.8
GAS PRODUCTION & DISTRIBUTION
Gazprom - 144A ADR{.} {\/} ................................ RUS 123,400 2,313,750 0.5
GAS PRODUCTION & DISTRIBUTION
Centrais Electricas Brasileiras S.A. (Electrobras)-/- ..... BRZL 6,000,000 1,863,136 0.4
ELECTRICAL & GAS UTILITIES
Electricidad de Argentina S.A.(.) -/- {\/} ................ ARG 100,000 1,360,000 0.3
ELECTRICAL & GAS UTILITIES
Pakistan State Oil Co., Ltd. .............................. PAK 42,400 366,029 0.1
OIL
Madras Refineries Ltd.-/- ................................. IND 199,500 189,665 --
OIL
------------
73,449,243
------------
Materials/Basic Industry (13.8%)
Kimberly-Clark de Mexico, S.A. de C.V. "A" ................ MEX 758,400 14,657,357 3.3
PAPER/PACKAGING
General Mining Union Corp. (Gencor) ....................... SAFR 4,161,900 14,467,683 3.3
METALS - NON-FERROUS
Industrias Penoles S.A. "CP"-/- ........................... MEX 2,217,000 8,818,242 2.0
METALS - NON-FERROUS
Pohang Iron & Steel Co., Ltd. ............................. KOR 98,529 6,344,000 1.4
METALS - STEEL
Eregli Demir Ve Lelik Fabrik T.A.S. ....................... TRKY 54,158,851 6,332,887 1.4
METALS - STEEL
PT Tambang Timah - Foreign ................................ INDO 1,846,000 2,774,986 0.6
METALS - STEEL
Cemex, S.A. de C.V. "B" ................................... MEX 720,125 2,590,475 0.6
CEMENT
Perlis Plantations ........................................ MAL 830,000 2,382,225 0.5
CHEMICALS
</TABLE>
The accompanying notes are an integral part of the financial statements.
F3
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
% OF NET
EQUITY INVESTMENTS COUNTRY SHARES VALUE ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Materials/Basic Industry (Continued)
Ashanti Goldfields Co., Ltd. - GDR{\/} .................... GHNA 127,800 $ 2,092,725 0.5
GOLD
Associated Cement Cos., Ltd.-/- ........................... IND 13,536 583,097 0.1
CEMENT
Gujarat Ambuja Cements - GDR-/- {\/} ...................... IND 60,000 465,000 0.1
CEMENT
Engro Chemicals Pakistan Ltd. ............................. PAK 650 2,222 --
CHEMICALS
------------
61,510,899
------------
Consumer Non-Durables (9.1%)
Delta Corp.-/- ............................................ ZBBW 3,500,000 10,916,824 2.5
BEVERAGE-ALCOHOLIC
Companhia Cervejaria Brahma Preferred ..................... BRZL 17,254,543 10,665,468 2.4
BEVERAGES - ALCOHOLIC
Panamerican Beverages, Inc. "A"{\/} ....................... MEX 125,100 5,457,488 1.2
BEVERAGES - NON-ALCOHOLIC
Gruma S.A. "B"-/- ......................................... MEX 1,057,000 4,876,434 1.1
FOOD
Sun Brewing Ltd. - 144A GDR{.} -/- {\/} {::} .............. RUS 500,000 4,750,000 1.1
BEVERAGES - ALCOHOLIC
Hellenic Bottling Co. S.A. ................................ GREC 58,115 1,871,604 0.4
BEVERAGES - NON-ALCOHOLIC
Companhia Tecidos Norte de Mina Preferred ................. BRZL 3,210,000 1,078,020 0.2
TEXTILES & APPAREL
Guinness Malaysia ......................................... MAL 241,000 620,150 0.1
BEVERAGES - ALCOHOLIC
Dhan Fibres Ltd.-/- ....................................... PAK 4,805,000 485,536 0.1
TEXTILES & APPAREL
Mahavir Spinning Mills Ltd.-/- ............................ IND 30 46 --
TEXTILES & APPAREL
Dewan Salman Fibre Ltd.-/- ................................ PAK 4 3 --
TEXTILES & APPAREL
------------
40,721,573
------------
Services (5.0%)
Berjaya Sports Toto Bhd. .................................. MAL 2,610,000 9,815,914 2.2
CONSUMER SERVICES
SPT Telecom-/- ............................................ CZCH 58,510 6,264,188 1.4
TELEPHONE NETWORKS
Amway Asia Pacific Ltd.{\/} ............................... HK 107,900 3,870,913 0.9
WHOLESALE & INTERNATIONAL TRADE
Pakistan Telecommunications Co., Ltd. - GDR-/- {\/} ....... PAK 22,150 1,661,250 0.4
TELEPHONE NETWORKS
Gran Cadena de Almacenes Colombianos S.A. ................. COL 327,960 297,460 0.1
RETAILERS-OTHER
Keppel Philippine Holdings, Inc. "B"-/- ................... PHIL 488,491 81,912 --
TRANSPORTATION - SHIPPING
</TABLE>
The accompanying notes are an integral part of the financial statements.
F4
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
% OF NET
EQUITY INVESTMENTS COUNTRY SHARES VALUE ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (Continued)
Indian Hotels Co., Ltd.-/- ................................ IND 3,000 $ 55,141 --
LEISURE & TOURISM
------------
22,046,778
------------
Multi-Industry/Miscellaneous (4.8%)
Jardine Strategic Holdings Ltd.{\/} ....................... HK 2,215,500 7,222,530 1.6
CONGLOMERATE
Koor Industries Ltd. - ADR{\/} ............................ ISRL 374,900 6,513,888 1.5
CONGLOMERATE
Banco Comercial Portgues "A", Convertible Preferred, 8%
till 6/30/03{\/} ......................................... PORT 99,900 5,082,912 1.1
MISCELLANEOUS
KEC International Ltd.-/- ................................. IND 481,500 922,310 0.2
MISCELLANEOUS
Alarko Holding A.S. ....................................... TRKY 4,357,000 769,868 0.2
MULTI-INDUSTRY
BPL Ltd.-/- ............................................... IND 624,200 641,783 0.1
MISCELLANEOUS
Nicholas Piramel India Ltd.-/- ............................ IND 80,000 250,704 0.1
MISCELLANEOUS
Grasim Industries Ltd. .................................... IND 6,500 76,764 --
MULTI-INDUSTRY
------------
21,480,759
------------
Capital Goods (4.1%)
ECI Telecommunications Ltd.{\/} ........................... ISRL 475,000 9,500,000 2.1
TELECOM EQUIPMENT
Tata Engineering and Locomotive Co., Ltd.-/- .............. IND 532,460 6,164,537 1.4
MACHINERY & ENGINEERING
Netas Telekomunik ......................................... TRKY 8,823,920 2,132,379 0.5
TELECOM EQUIPMENT
Gujarat Telephone Cables-/- ............................... IND 1,417,900 489,275 0.1
TELECOM EQUIPMENT
------------
18,286,191
------------
Health Care (3.5%)
Teva Pharmaceutical Industries Ltd. - ADR{\/} ............. ISRL 256,400 10,736,750 2.4
PHARMACEUTICALS
Ranbaxy Laboratories Ltd.-/- .............................. IND 225,200 3,931,485 0.9
MEDICAL TECHNOLOGY & SUPPLIES
EGIS RT-/- ................................................ HGRY 10,573 652,516 0.2
PHARMACEUTICALS
Core Healthcare-/- ........................................ IND 50 73 --
PHARMACEUTICALS
------------
15,320,824
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F5
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
% OF NET
EQUITY INVESTMENTS COUNTRY SHARES VALUE ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Technology (0.1%)
Himachal Telematics Ltd.-/- ............................... IND 750,000 $ 401,408 0.1
TELECOM TECHNOLOGY
------------ -----
TOTAL EQUITY INVESTMENTS (cost $359,658,653) ................ 377,593,658 85.0
------------ -----
<CAPTION>
PRINCIPAL % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT VALUE ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Corporate Bonds (0.7%)
Malaysia (0.4%)
Aokam Perdana Bhd., Convertible Bond, 3.5% due
6/13/04 ................................................ USD 2,650,000 1,848,375 0.4
Thailand (0.3%)
Bangkok Land Ltd., 3.125% due 3/31/01 ................... CHF 3,250,000 1,158,691 0.3
------------
Total Corporate Bonds (cost $3,095,275) ..................... 3,007,066
------------ -----
TOTAL FIXED INCOME INVESTMENTS (cost $3,095,275) ............ 3,007,066 0.7
------------ -----
TOTAL INVESTMENTS (cost $362,753,928) * .................... 380,600,724 85.7
Other Assets and Liabilities ................................ 63,505,545 14.3
------------ -----
NET ASSETS .................................................. $444,106,269 100.0
------------ -----
------------ -----
</TABLE>
- --------------
-/- Non-income producing security.
{\/} U.S. currency denominated.
{::} See Note 5 of Notes to Financial Statements.
{.} 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.
(.) Restricted securities. At October 31, 1996, the Fund owned the
following restricted security constituting 0.3% of net assets which
may not be publicly sold without registration under the Securities
Act of 1933 (Note 1). Additional information on the restricted
security is as follows:
<TABLE>
<CAPTION>
MARKET
VALUE
PER
DESCRIPTION ACQUISITION DATE SHARES COST SHARE
----------------------------------------------- ----------------- ------ ----------- ------
<S> <C> <C> <C> <C>
Electricidad de Argentina S.A.................. 12/23/93 100,000 $ 1,750,000 $13.60
</TABLE>
* For Federal income tax purposes, cost is $362,948,481 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 46,560,858
Unrealized depreciation: (28,908,615)
-------------
Net unrealized appreciation: $ 17,652,243
-------------
-------------
</TABLE>
Abbreviations:
ADR--American Depository Receipt
GDR--Global Depository Receipt
The accompanying notes are an integral part of the financial statements.
F6
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1996
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at October 31, 1996, was concentrated in the
following countries:
<TABLE>
<CAPTION>
PERCENTAGE OF NET ASSETS {D}
-------------------------------------------
FIXED INCOME,
RIGHTS & SHORT-TERM
COUNTRY (COUNTRY CODE/CURRENCY CODE) EQUITY WARRANTS & OTHER TOTAL
- -------------------------------------- ------ ------------- ---------- -----
<S> <C> <C> <C> <C>
Argentina (ARG/ARS) .................. 0.3 0.3
Brazil (BRZL/BRL) .................... 11.6 11.6
Chile (CHLE/CLP) ..................... 0.9 0.9
Colombia (COL/COP) ................... 0.8 0.8
Czech Republic (CZCH/CSK) ............ 3.0 3.0
Ghana (GHNA/GHC) ..................... 0.5 0.5
Greece (GREC/GRD) .................... 3.2 3.2
Hong Kong (HK/HKD) ................... 12.4 12.4
Hungary (HGRY/HUF) ................... 0.2 0.2
India (IND/INR) ...................... 5.2 5.2
Indonesia (INDO/IDR) ................. 0.6 0.6
Israel (ISRL/ILS) .................... 6.0 6.0
Korea (KOR/KRW) ...................... 5.2 5.2
Malaysia (MAL/MYR) ................... 2.8 0.4 3.2
Mexico (MEX/MXN) ..................... 8.2 8.2
Pakistan (PAK/PKR) ................... 0.6 0.6
Panama (PAN/PND) ..................... 3.3 3.3
Philippines (PHIL/PHP) ............... 0.6 0.6
Poland (POL/PLZ) ..................... 1.2 1.2
Portugal (PORT/PTE) .................. 1.8 1.8
Russia (RUS/SUR) ..................... 2.4 2.4
South Africa (SAFR/ZAR) .............. 4.8 4.8
Thailand (THAI/THB) .................. 1.5 0.3 1.8
Turkey (TRKY/TRL) .................... 2.1 2.1
United States & Other (US/USD) ....... 1.7 14.3 16.0
Venezuela (VENZ/VEB) ................. 1.6 1.6
Zimbabwe (ZBBW/ZWD) .................. 2.5 2.5
------ --- ----- -----
Total ............................... 85.0 0.7 14.3 100.0
------ --- ----- -----
------ --- ----- -----
</TABLE>
- --------------
{d} Percentages indicated are based on net assets of $444,106,269.
The accompanying notes are an integral part of the financial statements.
F7
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
STATEMENT OF ASSETS
AND LIABILITIES
October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $362,753,928) (Note 1).......................... $380,600,724
U.S. currency................................................................. $1,483,057
Foreign currencies (cost $21,506,397)......................................... 21,125,366 22,608,423
----------
Receivable for Fund shares sold........................................................... 30,516,050
Receivable for securities sold............................................................ 24,089,405
Dividends receivable...................................................................... 520,951
Interest receivable....................................................................... 46,642
Unamortized organizational costs (Note 1)................................................. 16,342
Miscellaneous receivable.................................................................. 239
Cash held as collateral for securities loaned (Note 1).................................... 18,390,625
-----------
Total assets............................................................................ 476,789,401
-----------
Liabilities:
Payable for securities purchased.......................................................... 10,019,556
Payable for Fund shares repurchased....................................................... 3,230,169
Payable for investment management and administration fees (Note 2)........................ 374,250
Payable for service and distribution expenses (Note 2).................................... 286,400
Payable for transfer agent fees (Note 2).................................................. 158,743
Payable for printing and postage expenses................................................. 122,207
Payable for professional fees............................................................. 41,737
Payable for custodian fees (Note 1)....................................................... 33,448
Payable for fund accounting fees (Note 2)................................................. 8,886
Payable for registration and filing fees.................................................. 4,773
Payable for Directors' fees and expenses (Note 2)......................................... 2,200
Other accrued expenses.................................................................... 10,138
Collateral for securities loaned (Note 1)................................................. 18,390,625
-----------
Total liabilities....................................................................... 32,683,132
-----------
Net assets.................................................................................. $444,106,269
-----------
-----------
Class A:
Net asset value and redemption price per share ($224,963,980 DIVIDED BY 15,772,254 shares
outstanding)............................................................................... $ 14.26
-----------
-----------
Maximum offering price per share (100/95.25 of $14.26) *.................................... $ 14.97
-----------
-----------
Class B:+
Net asset value and offering price per share ($216,003,768 DIVIDED BY 15,410,508 shares
outstanding)............................................................................... $ 14.02
-----------
-----------
Advisor Class:
Net asset value, offering price per share, and redemption price per share ($3,138,521
DIVIDED BY 218,221 shares outstanding)..................................................... $ 14.38
-----------
-----------
Net assets consist of:
Paid in capital (Note 4).................................................................. $466,990,479
Undistributed net investment income....................................................... 41,480
Accumulated net realized loss on investments and foreign currency transactions............ (40,434,003)
Net unrealized depreciation on translation of assets and liabilities in foreign
currencies............................................................................... (338,483)
Net unrealized appreciation of investments................................................ 17,846,796
-----------
Total -- representing net assets applicable to capital shares outstanding................... $444,106,269
-----------
-----------
<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.
F8
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
STATEMENT OF OPERATIONS
Year ended October 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Dividend income (net of foreign withholding tax of $410,700)............................... $10,681,651
Interest income............................................................................ 2,931,654
----------
Total investment income.................................................................. 13,613,305
----------
Expenses:
Investment management and administration fees (Note 2)..................................... 4,883,626
Transfer agent fees (Note 2)............................................................... 1,930,507
Service and distribution expenses: (Note 2)
Class A...................................................................... $1,301,360
Class B...................................................................... 2,387,891 3,689,251
----------
Custodian fees (Note 1).................................................................... 504,841
Printing and postage expenses.............................................................. 232,032
Fund accounting fees (Note 2).............................................................. 125,349
Audit fees................................................................................. 80,560
Registration and filing fees............................................................... 65,825
Amortization of organization costs (Note 1)................................................ 30,067
Legal fees................................................................................. 19,222
Directors' fees and expenses (Note 2)...................................................... 11,712
Other expenses............................................................................. 45,337
----------
Total expenses before reductions......................................................... 11,618,329
----------
Expense reductions (Notes 1 & 6)....................................................... (633,461)
----------
Total net expenses....................................................................... 10,984,868
----------
Net investment income........................................................................ 2,628,437
----------
Net realized and unrealized gain (loss) on investments and foreign currencies:
(Note 1)
Net realized loss on investments............................................... (3,746,398)
Net realized loss on foreign currency transactions............................. (1,782,560)
----------
Net realized loss during the year........................................................ (5,528,958)
Net change in unrealized depreciation on translation of assets and liabilities
in foreign currencies......................................................... 31,246
Net change in unrealized appreciation of investments........................... 22,530,391
----------
Net unrealized appreciation during the year.............................................. 22,561,637
----------
Net realized and unrealized gain on investments and foreign currencies....................... 17,032,679
----------
Net increase in net assets resulting from operations......................................... $19,661,116
----------
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F9
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31,
1996 1995
------------- ------------
Decrease in net assets
Operations:
Net investment income..................................................... $ 2,628,437 $ 3,715,528
Net realized loss on investments and foreign currency transactions........ (5,528,958) (39,959,384)
Net change in unrealized appreciation (depreciation) on translation of
assets and liabilities in foreign currencies............................. 31,246 (337,162)
Net change in unrealized appreciation (depreciation) of investments....... 22,530,391 (117,020,037)
------------- ------------
Net increase (decrease) in net assets resulting from operations......... 19,661,116 (153,601,055)
------------- ------------
Class A:
Distributions to shareholders: (Note 1)
From net realized gain on investments..................................... -- (15,193,744)
Class B:
Distributions to shareholders: (Note 1)
From net realized gain on investments..................................... -- (12,477,553)
------------- ------------
Total distributions..................................................... -- (27,671,297)
------------- ------------
Capital share transactions: (Note 4)
Increase from capital shares sold and reinvested.......................... 1,443,673,824 550,507,913
Decrease from capital shares repurchased.................................. (1,499,221,358) (597,853,943)
------------- ------------
Net decrease from capital share transactions............................ (55,547,534) (47,346,030)
------------- ------------
Total decrease in net assets................................................ (35,886,418) (228,618,382)
Net assets:
Beginning of year......................................................... 479,992,687 708,611,069
------------- ------------
End of year............................................................... $ 444,106,269* $479,992,687**
------------- ------------
------------- ------------
<FN>
- --------------
* Includes undistributed net investment income of $41,480.
** Includes undistributed net investment income of $40,513.
</TABLE>
The accompanying notes are an integral part of the financial statements.
F10
<PAGE>
GT GLOBAL EMERGING MARKETS 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+
---------------------------------------------------------------
MAY 18, 1992
(COMMENCEMENT
YEAR ENDED OCTOBER 31, OF OPERATIONS)
---------------------------------------------- TO OCTOBER 31,
1996 (D) 1995 (D) 1994 1993 1992
---------- ---------- ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 13.85 $ 18.81 $ 14.42 $ 11.10 $ 11.43
---------- ---------- ---------- ---------- ---------------
Income from investment operations:
Net investment income (loss).......... 0.11 0.13 (0.02) 0.02* * 0.07* *
Net realized and unrealized gain
(loss) on investments................ 0.30 (4.32) 4.68 3.38 (0.40)
---------- ---------- ---------- ---------- ---------------
Net increase (decrease) from
investment operations.............. 0.41 (4.19) 4.66 3.40 (0.33)
---------- ---------- ---------- ---------- ---------------
Distributions to shareholders:
From net investment income............ -- -- (0.01) (0.08) --
From net realized gain on
investments.......................... -- (0.77) (0.26) -- --
---------- ---------- ---------- ---------- ---------------
Total distributions................. -- (0.77) (0.27) (0.08) --
---------- ---------- ---------- ---------- ---------------
Net asset value, end of period.......... $ 14.26 $ 13.85 $ 18.81 $ 14.42 $ 11.10
---------- ---------- ---------- ---------- ---------------
---------- ---------- ---------- ---------- ---------------
Total investment return (c)............. 2.96% (23.04)% 32.58% 30.9% (2.9)% (a)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 224,964 $ 252,457 $ 417,322 $ 187,808 $ 84,558
Ratio of net investment income (loss) to
average net assets..................... 0.76% 0.89% (0.11)% 0.1%** 1.7% **(b)
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
6)................................... 1.96% 2.12% 2.06% 2.4%** 2.4% **(b)
Without expense reductions............ 2.08% 2.14% --%* --%* --%
Portfolio turnover rate++++............. 104% 114% 100% 99% 32% (b)
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0040 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.
(a) Not annualized
(b) Annualized
(c) Total investment return does not include sales charges.
(d) 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 Chancellor LGT Asset Management, Inc. of
Fund operating expenses of $0.02 for the year ended October 31, 1993,
and for the period from May 18, 1992, to October 31, 1992,
respectively. Without such reimbursements, the expense ratios would
have been 2.61% and 2.91% and the ratio of net investment income to
average not assets would have been 0.36% and 1.21% for the year ended
October 31, 1993, and for the period from May 18, 1992, to October 31,
1992, respectively (See Note 2).
* * * Includes reimbursement by Chancellor LGT Asset Management, Inc. of
Fund operating expenses of $0.02. Without such reimbursements, the
expense ratio would have been 3.63% and the ratio of net investment
income to average net assets would have been (0.76%) (See Note 2).
The accompanying notes are an integral part of the financial statements.
F11
<PAGE>
GT GLOBAL EMERGING MARKETS 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+++
APRIL 1, -------------------------
1993 YEAR JUNE 1, 1995
YEAR ENDED OCTOBER 31, TO ENDED TO
-------------------------------------- OCTOBER 31, OCTOBER 31, OCTOBER 31,
1996 (D) 1995 (D) 1994 1993 1996 (D) 1995
-------------- ---------- ---------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 13.68 $ 18.68 $ 14.39 $ 11.47 $ 13.88 $ 14.71
-------------- ---------- ---------- ----------- ----------- ------------
Income from investment operations:
Net investment income (loss).......... 0.04 0.06 (0.12) 0.00 * * 0.18 0.08
Net realized and unrealized gain
(loss) on investments................ 0.30 (4.29) 4.67 2.92 0.32 (0.91)
-------------- ---------- ---------- ----------- ----------- ------------
Net increase (decrease) from
investment operations.............. 0.34 (4.23) 4.55 2.92 0.50 (0.83)
-------------- ---------- ---------- ----------- ----------- ------------
Distributions to shareholders:
From net investment income............ -- -- -- -- -- --
From net realized gain on
investments.......................... -- (0.77) (0.26) -- -- --
-------------- ---------- ---------- ----------- ----------- ------------
Total distributions................. -- (0.77) (0.26) -- -- --
-------------- ---------- ---------- ----------- ----------- ------------
Net asset value, end of period.......... $ 14.02 $ 13.68 $ 18.68 $ 14.39 $ 14.38 $ 13.88
-------------- ---------- ---------- ----------- ----------- ------------
-------------- ---------- ---------- ----------- ----------- ------------
Total investment return (c)............. 2.49 % (23.37)% 31.77% 25.5%(a) 3.60% (5.71)%(a)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 216,004 $ 225,861 $ 291,289 $ 32,318 $ 3,139 $ 1,675
Ratio of net investment income (loss) to
average net assets..................... 0.26 % 0.39% (0.61)% (0.4)%***(b) 1.26% 1.39 %(b)
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
6)................................... 2.46 % 2.62% 2.56% 2.9%***(b) 1.46% 1.62 %(b)
Without expense reductions............ 2.58 % 2.64% --%* --%* 1.58% 1.64 %(b)
Portfolio turnover rate++++............. 104 % 114% 100% 99% 104% 114 %
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0040 N/A N/A N/A $ 0.0040 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.
(a) Not annualized
(b) Annualized
(c) Total investment return does not include sales charges.
(d) 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 Chancellor LGT Asset Management, Inc. of
Fund operating expenses of $0.02 for the year ended October 31, 1993,
and for the period from May 18, 1992, to October 31, 1992,
respectively. Without such reimbursements, the expense ratios would
have been 2.61% and 2.91% and the ratio of net investment income to
average not assets would have been 0.36% and 1.21% for the year ended
October 31, 1993, and for the period from May 18, 1992, to October 31,
1992, respectively (See Note 2).
* * * Includes reimbursement by Chancellor LGT Asset Management, Inc. of
Fund operating expenses of $0.02. Without such reimbursements, the
expense ratio would have been 3.63% and the ratio of net investment
income to average net assets would have been (0.76%) (See Note 2).
The accompanying notes are an integral part of the financial statements.
F12
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
NOTES TO
FINANCIAL STATEMENTS
October 31, 1996
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
GT Global Emerging Markets Fund ("Fund") is a separate series of GT 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 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 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 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 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 year
end, resulting from changes in exchange rates.
(C) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by the Fund, it is the Fund's
policy to always receive, as collateral, U.S. government securities or other
high quality debt securities of which the value, including accrued interest, is
at least equal to the amount to be repaid to the Fund under each agreement at
its maturity.
(D) FORWARD FOREIGN CURRENCY CONTRACTS
A forward foreign currency contract ("Forward Contract") is an agreement between
two parties to buy and sell a currency at a set price on a future date. The
market value of the Forward Contract fluctuates with changes in currency
exchange rates. The Forward Contract is marked-to-market daily and the change in
market value is recorded by the Fund as an unrealized gain or loss. When the
Forward Contract is closed, the Fund records a realized gain or loss
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GT GLOBAL EMERGING MARKETS FUND
equal to the difference between the value at the time it was opened and the
value at the time it was closed. The Fund could be exposed to risk if a
counterparty is unable to meet the terms of the contract or if the value of the
currency changes unfavorably. The Fund may enter into Forwards 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. 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 securities
and, for a put, requires the Fund to set aside cash, U.S. government securities,
or other liquid, high grade debt securities in an amount not less than the
exercise price or otherwise provide adequate cover at all times while the put
option is outstanding. The Fund may use options to manage its exposure to the
stock market and to fluctuations in currency values or interest rates.
The premium paid by the Fund for the purchase of a call or put option is
included in the Fund's "Statement of Assets and Liabilities" as an investment
and subsequently "marked-to-market" to reflect the current market value of the
option. If an option which the Fund has purchased expires on the stipulated
expiration date, the Fund would realize a loss in the amount of the cost of the
option. If the Fund enters into a closing sale transaction, the Fund would
realize a gain or loss, depending on whether proceeds from the closing sale
transaction are greater or less than the cost of the option. If the Fund
exercises a call option, the cost of the securities acquired by exercising the
call is increased by the premium paid to buy the call. If the Fund exercises a
put option, it realizes a gain or loss from the sale of the underlying security,
and the proceeds from such sale are decreased by the premium originally paid.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Fund may forego the
opportunity of profit if the market value of the underlying security or index
increases and the option is exercised. The risk in writing a put option is that
the fund may incur a loss if the market value of the underlying security or
index decreases and the option is exercised. In addition, there is the risk the
Fund may not be able to enter into a closing transaction because of an illiquid
secondary market.
(F) FUTURES CONTRACTS
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract the
Fund is required to pledge to the broker an amount of cash or securities equal
to the minimum "initial margin" requirements of the exchange on which the
contract is traded. Pursuant to the contract, the Fund agrees to receive from or
pay to the broker an amount of cash equal to the daily fluctuation in value of
the contract. Such receipts or payments are known as "variation margin" and are
recorded by the Fund as unrealized gains or losses. When the contract is closed,
the Fund records a realized gain or loss equal to the difference between the
value of the contract at the time it was opened and the value at the time it was
closed. The potential risk to the Fund is that the change in value of the
underlying securities may not correlate to the change in value of the contracts.
The Fund may use futures contracts to manage its exposure to the stock market
and to fluctuations in currency values or interest rates.
(G) SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on a first-in,
first-out basis, unless otherwise specified. Dividends are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Where a high
level of uncertainty exists as to its collection, income is recorded net of all
withholding tax with any rebate recorded when received. The Fund may trade
securities on other 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 October 31, 1996, stocks with an aggregate value of approximately $17,458,140
were on loan to brokers. The loans were secured by cash collateral of
$18,390,625 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 the 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 October 31, 1996, the Fund received fees of $114,161 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
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GT GLOBAL EMERGING MARKETS FUND
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 $40,222,829, of which $35,800,955 expires in
2003 and $4,421,874 expires in 2004.
(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) DEFERRED ORGANIZATIONAL EXPENSES
Expenses incurred by the Fund in connection with its organization, its initial
registration with the Securities and Exchange Commission and with various states
and the initial public offering of its shares aggregated $150,006. These
expenses are being amortized on a straightline basis over a five-year period.
(L) 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.
(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) 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.
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 annualized rate of 0.975% on the first
$500 million of average daily net assets of the Fund; 0.95% on the next $500
million; 0.925% on the next $500 million and 0.90% on amounts thereafter. These
fees are computed daily and paid monthly, and are subject to reduction in any
year to the extent that the Fund's 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 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 October 31, 1996, GT Global retained $118,254
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 $17,532 for the year ended October 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. For the year ended October 31, 1996, GT Global collected CDSCs in
the amount of $1,269,740. 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 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 0.50% 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
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GT GLOBAL EMERGING MARKETS FUND
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 voluntarily have undertaken to limit the Fund's
expenses (exclusive of brokerage commissions, taxes, interest, and extraordinary
expenses) to the maximum annual rate of 2.40% 2.90%, and 1.90% of the average
daily net assets of the Fund's Class A, Class B and Advisor Class shares,
respectively. If necessary, this limitation will be effected by waivers by the
Manager of investment management and administration fees, waivers by GT Global
of payments under the Class A Plan and/or Class B Plan and/or reimbursements by
the Manager or GT Global of portions of the Fund's other operating expenses.
GT Global Investor Services, Inc. ("GT Services"), an affiliate of the Manager
and GT Global, is the transfer agent of the Fund. For performing shareholder
servicing, reporting, and general transfer agent services, GT Services receives
an annual maintenance fee of $17.50 per account, a new account fee of $4.00 per
account, a per transaction fee of $1.75 for all transactions other than
exchanges and a per exchange fee of $2.25. GT Services also is reimbursed by the
Fund for its out-of-pocket expenses for such items as postage, forms, telephone
charges, stationery and office supplies.
The Manager is the pricing and accounting agent for the Fund. The monthly fee
for these services to the Manager is a percentage, not to exceed 0.03% annually,
of the Fund's average daily net assets. The annual fee rate is derived by
applying 0.03% to the first $5 billion of assets of all registered mutual funds
advised by the Manager and 0.02% to the assets in excess of $5 billion and
allocating the result according to the Fund's average daily net assets.
The Company pays each of its Directors 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 Director.
3. PURCHASES AND SALES OF SECURITIES
For the year ended October 31, 1996, purchases and sales of investment
securities by the Fund, other than short-term investments, aggregated
$543,620,761 and $644,841,661, respectively. There were no purchases or sales of
U.S. government obligations by the Fund for the year ended October 31, 1996.
4. CAPITAL SHARES
At October 31, 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
Strategic Income 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:
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GT GLOBAL EMERGING MARKETS FUND
CAPITAL SHARE TRANSACTIONS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1996 OCTOBER 31, 1995
-------------------------- --------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold............................. 75,574,030 $1,106,260,084 26,517,243 $ 389,593,563
Shares issued in connection with
reinvestment of distributions......... -- -- 788,804 13,204,560
----------- ------------- ----------- -------------
75,574,030 1,106,260,084 27,306,047 402,798,123
Share repurchased....................... (78,034,654) (1,146,692,253) (31,260,135) (469,990,809)
----------- ------------- ----------- -------------
Net decrease............................ (2,460,624) $ (40,432,169) (3,954,088) $ (67,192,686)
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1996 OCTOBER 31, 1995
-------------------------- --------------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold............................. 22,439,885 $ 323,192,109 9,004,842 $ 135,163,005
Shares issued in connection with
reinvestment of distributions......... -- -- 637,782 10,599,912
----------- ------------- ----------- -------------
22,439,885 323,192,109 9,642,624 145,762,917
Share repurchased....................... (23,539,619) (339,644,019) (8,726,345) (127,721,360)
----------- ------------- ----------- -------------
Net increase (decrease)................. (1,099,734) $ (16,451,910) 916,279 $ 18,041,557
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
</TABLE>
<TABLE>
<CAPTION>
JUNE 1, 1995
(COMMENCEMENT OF SALE OF
YEAR ENDED SHARES) TO OCTOBER 31,
OCTOBER 31, 1996 1995
-------------------------- --------------------------
ADVISOR CLASS SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold............................. 966,362 $ 14,221,631 130,495 $ 1,946,873
Share repurchased....................... (868,859) (12,885,086) (9,777) (141,774)
----------- ------------- ----------- -------------
Net increase............................ 97,503 $ 1,336,545 120,718 $ 1,805,099
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
</TABLE>
5. HOLDINGS OF 5% VOTING SECURITIES OF PORTFOLIO COMPANIES
Investments of 5% or more of an issuer's outstanding voting securities by the
Fund are defined in the Investment Company Act of 1940 as an affiliated company.
Investments in affiliated companies at October 31, 1996, amounted to $4,750,000,
at value.
Transactions with affiliated companies are as follows:
<TABLE>
<CAPTION>
PURCHASES NET REALIZED DIVIDEND
AFFILIATES COST SALES COST GAIN INCOME
- ---------------------------------------- ----------- ---------- ------------ -----------
<S> <C> <C> <C> <C>
Compania Boliviana de Energia
Electrica............................. $ -- $7,000,800 $4,166,500 $ 113,771
Sun Brewing Ltd. - 144A GDR............. -- -- -- --
</TABLE>
6. EXPENSE REDUCTIONS
The Manager has directed certain portfolio trades to brokers who paid a portion
of the Fund's expenses. For the year ended October 31, 1996, the Fund's expenses
were reduced by $519,300 under these arrangements.
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<PAGE>
GT GLOBAL EMERGING MARKETS FUND
NOTES
- --------------------------------------------------------------------------------
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
NOTES
- --------------------------------------------------------------------------------
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
NOTES
- --------------------------------------------------------------------------------
<PAGE>
GT GLOBAL EMERGING MARKETS 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 EMERGING MARKETS FUND
EMEAR612075M.584
