<PAGE>
CHANCELLOR LGT
ASSET MANAGEMENT
OVER 25 YEARS
OF INVESTING
WORLDWIDE
GT GLOBAL
EMERGING
MARKETS
FUND
SEMIANNUAL REPORT
APRIL 30, 1997
[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 as described in this report
are as of the date it was
written. Portfolio holdings and
allocations are as of April 30,
1997, unless otherwise noted.
Views, portfolio holdings and
allocations may have changed
subsequent to these dates.
</TABLE>
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
MESSAGE FROM THE CHAIRMAN
Dear Investor,
This report is written in a style we hope you find enjoyable to read and easy
to understand. Our intention is to provide our shareholders with meaningful
information about the relative performance of GT Global Mutual Funds. We
think it is important to help investors develop a global perspective about
their investments, including developments in individual economies around the
world. Specifically, we address how macroeconomic and political events within
countries influence investment results and, ultimately, Fund performance.
We describe our management process and offer insights into the Fund's
investment strategy. Companies and countries in which the Fund invests are
discussed, as well as issues pertinent to decisions affecting the Fund.
Biographical information on portfolio managers' background and experience is
also included, and through our question and answer format, we make it
possible for shareholders to be included in the thought processes that form
the basis of their investment decisions. Additionally, this report contains
performance illustrations that show the historical returns of a hypothetical
investment and compare it to an appropriate benchmark.
We make every effort to communicate as clearly as possible because we want you,
our shareholders, to have a useful understanding of what is happening with your
investments in GT Global Mutual Funds, and why.
We would also like to emphasize that today--as global investing continues to
become increasingly complex, information travels as quickly as a keystroke, and
critical decisions must be made within shorter time frames--prudent advice,
professional management, global diversification and investing for the long term
have never been more important.
As always, we appreciate and value our shareholders in GT Global Mutual Funds.
Sincerely,
[SIGNATURE]
William J. Guilfoyle
CHAIRMAN OF THE BOARD AND PRESIDENT
GT GLOBAL MUTUAL FUNDS
<PAGE>
[PICTURE]
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.
GT GLOBAL EMERGING MARKETS FUND
PERFORMANCE SUMMARY
MSCI Emerging IFC Investable GT Global Emerging
Markets Index Composite Markets Fund
5/18/92 10000 10000 9525
9974 9832 9550
9273 8823 9358
9063 8804 9333
8680 8432 9100
8500 8257 8942
9033 8626 9258
9091 8569 9075
9181 8855 9034
9136 8816 9269
9573 9040 9529
10019 9334 9630
10171 9669 9915
10311 9880 10159
10402 10160 10176
10530 10476 10386
11065 11326 10956
11420 11782 11150
12295 12774 12107
12992 13584 12736
15494 15905 14857
15922 16015 15556
15436 15599 15053
14153 14025 13739
14241 13759 13270
14689 14083 13526
14390 13579 12945
15353 14554 13858
16931 16425 15787
10/31/94 17390 16833 16197
16966 16279 16051
16172 15666 15522
15329 13997 14299
13649 12126 12809
13407 11969 11988
13595 11938 12139
13873 12439 12711
14361 12904 13130
14325 12982 12934
14543 13395 13344
14061 13036 13077
14216 12937 12898
13744 12449 12354
13400 12387 11791
13919 12818 12318
14551 13892 13282
14366 13583 13237
14569 13782 13318
15612 14337 13612
15310 14211 13630
15511 14380 13371
14458 13435 12675
14777 13852 13014
14905 14056 13112
14483 13754 12728
14743 13958 12773
14753 14020 12970
15714 15009 13792
16348 15744 14265
15947 15355 13685
4/30/97 16061 15094 13604
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 36.04% and an average annual
total return of 6.41% 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 $13,653 on April 30, 1997. 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 $10,465 on April 30, 1997.
AVERAGE ANNUAL TOTAL RETURNS%(1)
APRIL 30, 1997
<TABLE>
<CAPTION>
Share Class With Sales Charge(2) Without Sales Charge(2)
1-Year Life of Fund 1-Year Life of Fund
<S> <C> <C> <C> <C>
Class A(3) (0.06) 7.47 (4.80) 6.41
Class B(3) (0.53) 8.32 (5.51) 7.93
Advisor Class(4) 0.42 2.40 N/A N/A
</TABLE>
HISTORICAL PERFORMANCE%(2)
ANNUAL RETURNS (PER CALENDAR YEAR)
<TABLE>
<CAPTION>
1992 1993 1994 1995 1996
<S> <C> <C> <C> <C> <C>
Class A (5.16)(3) 64.46 (3.75) (13.86) 5.30
Class B N/A 53.92(3) (4.28) (14.34) 4.77
</TABLE>
(1)Figures assume reinvestment of all dividends and capital gain distributions
at net asset value.
(2)Performance data do not reflect the maximum 4.75% sales charge and the
contingent deferred sales charge (5% in the first year, decreasing to 0%
after six years) for Class A and Class B shares, respectively, which, if
included, would have reduced performance quoted.
(3)The Fund began operations on 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>
GT GLOBAL EMERGING MARKETS FUND
INTERVIEW WITH THE MANAGEMENT TEAM
As part of our commitment to enhance Fund performance, we have recently
appointed Allan Conway as head of global emerging markets investment. Mr.
Conway has an exceptional track record, with over 15 years of emerging
markets experience. Since his appointment, he has instituted significant
changes, beginning with augmenting existing disciplined, quantitative
measures, to control risk more effectively.
He is also building a highly regarded and experienced emerging markets equity
team that will include six portfolio managers dedicated to a top-down
approach. Based in London with Mr. Conway, they will be supported by regional
research/country portfolio management professionals. Our goal is that Mr.
Conway's hand-selected team and disciplined investment approach will, with
time, deliver above-average performance results.
Q HOW DID THE FUND PERFORM?
A For the six months ended April 30, 1997, the Fund's total return was 6.88%
for Class A shares (1.80% including the maximum 4.75% sales charge) and 6.63%
for Class B shares (1.63% including the maximum 5% contingent deferred sales
charge). Total return for the International Financial Corp. (IFC) Investable
Composite Index over the period was 9.74%, and 10.89% for the MSCI Emerging
Markets Index.(5)
Relative to the IFC Index, the Fund's performance suffered as a result of its
underweighted position in Taiwan, which rallied strongly over the six months,
and security selection in Mexico, Israel and Turkey.
Q WHAT CHANGES ARE YOU IMPLEMENTING WITH RESPECT TO THE FUND'S MANAGEMENT?
A The Fund is undergoing restructuring this quarter, in conjunction with a
revamping of our approach to emerging market investment products. Under the new
structure, the Fund's managers are members of the Global Emerging Markets team,
based in London, which collectively determines regional asset allocation and
applies those allocations and shared knowledge to various emerging market funds
throughout the world.
As part of this evolutionary change, risk control guidelines have been
enhanced with prescribed tracking error ranges at both the global and country
levels. The overall effect of these changes will be a more diversified
portfolio with a more disciplined approach for monitoring risk relative to
the Fund's benchmark.
Q WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE OVER THE SIX-MONTH PERIOD?
A The Fund benefited from privatization candidates in Brazil, plays on reviving
domestic demand in Mexico and leading Pan-American multinationals. In addition,
returns were buoyed by stock selection in Hong Kong, which focused on red
chips--Chinese companies listed in Hong Kong--and other beneficiaries of the
economic upturn in China and Malaysia. The Fund's orientation towards several of
the Emerging Europe Middle East and Africa (EMEA) markets such as Greece and
Zimbabwe also contributed positively to performance.
A number of developments, however, hampered performance. Sentiment in the
emerging markets of East Asia was, for the most part, dampened by concerns
that the tightening of monetary policy by the U.S. Federal Reserve
(specifically, a rise in the Fed funds rate from 5.25% to 5.50% on March 25)
represented the first in a series of interest rate increases.
Philippine and Malaysian markets trended down. Sentiment in Korea was
depressed by the high-profile bankruptcies of several of its largest steel
companies, and the continuing problems of Thailand's property and finance
sectors were the main reasons for falls in share prices there. The Hong Kong
market also ended slightly down for the six months, primarily on the back of
a correction in the property sector, which had outperformed during calendar
1996. The correction followed an announcement that authorities will take
steps to reduce market speculation on apartments.
Q WHAT WAS THE FUND'S INVESTMENT STRATEGY?
A In general, the Fund focused on situations we believe can benefit from the
cyclical acceleration in the Chinese economy, such as red chips. In Malaysia,
despite our overall pessimistic outlook, we are finding key players in the
strongly growing infrastructure and financial services sectors. We have also
found attractive opportunities in Russia, where President Yeltsin's return to
health and power indicates that public finances, and the general state of the
economy, could improve considerably. In Latin America, we are positioning the
Fund to take advantage of banks and privatization plays in Brazil.
Continued p.4
(5) The MSCI Emerging Markets and IFC Indices are market value-weighted
averages of the performance of securities listed on the exchanges of 27 and
26 countries, respectively. They include the effect of reinvested dividends
and are measured in U.S. dollars. The Fund has changed benchmarks to the IFC
Investable Composite Index because we feel it presents a more accurate
reflection of investment opportunities available to foreign investors.
Indices are unmanaged, not available for direct investment and do not incur
sales charges and professional management fees.
3
<PAGE>
INTERVIEW WITH THE MANAGEMENT TEAM CONTINUED
Conversely, the Fund presently has minimal positions in Argentina, where we
find only a few attractive stocks well placed to exploit the economic
recovery. Our view is similar in Pakistan, where political risks remain
unacceptably high.
Q HAVE LATIN AMERICAN MARKETS RECOVERED FROM THE CAPITAL OUTFLOW FOLLOWING THE
MEXICAN PESO CRISIS?
A Virtually all Latin American exchanges have enjoyed good returns over the
past six months. Foreign capital returned to Argentina, where it became clear
that strong economic growth is boosting the government's financial position.
Several bond issues during the quarter were well received.
In Brazil, investors overlooked a burgeoning current account deficit to focus
on falling inflation and progress towards privatization. Economic reform and
low inflation were also key themes in Colombia. Encouraged by patchy economic
recovery (and the repayment of the last of the emergency funding borrowed by
the government at the time of the January 1995 peso crisis), foreign
investors returned to Mexico. Not for the first time, the main exception was
Venezuela, where public sector strikes overshadowed all else.
Q WHAT IS YOUR OUTLOOK FOR HONG KONG IN LIGHT OF THE HANDOVER TO CHINA ON
JULY 1?
A We remain bullish on the Hong Kong market despite its lackluster
performance over the year to the end of April. The market's weakness, in our
opinion, conceals two divergent trends.
On one hand, the property sector (which led the bull market through calendar
1996) has corrected sharply. This was in part due to measures by the Hong
Kong government to curb speculation in luxury apartments, and in part due to
an announcement from the territory's designated chief executive, Tung
Chee-Hwa, that more land will be made available for development over the
coming years. On the other hand, plays on the growth of China in general and
red chips, in particular, performed well.
We remain enthusiastic about the outlook for the Chinese economy and for Hong
Kong companies that can participate in its growth. We estimate Chinese GDP
growth will accelerate from 10% in calendar 1996 to 12% this year. Even though
inflation may increase somewhat, we do not see any need for authorities to
tighten monetary policy in China. We note that the IFC Index will be
restructured in July and will include China/Hong Kong at around 3% (as opposed
to 0.6% for China and 0% for Hong Kong at present).
Nonetheless, the strong performance (and rerating) of red chips and other
China plays listed on the Hong Kong stock market, together with sharp rises
in the Shenzhen and Shanghai exchanges, suggests to us that much of the China
story has already been discounted. Although we remain overweighted, we have
been selling our holdings to take advantage of the strength in share prices.
Q WHAT ACCOUNTS FOR THE FUND'S CONSIDERABLY OVERWEIGHTED POSITION (RELATIVE TO
THE INDEX) IN INDIA?
A Of late, no other emerging market has been more affected by political
factors than India. Investor reaction to the United Front coalition's budget,
presented at the end of February, was euphoric. Key positive features
included an across-the-board reduction in corporate and personal taxes, a cut
in import tariffs and excise duties, and projections of a reduction in the
budget deficit as a proportion of GDP (from the current level of 6%).
Recognizing accelerating economic growth and the prospect of a 20%-25%
expansion in earnings per share over the next year, we have taken a bullish
stance.
Although there was some political instability in India around the end of
March, with Congress temporarily withdrawing its support for the coalition,
it has been reconstituted with the appointment of Chidabaram as finance
minister.
Q THE FUND IS SIGNIFICANTLY UNDERWEIGHTED IN MALAYSIA. WHY ARE YOU CAUTIOUS
ABOUT THIS MARKET?
A A slowing in GDP growth in 1996, to 8.2%, together with an improvement in
the trade and current account balances, suggests authorities may now be
feeling less pressure to raise interest rates. Nonetheless, we believe rapid
growth in money and credit, a rise in the country's net foreign liabilities
(suggesting widespread offshore borrowing), and early moves by authorities to
cool the property sector imply that Malaysia is approaching the top of its
business cycle.
However, this is only one reason for our caution about the prospects for the
stock market. P/E multiples also remain demanding. Earnings growth for the
telephone and power utilities is constrained by increasing competition and
falling tariffs.
Our stock selection emphasizes major companies in two sectors. One is
infrastructure, where growth prospects are underpinned by the Seventh
Malaysia Plan. The other is financial services, an industry still relatively
underdeveloped in Malaysia and within which government policies favor local
participants.
Continued p.5
4
<PAGE>
INTERVIEW WITH THE MANAGEMENT TEAM CONTINUED
Q WHAT DO YOU FIND ATTRACTIVE ABOUT THE BRAZILIAN MARKET?
A For the time being, the forces that have driven share prices in Brazil over
the last two years remain intact. Inflation has fallen, and we believe scope
exists for lower interest rates. The government continues to move very slowly
towards economic liberalization and privatization.
The current account, however, represents a constraint on the ability of the
central bank to reduce real interest rates from the present, very high levels.
Nonetheless, we do not envisage that the current account deficit will force
authorities to undertake drastic action. Thanks to continuing capital inflows
from abroad, foreign reserves have increased to US$58 billion.
We continue to focus on privatization candidates such as the "-bras" stocks,
utilities that can benefit from a deregulation of tariffs (which are presently
too low), banks positioned to increase their lending activity and cut operating
costs, and one or two other stocks that appear particularly attractive.
Q IS RECOVERY UNDERWAY IN MEXICO?
A Mexico's economic recovery is, and is likely to remain, patchy. Industrial
production and exports have been growing at over 11%. Retail sales have been
soft, not the least because real wages have been under pressure. Further, the
delicate condition of the banking sector precludes it from increasing its
lending.
The fragility of Mexican financial markets was illustrated by the behavior of
short-term interest rates in March. Yields on one-month Cetes rose by 450
basis points early in the month as investors became concerned about the
imminent rise in U.S. interest rates and by the possibility of Mexico's being
"decertified" by the U.S. government. Yields subsequently fell by 111 basis
points later in the month. The result was that yields on one-month Cetes
finished March at 20.6%, or roughly 200 basis points above the level at the
end of February.
Accordingly, we have taken a highly selective approach to Mexico. We have
focused on internationally competitive manufacturers and on regional
multinationals which, although based elsewhere, have a strong presence in
the country.
Q WHAT DEVELOPMENTS HAVE TAKEN PLACE IN RUSSIA?
A The focus of late has been the return to health, and power, of President
Yeltsin and his installation of a new team apparently committed to economic
reform. Any progress made by the team could have very positive results on the
economy and on corporate earnings. Russia's ability to service its foreign
debt (reflected in a US$28 billion trade surplus, gross reserves of more than
US$10 billion and a debt/export ratio of less than 10%) compares favorably
with most countries in Latin America. Russia's bond market is broadening, and
the economy could expand once more after contracting for seven consecutive
years.
Q WHAT IS YOUR OUTLOOK ON SOUTH AFRICA?
A The strengthening of the rand and the rally in the bond market are
testimony to growing investor confidence in South African developments. The
ANC-dominated government has produced a responsible budget, highlights of
which were a commitment to deregulation and a real cut in spending.
Inflationary pressures remain modest, partly because high unemployment is
keeping a lid on wage growth, partly because the economy has become more
competitive, and partly because import tariffs have been falling. The
strength of the informal sector has allowed retail sales to remain firm in
spite of high real interest rates.
The Reserve Bank has announced that exchange controls will be relaxed
substantially in June: from that month on, individuals will be able to invest
a certain (as yet unspecified) amount overseas and hold foreign currency
accounts within South Africa. More importantly, companies will be able to use
their domestic balance sheets as collateral for foreign borrowing when
acquiring overseas assets.
Our stock selection emphasizes companies that have restructured to meet
foreign competition (and can, therefore, benefit from further growth in
demand) and situations that can exploit the rising economic power of the
Black majority. We have increased the portfolio's exposure to South Africa,
even though we remain underweighted. The low level of foreign exchange
reserves and the still significant possibility of a run on the currency when
exchange controls are lifted are the main reasons we are cautious.
Q WHAT ARE YOUR EXPECTATIONS FOR EMERGING MARKETS IN GENERAL?
A First and foremost, the global financial environment remains benign. With
real yields of 5%, U.S. Treasuries are unlikely to be sold down much further,
implying that the U.S. stock market, although fully valued, has limited
downside. The absence of inflationary pressures in the U.S. suggests interest
rates are unlikely to increase by much, if at all. Unlike 1994, real
short-term U.S. dollar interest rates, at over 3.5%, are already
comparatively high.
Continued p.6
5
<PAGE>
INTERVIEW WITH THE MANAGEMENT TEAM CONTINUED
Except in the UK, European central banks appear unlikely to lift interest rates
any time soon. Easy money assists growth, exporters (by way of softening
currencies) and chances of participation in the European Monetary Union (EMU).
We find additional reasons to be bullish about emerging markets. In most
cases, major indices are still below their 1994 highs, while in relation to
their own past and developed markets, emerging markets generally appear
undervalued. Latin American economies, for example, are emerging from the
deep recession that followed the 1995 peso crisis in Mexico. A pickup in
activity in Germany and other "core" economies of Europe augurs well for some
exporting companies in emerging markets (in particular, those in eastern
Europe).
In Asia, we see attractive themes throughout the region. Specifically,
infrastructure development in Malaysia, the economic upturn in China and
reform in the Philippines are three themes we are exploiting. Above all, as
the general strength of the (hugely diverse) EMEA markets over the recent
past suggests, investors are alert to opportunities that materialize when
particular countries embark on the initial stages of economic reform.
About the Management team
ALLAN CONWAY -- Head of Global Emerging Markets. Prior to joining Chancellor
LGT Asset Management in 1997, Mr. Conway spent 23 years in the financial
services industry. Most recently, from 1992-97 he was the Director,
International Equities at Hermes Investment Management. He received a B.A.
from the University of York, England.
CHRISTINE ROWLEY -- Global Emerging Markets Portfolio Manager. Prior to
joining Chancellor LGT Asset Management in 1992, Ms. Rowley was an Analyst
with the Bank of England and received an M.Sc. from the London School of
Economics.
GEOGRAPHIC ALLOCATION OF NET ASSETS%
April 30, 1997 April 30, 1996
Argentina 0.3 1.6
Australia -- 0.4
Bolivia -- 2.0
Brazil 9.8 8.5
Chile -- 2.5
Colombia 2.9 0.5
Czech Republic 3.2 2.5
Greece 4.4 2.8
Hong Kong 8.5 12.1
India 9.8 6.0
Indonesia -- 0.1
Israel 3.2 --
Korea 1.4 10.0
Malaysia 3.6 9.6
Mexico 9.9 9.4
Pakistan 0.2 1.4
Panama 3.3 2.0
Philippines 0.6 0.5
Poland -- 0.7
Portugal 1.7 --
Russia 6.9 --
South Africa 7.3 12.9
Thailand 0.3 9.8
Turkey 2.4 0.9
United Kingdom -- 0.1
United States & Other 16.0 1.3
Venezuela 1.7 0.9
Zimbabwe 2.6 1.5
6
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
ALLOCATION OF NET ASSETS
Services 2.8%
Capital Goods 7.0%
Multi Industry/Misc. 7.3%
Materials/Basic Industries 9.9%
Consumer Non-Durables 10.5%
Energy 19.8%
Finance 26.6%
Other 16.1%
Allocations may change as market conditions change.
A complete listing may be found in the Financial Statements section
of this report.
GT GLOBAL EMERGING MARKETS FUND
KEY PORTFOLIO HOLDINGS(6)
% of
Country Net Assets
STATE BANK OF INDIA LTD Provides a wide range of INDIA 5.0
banking and financial services throughout India.
The bank also provides international banking principally
to its Indian customers and has operations in
34 countries.
LUKOIL HOLDING Russia's largest oil and gas company, RUSSIA 3.8
LUKoil holds 18% of the Russian oil and gas
extracting market and 11% of its refining market.
The company's oil reserves are estimated to be the
second largest in the world.
KIMBERLY-CLARK DE MEXICO, S.A. DE C.V. The largest MEXICO 3.6
manufacturer of diapers, 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.
BANCO LATINOAMERICANO DE EXPORTACIONES S.A. (BLADEX) PANAMA 3.3
A specialized multinational bank established to finance
Latin American and Caribbean foreign trade.
COMPANHIA ENERGETICA DE MINAS GERAIS (CEMIG) Provides BRAZIL 3.0
electrical utility services for industrial,
residential and rural customers.
ALPHA CREDIT BANK A full service commercial bank located GREECE 2.9
in Greece. The bank has 183 domestic branches, one in the
UK and one in Romania.
SASOL LTD. The holding company for a group that produces SOUTH AFRICA 2.9
and markets liquid fuels, pipeline gas, petrochemicals,
plastics and other products from coal and crude oil.
PETROLEO BRASILEIRO S.A. (PETROBRAS) Produces oil and BRAZIL 2.7
natural gas liquids through approximately 7,258
producing wells; also produces at sea through its fixed
and floating platforms. The company's main products are
oil products and fuel alcohol. Petrobras also provides
maritime freight services.
NATIONAL MUTUAL ASIA An investment holding company whose HONG KONG 2.7
principal subsidiaries are engaged in underwriting
insurance business. Other subsidiaries act as investment
holding companies, property managers, unit trust managers,
investment advisors and trustees.
GENERAL MINING UNION CORP. (GENCOR) A diversified SOUTH AFRICA 2.7
international holding company for a group of companies
with interests in natural resources.
Source: Bloomberg.
(6) There is no assurance the Fund will continue to hold these or any other
securities mentioned in this report.
7
<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 April 30,
1997, 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, 1996, and the financial highlights for each of the
periods indicated herein. 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, 1997 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 April 30, 1997, 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, 1996, and the financial highlights
for each of the periods indicated herein, in conformity with generally accepted
accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
JUNE 12, 1997
F1
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
PORTFOLIO OF INVESTMENTS
April 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (26.6%)
State Bank of India Ltd.: ................................. IND -- -- 5.0
BANKS-REGIONAL
Common-/- ............................................... -- 1,494,400 $ 13,310,742 --
GDR-/- {\/} ............................................. -- 257,600 6,266,120 --
Banco LatinoAmericano de Exportaciones S.A. (Bladex)
"E"{\/} .................................................. PAN 282,600 12,964,275 3.3
OTHER FINANCIAL
Alpha Credit Bank-/- ...................................... GREC 164,575 11,696,369 2.9
BANKS-REGIONAL
National Mutual Asia-/- ................................... HK 10,500,000 10,844,307 2.7
INSURANCE-BROKER
Uniao Bancos Brasileiras "A" Preferred .................... BRZL 281,440,000 10,398,512 2.6
BANKS-MONEY CENTER
Peregrine Investment Holdings Ltd. ........................ HK 6,000,000 9,217,661 2.3
INVESTMENT MANAGEMENT
Malaysian Assurance Alliance Bhd. ......................... MAL 911,000 4,899,801 1.2
INSURANCE - MULTI-LINE
Ergo Bank S.A. ............................................ GREC 71,320 4,701,762 1.2
BANKS-REGIONAL
MBF Capital Bhd. .......................................... MAL 3,000,000 4,446,215 1.1
OTHER FINANCIAL
Tai Cheung Holdings Co., Ltd. ............................. HK 5,000,000 3,969,791 1.0
REAL ESTATE
Banco Ganadero S.A. - ADR{\/} ............................. COL 137,200 3,790,150 1.0
BANKS-REGIONAL
Fondo de Valores Inmobiliarios C.A. "B" ................... VENZ 39,250,000 2,880,022 0.7
REAL ESTATE
Aksigorta ................................................. TRKY 56,000,000 2,644,823 0.7
INSURANCE - MULTI-LINE
Ayala Land, Inc. "B" ...................................... PHIL 3,350,000 2,415,560 0.6
REAL ESTATE
Industrial Finance Corporation of Thailand - Foreign ...... THAI 400,000 1,071,975 0.3
BANKS-MONEY CENTER
Korea Exchange Bank ....................................... KOR 6,345 41,064 --
BANKS-MONEY CENTER
Housing Development Finance Corp.-/- ...................... IND 262 23,302 --
OTHER FINANCIAL
HDFC Bank Ltd. - Subscription Shares-/- ................... IND 500 805 --
BANKS-MONEY CENTER
------------
105,583,256
------------
Energy (19.8%)
LUKoil Holding - ADR-/- {\/} .............................. RUS 265,900 14,890,400 3.8
GAS PRODUCTION & DISTRIBUTION
Companhia Energetica de Minas Gerais (CEMIG): ............. BRZL -- -- 3.0
ELECTRICAL & GAS UTILITIES
Preferred+/+ ............................................ -- 160,000,000 7,295,844 --
ADR{\/} ................................................. -- 109,000 4,905,000 --
Sasol Ltd. ................................................ SAFR 891,200 11,428,211 2.9
ENERGY SOURCES
Petroleo Brasileiro S.A. (Petrobras) Preferred ............ BRZL 51,870,000 10,901,773 2.7
OIL
</TABLE>
The accompanying notes are an integral part of the financial statements.
F2
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
PORTFOLIO OF INVESTMENTS (cont'd)
April 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Energy (Continued)
China Light & Power Co., Ltd. ............................. HK 1,700,000 $ 7,659,437 1.9
ELECTRICAL & GAS UTILITIES
Czeske Energeticke Zavody (CEZ AS)-/- ..................... CZCH 197,360 6,150,155 1.6
ELECTRICAL & GAS UTILITIES
Yukong Ltd. ............................................... KOR 277,383 4,955,494 1.2
OIL
Benton Oil & Gas Co.-/- ................................... US 313,100 4,579,088 1.2
OIL
C.A. La Electricidad de Caracas ........................... VENZ 3,573,714 3,883,178 1.0
ELECTRICAL & GAS UTILITIES
Electricidad de Argentina S.A. - ADR(.) -/- {\/} (::) ..... ARG 100,000 1,360,000 0.3
ELECTRICAL & GAS UTILITIES
Korea Electric Power Corp. ................................ KOR 25,300 756,157 0.2
ELECTRICAL & GAS UTILITIES
Pakistan State Oil Co., Ltd. .............................. PAK 12,720 95,875 --
OIL
------------
78,860,612
------------
Consumer Non-Durables (10.5%)
Gruma S.A. "B"-/- ......................................... MEX 1,885,000 9,093,778 2.3
FOOD
South African Breweries Ltd. .............................. SAFR 230,000 6,778,403 1.7
BEVERAGES - ALCOHOLIC
Panamerican Beverages, Inc. "A"{\/} ....................... MEX 232,400 6,739,600 1.7
BEVERAGES - NON-ALCOHOLIC
Companhia Cervejaria Brahma Preferred ..................... BRZL 8,564,543 5,827,014 1.5
BEVERAGES - ALCOHOLIC
Bavaria ................................................... COL 678,573 5,104,931 1.3
BEVERAGES - ALCOHOLIC
Sun Brewing Ltd. - 144A GDR{.} -/- {\/} ................... RUS 500,000 4,000,000 1.0
BEVERAGES - ALCOHOLIC
Guinness Malaysia-/- ...................................... MAL 1,499,000 3,314,522 0.8
BEVERAGES - ALCOHOLIC
Dhan Fibres Ltd.-/- ....................................... PAK 4,273,000 627,138 0.2
TEXTILES & APPAREL
------------
41,485,386
------------
Materials/Basic Industry (9.9%)
Kimberly-Clark de Mexico, S.A. de C.V. "A" ................ MEX 3,792,000 14,090,440 3.6
PAPER/PACKAGING
General Mining Union Corp. (Gencor) ....................... SAFR 2,571,000 10,816,130 2.7
METALS - NON-FERROUS
Industrias Penoles S.A. "CP"-/- ........................... MEX 1,952,400 9,148,417 2.3
METALS - NON-FERROUS
Cementos Argos S.A. ....................................... COL 281,876 2,306,379 0.6
CEMENT
Gujarat Ambuja Cements - GDR{\/} .......................... IND 220,000 2,090,000 0.5
CEMENT
Eregli Demir Ve Lelik Fabrik T.A.S. ....................... TRKY 5,922,851 579,129 0.1
METALS - STEEL
</TABLE>
The accompanying notes are an integral part of the financial statements.
F3
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
PORTFOLIO OF INVESTMENTS (cont'd)
April 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Materials/Basic Industry (Continued)
Associated Cement Cos., Ltd. .............................. IND 5,086 $ 210,066 0.1
CEMENT
Engro Chemicals Pakistan Ltd. ............................. PAK 812 3,050 --
CHEMICALS
------------
39,243,611
------------
Multi-Industry/Miscellaneous (7.3%)
Mosenergo - 144A ADR{.} -/- {\/} .......................... RUS 211,500 8,407,124 2.1
MISCELLANEOUS
Banco Comercial Portugues "A", Convertible Preferred, 8%
till 6/30/03{\/} ......................................... PORT 119,900 6,864,275 1.7
MISCELLANEOUS
ITC Ltd. .................................................. IND 497,000 5,751,735 1.5
MULTI-INDUSTRY
Koor Industries Ltd. - ADR{\/} ............................ ISRL 236,300 4,105,713 1.0
CONGLOMERATE
Alarko Holding A.S. ....................................... TRKY 25,945,000 3,589,910 0.9
MULTI-INDUSTRY
KEC International Ltd.-/- ................................. IND 160,500 289,736 0.1
MISCELLANEOUS
------------
29,008,493
------------
Capital Goods (7.0%)
Delta Electrical Industries Ltd. .......................... ZBBW 6,533,074 10,397,465 2.6
ELECTRICAL PLANT/EQUIPMENT
ECI Telecommunications Ltd.{\/} ........................... ISRL 405,000 8,859,375 2.2
TELECOM EQUIPMENT
Tata Engineering and Locomotive Co., Ltd.-/- .............. IND 532,460 6,005,636 1.5
MACHINERY & ENGINEERING
Netas Telekomunik ......................................... TRKY 10,200,120 2,822,703 0.7
TELECOM EQUIPMENT
Gujarat Telephone Cables-/- ............................... IND 58,900 16,485 --
TELECOM EQUIPMENT
------------
28,101,664
------------
Services (2.8%)
SPT Telecom-/- ............................................ CZCH 58,510 6,184,829 1.6
TELEPHONE NETWORKS
Amway Asia Pacific Ltd.{\/} ............................... HK 58,400 2,452,800 0.6
WHOLESALE & INTERNATIONAL TRADE
Resorts World Bhd. ........................................ MAL 499,000 1,838,944 0.5
LEISURE & TOURISM
Himachal Futuristic Communications Ltd. ................... IND 450,000 191,436 0.1
TELECOM - OTHER
Indian Hotels Co., Ltd. ................................... IND 3,000 56,255 --
LEISURE & TOURISM
------------
10,724,264
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F4
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
PORTFOLIO OF INVESTMENTS (cont'd)
April 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Health Care (1.0%)
Ranbaxy Laboratories Ltd. ................................. IND 225,200 $ 4,087,383 1.0
MEDICAL TECHNOLOGY & SUPPLIES
Core Healthcare ........................................... IND 50 39 --
PHARMACEUTICALS
------------
4,087,422
------------ -----
TOTAL EQUITY INVESTMENTS (cost $298,273,493) ................ 337,094,708 84.9
------------ -----
<CAPTION>
NO. OF VALUE % OF NET
RIGHTS COUNTRY RIGHTS (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Alpha Credit Bank Rights, expire May 9, 1997 (cost
$0)-/- ................................................... GREC 131,660 969,460 0.3
------------ -----
BANKS-MONEY CENTER
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated April 30, 1997, with State Street Bank & Trust Co.,
due May 1, 1997, for an effective yield of 5.27%,
collateralized by $48,875,000 Federal National Mortgage
Association Notes, 6.25% due 11/10/99 (market value of
collateral is $49,844,840, including accrued interest).
(cost $48,866,152) ....................................... 48,866,152 12.3
------------ -----
TOTAL INVESTMENTS (cost $347,139,645) * .................... 386,930,320 97.5
Other Assets and Liabilities ................................ 10,105,838 2.5
------------ -----
NET ASSETS .................................................. $397,036,158 100.0
------------ -----
------------ -----
</TABLE>
- --------------
-/- Non-income producing security.
{\/} U.S. currency denominated.
{.} 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.
(::) Valued in good faith at fair value using procedures approved by the
board of directors (see Note 1 of Notes to Financial Statements).
(.) Restricted securities: At April 30, 1997, the Fund owned the
following resticted security constituting less than 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>
+/+ Issued with detachable warrants or value recovery rights. The
current market value of each warrant or right is zero.
* For Federal income tax purposes, cost is $347,334,198 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 60,415,542
Unrealized depreciation: (20,819,420)
-------------
Net unrealized appreciation: $ 39,596,122
-------------
-------------
</TABLE>
Abbreviations:
ADR--American Depository Receipt
GDR--Global Depository Receipt
The accompanying notes are an integral part of the financial statements.
F5
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
PORTFOLIO OF INVESTMENTS (cont'd)
April 30, 1997
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at April 30, 1997, 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) .................... 9.8 9.8
Colombia (COL/COP) ................... 2.9 2.9
Czech Republic (CZCH/CSK) ............ 3.2 3.2
Greece (GREC/GRD) .................... 4.1 0.3 4.4
Hong Kong (HK/HKD) ................... 8.5 8.5
India (IND/INR) ...................... 9.8 9.8
Israel (ISRL/ILS) .................... 3.2 3.2
Korea (KOR/KRW) ...................... 1.4 1.4
Malaysia (MAL/MYR) ................... 3.6 3.6
Mexico (MEX/MXN) ..................... 9.9 9.9
Pakistan (PAK/PKR) ................... 0.2 0.2
Panama (PAN/PND) ..................... 3.3 3.3
Philippines (PHIL/PHP) ............... 0.6 0.6
Portugal (PORT/PTE) .................. 1.7 1.7
Russia (RUS/SUR) ..................... 6.9 6.9
South Africa (SAFR/ZAR) .............. 7.3 7.3
Thailand (THAI/THB) .................. 0.3 0.3
Turkey (TRKY/TRL) .................... 2.4 2.4
United States & Other (US/USD) ....... 1.2 14.8 16.0
Venezuela (VENZ/VEB) ................. 1.7 1.7
Zimbabwe (ZBBW/ZWD) .................. 2.6 2.6
------ ----- ----- -----
Total ............................... 84.9 0.3 14.8 100.0
------ ----- ----- -----
------ ----- ----- -----
</TABLE>
- --------------
{d} Percentages indicated are based on net assets of $397,036,158.
The accompanying notes are an integral part of the financial statements.
F6
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
STATEMENT OF ASSETS
AND LIABILITIES
April 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $298,273,493) (Note 1)...... $338,064,168
Repurchase agreement, at value and cost............................... 48,866,152
U.S. currency............................................. $ 834
Foreign currencies (cost $8,174,578)...................... 7,876,899 7,877,733
----------
Receivable for securities sold........................................ 3,941,689
Receivable for Fund shares sold....................................... 907,976
Dividends and dividend withholding tax reclaims receivable............ 701,958
Miscellaneous receivable.............................................. 15,080
Unamortized organizational costs (Note 1)............................. 13,138
Interest receivable................................................... 4,133
Cash held as collateral for securities loaned (Note 1)................ 19,246,525
------------
Total assets........................................................ 419,638,552
------------
Liabilities:
Payable for Fund shares repurchased................................... 2,391,354
Payable for investment management and administration fees (Note 2).... 317,376
Payable for service and distribution expenses (Note 2)................ 249,429
Payable for transfer agent fees (Note 2).............................. 131,763
Payable for printing and postage expenses............................. 84,386
Payable for registration and filing fees.............................. 67,996
Payable for custodian fees (Note 1)................................... 40,626
Payable for professional fees......................................... 39,426
Payable for fund accounting fees (Note 2)............................. 6,809
Payable for Directors' fees and expenses (Note 2)..................... 2,129
Other accrued expenses................................................ 24,575
Collateral for securities loaned (Note 1)............................. 19,246,525
------------
Total liabilities................................................... 22,602,394
------------
Net assets.............................................................. $397,036,158
------------
------------
Class A:
Net asset value and redemption price per share ($188,072,191 DIVIDED BY
12,349,264 shares outstanding)......................................... $ 15.23
------------
------------
Maximum offering price per share (100/95.25 of $15.23) *................ $ 15.99
------------
------------
Class B:+
Net asset value and offering price per share ($206,525,800 DIVIDED BY
13,818,645 shares outstanding)......................................... $ 14.95
------------
------------
Advisor Class:
Net asset value, offering price per share, and redemption price per
share ($2,438,167 DIVIDED BY 159,540 shares outstanding)............... $ 15.28
------------
------------
Net assets consist of:
Paid in capital (Note 4).............................................. $388,131,790
Accumulated net investment loss....................................... (871,386)
Accumulated net realized loss on investments and foreign currency
transactions......................................................... (29,710,352)
Net unrealized depreciation on translation of assets and liabilities
in foreign currencies................................................ (304,569)
Net unrealized appreciation of investments............................ 39,790,675
------------
Total -- representing net assets applicable to capital shares
outstanding............................................................ $397,036,158
------------
------------
<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 EMERGING MARKETS FUND
STATEMENT OF OPERATIONS
Six months ended April 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Dividend income (net of foreign withholding tax of $95,626)................................ $3,489,034
Interest income............................................................................ 801,984
----------
Total investment income.................................................................. 4,291,018
----------
Expenses:
Investment management and administration fees (Note 2)..................................... 2,084,810
Service and distribution expenses: (Note 2)
Class A...................................................................... $ 533,937
Class B...................................................................... 1,053,355 1,587,292
----------
Transfer agent fees (Note 2)............................................................... 824,844
Custodian fees (Note 1).................................................................... 186,733
Registration and filing fees............................................................... 122,978
Printing and postage expenses.............................................................. 102,610
Fund accounting fees (Note 2).............................................................. 53,457
Audit fees................................................................................. 35,916
Legal fees................................................................................. 6,855
Directors' fees and expenses (Note 2)...................................................... 6,644
Amortization of organization costs (Note 1)................................................ 3,204
Other expenses (Note 1).................................................................... 145,971
----------
Total expenses before reductions......................................................... 5,161,314
----------
Expense reductions (Notes 1 & 6)....................................................... (115,488)
----------
Total net expenses....................................................................... 5,045,826
----------
Net investment loss.......................................................................... (754,808)
----------
Net realized and unrealized gain on investments and foreign currencies: (Note 1)
Net realized gain on investments............................................... 11,668,018
Net realized loss on foreign currency transactions............................. (944,367)
----------
Net realized gain during the period...................................................... 10,723,651
Net change in unrealized depreciation on translation of assets and liabilities
in foreign currencies......................................................... 33,914
Net change in unrealized appreciation of investments........................... 21,943,879
----------
Net unrealized appreciation during the period............................................ 21,977,793
----------
Net realized and unrealized gain on investments and foreign currencies....................... 32,701,444
----------
Net increase in net assets resulting from operations......................................... $31,946,636
----------
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F8
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
APRIL 30, OCTOBER 31,
1997 1996
------------- ---------------
<S> <C> <C>
Decrease in net assets
Operations:
Net investment income (loss).............................. $ (754,808) $ 2,628,437
Net realized gain (loss) on investments and foreign
currency transactions.................................... 10,723,651 (5,528,958)
Net change in unrealized appreciation on translation of
assets and liabilities in foreign currencies............. 33,914 31,246
Net change in unrealized appreciation of investments...... 21,943,879 22,530,391
------------- ---------------
Net increase in net assets resulting from operations.... 31,946,636 19,661,116
------------- ---------------
Class A:
Distributions to shareholders: (Note 1)
From net investment income................................ (142,211) --
Advisor Class:
Distributions to shareholders:
From net investment income................................ (15,847) --
------------- ---------------
Total distributions..................................... (158,058) --
------------- ---------------
Capital share transactions: (Note 4)
Increase from capital shares sold and reinvested.......... 805,712,087 1,443,673,824
Decrease from capital shares repurchased.................. (884,570,776) (1,499,221,358)
------------- ---------------
Net decrease from capital share transactions............ (78,858,689) (55,547,534)
------------- ---------------
Total decrease in net assets................................ (47,070,111) (35,886,418)
Net assets:
Beginning of period....................................... 444,106,269 479,992,687
------------- ---------------
End of period............................................. $ 397,036,158* $ 444,106,269*
------------- ---------------
------------- ---------------
* Includes undistributed/accumulated net investment
income/loss of........................................... $ (871,386) $ 41,480
------------- ---------------
------------- ---------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F9
<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
SIX OF
MONTHS OPERATIONS)
ENDED TO
APRIL YEAR ENDED OCTOBER 31, OCTOBER
30, -------------------------------------------- 31,
1997 (D) 1996 (D) 1995 (D) 1994 1993 1992
-------- -------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $14.26 $ 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................ 0.98 0.30 (4.32 ) 4.68 3.38 (0.40 )
-------- -------- -------- -------- -------- -------
Net increase (decrease) from
investment operations.............. 0.98 0.41 (4.19 ) 4.66 3.40 (0.33 )
-------- -------- -------- -------- -------- -------
Distributions to shareholders:
From net investment income............ (0.01 ) -- -- (0.01 ) (0.08 ) --
From net realized gain on
investments.......................... -- -- (0.77 ) (0.26 ) -- --
-------- -------- -------- -------- -------- -------
Total distributions................. (0.01 ) -- (0.77 ) (0.27 ) (0.08 ) --
-------- -------- -------- -------- -------- -------
Net asset value, end of period.......... $15.23 $ 14.26 $ 13.85 $ 18.81 $ 14.42 $11.10
-------- -------- -------- -------- -------- -------
-------- -------- -------- -------- -------- -------
Total investment return (c)............. 6.88% (a) 2.96% (23.04% 32.58% 30.90% (2.9% (a)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $188,072 $224,964 $252,457 $417,322 $187,808 $84,558
Ratio of net investment income (loss) to
average net assets..................... (0.11% (b) 0.76% 0.89% (0.11% 0.1%** 1.7% * *(b)
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
6)................................... 2.12% (b) 1.96% 2.12% 2.06% 2.4%** 2.4% * *(b)
Without expense reductions............ 2.17% (b) 2.08% 2.14% --%* --%* --%
Portfolio turnover rate++++............. 91% (b) 104% 114% 100% 99% 32% (b)
Average commission rate per share paid
on portfolio transactions++++.......... $0.0012 $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 net 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).
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
F10
<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++
-------------------------------------------------------------
SIX APRIL
MONTHS 1, 1993
ENDED TO
APRIL YEAR ENDED OCTOBER 31, OCTOBER
30, --------------------------------- 31,
1997 (D) 1996 (D) 1995 (D) 1994 1993
-------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $14.02 $ 13.68 $ 18.68 $ 14.39 $11.47
-------- -------- -------- -------- -------
Income from investment operations:
Net investment income (loss).......... (0.04 ) 0.04 0.06 (0.12 ) 0.00 ***
Net realized and unrealized gain
(loss) on investments................ 0.97 0.30 (4.29 ) 4.67 2.92
-------- -------- -------- -------- -------
Net increase (decrease) from
investment operations.............. 0.93 0.34 (4.23 ) 4.55 2.92
-------- -------- -------- -------- -------
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.......... $14.95 $ 14.02 $ 13.68 $ 18.68 $14.39
-------- -------- -------- -------- -------
-------- -------- -------- -------- -------
Total investment return (c)............. 6.63% (a) 2.49% (23.37% 31.77% 25.5% (a)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $206,526 $216,004 $225,861 $291,289 $32,318
Ratio of net investment income (loss) to
average net assets..................... (0.61% (b) 0.26% 0.39% (0.61% (0.4 )%***(b)
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
6)................................... 2.62% (b) 2.46% 2.62% 2.56% 2.9% ***(b)
Without expense reductions............ 2.67% (b) 2.58% 2.64% --%* --% *
Portfolio turnover rate++++............. 91% (b) 104% 114% 100% 99%
Average commission rate per share paid
on portfolio transactions++++.......... $0.0012 $0.0040 N/A N/A N/A
<CAPTION>
ADVISOR CLASS+++
--------------------------------
SIX JUNE 1,
MONTHS YEAR 1995
ENDED ENDED TO
APRIL OCTOBER OCTOBER
30, 31, 31,
1997 (D) 1996 (D) 1995
------- ------- -------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $14.38 $13.88 $14.71
------- ------- -------
Income from investment operations:
Net investment income (loss).......... 0.04 0.18 0.08
Net realized and unrealized gain
(loss) on investments................ 0.97 0.32 (0.91 )
------- ------- -------
Net increase (decrease) from
investment operations.............. 1.01 0.50 (0.83 )
------- ------- -------
Distributions to shareholders:
From net investment income............ (0.11 ) -- --
From net realized gain on
investments.......................... -- -- --
------- ------- -------
Total distributions................. (0.11 ) -- --
------- ------- -------
Net asset value, end of period.......... $15.28 $14.38 $13.88
------- ------- -------
------- ------- -------
Total investment return (c)............. 7.13% (a) 3.60% (5.71% (a)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $2,438 $3,139 $1,675
Ratio of net investment income (loss) to
average net assets..................... 0.39% (b) 1.26% 1.39% (b)
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
6)................................... 1.62% (b) 1.46% 1.62% (b)
Without expense reductions............ 1.67% (b) 1.58% 1.64% (b)
Portfolio turnover rate++++............. 91% (b) 104% 114%
Average commission rate per share paid
on portfolio transactions++++.......... $0.0012 $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 net 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).
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
F11
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
NOTES TO
FINANCIAL STATEMENTS
April 30, 1997
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
GT Global Emerging Markets 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 an 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 except that 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 GT
Capital deems it appropriate, prices obtained for the day of valuation from a
bond pricing service will be used. Short-term investments 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 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, 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
F12
<PAGE>
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 Forward Contracts in
connection with planned purchases or sales of securities, or to hedge against
adverse fluctuations in exchange rates between currencies.
(E) OPTION ACCOUNTING PRINCIPLES
When the Fund writes a call or put option, an amount equal to the premium
received is included in the Fund's "Statement of Assets and Liabilities" as an
asset and an equivalent liability. The amount of the liability is subsequently
marked-to-market to reflect the current market value of the option. The current
market value of an option listed on a traded exchange is valued at its last bid
price, or, in the case of an over-the-counter option, is valued at the average
of the last bid prices obtained from brokers. 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 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 April 30, 1997, stocks with an aggregate value of approximately $18,073,337
were on loan to brokers. The loans were secured by cash collateral of
$19,246,525 received by the Fund. For international securities, cash collateral
is received by the Fund against loaned securities in an amount at least equal to
105% of the market value of the loaned securities at the inception of each loan.
This collateral must be maintained at not less than 103% of the market value of
the loaned securities during the period of the loan. For domestic securities,
cash collateral is received by the Fund against loaned securities in an amount
at least equal to 102% of the market value of the loaned securities at the
inception of each loan. This collateral must be maintained at not less than 100%
of the market value of the loaned securities during the period of each loan. For
the period ended April 30, 1997, the Fund received security lending fees of
$55,679. Fees received from securities loaned were used to reduce the Fund's
custodian and administrative expenses.
(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
F13
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
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 $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.
(O) LINE OF CREDIT
The Fund, along with certain other funds advised by the Manager, has a line of
credit with the Bank of Boston. The arrangement with the bank allows the Fund to
borrow an aggregate maximum amount of $100,000,000. The Fund is limited to
borrowing up to 33 1/3% of the value of the Funds' total assets. On April 30,
1997, the Fund had no loans outstanding.
For the six months ended April 30, 1997, the average outstanding daily balance
of bank loans (based on the number of days the loans were outstanding) for the
Fund was $11,777,778. The average interest rate for the Fund was 6.54%. Interest
incurred on this loan for the period ended April 30, 1997 was $119,865, included
in "Other Expenses" on the Statement of Operations.
2. RELATED PARTIES
Chancellor LGT Asset Management, Inc. is the Fund's investment manager and
administrator. 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.
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 period ended April 30, 1997, GT Global retained $23,529
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 $13,044 for the period ended April 30, 1997. 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, 1997, GT Global collected CDSCs in
the amount of $812,689. 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
F14
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
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.
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 period ended April 30, 1997, purchases and sales of investment
securities by the Fund, other than short-term investments, aggregated
$175,213,689 and $251,376,767 respectively. There were no purchases or sales of
U.S. government obligations by the Fund for the period ended April 30, 1997.
4. CAPITAL SHARES
At April 30, 1997, 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:
F15
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
CAPITAL SHARE TRANSACTIONS
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1997 OCTOBER 31, 1996
-------------------------- --------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold............................. 42,934,346 $ 640,355,327 75,574,030 $1,106,260,084
Shares issued in connection with
reinvestment of distributions......... 8,655 123,358 -- --
----------- ------------- ----------- -------------
42,943,001 640,478,685 75,574,030 1,106,260,084
Shares repurchased...................... (46,365,991) (694,720,194) (78,034,654) (1,146,692,253)
----------- ------------- ----------- -------------
Net decrease............................ (3,422,990) $ (54,241,509) (2,460,624) $ (40,432,169)
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1997 OCTOBER 31, 1996
-------------------------- --------------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold............................. 9,897,991 $ 146,677,585 22,439,885 $ 323,192,109
Shares repurchased...................... (11,489,854) (170,260,674) (23,539,619) (339,644,019)
----------- ------------- ----------- -------------
Net decrease............................ (1,591,863) $ (23,583,089) (1,099,734) $ (16,451,910)
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1997 OCTOBER 31, 1996
-------------------------- --------------------------
ADVISOR CLASS SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold............................. 1,192,831 $ 18,540,013 966,362 $ 14,221,631
Shares issued in connection with
reinvestment of distributions......... 1,106 15,804 -- --
----------- ------------- ----------- -------------
1,193,937 18,555,817 966,362 14,221,631
Shares repurchased (1,252,618) (19,589,908) (868,859) (12,885,086)
----------- ------------- ----------- -------------
Net increase (decrease) (58,681) $ (1,034,091) 97,503 $ 1,336,545
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
</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 April 30, 1997 amounted to $4,000,000, at
value.
Transactions with affiliated companies are as follows:
<TABLE>
<CAPTION>
PURCHASES NET REALIZED DIVIDEND
COST SALES COST GAIN INCOME
----------- ---------- ------------ -----------
<S> <C> <C> <C> <C>
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 period ended April 30, 1997, the Fund's expenses
were reduced by $59,809 under these arrangements.
F16
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
NOTES
- --------------------------------------------------------------------------------
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL FUNDS
GT GLOBAL OFFERS A BROAD RANGE OF FUNDS TO COMPLEMENT MANY INVESTORS'
PORTFOLIOS. FOR MORE INFORMATION AND A PROSPECTUS ON ANY OF THE GT GLOBAL
FUNDS, PLEASE CONTACT YOUR INVESTMENT ADVISOR OR CALL GT GLOBAL DIRECTLY AT
1-800-824-1580. THE PROSPECTUS CONTAINS MORE COMPLETE INFORMATION, INCLUDING
CHARGES, EXPENSES AND THE RISKS OF GLOBAL AND EMERGING MARKET INVESTING.
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
Focuses on worldwide opportunities from the demand for consumer products and
services
GT GLOBAL HEALTH CARE FUND
Invests in growing health care industries worldwide
GT GLOBAL FINANCIAL SERVICES FUND
Focuses on the worldwide opportunities from the demand for financial services
and products
GT GLOBAL INFRASTRUCTURE FUND
Seeks companies that build, improve or maintain 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 MID CAP GROWTH FUND
Concentrates on 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 securities
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
GT GLOBAL FLOATING RATE FUND
Invests primarily in senior secured floating rate loans that have the potential
to achieve a high level of current income
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
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THIS REPORT MUST BE ACCOMPANIED OR PRECEDED BY A CURRENT PROSPECTUS.
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[LOGO]
GT Global, Inc.
Fifty California Street
27th Floor
San Francisco, California
94111-4624
DATED MATERIAL
PLEASE EXPEDITE
GT GLOBAL EMERGING MARKETS FUND
EMESAR706075M.322
