G T INVESTMENT FUNDS INC, 485BPOS, 1997-10-30

G T INVESTMENT FUNDS INC
485BPOS, 1997-10-30

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<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 30, 1997

FILE NOS. 33-19338
811-05426
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

---------------------

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

POST-EFFECTIVE AMENDMENT NO. 49

/X/

AND
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940

AMENDMENT NO. 50

/X/

------------------------

G.T. INVESTMENT FUNDS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)

50 CALIFORNIA STREET, 27TH FLOOR,
SAN FRANCISCO, CALIFORNIA 94111
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
(415) 392-6181

------------------------

<TABLE>
<S> <C>
MICHAEL A. SILVER, ESQ. ARTHUR J. BROWN, ESQ.
CHANCELLOR LGT ASSET R. DARRELL MOUNTS, ESQ.
MANAGEMENT, INC. KIRKPATRICK & LOCKHART LLP
50 CALIFORNIA STREET, 27TH FLOOR 1800 MASSACHUSETTS AVENUE, N.W.,
SAN FRANCISCO, CALIFORNIA 94111 2ND FLOOR,
(NAME AND ADDRESS OF AGENT FOR SERVICE) WASHINGTON, D.C. 20036
(202) 778-9000
</TABLE>

------------------------

IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE:

/ / IMMEDIATELY UPON FILING PURSUANT TO PARAGRAPH (b) OF RULE 485

/X/ ON NOVEMBER 1, 1997 PURSUANT TO PARAGRAPH (b) OF RULE 485

/ / 60 DAYS AFTER FILING PURSUANT TO PARAGRAPH (a)(1) OF RULE 485

/ / ON PURSUANT TO PARAGRAPH (a)(1) OF RULE 485

/ / 75 DAYS AFTER FILING PURSUANT TO PARAGRAPH (a)(2) OF RULE 485

/ / ON PURSUANT TO PARAGRAPH (a)(2) OF RULE 485

/ / THIS POST-EFFECTIVE AMENDMENT DESIGNATES A NEW EFFECTIVE DATE FOR A
PREVIOUSLY FILED POST-EFFECTIVE AMENDMENT.

PURSUANT TO RULE 24f-2 UNDER THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED,
REGISTRANT HAS PREVIOUSLY ELECTED TO REGISTER AN INDEFINITE NUMBER OF ITS SHARES
OF COMMON STOCK. A RULE 24f-2 NOTICE FOR REGISTRANT'S FISCAL YEAR ENDED OCTOBER
31, 1996, WAS FILED ON DECEMBER 27, 1996.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
G.T. INVESTMENT FUNDS, INC.
CROSS-REFERENCE SHEET
BETWEEN ITEMS ENUMERATED IN FORM N-1A AND THIS AMENDMENT
PROSPECTUS -- CLASS A AND CLASS B

<TABLE>
<CAPTION>
ITEM NO. OF
PART A OF FORM N-1A CAPTIONS IN PROSPECTUS
- --------------------------------- ------------------------------------------------------------------
<S> <C>
1. Cover Page................... Cover Page
2. Synopsis..................... Prospectus Summary
3. Condensed Financial
Information.................. Financial Highlights
4. General Description of
Registrant................... Investment Objectives and Policies; Risk Factors; Management;
Other Information
5. Management of the
Fund......................... Management
5A. Management's Discussion of
Fund Performance............. See Annual Report
6. Capital Stock and Other
Securities................... Dividends, Other Distributions and Federal Income Taxation; Other
Information
7. Purchase of Securities Being
Offered...................... Alternative Purchase Plan; How to Invest; How to Make Exchanges;
Calculation of Net Asset Value; Management
8. Redemption or
Repurchase................... Alternative Purchase Plan; How to Redeem Shares; Calculation of
Net Asset Value
9. Pending Legal
Proceedings.................. Not applicable

PROSPECTUS -- ADVISOR CLASS

ITEM NO. OF
PART A OF FORM N-1A CAPTIONS IN PROSPECTUS
- --------------------------------- ------------------------------------------------------------------
<S> <C>
1. Cover Page................... Cover Page
2. Synopsis..................... Prospectus Summary
3. Condensed Financial
Information.................. Financial Highlights
4. General Description of
Registrant................... Investment Objectives and Policies; Risk Factors; Management;
Other Information
5. Management of the Fund....... Management
5A. Management's Discussion of
Fund Performance............. See Annual Report
6. Capital Stock and Other
Securities................... Dividends, Other Distributions and Federal Income Taxation; Other
Information
7. Purchase of Securities Being
Offered...................... How to Invest; How to Make Exchanges; Calculation of Net Asset
Value; Management
8. Redemption or Repurchase..... How to Redeem Shares; Calculation of Net Asset Value
9. Pending Legal Proceedings.... Not applicable
</TABLE>

<PAGE>
G.T. INVESTMENT FUNDS, INC.
CROSS-REFERENCE SHEET
BETWEEN ITEMS ENUMERATED IN FORM N-1A AND THIS AMENDMENT

STATEMENT OF ADDITIONAL INFORMATION -- CLASS A AND CLASS B

<TABLE>
<CAPTION>
ITEM NO. OF
PART B OF FORM N-1A CAPTIONS IN STATEMENT OF ADDITIONAL INFORMATION
- --------------------------------- ------------------------------------------------------------------
<S> <C>
10. Cover Page................... Cover Page
11. Table of Contents............ Table of Contents
12. General Information and
History...................... Cover Page; Additional Information
13. Investment Objectives and
Policies..................... Investment Objectives and Policies;
Investment Limitations; Options, Futures and Currency Strategies;
Risk Factors; Execution of Portfolio Transactions
14. Management of the
Registrant................... Directors and Executive Officers; Management
15. Control Persons and Principal
Holders of Securities........ Directors and Executive Officers; Management
16. Investment Advisory and Other
Services..................... Management; Additional Information
17. Brokerage Allocation and
Other Practices.............. Execution of Portfolio Transactions
18. Capital Stock and Other
Securities................... Not applicable
19. Purchase, Redemption and
Pricing of Securities Being
Offered...................... Valuation of Fund Shares; Information Relating to
Sales and Redemptions
20. Tax Status................... Taxes
21. Underwriters................. Management
22. Calculation of Performance
Data......................... Investment Results
23. Financial Statements......... Financial Statements
</TABLE>

<PAGE>
G.T. INVESTMENT FUNDS, INC.
CROSS-REFERENCE SHEET
BETWEEN ITEMS ENUMERATED IN FORM N-1A AND THIS AMENDMENT

STATEMENT OF ADDITIONAL INFORMATION -- ADVISOR CLASS

<PAGE>
G.T. INVESTMENT FUNDS, INC.
CONTENTS OF POST-EFFECTIVE AMENDMENT

THIS POST-EFFECTIVE AMENDMENT TO THE REGISTRATION STATEMENT OF G.T. INVESTMENT
FUNDS, INC. CONTAINS THE FOLLOWING DOCUMENTS:

<TABLE>
<S> <C> <C>
Facing Sheet
Cross-Reference Sheet
Contents of Post-Effective Amendment
Part A -- Prospectus
-- GT Global Developing Markets Fund
-- Prospectus -- Advisor Class
-- GT Global Developing Markets Fund
Part B -- Statement of Additional Information
-- GT Global Developing Markets Fund
-- Statement of Additional Information -- Advisor Class
-- GT Global Developing Markets Fund
Part C -- Other Information
Signature Page
Exhibits
<FN>
- ------------------------
* The currently effective prospectuses and statements of additional information
for each of the following series of the Registrant are not affected by this
Amendment: GT Global Strategic Income Fund, GT Global Government Income Fund,
GT Global High Income Fund, GT Global Telecommunications Fund, GT Global
Health Care Fund, GT Global Financial Services Fund, GT Global Infrastructure
Fund, GT Global Natural Resources Fund, GT Global Consumer Products and
Services Fund, GT Global Emerging Markets Fund, GT Global Latin America Growth
Fund, GT Global Growth & Income Fund, GT Global Currency Fund and GT Global
Small Companies Fund.
</TABLE>
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND

PROSPECTUS -- NOVEMBER 1, 1997
- --------------------------------------------------------------------------------

GT GLOBAL DEVELOPING MARKETS FUND (the "Fund") primarily seeks long-term capital
appreciation. Its secondary investment objective is income, to the extent
consistent with seeking capital appreciation. The Fund normally invests
substantially all of its assets in issuers in the developing (or "emerging")
markets of Asia, Europe, Latin America and elsewhere. A majority of the Fund's
assets ordinarily is invested in emerging market equity securities. The Fund
also invests in emerging market debt securities, which are selected based on
their potential to provide a combination of capital appreciation and current
income. There can be no assurance that the Fund will achieve its investment
objectives.

The Fund is managed by Chancellor LGT Asset Management, Inc. (the "Manager").
The Manager and its worldwide affiliates are part of Liechtenstein Global Trust,
a provider of global asset management and private banking products and services
to individual and institutional investors.

The Fund is designed for long-term investors and not as a trading vehicle. The
Fund does not represent a complete investment program, nor is it suitable for
all investors. The Fund may invest significantly in equity and high yield, high
risk ("lower quality") debt securities that are predominantly speculative.
Investments of this type are subject to a greater risk of loss of principal and
interest. The Fund's investments in securities of issuers in developing markets
involves special considerations and risks that are not typically associated with
investments in securities of issuers in the United States or in other more
established markets. Investors should carefully assess the risks associated with
an investment in the Fund.

This Prospectus sets forth concisely information an investor should know before
investing and should be read carefully and retained for future reference. A
Statement of Additional Information, dated November 1, 1997, has been filed with
the Securities and Exchange Commission ("SEC") and, as supplemented or amended
from time to time, is incorporated herein by reference. The Statement of
Additional Information is available without charge by writing to the Fund at 50
California Street, 27th Floor, San Francisco, California 94111, or by calling
(800) 824-1580. It is also available, along with other related materials, on the
SEC's Internet web site (http://www.sec.gov).

FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR ENDORSED OR GUARANTEED BY,
ANY BANK, NOR ARE THEY FEDERALLY INSURED OR OTHERWISE PROTECTED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.

An investment in the Fund offers the following advantages:

/ / Access to Securities Markets Around the World

/ / Professional Management by a Leading Manager with Offices in the World's
Major Markets

/ / Low $500 Minimum Investment

/ / Alternative Purchase Plan

/ / Automatic Dividend and Other Distribution Reinvestment at No Additional
Sales Charge

/ / Exchange Privileges with the Corresponding Classes of the Other GT Global
Mutual Funds

/ / Reduced Sales Charge Plans

/ / Dollar Cost Averaging Program

/ / Automatic Investment Plan

/ / Systematic Withdrawal Plan

/ / Portfolio Rebalancing Program

FOR FURTHER INFORMATION, CALL

(800) 824-1580 OR CONTACT YOUR FINANCIAL ADVISER.

[LOGO]

- --------------------------------------------------------------------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED
ON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.

Prospectus Page 1
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND

TABLE OF CONTENTS
- ------------------------------------------------------------

<TABLE>
<CAPTION>
Page
---------
<S> <C>
Prospectus Summary........................................................................ 3
Financial Highlights...................................................................... 6
Alternative Purchase Plan................................................................. 7
Investment Objectives and Policies........................................................ 8
Risk Factors.............................................................................. 14
How to Invest............................................................................. 19
How to Make Exchanges..................................................................... 26
How to Redeem Shares...................................................................... 27
Shareholder Account Manual................................................................ 29
Calculation of Net Asset Value............................................................ 30
Dividends, Other Distributions and Federal Income Taxation................................ 31
Management................................................................................ 33
Other Information......................................................................... 36
</TABLE>

Prospectus Page 2
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND

PROSPECTUS SUMMARY
- ------------------------------------------------------------
The following summary is qualified in its entirety by the more detailed
information appearing in the body of this Prospectus.

<TABLE>
<S> <C> <C>
The Fund: The Fund is a non-diversified series of G.T. Investment Funds, Inc. (the
"Company").
Investment Objectives: The Fund's primary investment objective is long-term capital
appreciation; its secondary objective is income, to the extent
consistent with seeking capital appreciation.
Principal Investments: The Fund ordinarily invests a majority of its assets in emerging
market equity securities and also may invest in emerging market
debt securities.
Principal Risk Factors: There is no assurance that the Fund will achieve its investment
objectives. The Fund's net asset value per share will fluctuate,
reflecting fluctuations in the market value of its portfolio
holdings.
The Fund invests in foreign securities. Investments in foreign
securities involve risks relating to political and economic
developments abroad and the differences between the regulations to
which U.S. and foreign issuers are subject. Individual foreign
economies also may differ favorably or unfavorably from the U.S.
economy. Changes in foreign currency exchange rates will affect
the Fund's net asset value, earnings, and gains and losses
realized on sales of securities. Securities of foreign companies
may be less liquid and their prices more volatile than those of
securities of comparable U.S. companies. The Fund normally invests
substantially all of its assets in issuers in emerging markets.
Such investments entail greater risks than investing in issuers in
developed markets.
The Fund may engage in certain foreign currency, options and
futures transactions to attempt to hedge against the overall level
of investment and currency risk associated with its present or
planned investments. Such transactions involve certain risks and
transaction costs.
The value of debt securities held by the Fund generally fluctuates
inversely with interest rate movements. Certain investment grade
debt securities may possess speculative qualities. The Fund may
invest in below investment grade debt securities. Investments of
this type are subject to a greater risk of loss of principal and
interest.
See "Investment Objectives and Policies" and "Risk Factors."
Investment Manager: The Manager is part of Liechtenstein Global Trust, a provider of
global asset management and private banking products and services
to individual and institutional investors, entrusted with
approximately $86 billion in total assets as of September 30,
1997. The Manager and its worldwide asset management affiliates
maintain investment offices in Frankfurt, Hong Kong, London, New
York, San Francisco, Singapore, Sydney, Tokyo and Toronto. See
"Management."
Alternative Purchase Plan: Investors may select Class A or Class B shares of the Fund's
common stock, each subject to different expenses and a different
sales charge structure.
Class A Shares: Offered at net asset value plus any applicable sales charge
(maximum is 4.75% of public offering price) and subject to service
and distribution fees at the annualized rate of up to 0.50% of the
average daily net assets of the Class A shares.
</TABLE>

Prospectus Page 3
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND

PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------

<TABLE>
<S> <C> <C>
Class B Shares: Offered at net asset value (a maximum contingent deferred sales
charge of 5% of the shares' net asset value at time of purchase or
sale (whichever is less) is imposed on certain redemptions made
within six years of date of purchase) and subject to service and
distribution fees at the annualized rate of up to 1.00% of the
average daily net assets of the Class B shares.
Shares Available Through: Class A and Class B shares are available through broker/dealers
that have entered into agreements to sell shares with the Fund's
distributor, GT Global, Inc. ("GT Global"). Shares also may be
acquired directly through GT Global or through exchanges of shares
of the other GT Global Mutual Funds, which are open-end management
investment companies advised and/or administered by the Manager.
See "How to Invest" and "Shareholder Account Manual."
Exchange Privileges: Shares of a class of the Fund may be exchanged without a sales
charge for shares of the corresponding class of other GT Global
Mutual Funds. See "How to Make Exchanges" and "Shareholder Account
Manual." A redemption fee may apply on exchanges of Class A shares
out of the Fund. See "How to Redeem Shares -- Redemption Fee."
Redemptions: Shares may be redeemed either through broker/dealers or the Fund's
transfer agent, GT Global Investor Services, Inc. ("Transfer
Agent"). See "How to Redeem Shares" and "Shareholder Account
Manual."
Redemption Fee: The Fund will deduct and retain a 2% redemption fee from the
proceeds of all redemptions of Class A shares acquired as a result
of the reorganization of G.T. Global Developing Markets Fund, Inc.
into the Fund. The redemption fee will be imposed on all such
redemptions made before May 1, 1998. See "How to Redeem Shares."
Dividends and Other Dividends and other distributions from net investment income, and
Distributions: net short-term capital gain, net capital gain and net gains from
foreign currency transactions, if any, are paid annually.
Reinvestment: Dividends and other distributions may be reinvested automatically
in Fund shares of the distributing class or in shares of the
corresponding class of other GT Global Mutual Funds without a
sales charge.
First Purchase: $500 minimum ($100 for individual retirement accounts ("IRAs") and
reduced amounts for certain other retirement plans).
Subsequent Purchases: $100 minimum ($25 for IRAs and reduced amounts for certain other
retirement plans).
Net Asset Value: Quoted daily for Class A shares and expected to be quoted daily
for Class B shares in the financial section of most newspapers.
Other Features:
Class A Shares: Letter of Intent Dollar Cost Averaging Program
Quantity Discounts Automatic Investment Plan
Right of Accumulation Systematic Withdrawal Plan
Reinstatement Privilege Portfolio Rebalancing Program
Class B Shares: Reinstatement Privilege Systematic Withdrawal Plan
Dollar Cost Averaging Program Portfolio Rebalancing Program
Automatic Investment Plan
</TABLE>

Prospectus Page 4
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND

PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------

SUMMARY OF INVESTOR COSTS. The expenses and maximum transactions costs
associated with investing in the Class A and Class B shares of the Fund are
reflected in the following tables (1).

<TABLE>
<CAPTION>
CLASS A CLASS B
----------- -----------
<S> <C> <C>
SHAREHOLDER TRANSACTION COSTS (2):
Maximum sales charge on purchases of shares (as a % of offering price)............................. 4.75% None
Sales charges on reinvested distributions to shareholders.......................................... None None
Maximum deferred sales charge (as a % of net asset value at time of purchase or sale, whichever is
less)............................................................................................ None 5.0%
Redemption charges (3)............................................................................. 2.0% None
Exchange Fees:
-- On first four exchanges each year............................................................. None None
-- On each additional exchange................................................................... $7.50 $7.50
ANNUAL FUND OPERATING EXPENSES (4):
(AS A % OF AVERAGE NET ASSETS)
Investment management and administration fees...................................................... 0.98% 0.98%
12b-1 distribution and service fees (5)............................................................ 0.50% 1.00%
Other expenses (after estimated waivers)........................................................... 0.52% 0.52%
----------- -----------
Total Fund Operating Expenses........................................................................ 2.00% 2.50%
----------- -----------
----------- -----------
</TABLE>

HYPOTHETICAL EXAMPLE OF EFFECT OF EXPENSES:

An investor would have directly or indirectly paid the following expenses at the
end of the periods shown on a $1,000 investment in the Fund, assuming a 5%
annual return:

<TABLE>
<CAPTION>
ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS
---- ----- ----- -----
<S> <C> <C> <C> <C>
Class A Shares (6)........................................................................ $67 $108 $151 $271
Class B Shares:
Assuming a complete redemption at end of period (7)................................... $77 $111 $157 $286
Assuming no redemption................................................................ $26 $ 79 $135 $286
</TABLE>

- ------------------

(1) THESE TABLES ARE INTENDED TO ASSIST INVESTORS IN UNDERSTANDING THE VARIOUS
COSTS AND EXPENSES ASSOCIATED WITH INVESTING IN THE FUND. Long-term
shareholders may pay more than the economic equivalent of the maximum
front-end sales charges permitted by National Association of Securities
Dealers, Inc. rules regarding investment companies. THE "HYPOTHETICAL
EXAMPLE" IS NOT A REPRESENTATION OF PAST OR FUTURE EXPENSES. THE FUND'S
ACTUAL EXPENSES MAY BE MORE OR LESS THAN THOSE SHOWN. The tables and the
assumption in the example of a 5% annual return are required by regulations
of the SEC applicable to all mutual funds. The 5% annual return is not a
prediction of and does not represent the Fund's projected or actual
performance.

(2) Sales charge waivers are available for Class A and Class B shares, and
reduced sales charge purchase plans are available for Class A shares. The
maximum 5% contingent deferred sales charge on Class B shares applies to
redemptions during the first year after purchase; the charge generally
declines by 1% annually thereafter, reaching zero after six years. See "How
to Invest."

(3) The Fund will deduct and retain a 2% redemption fee from the proceeds of all
redemptions of Class A shares acquired as a result of the reorganization of
G.T. Global Developing Markets Fund, Inc. into the Fund. The redemption fee
will be imposed on all such redemptions before May 1, 1998. See "How to
Redeem Shares."

(4) Expenses are estimated based on the fees and expenses the Fund is expected
to incur during its initial fiscal year as an open-end fund and the
Manager's and GT Global's undertaking to limit the Fund's expenses
(exclusive of brokerage commissions, taxes, interest and extraordinary
expenses) to the annual rate of 2.00% and 2.50% of the average daily net
assets of the Fund's Class A shares and Class B shares, respectively.
Without waivers, "Other expenses" and "Total Fund Operating Expenses" are
estimated to be 0.65% and 2.13%, respectively, for Class A shares and 0.65%
and 2.63%, respectively, for Class B shares. "Other expenses" include
custody, transfer agent, legal and audit fees and other operating expenses.
See "Management" herein and in the Statement of Additional Information for
more information. The Fund also offers Advisor Class shares to certain
categories of investors. See "Alternative Purchase Plan." Advisor Class
shares are not subject to 12b-1 distribution and service fees.

(5) Reflects maximum level of fees authorized for each Class under the Fund's
Rule 12b-1 distribution plans. The actual level of fees may be lower.

(6) Assumes payment of maximum sales charge by the investor.

(7) Assumes payment of the applicable contingent deferred sales charge.

Prospectus Page 5
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND

FINANCIAL HIGHLIGHTS

- --------------------------------------------------------------------------------

The table below provides condensed financial information concerning income and
capital changes for one share of G.T. Global Developing Markets Fund, Inc. (the
"Predecessor Fund") for the periods shown. This information is supplemented by
the financial statements and accompanying notes appearing in the Statement of
Additional Information. The financial information in the table below has been
audited by Coopers & Lybrand L.L.P., independent accountants. The Predecessor
Fund was a closed-end investment company whose single class of shares traded on
the New York Stock Exchange ("NYSE"). On October 31, 1997, the Fund, which had
no previous operating history, acquired the assets and assumed the liabilities
of the Predecessor Fund. On that date, all shareholders of the Predecessor Fund
received Class A shares of the Fund. The fees and expenses of the Fund will
differ from those of the Predecessor Fund. The Fund's fiscal year end will be
October 31, rather than December 31, which was the Predecessor Fund's fiscal
year end.

GT GLOBAL DEVELOPING MARKETS FUND
(SUCCESSOR TO G.T. GLOBAL DEVELOPING MARKETS FUND, INC.)

(For the entire period shown, the Predecessor Fund operated as a closed-end
investment company traded on the NYSE.)

<TABLE>
<CAPTION>
YEAR ENDED JANUARY 11, 1994
SIX MONTHS DECEMBER 31, (COMMENCEMENT
ENDED -------------------- OF OPERATIONS) TO
JUNE 30, 1997 1996 1995 DECEMBER 31, 1994
------------- --------- --------- ------------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period......................... $ 13.84 $ 11.60 $ 12.44 $ 15.00
------------- --------- --------- ----------
Income from investment operations:
Net investment income...................................... 0.20 0.53 0.72 0.35
Net realized and unrealized gain (loss) on investments..... 1.35 2.19 (0.84) (2.46)
------------- --------- --------- ----------
Net increase (decrease) from investment operations....... 1.55 2.72 (0.12) (2.11)
------------- --------- --------- ----------
Distributions to shareholders:
From net investment income................................. -- (0.48) (0.72) (0.35)
From net realized gain on investments...................... -- -- -- (0.10)
------------- --------- --------- ----------
Total distributions...................................... -- (0.48) (0.72) (0.45)
------------- --------- --------- ----------
Net asset value, end of period............................... $ 15.39 $ 13.84 $ 11.60 $ 12.44
------------- --------- --------- ----------
------------- --------- --------- ----------
Total investment return (based on net asset value)(a)........ 11.20%+ 23.59% (0.95)% (14.07 )%+

Ratios and supplemental data:
Net assets, end of period (in 000's)......................... $ 560,599 $ 504,012 $ 422,348 $ 452,872
Ratio of net investment income to average net assets....... 2.75%++ 4.07% 6.33% 2.75%++
Ratio of expenses to average net assets:
With expense reductions.................................... 1.82%++ 1.82% 1.77% 2.01%++
Without expense reductions................................. 1.85%++ 1.85% 1.80% 2.01%++
Portfolio turnover rate...................................... 217%++ 138% 75% 56%
Average commission rate per share paid on portfolio
transactions................................................ $ 0.0019 $ 0.0022 N/A N/A
<FN>
- ------------------
</TABLE>

+ Not annualized

++ Annualized

N/A Not Applicable

(a) Total investment return does not include sales charges and differs from the
Predecessor Fund's total investment return based on market value.

Prospectus Page 6
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND

ALTERNATIVE PURCHASE PLAN

- --------------------------------------------------------------------------------

DIFFERENCES BETWEEN THE CLASSES. The primary difference between the two classes
of the Fund's shares offered through this Prospectus lies in their sales charge
structures and ongoing expenses, as summarized below. Class A and Class B shares
represent the same interests in the Fund and have the same rights, except that
each class bears the separate expenses of its Rule 12b-1 distribution plan and
has exclusive voting rights with respect to such plan, and each class has a
separate exchange privilege. See "Management" and "How to Make Exchanges." Each
class has distinct advantages and disadvantages for different investors, and
investors should choose the class that better suits their circumstances and
objectives.

CLASS A SHARES. Class A shares are sold at net asset value plus an initial sales
charge of up to 4.75% of the public offering price imposed at the time of
purchase. This initial sales charge is reduced or waived for certain purchases.
Purchases of $500,000 or more must be for Class A shares. Class A shares bear
annual service and distribution fees of up to 0.50% of the average daily net
assets of that class.

CLASS B SHARES. Class B shares are sold at net asset value with no initial sales
charge at the time of purchase. Therefore, the entire amount of an investor's
purchase payment is invested in the Fund. Class B shares bear annual service and
distribution fees of up to 1.00% of the average daily net assets of that class,
and Class B shareholders pay a contingent deferred sales charge of up to 5% of
the lesser of the original purchase price or the net asset value of such shares
at the time of redemption. The higher service and distribution fees paid by the
Class B shares should cause that class to have a higher expense ratio and to pay
lower dividends per share than Class A shares.

FACTORS TO CONSIDER IN CHOOSING A CLASS OF SHARES. In deciding which class of
shares to purchase, investors should consider the foregoing factors as well as
the following:

INTENDED HOLDING PERIOD. Over time, the cumulative expense of the 1.00% annual
service and distribution fees on the Class B shares will approximate or exceed
the expense of the applicable 4.75% maximum initial sales charge plus the 0.50%
service and distribution fees on the Class A shares. For example, if net asset
value remains constant, the Class B shares' aggregate service and distribution
fees would be equal to the Class A shares' initial maximum sales charge and
service and distribution fees approximately nine years after purchase.
Thereafter, Class B shares would experience higher cumulative expenses.
Investors who expect to maintain their investment in the Fund over the long-term
but do not qualify for a reduced initial sales charge might elect the Class A
initial sales charge alternative because the indirect expense to the shareholder
of the accumulated service and distribution fees on the Class B shares
eventually will exceed the initial sales charge paid by the shareholder plus the
indirect expense to the shareholder of the accumulated distribution fees of
Class A shares. Class B investors, however, enjoy the benefit of permitting all
their dollars to work from the time the investments are made. Any positive
investment return on this additional invested amount would partially or wholly
offset the higher annual expenses borne by Class B shares. Because the Fund's
future returns cannot be predicted, however, there can be no assurance that such
a positive return will be achieved.

Finally, Class B shareholders pay a contingent deferred sales charge if they
redeem during the first six years after purchase, unless a sales charge waiver
applies. Investors expecting to redeem during this period should consider the
cost of the applicable contingent deferred sales charge in addition to the
annual Class B service and distribution fees, as compared with the cost of the
applicable initial sales charge and the annual service and distribution fees
applicable to the Class A shares.

REDUCED SALES CHARGES. Class A share purchases of $50,000 or more and Class A
share purchases made under the Fund's reduced sales charge plans may be made at
a reduced initial sales charge. See "How to Invest" for a complete list of
reduced sales charges applicable to Class A purchases.

WAIVER OF SALES CHARGES. The entire initial sales charge on Class A shares is
waived for certain eligible purchasers, and these purchasers' entire purchase
price would be immediately invested in the Fund. Investors eligible for complete
initial sales

Prospectus Page 7
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND
charge waivers should purchase Class A shares. The contingent deferred sales
charge is waived for certain redemptions of Class B shares. A 1% contingent
deferred sales charge is imposed on certain redemptions of Class A shares on
which no initial sales charge was assessed.

Investors should understand that the contingent deferred sales charge on the
Class B shares and the initial sales charge on the Class A shares are both
intended to compensate GT Global and selling broker/dealers for their
distribution services. Broker/dealers may receive different levels of
compensation for selling a particular class of shares.

See "How to Invest," "How to Redeem Shares," and "Management" for a more
complete description of the initial and contingent deferred sales charges,
service fees and distribution fees for Class A and Class B shares and
"Dividends, Other Distributions and Federal Income Taxation" and "Calculation of
Net Asset Value" for other differences between these two classes.

ADVISOR CLASS SHARES. Advisor Class shares are offered through a separate
prospectus to (a) trustees or other fiduciaries purchasing shares for employee
benefit plans that are sponsored by organizations that have at least 1,000
employees; (b) any account with assets of at least $10,000 if (i) a financial
planner, trust company, bank trust department or registered investment adviser
has investment discretion over such account, and (ii) the account holder pays
such person as compensation for its advice and other services an annual fee of
at least .50% on the assets in the account; (c) any account with assets of a
least $10,000 if (i) such account is established under a "wrap fee" program and
(ii) the account holder pays the sponsor of such program an annual fee of at
least .50% on the assets in the account; (d) accounts advised by one of the
companies composing or affiliated with Liechtenstein Global Trust; and (e) any
of the companies composing or affiliated with Liechtenstein Global Trust.

- --------------------------------------------------------------------------------

INVESTMENT OBJECTIVES
AND POLICIES

- --------------------------------------------------------------------------------

The Fund's primary investment objective is long-term capital appreciation; its
secondary objective is income, to the extent consistent with seeking capital
appreciation. The Fund normally invests substantially all of its assets in
issuers in the developing (or "emerging") markets of Asia, Europe, Latin America
and elsewhere. A majority of the Fund's assets ordinarily are invested in
emerging market equity securities. The Fund may invest in the following types of
equity securities: common stock, preferred stock, securities convertible into
common stock, American Depository Receipts, Global Depository Receipts, rights
and warrants to acquire such securities and substantially similar forms of
equity with comparable risk characteristics. The Fund may also invest in
emerging market debt securities that will be selected based on their potential
to provide a combination of capital appreciation and current income.

For purposes of the Fund's operations, emerging markets consist of all countries
determined by the Manager to have developing or emerging economies and markets.
These countries generally include every country in the world except the United
States, Canada, Japan, Australia, New Zealand and most countries located in
Western Europe. See "Investment Objectives and Policies" in the Statement of
Additional Information for a complete list of all the countries that the Fund
does not currently consider to be emerging markets.

For purposes of the Fund's policy of normally investing substantially all of its
assets in issuers in

Prospectus Page 8
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND
emerging markets, the Fund will consider investment in the following emerging
markets:

<TABLE>
<S> <C> <C>
Algeria Hong Kong Peru
Argentina Hungary Philippines
Bolivia India Poland
Botswana Indonesia Portugal
Brazil Israel Republic of
Bulgaria Ivory Coast Slovakia
Chile Jamaica Russia
China Jordan Singapore
Colombia Kazakhstan Slovenia
Costa Rica Kenya South Africa
Cyprus Lebanon South Korea
Czech Malaysia Sri Lanka
Republic Mauritius Swaziland
Dominican Mexico Taiwan
Republic Morocco Thailand
Ecuador Nicaragua Turkey
Egypt Nigeria Ukraine
El Salvador Oman Uruguay
Finland Pakistan Venezuela
Ghana Panama Zambia
Greece Paraguay Zimbabwe
</TABLE>

Although the Fund considers each of the above-listed countries eligible for
investment, it will not be invested in all such markets at all times. Moreover,
investing in some of those markets currently may not be desirable or feasible,
due to the lack of adequate custody arrangements for the Fund's assets, overly
burdensome repatriation and similar restrictions, the lack of organized and
liquid securities markets, unacceptable political risks or for other reasons.

As used in this Prospectus, an issuer in an emerging market is an entity (1) for
which the principal securities trading market is an emerging market, as defined
above, (2) that (alone or on a consolidated basis) derives 50% or more of its
total revenues from business in emerging markets, provided that, in the
Manager's view, the value of such issuer's securities will tend to reflect
emerging market developments to a greater extent than developments elsewhere, or
(3) organized under the laws of, or with a principal office in, an emerging
market.

In selecting investments, the Manager seeks to identify those countries and
industries where economic and political factors, including currency movements,
are likely to produce above-average growth rates over the long term. The Manager
seeks those emerging markets that have strongly developing economies and in
which the markets are becoming more sophisticated. The Manager then invests in
those companies in such countries and industries that it believes are best
positioned and managed to take advantage of these economic and political
factors. The Manager believes that the issuers of securities in emerging markets
often have sales and earnings growth rates that exceed those in developed
countries and that such growth rates may in turn be reflected in more rapid
share price appreciation.

As opportunities to invest in securities in other emerging markets develop, the
Fund expects to expand and further broaden the group of emerging markets in
which it invests. In some cases, investments in debt securities could provide
the Fund with access to emerging markets in the early stages of their economic
development, when equity securities are not yet generally available or, in the
Manager's view, do not yet present an acceptable investment alternative. While
the Fund generally is not restricted in the portion of its assets that may be
invested in a single region, under normal conditions its assets will be invested
in issuers in at least four countries, and it will not invest more than 25% of
its assets in issuers in one country. The Fund's holdings of any one foreign
currency together with securities denominated in or indexed to such currency
will not exceed 40% of its assets.

INVESTMENTS IN DEBT SECURITIES. The Fund may invest up to 50% of its total
assets in the following types of emerging market debt securities: (1) debt
securities issued or guaranteed by governments, their agencies,
instrumentalities or political subdivisions, or by government owned, controlled
or sponsored entities, including central banks (collectively, "Sovereign Debt"),
including Brady Bonds; (2) interests in issuers organized and operated for the
purpose of restructuring the investment characteristics of Sovereign Debt; (3)
debt securities issued by banks and other business entities; and (4) debt
securities denominated in or indexed to the currencies of emerging markets. Debt
securities held by the Fund may take the form of bonds, notes, bills,
debentures, bank debt obligations, short-term paper, loan participations,
assignments and interests issued by entities organized and operated for the
purpose of restructuring the investment characteristics of any of the foregoing.
There is no requirement with respect to the maturity or duration of debt
securities in which the Fund may invest.

Prospectus Page 9
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND

bonds." Debt securities in which the Fund will invest may not be rated; if
rated, it is expected that such ratings will be below investment grade. See
"Risk Factors -- Risks Associated with Debt Securities" and "-- Risks Associated
with Below Investment Grade Debt Securities."

The Fund may invest in "Brady Bonds," which are debt restructurings that provide
for the exchange of cash and loans for newly issued bonds. Brady Bonds have been
issued by the countries of Albania, Argentina, Brazil, Bulgaria, Costa Rica,
Dominican Republic, Ecuador, Ivory Coast, Jordan, Mexico, Nigeria, Panama, Peru,
Philippines, Poland, Uruguay, Venezuela and Vietnam, and are expected to be
issued by other emerging market countries. As of the date of this Prospectus,
the Fund is not aware of the occurrence of any payment defaults on Brady Bonds.
Investors should recognize, however, that Brady Bonds do not have a long payment
history. In addition, Brady Bonds are often rated below investment grade.

The Fund may invest in either collateralized or uncollateralized Brady Bonds.
U.S. dollar-denominated collateralized Brady Bonds, which may be fixed rate par
bonds or floating rate discount bonds, are collateralized in full as to
principal by U.S. Treasury zero coupon bonds having the same maturity as the
bonds. Interest payments on such bonds generally are collateralized by cash or
securities in an amount that, in the case of fixed rate bonds, is equal to at
least one year of rolling interest payments or, in the case of floating rate
bonds, initially is equal to at least one year's rolling interest payments based
on the applicable interest rate at the time of issuance and is adjusted at
regular intervals thereafter.

Capital appreciation in debt securities may arise as a result of a favorable
change in relative foreign exchange rates, relative interest rate levels and/or
the creditworthiness of issuers.

ADDITIONAL INVESTMENT POLICIES

TEMPORARY DEFENSIVE STRATEGIES. In the interest of preserving shareholders'
capital, the Manager may employ a temporary defensive investment strategy for
the Fund if it determines such a strategy to be warranted due to market,
economic or political conditions. Under a defensive strategy, the Fund may hold
cash (U.S. dollars, foreign currencies or multinational currency units) and/or
invest any portion or all of its assets in high quality money market instruments
of U.S. or foreign issuers. In addition, for temporary defensive purposes, most
or all of the Fund's investments may be made in the United States and
denominated in U.S. dollars. To the extent the Fund adopts a temporary defensive
posture, it will not be invested so as to directly achieve its investment
objectives. In addition, pending investment of proceeds from new sales of Fund
shares or in order to meet ordinary daily cash needs, the Fund may hold cash
(U.S. dollars, foreign currencies or multinational currency units) and may
invest in foreign or domestic high quality money market instruments.

BORROWING AND REVERSE REPURCHASE AGREEMENTS. In connection with meeting requests
for the redemption of Fund shares, the Fund may borrow from banks or may borrow
through reverse repurchase agreements. The Fund also may borrow up to 5% of its
total assets for temporary or emergency purposes other than to meet redemptions,
but total borrowings may not exceed 33 1/3% of its total assets. However, the
Fund will not purchase securities while borrowings in excess of 5% of its total
assets are outstanding. Any borrowing by the Fund may cause greater fluctuation
in the value of its shares than would be the case if it did not borrow.

A reverse repurchase agreement is a borrowing transaction in which the Fund
transfers possession of a security to another party, such as a bank or
broker/dealer, in return for cash and agrees to repurchase the security in the
future at an agreed-upon price that includes an interest component.

SECURITIES LENDING. The Fund may lend its portfolio securities to broker/dealers
or to other institutional investors. Securities lending allows the Fund to
retain ownership of the securities loaned and, at the same time, enhances the
Fund's total return. The Fund limits its loans of portfolio securities to an
aggregate of 30% of the value of its total assets, measured at the time any such
loan is made. While a loan is outstanding, the borrower must maintain with the
Fund's custodian collateral consisting of cash, U.S. government securities or
certain irrevocable letters of credit equal to at least 100% of the value of the
borrowed securities plus any accrued interest or such other collateral as
permitted by the Fund's investment program and regulatory agencies, and as
approved by the Board. The risks in lending portfolio securities, as with other
extensions of secured credit, consist of possible delays in receiving additional
collateral or in recovery of the securities and possible loss of rights in the
collateral if the borrower fails financially.

OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. To attempt to increase
return, the

Prospectus Page 10
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND
Fund may write call options on securities. This strategy will be employed only
when, in the opinion of the Manager, the size of the premium the Fund receives
for writing the option is adequate to compensate it against the risk that
appreciation in the underlying security may not be fully realized if the option
is exercised. The Fund also is authorized to write put options to attempt to
enhance return, although it does not currently intend to do so.

The Fund may also use forward currency contracts, futures contracts, options on
securities, options on currencies, options on indices and options on futures
contracts to attempt to hedge against the overall level of investment and
currency risk normally associated with its investments. These instruments are
often referred to as "derivatives," which may be defined as financial
instruments whose performance is derived, at least in part, from the performance
of another asset (such as a security, currency or an index of securities). The
Fund may enter into such instruments up to the full value of its portfolio
assets. See "Options, Futures and Currency Strategies" in the Statement of
Additional Information.

To attempt to hedge against adverse movements in exchange rates between
currencies, the Fund may enter into forward currency contracts for the purchase
or sale of a specified currency at a specified future date. Such contracts may
involve the purchase or sale of a foreign currency against the U.S. dollar or
may involve two foreign currencies. The Fund may enter into forward currency
contracts either with respect to specific transactions or with respect to its
portfolio positions. The Fund also may purchase and sell put and call options on
currencies, futures contracts on currencies and options on such futures
contracts to hedge its portfolio against movements in exchange rates.

Only a limited market, if any, currently exists for options and futures
transactions relating to currencies of most emerging markets, to securities
denominated in such currencies or to securities of issuers domiciled or
principally engaged in business in such emerging markets. To the extent that
such a market does not exist, the Manager may not be able to effectively hedge
its investment in such markets.

In addition, the Fund may purchase and sell put and call options on equity and
debt securities to hedge against the risk of fluctuations in the prices of
securities held by the Fund or that the Manager intends to include in the Fund's
portfolio. The Fund also may purchase and sell put and call options on stock
indices to hedge against overall fluctuations in the securities markets or in a
specific market sector.

Further, the Fund may sell index futures contracts and may purchase put options
or write call options on such futures contracts to protect against a general
market or a specific market sector decline that could adversely affect the
Fund's portfolio. The Fund also may purchase index futures contracts and
purchase call options or write put options on such contracts to hedge against a
general market or market sector advance and thereby attempt to lessen the cost
of future securities acquisitions. Similarly, the Fund may use interest rate
futures contracts and options thereon to hedge the debt portion of its portfolio
against changes in the general level of interest rates.

INVESTMENT IN OTHER INVESTMENT COMPANIES OR VEHICLES. The Fund may be able to
invest in certain countries solely or primarily through governmentally
authorized investment vehicles or companies. Pursuant to the Investment Company
Act of 1940, as amended (the "1940 Act"), the Fund generally may invest up to
10% of its total assets in the aggregate in shares of other investment companies
and up to 5% of its total assets in any one investment company, as long as each
investment does not represent more than 3% of the outstanding voting stock of
the acquired investment company at the time of investment.

Investment in other investment companies may involve the payment of substantial
premiums above the value of their portfolio securities and multiple layering of
fees and expenses and is subject to limitations under the 1940 Act and market
availability. The Fund does not intend to invest in other investment companies
unless, in the judgment of the Manager, the potential benefits of such
investment justify the payment of any applicable premium or sales charge. As a
shareholder in another investment company, the Fund would bear its ratable share
of that company's expenses, including its advisory and administration fees. At
the same time the Fund would continue to pay its own management fees and other
expenses.

Prospectus Page 11
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND
and intends to invest assets of the Fund in privatizations in appropriate
circumstances. In certain emerging markets, the ability of foreign entities such
as the Fund to participate in privatizations may be limited by local law or the
terms on which the Fund may be permitted to participate may be less advantageous
than those afforded local investors. There can be no assurance that governments
in emerging markets will continue to sell companies currently owned or
controlled by them or that privatization programs will be successful.

WHEN-ISSUED AND FORWARD COMMITMENT SECURITIES. The Fund may purchase debt
securities on a "when-issued" basis and may purchase or sell such securities on
a "forward commitment" basis in order to hedge against anticipated changes in
interest rates and prices. The price, which is generally expressed in yield
terms, is fixed at the time the commitment is made, but delivery and payment for
the securities take place at a later date. When-issued securities and forward
commitments may be sold prior to the settlement date, but the Fund will purchase
or sell when-issued securities and forward commitments only with the intention
of actually receiving or delivering the securities, as the case may be. No
income accrues on securities that have been purchased pursuant to a forward
commitment or on a when-issued basis prior to delivery to the Fund. If the Fund
disposes of the right to acquire a when-issued security prior to its acquisition
or disposes of its right to deliver or receive against a forward commitment, it
may incur a gain or loss. At the time the Fund enters into a transaction on a
when-issued or forward commitment basis, a segregated account consisting of cash
or liquid securities equal to the value of the when-issued or forward commitment
securities will be established and maintained with the Fund's custodian bank and
will be marked to market daily. There is a risk that the securities may not be
delivered and that the Fund may incur a loss.

LOAN PARTICIPATIONS AND ASSIGNMENTS. The Fund may invest in fixed and floating
rate loans ("Loans") arranged through private negotiations between a foreign
entity and one or more financial institutions ("Lenders"). The majority of the
Fund's investments in Loans in emerging markets is expected to be in the form of
participations in Loans ("Participations") and assignments of portions of Loans
from third parties ("Assignments"). Participations typically will result in the
Fund having a contractual relationship only with the Lender, not with the
borrower. The Fund will have the right to receive payments of principal,
interest and any fees to which it is entitled only from the Lender selling the
Participation and only upon receipt by the Lender of the payments from the
borrower. In connection with purchasing Participations, the Fund generally will
have no right to enforce compliance by the borrower with the terms of the loan
agreement relating to the loan, nor any rights of set-off against the borrower,
and the Fund may not directly benefit from any collateral supporting the Loan in
which it has purchased the Participation. As a result, the Fund will assume the
credit risk of both the borrower and the Lender that is selling the
Participation.

In the event of the insolvency of the Lender selling a Participation, the Fund
may be treated as a general creditor of the Lender and may not benefit from any
set-off between the Lender and the borrower. The Fund will acquire
Participations only if the Lender interpositioned between the Fund and the
borrower is determined by the Manager to be creditworthy. When the Fund
purchases Assignments from Lenders, the Fund will acquire direct rights against
the borrower on the Loan. However, because Assignments are arranged through
private negotiations between potential assignees and assignors, the rights and
obligations acquired by the Fund as the purchaser of an Assignment may differ
from, and be more limited than, those held by the assigning Lender.

ZERO COUPON SECURITIES. The Fund may invest in certain zero coupon securities
that are "stripped" U.S. Treasury notes and bonds. The Fund also may invest in
zero coupon and other deep discount securities issued by foreign governments and
domestic and foreign corporations, including certain Brady Bonds and other
foreign debt, and in payment-in-kind securities. Zero coupon securities pay no
interest to holders prior to maturity, and payment-in-kind securities pay
"interest" in the form of additional securities. However, a portion of the
original issue discount on zero coupon securities and the interest on
payment-in-kind securities will be included in the Fund's income. Accordingly,
for the Fund to continue to qualify for tax treatment as a regulated investment
company and to avoid a certain excise tax (see "Taxes" in the Statement of
Additional Information), it may be required to distribute an amount that is
greater than the total amount of cash it actually receives. These distributions
may be made from the Fund's cash assets or, if necessary, from the proceeds of
sales of portfolio securities. The Fund will not be able to purchase additional
income-producing securities with cash used to make such

Prospectus Page 12
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND
distributions, and its current income ultimately may be reduced as a result.
Zero coupon and payment-in-kind securities usually trade at a deep discount from
their face or par value and will be subject to greater fluctuations of market
value in response to changing interest rates than debt obligations of comparable
maturities that make current distributions of interest in cash.

INDEXED COMMERCIAL PAPER. The Fund may invest without limitation in commercial
paper that is indexed to certain specific foreign currency exchange rates. The
terms of such commercial paper provide that its principal amount is adjusted
upwards or downwards (but not below zero) at maturity to reflect changes in the
exchange rate between two currencies while the obligation is outstanding. The
Fund will purchase such commercial paper with the currency in which it is
denominated and, at maturity, will receive interest and principal payments
thereon in that currency, but the amount of principal payable by the issuer at
maturity will change in proportion to the change (if any) in the exchange rate
between the two specified currencies between the date the instrument is issued
and the date the instrument matures. While such commercial paper entails the
risk of loss of principal, the potential for realizing gains as a result of
changes in foreign currency exchange rates enables the Fund to hedge against a
decline in the U.S. dollar value of investments denominated in foreign
currencies while seeking to provide an attractive money market rate of return.
The Fund will not purchase such commercial paper for speculation.

OTHER INDEXED SECURITIES. The Fund may invest in certain other indexed
securities, which are securities whose prices are indexed to the prices of other
securities, securities indices, currencies, precious metals or other commodities
or other financial indicators. Indexed securities typically, but not always, are
debt securities or deposits whose value at maturity or coupon rate is determined
by reference to a specific instrument or statistic. The performance of indexed
securities depends to a great extent on the performance of the security,
currency or other instrument to which they are indexed and also may be
influenced by interest rate changes in the United States and abroad. At the same
time, indexed securities are subject to the credit risks associated with the
issuer of the security, and their values may decline substantially if the
issuer's creditworthiness deteriorates. Indexed securities may be more volatile
than the underlying instruments. New forms of indexed securities continue to be
developed. The Fund may invest in such securities to the extent consistent with
its investment objectives.

OTHER INFORMATION. The Fund's investment objectives may not be changed without
the approval of a majority of its outstanding voting securities. A "majority of
its outstanding voting securities" means the lesser of (i) 67% of the shares
represented at a meeting at which more than 50% of the outstanding shares are
represented, or (ii) more than 50% of the outstanding shares. In addition, the
Fund has adopted certain investment limitations that also may not be changed
without shareholder approval. A complete description of these limitations is
included in the Statement of Additional Information. Unless specifically noted,
the Fund's investment policies described in this Prospectus and in the Statement
of Additional Information may be changed by a vote of a majority of the
Company's Board of Directors without shareholder approval. The Fund's policies
regarding lending, and the percentage of Fund assets that may be committed to
borrowing, are fundamental policies and may not be changed without shareholder
approval.

Prospectus Page 13
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND

RISK FACTORS

- --------------------------------------------------------------------------------

GENERAL. There is no assurance that the Fund will achieve its investment
objectives. The Fund's net asset value will fluctuate, reflecting fluctuations
in the market value of its portfolio positions. Equity securities, particularly
common stocks, generally represent the most junior position in an issuer's
capital structure and entitle holders to an interest in the assets of an issuer,
if any, remaining after all more senior claims have been satisfied.

Investing in the Fund entails a substantial degree of risk, and an investment in
the Fund should be considered speculative. Investors are strongly advised to
consider carefully the special risks involved in investing in emerging markets,
which are in addition to the usual risks of investing in developed markets
around the world.

NON-DIVERSIFIED CLASSIFICATION. The Fund is classified under the 1940 Act as a
"non-diversified" fund. As a result, the Fund will be able to invest in a
smaller number of issuers than if it was classified under the 1940 Act as a
"diversified" fund. To the extent that the Fund invests in a smaller number of
issuers, the net asset value of its shares may fluctuate more widely and it may
be subject to greater investment and credit risk with respect to its portfolio.

FOREIGN INVESTING. Investing in foreign securities entails certain risks. The
securities of non-U.S. issuers generally will not be registered with, nor the
issuers thereof be subject to, the reporting requirements of, the SEC.
Accordingly, there may be less publicly available information about foreign
securities and issuers than is available about domestic securities and issuers.
Foreign companies generally are not subject to uniform accounting, auditing and
financial reporting standards, practices and requirements comparable to those
applicable to domestic companies. In addition, certain costs attributable to
foreign investing, such as custody charges, are higher than those attributable
to domestic investing. Securities of some foreign companies are less liquid and
their prices may be more volatile than securities of comparable domestic
companies. The Fund's net investment income from foreign issuers may be subject
to non-U.S. withholding taxes, thereby reducing that income.

Investing in some foreign countries involves risks relating to potential
political and economic instability within such countries and the risks of
expropriation, nationalization, confiscation of assets and property or the
imposition of restrictions on foreign investment and on repatriation of capital
invested. In the event of such expropriation, nationalization or other
confiscation, the Fund could lose its entire investment in that market.
Moreover, individual foreign economies may differ favorably or unfavorably from
the U.S. economy in such respects as growth of gross national product, rate of
inflation, rate of savings and capital reinvestment, currency depreciation,
resource self-sufficiency and balance of payments positions. Investments in
foreign government securities involve special risks, including the risk that the
government issuers may be unable or unwilling to repay principal or interest
when due.

The Fund will also be affected favorably or unfavorably by exchange control
regulations or changes in the exchange rates between such currencies and the
U.S. dollar. Changes in currency exchange rates will affect the net asset value
of the Fund's shares and also may affect the value of dividends and interest
earned by the Fund and gains and losses realized by it.

INVESTING IN EMERGING MARKETS. Emerging markets generally are dependent heavily
upon international trade and, accordingly, have been and may continue to be
affected adversely by trade barriers, exchange controls, managed adjustments in
relative currency values and other protectionist measures imposed or negotiated
by the countries with which they trade. Inflation and rapid fluctuations in
inflation rates have had and may continue to have negative effects on the
economies and securities markets of certain countries with emerging markets.

Disclosure and regulatory standards in many respects are less stringent than in
the United States and other major markets. There also may be a lower level of
monitoring and regulation of emerging markets and the activities of investors in
such markets, and enforcement of existing regulations has been extremely
limited.

Prospectus Page 14
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND

In addition, brokerage commissions, custodial services and other costs relating
to investment in foreign markets generally are more expensive than in the United
States, particularly with respect to emerging markets. Such markets have
different settlement and clearance procedures. In certain markets there have
been times when settlements have been unable to keep pace with the volume of
securities transactions, making it difficult to conduct such transactions. The
inability of the Fund to make intended securities purchases due to settlement
problems could cause it to miss attractive investment opportunities. Inability
to dispose of a portfolio security caused by settlement problems could result
either in losses to the Fund due to subsequent declines in value of the
portfolio security or, if the Fund has entered into a contract to sell the
security, could result in possible liability to the purchaser.

The securities markets of emerging countries are substantially smaller, less
developed, less liquid and more volatile than the securities markets of the
developed countries. The risk also exists that an emergency situation may arise
in one or more emerging markets as a result of which trading of securities may
cease or may be substantially curtailed and prices for the Fund's portfolio
securities in such markets may not be readily available. Section 22(e) of the
1940 Act permits a registered investment company, such as the Fund, to suspend
redemption of its shares for any period during which an emergency exists, as
determined by the SEC. Accordingly, when the Fund believes that circumstances
dictate, it will promptly apply to the SEC for a determination that such an
emergency exists. During the period commencing with the Fund's identification of
such conditions until the date of any SEC action, the Fund's portfolio
securities in the affected markets will be valued at fair value determined in
good faith by or under the direction of the Company's Board of Directors.

RISKS ASSOCIATED WITH DEBT SECURITIES. The value of the debt securities held by
the Fund generally will vary inversely with market interest rates. If interest
rates in a market fall, the Fund's debt securities issued by governments or
companies in that market ordinarily will increase in value. If market interest
rates increase, however, the debt securities owned by the Fund in that market
will likely decrease in value.

RISKS ASSOCIATED WITH BELOW INVESTMENT GRADE DEBT SECURITIES. The Fund may
invest up to 50% of its total assets in debt securities rated below investment
grade. Such investments involve a high degree of risk.

Debt rated Baa by Moody's Investors Service, Inc. ("Moody's") is considered by
Moody's to have speculative characteristics. Debt rated BB, B, CCC, CC or C by
Standard & Poor's Ratings Group ("S&P"), and debt rated Ba, B, Caa, Ca or C by
Moody's is regarded, on balance, as predominantly speculative with respect to
the issuer's capacity to pay interest and repay principal in accordance with the
terms of the obligation. While such lower quality debt will likely have some
quality and protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions. Debt rated C by
Moody's or S&P is the lowest rated debt that is not in default as to principal
or interest, and issues so rated can be regarded as having extremely poor
prospects of ever attaining any real investment standing. Lower quality debt
securities are also generally considered to be subject to greater risk than
securities with higher ratings with regard to a deterioration of general
economic conditions. These foreign debt securities are the equivalent of high
yield, high risk bonds, commonly known as "junk bonds."

Ratings of debt securities represent the rating agency's opinion regarding their
quality and are not a guarantee of quality. Rating agencies attempt to evaluate
the safety of principal and interest payments and do not evaluate the risks of
fluctuations in market value. Also, rating agencies may fail to make timely
changes in credit ratings in response to subsequent events, so that an issuer's
current financial condition may be better or worse than a rating indicates.

Prospectus Page 15
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND
such as its inability to meet specific projected business forecasts or the
unavailability of additional financing. Similarly, certain emerging market
governments that issue lower quality debt securities are among the largest
debtors to commercial banks, foreign governments and supranational organizations
such as the World Bank and may not be able or willing to make principal and/or
interest repayments as they come due. The risk of loss due to default by the
issuer is significantly greater for the holders of lower quality securities
because such securities are generally unsecured and may be subordinated to the
claims of other creditors of the issuer.

Lower quality debt securities frequently have call or buy-back features that
would permit an issuer to call or repurchase the security from the Fund. In
addition, the Fund may have difficulty disposing of lower quality securities
because they may have a thin trading market. There may be no established retail
secondary market for many of these securities, and the Fund anticipates that
such securities could be sold only to a limited number of dealers or
institutional investors. The lack of a liquid secondary market also may have an
adverse impact on market prices of such instruments and may make it more
difficult for the Fund to obtain accurate market quotations for purposes of
valuing its portfolio. The Fund may also acquire lower quality debt securities
during an initial underwriting or that are sold without registration under
applicable securities laws. Such securities involve special considerations and
risks.

In addition to the foregoing, factors that could have an adverse effect on the
market value of lower quality debt securities in which the Fund may invest
include (1) potential adverse publicity, (2) heightened sensitivity to general
economic or political conditions and (3) the likely adverse impact of a major
economic recession.

The Fund may also incur additional expenses to the extent it is required to seek
recovery upon a default in the payment of principal or interest on its portfolio
holdings, and the Fund may have limited legal recourse in the event of a
default. Debt securities issued by governments in emerging markets can differ
from debt obligations issued by private entities in that remedies from defaults
generally must be pursued in the courts of the defaulting government, and legal
recourse is therefore somewhat diminished. Political conditions, in terms of a
government's willingness to meet the terms of its debt obligations, also are of
considerable significance. There can be no assurance that the holders of
commercial bank debt may not contest payments to the holders of debt securities
issued by governments in emerging markets in the event of default by the
governments under commercial bank loan agreements.

ILLIQUID SECURITIES. The Fund may invest up to 15% of its net assets in
securities for which no readily available market exists, so-called "illiquid
securities." Illiquid securities may be more difficult to value than liquid
securities, and the sale of illiquid securities generally will require more time
and result in higher brokerage charges or dealer discounts and other selling
expenses than the sale of liquid securities. Moreover, illiquid restricted
securities often sell at a price lower than similar securities that are not
subject to restrictions on resale.

CURRENCY RISK. Because the Fund may invest substantially in securities
denominated in currencies other than the U.S. dollar, and since the Fund may
hold foreign currencies, it will be affected favorably or unfavorably by
exchange control regulations or changes in the exchange rates between such
currencies and the U.S. dollar. Changes in currency exchange rates will affect
the net asset value of the Fund's shares and also may affect the value of
dividends and interest earned by the Fund and gains and losses realized by it.
Currencies generally are evaluated on the basis of fundamental economic criteria
(e.g., relative inflation and interest rate levels and trends, growth rate
forecasts, balance of payments status and economic policies) as well as
technical and political data. Exchange rates are determined by the forces of
supply and demand in the foreign exchange markets. These forces are affected by
the international balance of payments and other economic and financial
conditions, government intervention, speculation and other factors. If the
currency in which a security is denominated appreciates against the U.S. dollar,
the dollar value of the security will increase. Conversely, a decline in the
exchange rate of the currency would adversely affect the value of the security
expressed in dollars.

Many of the currencies of emerging market countries have experienced steady
devaluations relative to the U.S. dollar, and major devaluations have
historically occurred in certain countries. Any devaluations in the currencies
in which the Fund's portfolio securities are denominated may have a detrimental
impact on the Fund.

Prospectus Page 16
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND

Some countries also may have fixed currencies whose values against the U.S.
dollar are not independently determined. In addition, there is a risk that
certain countries may restrict the free conversion of their currencies into
other currencies. Further, certain currencies may not be internationally traded.

OPTIONS, FUTURES AND FOREIGN CURRENCY TRANSACTIONS. The Fund is authorized to
enter into options, futures and forward currency transactions. These
transactions involve certain risks, which include: (1) dependence on the
Manager's ability to predict movements in the prices of individual securities,
fluctuations in the general securities markets and movements in interest rates
and currency markets; (2) imperfect correlation, or even no correlation, between
movements in the price of forward contracts, options, futures contracts or
options thereon and movements in the price of the currency or security hedged or
used for cover; (3) the fact that skills and techniques needed to trade options,
futures contracts and options thereon or to use forward currency contracts are
different from those needed to select the securities in which the Fund invests;
(4) lack of assurance that a liquid secondary market will exist for any
particular option, futures contract or option thereon at any particular time;
(5) the possible loss of principal under certain conditions; and (6) the
possible inability of the Fund to purchase or sell a portfolio security at a
time when it would otherwise be favorable for it to do so, or the possible need
for the Fund to sell a security at a disadvantageous time, due to the need for
the Fund to maintain "cover" or to set aside securities in connection with
hedging transactions.

LOAN PARTICIPATIONS AND ASSIGNMENTS. The Fund may have difficulty disposing of
Assignments and Participations. The liquidity of such securities is limited, and
the Fund anticipates that such securities could be sold only to a limited number
of institutional investors. The lack of a liquid secondary market could have an
adverse impact on the value of such securities and on the Fund's ability to
dispose of particular Assignments or Participations when necessary to meet its
liquidity needs or in response to a specific economic event, such as a
deterioration in the creditworthiness of the borrower. The lack of a liquid
secondary market for Assignments and Participations also may make it more
difficult for the Fund to assign a value to those securities for purposes of
valuing its portfolio and calculating its net asset value.

SOVEREIGN DEBT. The Fund may invest in sovereign debt securities of emerging
market governments, including Brady Bonds. Investments in such securities
involve special risks. The issuer of the debt or the governmental authorities
that control the repayment of the debt may be unable or unwilling to repay
principal or interest when due in accordance with the terms of such debt.
Periods of economic uncertainty may result in the volatility of market prices of
sovereign debt obligations and in turn the Fund's net asset value, to a greater
extent than the volatility inherent in domestic fixed income securities.

A sovereign debtor's willingness or ability to repay principal and pay interest
in a timely manner may be affected by, among other factors, its cash flow
situation, the extent of its foreign reserves, the availability of sufficient
foreign exchange on the date a payment is due, the relative size of the debt
service burden to the economy as a whole, the sovereign debtor's policy toward
principal international lenders and the political constraints to which a
sovereign debtor may be subject. Emerging market governments could default on
their sovereign debt. Such sovereign debtors also may be dependent on expected
disbursements from foreign governments, multilateral agencies and other entities
abroad to reduce principal and interest arrearages on their debt. The commitment
on the part of these governments, agencies and others to make such disbursements
may be conditioned on a sovereign debtor's implementation of economic reforms
and/or economic performance and the timely service of such debtor's obligations.
Failure to implement such reforms, achieve such levels of economic performance
or repay principal or interest when due may result in the cancellation of such
third parties' commitments to lend funds to the sovereign debtor, which may
further impair such debtor's ability or willingness to timely service its debts.

Prospectus Page 17
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND
domestic economy or balance of trade may affect its willingness to service its
sovereign debt. Although the Manager intends to manage the Fund in a manner that
will minimize the exposure to such risks, there can be no assurance that adverse
political changes will not cause the Fund to suffer a loss of interest or
principal on any of its holdings.

In recent years, some of the emerging market countries in which the Fund expects
to invest have encountered difficulties in servicing their sovereign debt
obligations. Some of these countries have withheld payments of interest and/or
principal of sovereign debt. These difficulties have also led to agreements to
restructure external debt obligations -- in particular, commercial bank loans --
typically by rescheduling principal payments, reducing interest rates and
extending new credits to finance interest payments on existing debt. In the
future, holders of emerging market sovereign debt securities may be requested to
participate in similar rescheduling of such debt. Certain emerging market
countries are among the largest debtors to commercial banks and foreign
governments. Currently, Brazil, Mexico and Argentina are the largest debtors
among developing countries. At times certain emerging market countries have
declared moratoria on the payment of principal and interest on external debt;
such a moratorium is currently in effect in certain emerging market countries.
There is no bankruptcy proceeding by which a creditor may collect in whole or in
part sovereign debt on which an emerging market government has defaulted.

The ability of emerging market governments to make timely payments on their
sovereign debt securities is likely to be influenced strongly by a country's
balance of trade and its access to trade and other international credits. A
country whose exports are concentrated in a few commodities could be vulnerable
to a decline in the international prices of one or more of such commodities.
Increased protectionism on the part of a country's trading partners could also
adversely affect its exports. Such events could diminish a country's trade
account surplus, if any. To the extent that a country receives payment for its
exports in currencies other than hard currencies, its ability to make hard
currency payments could be affected.

As noted above, sovereign debt obligations issued by emerging market governments
generally are deemed to be the equivalent in terms of quality to securities
rated below investment grade by Moody's and S&P. Such securities are regarded as
predominantly speculative with respect to the issuer's capacity to pay interest
and repay principal in accordance with the terms of the obligations and involve
major risk exposure to adverse conditions. Some of such securities, with respect
to which the issuer currently may not be paying interest or may be in payment
default, may be comparable to securities rated D by S&P or C by Moody's. The
Fund may have difficulty disposing of and valuing certain sovereign debt
obligations because there may be a limited trading market for such securities.
Because there is no liquid secondary market for many of these securities, the
Fund anticipates that such securities could be sold only to a limited number of
dealers or institutional investors.

Prospectus Page 18
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND

HOW TO INVEST

- --------------------------------------------------------------------------------

GENERAL. All purchase orders will be executed at the public offering price next
determined after the purchase order is received, which includes any applicable
sales charge for Class A shares. Orders received before the close of regular
trading on the NYSE (currently 4:00 P.M. Eastern time, unless weather, equipment
failure or other factors contribute to an earlier closing time) on any Business
Day will be executed at the public offering price for the applicable class of
shares determined that day. A "Business Day" is any day Monday through Friday on
which the NYSE is open for business. The minimum initial investment is $500
($100 for IRAs and $25 for custodial accounts under Section 403(b)(7) of the
Internal Revenue Code of 1986, as amended ("Code"), and other tax-qualified
employer-sponsored retirement accounts, if made by such investors under a
systematic investment plan providing for monthly or quarterly payments of at
least that amount), and the minimum for additional purchases is $100 (with a $25
minimum for IRAs, Code Section 403(b)(7) custodial accounts and other
tax-qualified employer-sponsored retirement accounts, as mentioned above). THE
FUND AND GT GLOBAL RESERVE THE RIGHT TO REJECT ANY PURCHASE ORDER AND TO SUSPEND
THE OFFERING OF SHARES FOR A PERIOD OF TIME. In particular, the Fund and GT
Global may reject purchase orders or exchanges by investors who appear to
follow, in the Manager's judgment, a market-timing strategy or otherwise engage
in excessive trading. See "How to Make Exchanges -- Limitations on Purchase
Orders and Exchanges."

WHEN PLACING PURCHASE ORDERS, INVESTORS SHOULD SPECIFY WHETHER THE ORDER IS FOR
CLASS A OR CLASS B SHARES OF THE FUND. ALL PURCHASE ORDERS THAT FAIL TO SPECIFY
A CLASS WILL AUTOMATICALLY BE INVESTED IN CLASS A SHARES. PURCHASES OF $500,000
OR MORE MUST BE FOR CLASS A SHARES.

PURCHASES THROUGH BROKER/DEALERS. Shares of the Fund may be purchased through
broker/dealers with which GT Global has entered into dealer agreements. Orders
received by such broker/dealers before the close of regular trading on the NYSE
on a Business Day will be effected that day, provided that such order is
transmitted to the Transfer Agent prior to its close of business on such day.
The broker/dealer will be responsible for forwarding the investor's order to the
Transfer Agent so that it will be received prior to such time. After an initial
investment is made and a shareholder account is established through a
broker/dealer, at the investor's option, subsequent purchases may be made
directly through GT Global. See "Shareholder Account Manual."

Broker/dealers that do not have dealer agreements with GT Global also may offer
to place orders for the purchase of shares. Purchases made through such
broker/dealers will be effected at the public offering price next determined
after the order is received by the Transfer Agent. Such a broker/ dealer may
charge the investor a transaction fee as determined by the broker/dealer. That
fee will be in addition to the sales charge payable by the investor with respect
to Class A shares, and may be avoided if shares are purchased through a broker/
dealer that has a dealer agreement with GT Global or directly through GT Global.

PURCHASES THROUGH GT GLOBAL. Investors may purchase shares and open an account
directly through GT Global, the Fund's distributor, by completing and signing an
Account Application accompanying this Prospectus. Investors should mail to the
Transfer Agent the completed Application together with a check to cover the
purchase in accordance with the instructions provided in the Shareholder Account
Manual. Purchases will be executed at the public offering price next determined
after the Transfer Agent has received the Account Application and check.
Subsequent investments do not need to be accompanied by an application.

Investors also may purchase shares of the Fund through GT Global by bank wire.
Bank wire purchases will be effected at the next determined public offering
price after the bank wire is received. A wire investment is considered received
when the Transfer Agent is notified that the bank wire has been credited to the
Fund. The investor is responsible for providing prior telephonic or facsimile
notice to the Transfer Agent that a bank wire is being sent. An investor's bank
may charge a service fee for wiring money to the Fund. The Transfer Agent
currently does not charge a service fee for

Prospectus Page 19
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND
facilitating wire purchases, but reserves the right to do so in the future.
Investors desiring to open an account by bank wire should call the Transfer
Agent at the appropriate toll-free number provided in the Shareholder Account
Manual to obtain an account number and detailed instructions.

CERTIFICATES. Physical certificates representing the Fund's shares will not be
issued unless a written request is submitted to the Transfer Agent. Shares of
the Fund are recorded on a register by the Transfer Agent, and shareholders who
do not elect to receive certificates have the same rights of ownership as if
certificates had been issued to them. Redemptions and exchanges by shareholders
who hold certificates may take longer to effect than similar transactions
involving non-certificated shares because the physical delivery and processing
of properly executed certificates is required. ACCORDINGLY, THE FUND AND GT
GLOBAL RECOMMEND THAT SHAREHOLDERS DO NOT REQUEST ISSUANCE OF CERTIFICATES.

PURCHASING CLASS A SHARES

The Fund's public offering price for Class A shares is the next determined net
asset value per share (see "Calculation of Net Asset Value") plus a sales charge
determined in accordance with the following schedule:

<TABLE>
<CAPTION>
SALES CHARGE AS PERCENTAGE OF DEALER
REALLOWANCE AS
AMOUNT OF PURCHASE ------------------------------ PERCENTAGE OF
AT THE PUBLIC OFFERING NET THE OFFERING
OFFERING PRICE PRICE INVESTMENT PRICE
- ----------------------- ------------- --------------- -------------------
<S> <C> <C> <C>
Less than $50,000....................... 4.75% 4.99% 4.25%
$50,000 but less than $100,000.......... 4.00% 4.17% 3.50%
$100,000 but less than $250,000......... 3.00% 3.09% 2.75%
$250,000 but less than $500,000......... 2.00% 2.04% 1.75%
$500,000 or more........................ 0.00% 0.00% *
</TABLE>

- ------------------
* GT Global will pay the following commissions to broker/ dealers that
initiate and are responsible for purchases by any single purchaser of Class
A shares of $500,000 or more in the aggregate: 1.00% of the purchase amount
up to $3 million, plus 0.50% on the excess over $3 million. For purposes of
determining the appropriate commission to be paid in connection with the
transaction, GT Global will combine purchases made by a broker/dealer on
behalf of a single client so that the broker/dealer's commission, as
outlined above, will be based on the aggregate amount of such client's share
purchases over a rolling twelve month period from the date of the
transaction.

All shares purchased without a sales charge based on the aggregate purchase
amount equalling at least $500,000 will be subject to a contingent deferred
sales charge, for the first year after their purchase equal to 1% of the lower
of the original purchase price or the net asset value of such shares at the time
of redemption. See "Contingent Deferred Sales Charge -- Class A Shares."

From time to time, GT Global may reallow to broker/ dealers the full amount of
the sales charge or may pay out additional amounts to broker/dealers who sell
Class A shares. In some instances, GT Global may offer these reallowances or
additional payments only to broker/dealers that have sold or may sell
significant amounts of Class A shares. To the extent that GT Global reallows the
full amount of the sales charge to broker/dealers, such broker/dealers may be
deemed to be underwriters under the Securities Act of 1933, as amended.
Commissions also may be paid to broker/dealers and other financial institutions
that initiate purchases of at least $500,000 made pursuant to sales charge
waivers (i) and (vii), described below under "Sales Charge Waivers -- Class A
Shares."

The following purchases may be aggregated for purposes of determining the
"Amount of Purchase":

(a) Individual purchases on behalf of a single purchaser, the purchaser's spouse
and their children under the age of 21 years including purchases in connection
with an employee benefit plan or plans exclusively for the benefit of such
individual(s), such as an IRA, individual Code Section 403(b) plan or
single-participant, self-employed individual retirement plan ("Keogh Plan") and
purchases made by a company controlled by such individual(s);

(b) Individual purchases by a trustee or other fiduciary purchasing shares for a
single trust estate or a single fiduciary account, including an employee benefit
plan (such as employer-sponsored pension, profit-sharing and stock bonus plans,
including Code Section 401(k) plans, and medical, life and disability insurance
trusts) other than a plan described in "(a)" above; and

(c) Individual purchases by a trustee or other fiduciary purchasing shares
concurrently for two or more employee benefit plans of a single employer or of
employers affiliated with each other (again excluding an employee benefit plan
described in "(a)" above).

SALES CHARGE WAIVERS -- CLASS A SHARES. Class A shares are sold at net asset
value without imposition of sales charges when investments are made by the
following classes of investors:

(i) Trustees or other fiduciaries purchasing shares for employee benefit plans
which are sponsored by organizations that have at least 100 but less than 1,000
employees, and trustees or other fiduciaries

Prospectus Page 20
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND
purchasing shares for employee benefit plans which are sponsored by
organizations with collective retirement plan assets of $500,000 or more and
have less than 100 employees, and purchases of at least $500,000 by trustees or
other fiduciaries of employee benefit plans with collective retirement plan
assets of $100 million or more.

(ii) Current or retired Trustees, Directors and officers of the investment
companies for which the Manager serves as investment manager and/or
administrator; employees or retired employees of the companies composing
Liechtenstein Global Trust or affiliated companies of Liechtenstein Global
Trust; the children, siblings and parents of the persons in the foregoing
categories; and trusts primarily for the benefit of such persons.

(iii) Registered representatives or full-time employees of broker/dealers that
have entered into dealer agreements with GT Global, and the children, siblings
and parents of such persons, and employees of financial institutions that
directly, or through their affiliates, have entered into dealer agreements with
GT Global (or that otherwise have an arrangement with respect to sales of Fund
shares with a broker/dealer that has entered into a dealer agreement with GT
Global) and the children, siblings and parents of such employees.

(iv) Companies exchanging shares with or selling assets to one or more of the GT
Global Mutual Funds pursuant to a merger, acquisition or exchange offer.

(v) Shareholders of any of the GT Global Mutual Funds as of April 30, 1987 who
since that date continually have owned shares of one or more of the GT Global
Mutual Funds.

(vi) Purchases made through the automatic investment of dividends and other
distributions paid by any of the other GT Global Mutual Funds.

(vii) Registered investment advisers, trust companies and bank trust departments
exercising discretionary investment authority with respect to the money to be
invested in the GT Global Mutual Funds provided that the aggregate amount
invested pursuant to this sales charge waiver is at least $500,000, and further
provided that such money is not eligible to be invested in the Advisor Class.

(viii) Clients of administrators of tax-qualified employee benefit plans which
have entered into agreements with GT Global.

(ix) Retirement plan participants who borrow from their retirement accounts by
redeeming GT Global Mutual Fund shares and subsequently repay such loans via a
purchase of Fund shares.

(x) Retirement plan participants who receive distributions from a tax-qualified
employer-sponsored retirement plan which is invested in GT Global Mutual Funds,
the proceeds of which are reinvested in Fund shares.

(xi) Accounts not eligible for the Advisor Class as to which a financial
institution or broker/dealer charges an account management fee, provided the
financial institution or broker/dealer has entered into an agreement with GT
Global regarding such accounts.

(xii) Certain former AMA Investment Advisers' shareholders who became
shareholders of the GT Global Health Care Fund in October 1989, and who have
continuously held shares in the GT Global Mutual Funds since that time.

REINSTATEMENT PRIVILEGE. Shareholders who redeem their Class A shares in the
Fund have a one-time privilege of reinstating their investment by investing the
proceeds of the redemption at net asset value without a sales charge in Class A
shares of the Fund and/or one or more of the other GT Global Mutual Funds. The
Transfer Agent must receive from the investor or the investor's broker/dealer
within 180 days after the date of the redemption both a written request for
reinvestment and a check not exceeding the amount of the redemption proceeds.
The reinstatement purchase will be effected at the net asset value per share
next determined after such receipt. Gain on the redemption is taxable
notwithstanding exercise of the reinvestment privilege. See "Dividends, Other
Distributions and Federal Income Taxation -- Taxes."

REDUCED SALES CHARGE PLANS -- CLASS A SHARES. Class A shares may be purchased at
reduced sales charges either through the Right of Accumulation or under a Letter
of Intent. For more details on these plans, investors should contact their
broker/ dealers or the Transfer Agent.

RIGHT OF ACCUMULATION. Pursuant to the Right of Accumulation, investors are
permitted to purchase shares of the Fund at the sales charge applicable to the
total of (a) the dollar amount then being purchased plus (b) the dollar amount
of the investor's concurrent purchases of other GT Global Mutual Funds (other
than GT Global Dollar Fund) plus (c) the price of all shares of GT Global

Prospectus Page 21
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND

Mutual Funds (other than shares of GT Global Dollar Fund not acquired by
exchange) already held by the investor. To receive the Right of Accumulation, at
the time of purchase investors must give their broker/dealers, the Transfer
Agent or GT Global sufficient information to permit confirmation of
qualification. THE FOREGOING RIGHT OF ACCUMULATION APPLIES ONLY TO CLASS A
SHARES OF THE FUND AND OTHER GT GLOBAL MUTUAL FUNDS (OTHER THAN GT GLOBAL DOLLAR
FUND).

LETTER OF INTENT. In executing a Letter of Intent ("LOI") an investor indicates
an aggregate investment amount he or she intends to invest in the Class A shares
of the Fund and the Class A shares of other GT Global Mutual Funds (other than
GT Global Dollar Fund) in the following thirteen months. The LOI is included as
part of the Account Application located at the end of this Prospectus. The sales
charge applicable to that aggregate amount then becomes the applicable sales
charge on all purchases made concurrently with the execution of the LOI and in
the thirteen months following that execution. If an investor executes an LOI
within 90 days of a prior purchase of GT Global Mutual Fund Class A shares
(other than shares of GT Global Dollar Fund), the prior purchase may be included
under the LOI and an appropriate adjustment, if any, with respect to the sales
charges paid by the investor in connection with the prior purchase will be made,
based on the then-current net asset value(s) of the pertinent Fund(s).

If at the end of the thirteen month period covered by the LOI the total amount
of purchases does not equal the amount indicated, the investor will be required
to pay the difference between the sales charges paid at the reduced rate and the
sales charges applicable to the purchases actually made. Shares having a value
equal to 5% of the amount specified in the LOI will be held in escrow during the
thirteen month period (while remaining registered in the investor's name) and
are subject to redemption to assure any necessary payment to GT Global of a
higher applicable sales charge.

Investors should be aware that the Fund may, in the future, suspend the offering
of its shares although not for previously established LOIs. If all ongoing sales
of the Fund shares are suspended, however, an LOI executed in connection with
the offering of the Fund's shares may continue to be completed by the purchase
of shares of one or more other GT Global Mutual Funds (other than GT Global
Dollar Fund).

For purposes of an LOI, any registered investment adviser, trust company or bank
trust department which exercises investment discretion and which intends within
thirteen months to invest $500,000 or more can be treated as a single purchaser,
provided further that such entity places all purchase and redemption orders.
Such entities should be prepared to establish their qualification for such
treatment. THE FOREGOING LOI APPLIES ONLY TO CLASS A SHARES OF THE FUND AND
OTHER GT GLOBAL MUTUAL FUNDS (OTHER THAN GT GLOBAL DOLLAR FUND).

CONTINGENT DEFERRED SALES CHARGE -- CLASS A SHARES. Purchases of Class A shares
of $500,000 or more may be made without a sales charge. If a shareholder within
one year after the date of purchase redeems any Class A shares that were
purchased without a sales charge by reason of a purchase of $500,000 or more, a
contingent deferred sales charge of 1% of the lower of the original purchase
price or the net asset value of such shares at the time of redemption will be
charged. Class A shares will not be subject to the contingent deferred sales
charge to the extent that the value of such shares represents (1) reinvestment
of dividends or other distributions or (2) shares redeemed more than one year
after their purchase. Such shares purchased without a sales charge may be
exchanged for Class A shares of another GT Global Mutual Fund (other than GT
Global Dollar Fund) without the imposition of a contingent deferred sales
charge, although the contingent deferred sales charge described above will apply
to the redemption of the shares acquired through an exchange. The waivers set
forth under "Contingent Deferred Sales Charge Waivers" below apply to
redemptions of Class A shares upon which a contingent deferred sales charge
would otherwise be imposed. For federal income tax purposes, the amount of the
contingent deferred sales charge will reduce the gain or increase the loss, as
the case may be, realized on a redemption. The amount of any contingent deferred
sales charge will be paid to GT Global.

PURCHASING CLASS B SHARES

The Fund's public offering price for Class B shares is the next determined net
asset value per share. See "Calculation of Net Asset Value." No initial sales
charge is imposed. A contingent deferred sales charge, however, is imposed on
certain redemptions of Class B shares. Because Class B shares are sold without
an initial sales charge, the Fund receives the full amount of the investor's
purchase payment.

Prospectus Page 22
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND

Class B shares will not be subject to a contingent deferred sales charge to the
extent that the value of such shares represents: (1) reinvestment of dividends
or other distributions or (2) shares redeemed more than six years after their
purchase. Redemptions of most other Class B shares will be subject to a
contingent deferred sales charge. See "Contingent Deferred Sales Charge
Waivers." The amount of any applicable contingent deferred sales charge will be
calculated by multiplying the lesser of the original purchase price or the net
asset value of such shares at the time of redemption by the applicable
percentage shown in the table below:

<TABLE>
<CAPTION>
CONTINGENT DEFERRED SALES
CHARGE AS A PERCENTAGE OF THE
LESSER OF NET ASSET VALUE AT
REDEMPTION
OR THE ORIGINAL
REDEMPTION DURING PURCHASE PRICE
- ------------------------------ -----------------------------
<S> <C>
1st Year Since Purchase....... 5%
2nd Year Since Purchase....... 4%
3rd Year Since Purchase....... 3%
4th Year Since Purchase....... 3%
5th Year Since Purchase....... 2%
6th year Since Purchase....... 1%
Thereafter.................... 0%
</TABLE>

In determining whether a contingent deferred sales charge is applicable, it will
be assumed that the redemption is made first of shares acquired pursuant to the
reinvestment of dividends and distributions; then of shares purchased seven
years or more prior to the redemption; and finally, of shares held for the
longest period of time within the applicable six-year period. For shares
acquired in an exchange, the length of the holding period will be measured from
the date of original purchase.

For example, assume an investor purchased 100 shares at $10 per share for a cost
of $1,000. Subsequently, the shareholder acquired 15 additional shares through
dividend reinvestment. During the second year after the purchase the investor
decided to redeem $500 of his or her investment. Assuming at the time of the
redemption a net asset value of $11 per share, the value of the investor's
shares would be $1,265 (115 shares at $11 per share). The contingent deferred
sales charge would not be applied to the value of the reinvested dividend
shares. Therefore, the 15 shares currently valued at $165.00 would be redeemed
without a contingent deferred sales charge. The number of shares needed to fund
the remaining $335.00 of the redemption would equal 30.455. Using the lower of
cost or market price to determine the contingent deferred sales charge the
original purchase price of $10.00 per share would be used. The contingent
deferred sales charge calculation would therefore be 30.455 shares times $10.00
per share at a contingent deferred sales charge rate of 4% (the applicable rate
in the second year after purchase) for a total contingent deferred sales charge
of $12.18.

Class B shares that are acquired pursuant to the exchange privilege during a
tender offer by GT Global Floating Rate Fund, Inc. ("Floating Rate Fund") will
be subject, in lieu of the contingent deferred sales charge described above, to
a contingent deferred sales charge equivalent to the early withdrawal charge on
the common stock of the Floating Rate Fund. The purchase of Class B shares will
be deemed to have occurred at the time of the initial purchase of the Floating
Rate Fund's common stock.

For federal income tax purposes, the amount of the contingent deferred sales
charge will reduce the gain or increase the loss, as the case may be, realized
on a redemption. The amount of any contingent deferred sales charge will be paid
to GT Global.

CONTINGENT DEFERRED
SALES CHARGE WAIVERS

The contingent deferred sales charge will be waived for (1) exchanges, as
described below; (2) redemptions in connection with the Fund's systematic
withdrawal plan not in excess of 12% of the value of the account annually; (3)
total or partial redemptions made within one year following the death or
disability of a shareholder; (4) minimum required distributions made in
connection with a GT Global IRA, Keogh Plan or custodial account under Section
403(b) of the Code or other retirement plan following attainment of age 70 1/2;
(5) total or partial redemptions resulting from a distribution following
retirement in the case of a tax-qualified employer-sponsored retirement plan;
(6) when a redemption results from a tax-free return of an excess contribution
pursuant to Section 408(d)(4) or (5) of the Code or from the death or disability
of the employee; (7) a one-time reinvestment in Class B shares of the Fund
within 180 days of a prior redemption; (8) redemptions pursuant to the Fund's
right to liquidate a shareholder's account involuntarily; (9) redemptions
pursuant to a distribution from a tax-qualified employer-sponsored retirement
plan, which is invested in GT Global Mutual Funds, that is permitted to be made
without penalty pursuant to the Code (other than tax-free rollovers or transfers
of assets) and the proceeds of which are reinvested in GT Global Mutual Funds;

Prospectus Page 23
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GT GLOBAL DEVELOPING MARKETS FUND

(10) redemptions made in connection with participant-directed exchanges between
options in an employer-sponsored benefit plan; (11) redemptions made for the
purpose of providing cash to fund a loan to a participant in a tax-qualified
retirement plan; (12) redemptions made in connection with a distribution from
any retirement plan or account that is permitted in accordance with the
provisions of Section 72(t)(2) of the Code and the regulations promulgated
thereunder; (13) redemptions made in connection with a distribution from any
retirement plan or account that involves the return of an excess deferral amount
pursuant to Sections 401(k)(8) or 402(g)(2) of the Code or the return of excess
aggregate contributions pursuant to Section 401(m)(6) of the Code; (14)
redemptions made in connection with a distribution (from a qualified
profit-sharing or stock bonus plan described in Section 401(k) of the Code) to a
participant or beneficiary under Section 401(k)(2)(B)(IV) of the Code upon
hardship of the covered employee determined pursuant to Treasury Regulation
Section 1.401(k)-1(d)(2); and (15) redemptions made by or for the benefit of
certain states, counties or cities, or any instrumentalities, departments or
authorities thereof, where such entities are prohibited or limited by applicable
law from paying a sales charge or commission.

PROGRAMS APPLICABLE TO CLASS A SHARES AND CLASS B SHARES

AUTOMATIC INVESTMENT PLAN. Investors may purchase either Class A or Class B
shares of the Fund through the GT Global Automatic Investment Plan. Under this
Plan, an amount specified by the shareholder of $100 or more ($25 or more for
IRAs, Code Section 403(b)(7) custodial accounts and other tax-qualified
employer-sponsored retirement accounts) on a monthly or quarterly basis will be
sent to the Transfer Agent from the investor's bank for investment in the Fund.
Participants in the Automatic Investment Plan should not elect to receive
dividends or other distributions from the Fund in cash. A sales charge will be
applied to each automatic monthly purchase of Class A shares in an amount
determined in accordance with the Right of Accumulation privilege described
above. To participate in the Automatic Investment Plan, investors should
complete the appropriate portion of the Supplemental Application provided at the
end of this Prospectus. Investors should contact their broker/ dealers or GT
Global for more information.

DOLLAR COST AVERAGING PROGRAM. Investors may purchase either Class A or Class B
shares of the Fund through the GT Global Dollar Cost Averaging Program whereby a
shareholder invests the same dollar amount each month; accordingly, the investor
purchases more shares when the Fund's net asset value is relatively low and
fewer shares when the Fund's net asset value is relatively high. This can result
in a lower average cost-per-share than if the shareholder followed a less
systematic approach. Dollar cost averaging does not assure a profit and does not
protect against loss in declining markets. Because such a program involves
continuous investment in securities regardless of fluctuating price levels of
such securities, investors should consider their financial ability to continue
purchases when prices are declining.

A participant in the GT Global Dollar Cost Averaging Program first designates
the size of his or her monthly investment in the Fund ("Monthly Investment")
after participation in the Program begins. The Monthly Investment must be at
least $1,000. The investor then will make an initial investment of at least
$10,000 in the GT Global Dollar Fund. Thereafter, each month an amount equal to
the specified Monthly Investment automatically will be redeemed from the GT
Global Dollar Fund and invested in Fund shares. A sales charge will be applied
to each automatic monthly purchase of Class A shares in an amount determined in
accordance with the Right of Accumulation privilege described above. Investors
should contact their broker/dealers or GT Global for more information.

PORTFOLIO REBALANCING PROGRAM. The GT Global Portfolio Rebalancing Program
("Program") permits eligible shareholders to establish and maintain an
allocation across a range of GT Global Mutual Funds. The Program automatically
rebalances holdings of GT Global Mutual Funds to the established allocation on a
periodic basis. Under the Program, a shareholder may predesignate, on a
percentage basis, how the total value of his or her holdings in a minimum of
two, and a maximum of ten, GT Global Mutual Funds ("Personal Portfolio") is to
be rebalanced on a monthly, quarterly, semiannual, or annual basis.

Rebalancing under the Program will be effected through the exchange of shares of
one or more GT Global Mutual Funds in the shareholder's Personal Portfolio for
shares of the same class(es) of one or more other GT Global Mutual Funds in the
shareholder's Personal Portfolio. See "How to Make Exchanges." If shares of the
GT Global Mutual Funds in a shareholder's Personal Portfolio have appreciated
during a rebalancing period, the Program will result in shares of GT Global
Mutual

Prospectus Page 24
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GT GLOBAL DEVELOPING MARKETS FUND

Fund(s) that have appreciated most during the period being exchanged for shares
of GT Global Mutual Fund(s) that have appreciated least. SUCH EXCHANGES ARE NOT
TAX-FREE AND MAY RESULT IN A SHAREHOLDER'S REALIZING A GAIN OR LOSS, AS THE CASE
MAY BE, FOR TAX PURPOSES. See "Dividends, Other Distributions and Federal Income
Taxation." Participation in the Program does not assure that a shareholder will
profit from purchases under the Program nor does it prevent or lessen losses in
a declining market.

The Program will automatically rebalance the shareholder's Personal Portfolio on
the 28th day of the last month of the period chosen (or the immediately
preceding business day if the 28th is not a business day), subject to any
limitations below. The Program will not execute an exchange if the variance in a
shareholder's Personal Portfolio for a particular Fund would be 2% or less. In
predesignating percentages, shareholders must use whole percentages and totals
must equal 100%. Shareholders participating in the Program may not request
issuance of physical certificates representing a Fund's shares. Exchanges made
under the Program are not subject to the four free exchanges per year
limitation. The Funds and GT Global reserve the right to modify, suspend, or
terminate the Program at any time on 60 days' prior written notice to
shareholders. A request to participate in the Program must be received in good
order at least five business days prior to the next rebalancing date. Once a
shareholder establishes the Program for his or her Personal Portfolio, a
shareholder cannot cancel or change which rebalancing frequency, which Funds or
what allocation percentages are assigned to the Program, unless canceled or
changed in writing and received by the Transfer Agent in good order at least
five business days prior to the rebalancing date. Shareholders participating in
the Program may also participate in the Right of Accumulation, Letter of Intent,
and Dollar Cost Averaging programs. Certain broker/dealers may charge a fee for
establishing accounts relating to the Program. Investors should contact their
broker/dealers or GT Global for more information.

Prospectus Page 25
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GT GLOBAL DEVELOPING MARKETS FUND

HOW TO MAKE EXCHANGES

- --------------------------------------------------------------------------------

Shares of the Fund may be exchanged for shares of the same class of any of the
other GT Global Mutual Funds, based on their respective net asset values without
imposition of any sales charges, provided that the registration remains
identical. Until May 1, 1998, the Fund will deduct a 2% fee from the amount of
all exchanges of Class A shares of the Fund acquired as a result of the
reorganization of the Predecessor Fund into the Fund. See "How to Redeem Shares
- -- Redemption Fee." EXCHANGES ARE NOT TAX-FREE AND MAY RESULT IN A SHAREHOLDER'S
REALIZING A GAIN OR LOSS, AS THE CASE MAY BE, FOR TAX PURPOSES. See "Dividends,
Other Distributions and Federal Income Taxation." In addition to the Fund, the
GT Global Mutual Funds currently include:

-- GT GLOBAL AMERICA SMALL CAP GROWTH FUND
-- GT GLOBAL AMERICA MID CAP GROWTH FUND
-- GT GLOBAL AMERICA VALUE FUND
-- GT GLOBAL CONSUMER PRODUCTS AND
SERVICES FUND
-- GT GLOBAL DOLLAR FUND
-- GT GLOBAL EMERGING MARKETS FUND
-- GT GLOBAL EUROPE GROWTH FUND
-- GT GLOBAL FINANCIAL SERVICES FUND
-- GT GLOBAL GOVERNMENT INCOME FUND
-- GT GLOBAL GROWTH & INCOME FUND
-- GT GLOBAL HEALTH CARE FUND
-- GT GLOBAL HIGH INCOME FUND
-- GT GLOBAL INFRASTRUCTURE FUND
-- GT GLOBAL INTERNATIONAL GROWTH FUND
-- GT GLOBAL JAPAN GROWTH FUND
-- GT GLOBAL LATIN AMERICA GROWTH FUND
-- GT GLOBAL NATURAL RESOURCES FUND
-- GT GLOBAL NEW DIMENSION FUND
-- GT GLOBAL NEW PACIFIC GROWTH FUND
-- GT GLOBAL STRATEGIC INCOME FUND
-- GT GLOBAL TELECOMMUNICATIONS FUND
-- GT GLOBAL WORLDWIDE GROWTH FUND

Up to four exchanges each year may be made without charge. A $7.50 service
charge will be imposed on each subsequent exchange. If an investor does not
surrender all of his or her shares in an exchange, the remaining balance in the
investor's account after the exchange must be at least $500. Exchange requests
received in good order by the Transfer Agent before the close of regular trading
on the NYSE on any Business Day will be processed at the net asset value
calculated on that day. The terms of the exchange offer may be modified at any
time, on 60 days' prior written notice.

A shareholder interested in making an exchange should contact his or her
broker/dealer or the Transfer Agent to request the prospectus of the other GT
Global Mutual Fund(s) being considered. Certain broker/dealers may charge a fee
for handling exchanges.

EXCHANGES BY TELEPHONE. A shareholder may give exchange instructions to his or
her broker/dealer or the Transfer Agent by telephone at the appropriate
toll-free number provided in the Shareholder Account Manual. Exchange orders
will be accepted by telephone provided that the exchange involves only
uncertificated shares on deposit in the shareholder's account or for which
certificates previously have been deposited.

Shareholders automatically have telephone privileges to authorize exchanges. The
Fund, GT Global and the Transfer Agent will not be liable for any loss or damage
for acting in good faith upon instructions received by telephone and reasonably
believed to be genuine. The Fund employs reasonable procedures to confirm that
instructions communicated by telephone are genuine prior to acting upon
instructions received by telephone, including requiring some form of personal
identification, providing written confirmation of such transactions, and/or tape
recording of telephone instructions.

EXCHANGES BY MAIL. Exchange orders should be sent by mail to the investor's
broker/dealer or to the Transfer Agent at the address set forth in the
Shareholder Account Manual.

LIMITATIONS ON PURCHASE ORDERS AND EXCHANGES. The GT Global Mutual Funds are not
intended to serve as vehicles for frequent trading in response to short-term
fluctuations in the market. Due to the disruptive effect that market-timing
investment strategies and excessive trading can have on efficient portfolio
management, each GT Global Mutual Fund and GT Global reserves the right to
refuse purchase orders and exchanges by any person or group, if, in the
Manager's judgment, such person or group was following a market-timing strategy
or was otherwise engaging in excessive trading.

In addition, each GT Global Mutual Fund and GT Global reserves the right to
refuse purchase orders and exchanges by any person or group if, in the Manager's
judgment, the Fund would not be able to invest the money effectively in
accordance with that Fund's investment objective and policies or would otherwise
potentially be adversely affected. Although a GT Global Mutual Fund will attempt
to give investors prior notice whenever it is reasonably able to do so, it may
impose the above restrictions at any time.

Finally, as described above, each GT Global Mutual Fund and GT Global reserve
the right to reject any purchase order.

Prospectus Page 26
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GT GLOBAL DEVELOPING MARKETS FUND

HOW TO REDEEM SHARES

- --------------------------------------------------------------------------------

Fund shares may be redeemed at their net asset value (subject to any applicable
contingent deferred sales charge for Class B shares or, in limited
circumstances, Class A shares), and redemption proceeds will be sent within
seven days of the execution of a redemption request. If a redeeming shareholder
owns more than one class of shares, shares will be redeemed from the class
specified by the shareholder.

REDEMPTIONS THROUGH BROKERS/DEALERS. Shareholders with accounts at
broker/dealers which sell shares of the Fund may submit redemption requests to
such broker/dealers. If the shares are held in the broker/dealer's "street
name," the redemption must be made through the broker/ dealer. Broker/dealers
may honor a redemption request either by repurchasing shares from a redeeming
shareholder at the net asset value next determined after the broker/dealer
receives the request or, as described below, by forwarding such requests to the
Transfer Agent (see "How to Redeem Shares -- Redemptions Through the Transfer
Agent"). Redemption proceeds normally will be paid by check or, if offered by
the broker/dealer, credited to the shareholder's brokerage account at the
election of the shareholder. Broker/dealers may impose a service charge for
handling redemption transactions placed through them and may have other
requirements concerning redemptions. Accordingly, shareholders should contact
their broker/dealers for more details.

REDEMPTIONS THROUGH THE TRANSFER AGENT. Redemption requests may be transmitted
to the Transfer Agent by telephone or by mail, in accordance with the
instructions provided in the Shareholder Account Manual. Redemptions will be
effected at the net asset value next determined after the Transfer Agent has
received the request in good order and any required supporting documentation
(less any applicable contingent deferred sales charge for Class B shares or, in
limited circumstances, Class A shares). Redemption requests will not require a
signature guarantee if the redemption proceeds are to be sent either: (i) to the
redeeming shareholder at the shareholder's address of record as maintained by
the Transfer Agent, provided the shareholder's address of record has not been
changed within the preceding thirty days; or (ii) directly to a pre-designated
bank, savings and loan or credit union account ("Pre-Designated Account"). ALL
OTHER REDEMPTION REQUESTS MUST BE ACCOMPANIED BY A SIGNATURE GUARANTEE OF THE
REDEEMING SHAREHOLDER'S SIGNATURE. A signature guarantee can be obtained from
any bank, U.S. trust company, a member firm of a U.S. stock exchange or a
foreign branch of any of the foregoing or other eligible guarantor institutions.
A notary public is not an acceptable guarantor. A shareholder with questions
concerning the Fund's signature guarantee requirement should contact the
Transfer Agent.

Shareholders may qualify to have redemption proceeds sent to a Pre-Designated
Account by completing the appropriate section of the Account Application at the
end of this Prospectus. Shareholders with Pre-Designated Accounts should request
that redemption proceeds be sent either by bank wire or by check. The minimum
redemption amount for a bank wire is $1,000. Shareholders requesting a bank wire
should allow two business days from the time the redemption request is effected
for the proceeds to be deposited in the shareholder's Pre-Designated Account.
See "How to Redeem Shares -- Other Important Redemption Information."
Shareholders may change their Pre-Designated Accounts only by a letter of
instruction to the Transfer Agent containing all account signatures, each of
which must be guaranteed. The Transfer Agent currently does not charge a bank
wire service fee for each wire redemption sent but reserves the right to do so
in the future. The shareholder's bank may charge a bank wire service fee.

REDEMPTIONS BY TELEPHONE. Redemption requests may be made by telephone by
calling the Transfer Agent at the appropriate toll free number provided in the
Shareholder Account Manual. Shareholders who hold certificates for shares may
not redeem by telephone. REDEMPTION REQUESTS MAY NOT BE MADE BY TELEPHONE FOR
THIRTY DAYS FOLLOWING ANY CHANGE OF THE SHAREHOLDER'S ADDRESS OF RECORD.

Shareholders automatically have telephone privileges to authorize redemptions.
The Fund, GT Global and the Transfer Agent will not be liable for any loss or
damage for acting in good faith upon instructions received by telephone and
reasonably believed to be genuine. The Fund employs reasonable procedures to
confirm that

Prospectus Page 27
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GT GLOBAL DEVELOPING MARKETS FUND
instructions communicated by telephone are genuine prior to acting upon
instructions received by telephone, including requiring some form of personal
identification, providing written confirmation of such transactions, and/or tape
recording of telephone instructions.

REDEMPTIONS BY MAIL. Redemption requests should be mailed directly to the
Transfer Agent at the appropriate address provided in the Shareholder Account
Manual. As discussed above, requests for payment of redemption proceeds to a
party other than the shareholder of record and/or requests that redemption
proceeds be mailed to an address other than the shareholder's address of record
require a signature guarantee. In addition, if the shareholder's address of
record has been changed within the preceding thirty days, a signature guarantee
is required. Redemptions of shares for which certificates have been issued must
be accompanied by properly endorsed share certificates.

SYSTEMATIC WITHDRAWAL PLAN. Shareholders owning shares in the Fund with a value
of $10,000 or more may participate in the GT Global Systematic Withdrawal Plan.
A participating shareholder will receive proceeds from monthly, quarterly or
annual redemptions of Fund shares with respect to either Class A or Class B
shares. No contingent deferred sales charge will be imposed on redemptions made
under the Systematic Withdrawal Plan. The minimum withdrawal amount is $100. The
amount or percentage a participating shareholder specifies to be redeemed may
not, on an annualized basis, exceed 12% of the value of the account, as of the
time the shareholder elects to participate in the Systematic Withdrawal Plan. To
participate in the Systematic Withdrawal Plan, investors should complete the
appropriate portion of the Supplemental Application provided at the end of this
Prospectus. Investors should contact their broker/dealers or the Transfer Agent
for more information. With respect to Class A shares, participation in the
Systematic Withdrawal Plan concurrent with purchases of Class A shares of the
Fund may be disadvantageous to investors because of the sales charges involved
and possible tax implications, and therefore is discouraged. In addition,
shareholders who participate in the Systematic Withdrawal Plan should not elect
to reinvest dividends or other distributions in additional Fund shares.

REDEMPTION FEE. Until May 1, 1998, the Fund will deduct a 2% fee from the
proceeds of all redemptions of Class A shares of the Fund acquired as a result
of the reorganization of the Predecessor Fund into the Fund. The redemption fee
will be paid to the Fund and not to GT Global or the Manager, and is intended to
offset brokerage and other costs the Fund may experience as a result of such
redemptions.

OTHER IMPORTANT REDEMPTION INFORMATION. A request for redemption will not be
processed until all of the necessary documentation has been received in good
order. A shareholder in doubt as to what documents are required should contact
his broker/dealer or the Transfer Agent.

Except in extraordinary circumstances and as permitted under the 1940 Act,
payment for shares redeemed by telephone or in writing will be made promptly
after receipt of a redemption request, if in good order, but not later than
seven days after the date the request is executed. Requests for redemption which
are subject to any special conditions or which specify a future or past
effective date cannot be accepted.

If the Transfer Agent is requested to redeem shares for which the Fund has not
yet received good payment, the Fund may delay payment of redemption proceeds
until it has assured itself that good payment has been collected for the
purchase of the shares. In the case of purchases by check it can take up to 10
business days to confirm that the check has cleared and good payment has been
received. Redemption proceeds will not be delayed when shares have been paid for
by wire or when the investor's account holds a sufficient number of shares for
which funds already have been collected.

The Fund may redeem the shares of any shareholder whose account is reduced to
less than $500 in value through redemptions or other action by the shareholder.
Written notice will be given to the shareholder at least 60 days prior to the
date fixed for such redemption, during which time the shareholder may increase
his or her holdings to an aggregate amount of $500 or more (with a minimum
purchase of $100).

Prospectus Page 28
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND

SHAREHOLDER ACCOUNT MANUAL

- --------------------------------------------------------------------------------

Shareholders are encouraged to place purchase, exchange and redemption orders
through their broker/dealers. Shareholders also may place such orders directly
through the Transfer Agent in accordance with this Manual. See "How to Invest,"
"How to Make Exchanges," "How to Redeem Shares" and "Dividends, Other
Distributions and Federal Income Taxation" for more information.

The Fund's Transfer Agent is GT GLOBAL INVESTOR SERVICES, INC.

INVESTMENTS BY MAIL

Send completed Account Application (if initial purchase) or letter stating Fund
name, class of shares, shareholder's registered name and account number (if
subsequent purchase) with a check to:

GT Global Mutual Funds
P.O. Box 7345
San Francisco, California 94120-7345

INVESTMENTS BY BANK WIRE

An investor opening a new account should call 1-800-223-2138 to obtain an
account number. WITHIN SEVEN DAYS OF PURCHASE A COMPLETED ACCOUNT APPLICATION
CONTAINING THE INVESTOR'S CERTIFIED TAXPAYER IDENTIFICATION NUMBER MUST BE SENT
TO GT GLOBAL AT THE ADDRESS PROVIDED ABOVE UNDER "INVESTMENTS BY MAIL." Wire
instructions must state Fund name, class of shares, shareholder's registered
name and account number. Bank wires should be sent through the Federal Reserve
Bank Wire System to:

WELLS FARGO BANK N.A.
ABA 121000248
Attn: GT GLOBAL
Account No. 4023-050701

EXCHANGES BY TELEPHONE

Call the Transfer Agent at 1-800-223-2138

EXCHANGES BY MAIL

Send complete instructions, including name of Fund exchanging from, class of
shares, amount of exchange, name of the GT Global Mutual Fund exchanging into,
shareholder's registered name and account number, to:

GT Global Mutual Funds
P.O. Box 7893
San Francisco, California 94120-7893

REDEMPTIONS BY TELEPHONE

Call the Transfer Agent at 1-800-223-2138

REDEMPTIONS BY MAIL

Send complete instructions, including name of Fund, class of shares, amount of
redemption, shareholder's registered name and account number, to:

GT Global Investor Services, Inc.
P.O. Box 7893
San Francisco, California 94120-7893

OVERNIGHT MAIL

Overnight mail services do not deliver to post office boxes. To send purchase,
exchange or redemption orders by overnight mail, follow the above instructions
but send to the following:

GT Global Investor Services, Inc.
California Plaza
2121 N. California Boulevard
Suite 450
Walnut Creek, California 94596

ADDITIONAL QUESTIONS

Shareholders with additional questions regarding purchase, exchange and
redemption procedures may call the Transfer Agent at 1-800-223-2138.

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<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND

CALCULATION OF NET ASSET VALUE

- --------------------------------------------------------------------------------

The Fund calculates its net asset value as of the close of regular trading on
the NYSE (currently 4:00 p.m. Eastern time, unless weather, equipment failure or
other factors contribute to an earlier closing time) each Business Day. The
Fund's net asset value per share is computed by determining the value of its
total assets (the securities it holds plus any cash or other assets, including
dividends and interest accrued but not yet received), subtracting all of its
liabilities (including accrued expenses), and dividing the result by the total
number of shares outstanding. Net asset value is determined separately for each
class of the Fund's shares.

Equity securities are valued at the last sale price on the exchange or in the
over-the-counter market in which the securities are primarily 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. Long-term obligations are valued at the
mean of representative quoted bid and asked prices for the securities or, if
such prices are not available, at prices for securities of comparable maturity,
quality and type; however, when the Manager deems it appropriate, prices
obtained from a bond pricing service will be used. Short-term debt investments
are amortized to maturity based on their cost, adjusted for foreign exchange
translation and market fluctuations, provided such valuations represent fair
value. When market quotations for futures and options positions held by the Fund
are readily available, those positions are valued based upon such quotations.

Securities and other assets for which market quotations are not readily
available are valued at fair value determined in good faith by or under the
direction of the Company's Board of Directors. Securities and other assets
quoted in foreign currencies are valued in U.S. dollars based on the prevailing
exchange rates on that day.

The Fund's portfolio securities, from time to time, may be listed primarily on
foreign exchanges or over-the-counter dealer markets that trade on days when the
NYSE is closed (such as a Saturday). As a result, the net asset value of the
Fund may be significantly affected by such trading on days when shareholders
cannot purchase or redeem Fund shares.
The different service and distribution fees borne by each class of shares will
result in different net asset values and dividends. The per share net asset
value of the Class B shares generally will be lower than that of the Class A
shares because of the higher service and distribution fees borne by the Class B
shares. The per share net asset value of the Advisor Class shares of the Fund
generally will be higher than that of the Class A and Class B shares because of
the absence of any service and distribution fees applicable to the Advisor Class
shares. It is expected, however, that the net asset value per share of Class A
and Class B shares will tend to converge immediately after the payment of
dividends, which will differ by approximately the amount of the service and
distribution fee accrual differential between the classes.

Prospectus Page 30
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GT GLOBAL DEVELOPING MARKETS FUND

DIVIDENDS, OTHER DISTRIBUTIONS
AND FEDERAL INCOME TAXATION

- --------------------------------------------------------------------------------

DIVIDENDS AND OTHER DISTRIBUTIONS. The Fund annually declares and pays as a
dividend all of its net investment income, if any, which includes dividends,
accrued interest and earned discount (including both original issue and market
discounts) less applicable expenses. The Fund also annually distributes
substantially all of its realized net capital gains and net gains from foreign
currency transactions, if any. The Fund may make an additional dividend or other
distribution if necessary to avoid a 4% excise tax on certain undistributed
income and gain.

Dividends and other distributions paid by the Fund with respect to all classes
of its shares are calculated in the same manner and at the same time. The per
share income dividends on Class B shares will be lower than the per share income
dividends on Class A shares as a result of the higher service and distribution
fees applicable to Class B shares; and the per share income dividends on both
such classes of shares will be lower than the per share income dividends on the
Advisor Class shares as a result of the absence of any service and distribution
fees applicable to Advisor Class shares. SHAREHOLDERS MAY ELECT:

/ / to have all dividends and other distributions automatically reinvested in
additional Fund shares of the distributing class (or in shares of the
corresponding class of other GT Global Mutual Funds); or

/ / to receive dividends in cash and have other distributions automatically
reinvested in additional Fund shares of the distributing class (or in shares
of the corresponding class of other GT Global Mutual Funds); or

/ / to receive other distributions in cash and have dividends automatically
reinvested in additional Fund shares of the distributing class (or in shares
of the corresponding class of other GT Global Mutual Funds); or

/ / to receive dividends and other distributions in cash.

Automatic reinvestments in additional shares are made at net asset value without
imposition of a sales charge. IF NO ELECTION IS MADE BY A SHAREHOLDER, ALL
DIVIDENDS AND OTHER DISTRIBUTIONS WILL BE AUTOMATICALLY REINVESTED IN ADDITIONAL
FUND SHARES OF THE DISTRIBUTING CLASS. Reinvestments in another GT Global Mutual
Fund may only be directed to an account with the identical shareholder
registration and account number. These elections may be changed by a shareholder
at any time; to be effective with respect to a distribution, the shareholder or
the shareholder's broker must contact the Transfer Agent by mail or telephone at
least 15 Business Days prior to the payment date. THE FEDERAL INCOME TAX
CONSEQUENCES OF DIVIDENDS AND OTHER DISTRIBUTIONS ARE THE SAME WHETHER THEY ARE
RECEIVED IN CASH OR REINVESTED IN ADDITIONAL SHARES.

Any dividend or other distribution paid by the Fund has the effect of reducing
the net asset value per share on the ex-distribution date by the amount thereof.
Therefore, a dividend or other distribution paid shortly after a purchase of
shares would represent, in substance, a return of capital to the shareholder (to
the extent the distribution is paid on the shares so purchased), even though
subject to income tax, as discussed below.

TAXES. The Fund intends to continue to qualify for treatment as a regulated
investment company under the Code. In each taxable year that the Fund so
qualifies, the Fund (but not its shareholders) will be relieved of federal
income tax on that part of its investment company taxable income (consisting
generally of net investment income, net gains from certain foreign currency
transactions and net short-term capital gain) and net capital gain (i.e., the
excess of net long-term capital gain over net short-term capital loss) that is
distributed to its shareholders.

Dividends from the Fund's investment company taxable income (whether paid in
cash or reinvested in additional shares) are taxable to its shareholders as
ordinary income to the extent of its earnings and profits. Distributions of the
Fund's net capital gain, when designated as such, are taxable to its
shareholders as long-term capital gain, regardless of how long they have held
their Fund shares and whether paid in cash or reinvested in additional shares.

The Fund provides federal tax information to its shareholders annually,
including information about

Prospectus Page 31
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND

dividends and capital gain distributions paid during the preceding year and,
under certain circumstances, the shareholders' respective shares of any foreign
taxes paid by the Fund, in which event each shareholder would be required to
include in his or her gross income his or her pro rata share of those taxes but
might be entitled to claim a credit or deduction for them.

The information regarding capital gain distributions designates the portions of
those distributions that are subject to (1) the 20% maximum rate of tax (10% for
investors in the 15% marginal tax bracket) enacted by the Taxpayer Relief Act of
1997 ("Tax Act"), which applies to gain on securities held for more than 18
months, and (2) the 28% maximum tax rate, applicable to gain on securities held
for more than 12 and up to 18 months (which, prior to enactment of the Tax Act,
applied to all capital gain on securities held for more than one year).

The Fund must withhold 31% from dividends, capital gain distributions and
redemption proceeds payable to any individuals and certain other noncorporate
shareholders who have not furnished to the Fund a correct taxpayer
identification number or a properly completed claim for exemption on Form W-8 or
W-9. Withholding at that rate also is required from dividends and capital gain
distributions payable to such shareholders who otherwise are subject to backup
withholding. Fund accounts opened via a bank wire purchase (see "How to Invest
- -- Purchases Through the Distributor") are considered to have uncertified
taxpayer identification numbers unless a completed Form W-8 or W-9 or Account
Application is received by the Transfer Agent within seven days after the
purchase. A shareholder should contact the Transfer Agent if the shareholder is
uncertain whether a proper taxpayer identification number is on file with the
Fund.

A redemption of Fund shares may result in taxable gain or loss to the redeeming
shareholder, depending upon whether the redemption proceeds are more or less
than the shareholder's adjusted basis for the redeemed shares (which normally
includes any initial sales charge paid on Class A shares). An exchange of Fund
shares for shares of another GT Global Mutual Fund generally will have similar
tax consequences. However, special tax rules apply when a shareholder (1)
disposes of Class A shares through a redemption or exchange within 90 days after
purchase and (2) subsequently acquires Class A shares of the Fund or of any
other GT Global Mutual Fund on which an initial sales charge normally is imposed
without paying that sales charge due to the reinstatement privilege or exchange
privilege. In these cases, any gain on the disposition of the original Class A
shares will be increased, or loss decreased, by the amount of the sales charge
paid when those shares were acquired, and that amount will increase the adjusted
basis of the shares subsequently acquired. In addition, if Fund shares are
purchased within 30 days before or after redeeming other Fund shares (regardless
of class) at a loss, all or a part of the loss will not be deductible and
instead will increase the basis of the newly purchased shares.

The foregoing is only a summary of some of the important federal tax
considerations generally affecting the Fund and its shareholders. See "Taxes" in
the Statement of Additional Information for a further discussion. There may be
other federal, state, local or foreign tax considerations applicable to a
particular investor. Prospective investors therefore are urged to consult their
tax advisers.

Prospectus Page 32
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND

MANAGEMENT

- --------------------------------------------------------------------------------

The Company's Board of Directors has overall responsibility for the operation of
the Fund. Pursuant to such responsibility, the Board has approved contracts with
various financial organizations to provide, among other things, day to day
management services required by the Fund. See "Directors and Executive Officers"
in the Statement of Additional Information for a complete description of the
Directors of the Company.

INVESTMENT MANAGEMENT AND ADMINISTRATION. Services provided by Chancellor LGT
Asset Management, Inc. (the Manager) as the Fund's investment manager and
administrator include determining the composition of the Fund's portfolio and
placing orders to buy, sell or hold particular securities; furnishing corporate
officers and clerical staff; providing office space, services and equipment; and
supervising all matters relating to the Fund's operation. For these services,
the Fund pays the Manager investment management and administration fees,
computed daily and paid monthly, based on its average daily net assets, at the
annualized rate of .975% on the first $500 million, .95% on the next $500
million, .925% on the next $500 million and .90% on amounts thereafter. This
rate is higher than that paid by most mutual funds. The Manager and GT Global
have undertaken to limit the Fund's expenses (exclusive of brokerage
commissions, taxes, interest and extraordinary expenses) to the annual rate of
2.00% and 2.50% of the average daily net assets of the Fund's Class A and Class
B shares, respectively. These undertakings may be changed or eliminated in the
future.

The Manager also serves as the Fund's pricing and accounting agent. For these
services the Manager receives a fee at an annual rate derived by applying 0.03%
to the first $5 billion of assets of GT Global Mutual Funds 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 Manager provides investment management and/or administration services to the
GT Global Mutual Funds. The Manager and its worldwide asset management
affiliates have provided investment management and/or administration services to
institutional, corporate and individual clients around the world since 1969. The
U.S. offices of the Manager are located at 50 California Street, 27th Floor, San
Francisco, CA 94111, and 1166 Avenue of the Americas, New York, NY 10036.

The Manager and its worldwide affiliates, including LGT Bank in Liechtenstein,
compose Liechtenstein Global Trust. Liechtenstein Global Trust is a provider of
global asset management and private banking products and services to individual
and institutional investors. Liechtenstein Global Trust is controlled by the
Prince of Liechtenstein Foundation, which serves as a parent organization for
the various business enterprises of the Princely Family of Liechtenstein. The
principal business address of the Prince of Liechtenstein Foundation is
Herrengasse 12, FL-9490, Vaduz, Liechtenstein.

As of September 30, 1997, the Manager and its worldwide asset management
affiliates managed approximately $62 billion. In the United States, as of
September 30, 1997, the Manager managed or administered approximately $9 billion
of GT Global Funds. As of September 30, 1997, assets entrusted to Liechtenstein
Global Trust totaled approximately $86 billion.

In addition to the investment resources of its San Francisco and New York
offices, the Manager draws upon the expertise, personnel, data and systems of
other offices of Liechtenstein Global Trust, including investment offices in
Frankfurt, Hong Kong, London, Singapore, Sydney, Tokyo, and Toronto. In managing
the GT Global Mutual Funds, the Manager employs a team approach, taking
advantage of its investment resources around the world in seeking to achieve the
Fund's investment objective. Many of the GT Global Mutual Funds' portfolio
managers are natives of the countries in which they invest, speak local
languages and/or live or work in the markets they follow.

Prospectus Page 33
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND

The investment professionals primarily responsible for the portfolio management
of the Fund are as follows:

<TABLE>
<CAPTION>
RESPONSIBILITIES BUSINESS EXPERIENCE
NAME/OFFICE FOR THE FUND PAST FIVE YEARS
- -------------------------- -------------------------- ---------------------------------------------------------------
<S> <C> <C>
Allan Conway Portfolio Manager since Mr. Conway joined Chancellor LGT Asset Management, Inc. (the
London 1997 "Manager") and LGT Asset Management PLC (London), an affiliate
of the Manager, in January 1997 as Head of Global Emerging
Market Equities. Based in London, he manages a centralized
team of global emerging market fund managers. From 1992 to
1997, Mr. Conway was Director of International Equities at
Hermes Investment Management, and from 1982 to 1992 was a
Portfolio Manager, and eventually overall Head of Overseas
Equities, at Provident Mutual.

Michael Mabbutt Portfolio Manager since Mr. Mabbutt joined Chancellor LGT Asset Management, Inc. (the
London 1997 "Manager") and LGT Asset Management PLC (London), an affiliate
of the Manager, in December 1996. He was appointed Head of
Global Emerging Market Debt for the Manager in April 1997.
Prior to joining the Manager, he was a Senior Portfolio
Manager for global fixed income at Baring Asset Management in
London from 1992 to 1996. At Baring Asset Management, he was
responsible for creating the emerging market debt process as
head of the five member Emerging Market Fixed Income Strategy
Group.

Cheng-Hock Lau Portfolio Manager since Mr. Lau has been Chief Investment Officer for Developed Market
New York 1997 Debt for the Manager since November 1996, and was a Senior
Portfolio Manager for global/international fixed income for
the Manager from July 1995 to November 1996. Mr. Lau was a
Senior Vice President and Senior Portfolio Manager for
Fiduciary Trust Company International from 1993 to 1995, and
Vice President at Bankers Trust Company from 1991 to 1993.
</TABLE>

In placing securities orders for the Fund's portfolio transactions, the Manager
seeks to obtain the best net results. Consistent with its obligation to obtain
the best net results, the Manager may consider a broker/dealer's sale of shares
of the GT Global Mutual Funds as a factor in considering through whom portfolio
transactions will be effected. Brokerage transactions may be executed through
affiliates of Liechtenstein Global Trust.

DISTRIBUTION OF FUND SHARES. GT Global is the distributor of the Fund's Class A
and Class B shares. GT Global is a subsidiary of Liechtenstein Global Trust with
offices at 50 California Street, 27th Floor, San Francisco, California 94111. As
distributor, GT Global collects the sales charges imposed on purchases of Class
A shares and any contingent deferred sales charges that may be imposed on
certain redemptions on Class A or Class B shares. GT Global reallows a portion
of the sales charge on Class A shares to broker/dealers that have sold such
shares in accordance with the schedule set forth above under "How to Invest." GT
Global also pays a commission equal to 4.00% of the amount invested to
broker/dealers who sell Class B shares. A commission is not paid on exchanges or
certain reinvestments in Class B shares. In addition, with respect to both
classes of shares, GT Global makes ongoing payments to broker/dealers for
distribution and service activities in accordance with the Rule 12b-1 plans
described below.

The Fund reserves the right to suspend the offering of its shares upon the
advice of the Manager that doing so is in the best interests of the portfolio
management process.

Prospectus Page 34
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND

GT Global, at its own expense, may provide additional promotional incentives to
brokers that sell shares of the Fund and/or shares of the other GT Global Mutual
Funds. In some instances additional compensation or promotional incentives may
be offered to brokers that have sold or may sell significant amounts of shares
during specified periods of time. Such compensation and incentives may include,
but are not limited to, cash, merchandise, trips and financial assistance to
broker/ dealers in connection with preapproved conferences or seminars, sales or
training programs for invited sales personnel, payment for travel expenses
(including meals and lodging) incurred by sales personnel and members of their
families or other invited guests to various locations for such seminars or
training programs, seminars for the public, advertising and sales campaigns
regarding one or more of the GT Global Mutual Funds, and/ or other events
sponsored by the broker/dealers. In addition, GT Global makes ongoing payments
to brokerage firms, financial institutions (including banks) and others that
facilitate the administration and servicing of shareholder accounts.

Under a plan of distribution adopted by the Company's Board of Directors
pursuant to Rule 12b-1 under the 1940 Act, with respect to the Fund's Class A
shares ("Class A Plan"), the Fund may pay GT Global a service fee at the
annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class A shares for its expenditures incurred in servicing and maintaining
shareholder accounts. Under the Class A Plan for the Fund, the Fund may also 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 its expenditures in providing
services as distributor. All expenses for which GT Global is reimbursed under
the Class A Plan will have been incurred within one year of such reimbursement.

Pursuant to a separate plan of distribution adopted with respect to the Fund's
Class B shares ("Class B Plan"), the Fund may pay GT Global a service fee at the
annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class B shares for its expenditures incurred in servicing and maintaining
shareholder accounts, and may pay GT Global a distribution fee at the annualized
rate of up to 0.75% of the average daily net assets of the Fund's Class B shares
for its expenditures incurred in providing services as distributor. Expenses
incurred under the Class B Plan in excess of 1.00% annually may be carried
forward for reimbursement in subsequent years as long as that Plan continues in
effect.

GT Global's service and distribution expenses covered by the Plans include the
payment of ongoing commissions; the cost of any additional compensation paid by
GT Global to brokers/dealers; the costs of printing and mailing to prospective
investors prospectuses and other materials relating to the Fund; the costs of
developing, printing, distributing and publishing advertisements and other sales
literature; and allocated costs relating to GT Global's distribution activities,
including, among other things, employee salaries, bonuses and other overhead
expenses. In addition, its expenses under the Class B Plan include payment of
initial sales commissions to broker/ dealers and interest on any unreimbursed
amounts carried forward thereunder.

The Glass-Steagall Act and other applicable laws, among other things, generally
prohibit federally chartered or supervised banks from engaging in the business
of underwriting or distributing securities. Accordingly, GT Global intends to
engage banks (if at all) only to perform administrative and shareholder
servicing functions. Banks and broker/ dealer affiliates of banks may also
execute dealer agreements with GT Global for the purpose of selling shares of
the Fund. If a bank were prohibited from so acting, its shareholder clients
would be permitted to remain shareholders, and alternative means for continuing
the servicing of such shareholders would be sought. It is not expected that
shareholders would suffer any adverse financial consequences as a result of any
of these occurrences.

Prospectus Page 35
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND

OTHER INFORMATION

- --------------------------------------------------------------------------------

CONFIRMATIONS AND REPORTS TO SHAREHOLDERS. Each time a transaction is made that
affects a shareholder's account in the Fund, the shareholder will receive from
the Transfer Agent a confirmation statement reflecting the transaction.
Confirmations for transactions effected pursuant to the Fund's Automatic
Investment Plan, Systematic Withdrawal Plan, and automatic dividend reinvestment
program may be provided quarterly. Shortly after the end of the Fund's fiscal
year on October 31 and fiscal half-year on April 30 of each year, shareholders
receive an annual and semiannual report, respectively. In addition, the federal
income tax status of distributions made by the Fund to shareholders is reported
after the end of each calendar year on Form 1099-DIV. Under certain
circumstances, duplicate mailings of the foregoing reports to the same household
may be consolidated.

ORGANIZATION OF THE COMPANY. The Company was organized as a Maryland corporation
on October 29, 1987. From time to time, the Company has established and may
continue to establish other funds, each corresponding to a distinct investment
portfolio and a distinct series of the Company's common stock. Shares of the
Fund are entitled to one vote per share (with proportional voting for fractional
shares) and are freely transferable. Shareholders have no preemptive or
conversion rights.

On any matter submitted to a vote of shareholders, shares of the Fund will be
voted by the Fund's shareholders individually when the matter affects the
specific interest of the Fund only, such as approval of its investment
management arrangements. In addition, each class of shares of the Fund has
exclusive voting rights with respect to its distribution plan. The shares of the
Company's funds will be voted in the aggregate on other matters, such as the
election of Directors and ratification of the Board of Directors' selection of
the Company's independent accountants.

Normally there will be no annual meeting of shareholders in any year, except as
required under the 1940 Act. The Company would be required to hold a
shareholders' meeting in the event that at any time less than a majority of the
Directors holding office had been elected by shareholders. Directors shall
continue to hold office until their successors are elected and have qualified.
Shares of the Company's funds do not have cumulative voting rights, which means
that the holders of a majority of the shares voting for the election of
Directors can elect all the Directors. A Director may be removed upon a majority
vote of the shareholders qualified to vote in the election. Shareholders holding
10% of the Company's outstanding voting securities may call a meeting of
shareholders for the purpose of voting upon the question of removal of any
Director or for any other purpose. The 1940 Act requires the Company to assist
shareholders in calling such a meeting.

Pursuant to the Company's Articles of Incorporation, it may issue six billion
shares. Of this number, 300 million shares have been classified as shares of the
Fund; 100 million shares have been classified as Class A shares of the Fund, 100
million shares have been classified as Class B shares of the Fund, and 100
million shares have been classified as Advisor Class shares of the Fund. This
amount may be increased from time to time in the discretion of the Board of
Directors. Each share of the Fund represents an interest in the Fund only, has a
par value of $0.0001 per share, represents an equal proportionate interest in
the Fund with other shares of the Fund and is entitled to such dividends and
other distributions out of the income earned and gain realized on the assets
belonging to the Fund as may be declared at the discretion of the Board of
Directors. Each Class A, Class B and Advisor Class share of the Fund is equal as
to earnings, assets and voting privileges, except as noted above, and each class
bears the expenses, if any, related to the distribution of its shares. Shares of
the Fund when issued are fully paid and nonassessable.

SHAREHOLDER INQUIRIES. Shareholder inquiries may be made by calling the Fund
toll free at (800) 223-2138 or by writing to the Fund at 50 California Street,
27th Floor, San Francisco, California 94111.

PERFORMANCE INFORMATION. The Fund, from time to time, may include information on
its investment results and/or comparisons of its investment results to various
unmanaged indices or results of other

Prospectus Page 36
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND
mutual funds or groups of mutual funds in advertisements, sales literature or
reports furnished to present or prospective shareholders.

In such materials, the Fund may quote its average annual total return
("Standardized Return"). Standardized Return is calculated separately for each
class of shares of the Fund. Standardized Return shows percentage rates
reflecting the average annual change in the value of an assumed investment in
the Fund at the end of one-, five- and ten-year periods, reduced by the maximum
applicable sales charge imposed on sales of Fund shares. If a one-, five- and/or
ten-year period has not yet elapsed, data will be provided as of the end of a
shorter period corresponding to the life of the Fund. Standardized Return
assumes reinvestment of all dividends and other distributions.

In addition, in order to more completely represent the Fund's performance or
more accurately compare such performance to other measures of investment return,
the Fund also may include in advertisements, sales literature and shareholder
reports other total return performance data ("Non-Standardized Return").
Non-Standardized return reflects percentage rates of return encompassing all
elements of total return (e.g., income and capital appreciation or
depreciation); it assumes reinvestment of all dividends and other distributions.
Non-Standardized Return may be quoted for the same or different periods as those
for which Standardized Return is quoted; it may consist of an aggregate or
average annual percentage rate of return, actual year-by-year rates or any
combination thereof. Non-Standardized Return may or may not take sales charges
into account; performance data calculated without taking the effect of sales
charges into account will be higher than data including the effect of such
charges.

The Fund's performance data reflects past performance and is not necessarily
indicative of future results. The Fund's investment results will vary from time
to time depending upon market conditions, the composition of its portfolio and
its operating expenses. These factors and possible differences in calculation
methods should be considered when comparing the Fund's investment results with
those published for other investment companies, other investment vehicles and
unmanaged indices. The Fund's results also should be considered relative to the
risks associated with its investment objective and policies. See "Investment
Results" in the Statement of Additional Information.

The Fund's annual report contains additional information with respect to its
performance. The annual report is available to investors upon request and free
of charge.

TRANSFER AGENT. Shareholder servicing, reporting and general transfer agent
functions for the Fund are performed by GT Global Investor Services, Inc. The
Transfer Agent is an affiliate of the Manager and GT Global and a subsidiary of
Liechtenstein Global Trust, and maintains its offices at California Plaza, 2121
North California Boulevard, Suite 450, Walnut Creek, California 94596.

CUSTODIAN. State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110 is custodian of the Fund's assets.

COUNSEL. The law firm of Kirkpatrick & Lockhart LLP, 1800 Massachusetts Avenue,
N.W., Washington, D.C. 20036-1800, acts as counsel to the Company and the Fund.
Kirkpatrick & Lockhart LLP also acts as counsel to the Manager, GT Global and
the Transfer Agent.

INDEPENDENT ACCOUNTANTS. The Company's and the Fund's independent accountants
are Coopers & Lybrand L.L.P., One Post Office Square, Boston, Massachusetts
02109. Coopers & Lybrand L.L.P. conducts an annual audit of the Fund, assists in
the preparation of the Fund's federal and state income tax returns and consults
with the Company and the Fund as to matters of accounting, regulatory filings,
and federal and state income taxation.

MULTIPLE TRANSLATIONS OF THE PROSPECTUS. This Prospectus may be translated into
other languages. In the event of any inconsistency or ambiguity as to the
meaning of any word or phrase contained in a translation, the English text shall
prevail.

Prospectus Page 37
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND

NOTES

- --------------------------------------------------------------------------------

Prospectus Page 38
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND

NOTES

- --------------------------------------------------------------------------------

Prospectus Page 39
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND

NOTES

- --------------------------------------------------------------------------------

Prospectus Page 40
<PAGE>
GT GLOBAL DEVELOPING 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 GT GLOBAL FUND,
INCLUDING FEES, EXPENSES AND THE RISKS OF GLOBAL AND EMERGING MARKET
INVESTING AND THE RISKS OF INVESTING IN RELATED INDUSTRIES, PLEASE CONTACT
YOUR FINANCIAL ADVISER OR CALL GT GLOBAL DIRECTLY AT 1-800-824-1580.

GROWTH FUNDS

/ / GLOBALLY DIVERSIFIED FUNDS

GT GLOBAL NEW DIMENSION FUND

Captures global growth opportunities by investing directly in the six GT Global
Theme 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

GT GLOBAL DEVELOPING MARKETS FUND

Invests in debt and equity securities of developing market issuers

/ / GLOBAL THEME FUNDS

GT GLOBAL CONSUMER PRODUCTS AND
SERVICES FUND
Invests in companies that manufacture, market, retail, or distribute consumer
products or services

GT GLOBAL FINANCIAL SERVICES FUND
Focuses on the worldwide opportunities from the demand for financial services
and products

GT GLOBAL HEALTH CARE FUND
Invests in growing health care industries worldwide

GT GLOBAL INFRASTRUCTURE FUND
Seeks companies that build, improve or maintain a country's infrastructure

GT GLOBAL NATURAL RESOURCES FUND
Concentrates on companies that own, explore or develop natural resources

GT GLOBAL TELECOMMUNICATIONS FUND
Invests in companies worldwide that develop, manufacture or sell
telecommunications services or equipment

/ / REGIONALLY DIVERSIFIED FUNDS

GT GLOBAL NEW PACIFIC GROWTH FUND
Offers access to the emerging and established markets of the Pacific Rim,
excluding Japan

GT GLOBAL EUROPE GROWTH FUND
Focuses on investment opportunities in the new, unified Europe

GT GLOBAL LATIN AMERICA GROWTH FUND
Invests in the emerging markets of Latin America

/ / SINGLE COUNTRY FUNDS

GT GLOBAL AMERICA SMALL CAP GROWTH FUND
Invests in equity securities of small U.S. companies

GT GLOBAL AMERICA 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 bonds from around the world

INCOME FUNDS

GT GLOBAL GOVERNMENT INCOME FUND
Earns monthly income from global government securities

GT GLOBAL STRATEGIC INCOME FUND
Allocates its assets among debt securities from the U.S., developed foreign
countries and emerging markets

GT GLOBAL HIGH INCOME FUND
Invests in debt securities in emerging markets

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

[LOGO]

NO DEALER, SALES REPRESENTATIVE OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY G.T. INVESTMENT FUNDS, INC.,
GT GLOBAL DEVELOPING MARKETS FUND, CHANCELLOR LGT ASSET MANAGEMENT, INC. OR
GT GLOBAL, INC. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR
SOLICITATION OF ANY OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY
JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH
JURISDICTION.

GTDPR711060M.614

<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND:
ADVISOR CLASS

PROSPECTUS -- NOVEMBER 1, 1997
- --------------------------------------------------------------------------------

Shares offered by this Prospectus are available for purchase only by certain
investors and are offered at net asset value without the imposition of a front-
end or contingent deferred sales charge or Rule 12b-1 fees.

An investment in the Fund offers the following advantages:

/ / Access to Securities Markets Around the World

/ / Professional Management by a Leading Manager with Offices in the World's
Major Markets

/ / Automatic Dividend and Other Distribution Reinvestment

/ / Exchange Privileges with the Advisor Class of the Other GT Global Mutual
Funds

/ / Portfolio Rebalancing Program

FOR FURTHER INFORMATION, CALL
(800) 824-1580 OR CONTACT YOUR FINANCIAL ADVISER.

[LOGO]

- --------------------------------------------------------------------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
PASSED ON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

Prospectus Page 1
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND

TABLE OF CONTENTS
- ------------------------------------------------------------

<TABLE>
<CAPTION>
Page
---------
<S> <C>
Prospectus Summary........................................................................ 3
Financial Highlights...................................................................... 6
Investment Objectives and Policies........................................................ 7
Risk Factors.............................................................................. 12
How to Invest............................................................................. 17
How to Make Exchanges..................................................................... 19
How to Redeem Shares...................................................................... 20
Shareholder Account Manual................................................................ 22
Calculation of Net Asset Value............................................................ 23
Dividends, Other Distributions and Federal Income Taxation................................ 23
Management................................................................................ 25
Other Information......................................................................... 27
</TABLE>

Prospectus Page 2
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND

<TABLE>
<S> <C> <C>
The Fund: The Fund is a non-diversified series of G.T. Investment Funds, Inc. (the
"Company").

Investment Objectives: The Fund's primary investment objective is long-term capital
appreciation; its secondary objective is income, to the extent
consistent with seeking capital appreciation.

Principal Investments: The Fund ordinarily invests a majority of its assets in emerging
market equity securities and also may invest in emerging market
debt securities.

Principal Risk Factors: There is no assurance that the Fund will achieve its investment
objectives. The Fund's net asset value per share will fluctuate,
reflecting fluctuations in the market value of its portfolio
holdings.

The Fund invests in foreign securities. Investments in foreign
securities involve risks relating to political and economic
developments abroad and the differences between the regulations to
which U.S. and foreign issuers are subject. Individual foreign
economies also may differ favorably or unfavorably from the U.S.
economy. Changes in foreign currency exchange rates will affect
the Fund's net asset value, earnings, and gains and losses
realized on sales of securities. Securities of foreign companies
may be less liquid and their prices more volatile than those of
securities of comparable U.S. companies. The Fund normally invests
substantially all of its assets in issuers in emerging markets.
Such investments entail greater risks than investing in issuers in
developed markets.

The Fund may engage in certain foreign currency, options and
futures transactions to attempt to hedge against the overall level
of investment and currency risk associated with its present or
planned investments. Such transactions involve certain risks and
transaction costs.

The value of debt securities held by the Fund generally fluctuates
inversely with interest rate movements. Certain investment grade
debt securities may possess speculative qualities. The Fund may
invest in below investment grade debt securities. Investments of
this type are subject to a greater risk of loss of principal and
interest.

See "Investment Objectives and Policies" and "Risk Factors."

Investment Manager: The Manager is part of Liechtenstein Global Trust, a provider of
global asset management and private banking products and services
to individual and institutional investors, entrusted with
approximately $86 billion in total assets as of September 30,
1997. The Manager and its worldwide asset management affiliates
maintain investment offices in Frankfurt, Hong Kong, London, New
York, San Francisco, Singapore, Sydney, Tokyo and Toronto. See
"Management."
</TABLE>

Prospectus Page 3
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND

PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------

<TABLE>
<S> <C> <C>
Advisor Class shares are offered through this Prospectus to (a)
trustees or other fiduciaries purchasing shares for employee
benefit plans that are sponsored by organizations that have at
Advisor Class Shares: least 1,000 employees; (b) any account with assets of at least
$10,000 if (i) a financial planner, trust company, bank trust
department or registered investment adviser has investment
discretion over such account, and (ii) the account holder pays
such person as compensation for its advice and other services an
annual fee of at least .50% on the assets in the account; (c) any
account with assets of a least $10,000 if (i) such account is
established under a "wrap fee" program, and (ii) the account
holder pays the sponsor of such program an annual fee of at least
.50% on the assets in the account; (d) accounts advised by one of
the companies composing or affiliated with the Liechtenstein
Global Trust; and (e) any of the companies composing or affiliated
with the Liechtenstein Global Trust.

Shares Available Through: Advisor Class shares of the Fund's common stock are available
through Financial Advisors (as defined herein) that have entered
into agreements with the Fund's distributor, GT Global, Inc. ("GT
Global") or certain of its affiliates. See "How to Invest" and
"Shareholder Account Manual."

Exchange Privileges: Advisor Class shares may only be exchanged for Advisor Class
shares of other GT Global Mutual Funds, which are open-end
management investment companies advised and/or administered by the
Manager. See "How to Make Exchanges" and "Shareholder Account
Manual."

Redemptions: Shares may be redeemed through the Fund's transfer agent, GT
Global Investor Services, Inc. ("Transfer Agent"). See "How to
Redeem Shares" and "Shareholder Account Manual."

Dividends and Other Dividends and other distributions from net investment income, net
Distributions: short- term capital gain, net capital gain and net gains from
foreign currency transactions, if any, are paid annually.

Reinvestment: Dividends and other distributions may be reinvested automatically
in Advisor Class shares of the Fund or in Advisor Class shares of
other GT Global Mutual Funds.

Net Asset Value: Expected to be quoted daily in the financial section of most
newspapers.
</TABLE>

Prospectus Page 4
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND

PROSPECTUS SUMMARY
(Continued)
- --------------------------------------------------------------------------------

SUMMARY OF INVESTOR COSTS. The expenses and maximum transactions costs
associated with investing in the Advisor Class shares of the Fund are reflected
in the following tables (1):

<TABLE>
<CAPTION>
ADVISOR CLASS
----------------
<S> <C>
SHAREHOLDER TRANSACTION COSTS:
Maximum sales charge on purchases of shares (as a % of offering price)................................. None
Sales charges on reinvested distributions to shareholders.............................................. None
Maximum deferred sales charge (as a % of net asset value at time of purchase or sale, whichever is
less)................................................................................................ None
Redemption charges..................................................................................... None
Exchange Fees:
-- On first four exchanges each year................................................................. None
-- On each additional exchange....................................................................... $ 7.50
ANNUAL FUND OPERATING EXPENSES (2):
(AS A % OF AVERAGE NET ASSETS)
Investment management and administration fees.......................................................... 0.98%
12b-1 distribution and service fees.................................................................... None
Other expenses (after estimated waivers)............................................................... 0.52%
-----
Total Fund Operating Expenses............................................................................ 1.50%
-----
-----
</TABLE>

HYPOTHETICAL EXAMPLE OF EFFECT OF EXPENSES:

An investor would have directly or indirectly paid the following expenses at the
end of the periods shown on a $1,000 investment in the Fund, assuming a 5%
annual return:

<TABLE>
<CAPTION>
ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS
---- ----- ----- -----
<S> <C> <C> <C> <C>
Advisor Class Shares...................................................................... $15 $ 46 $ 82 $180
</TABLE>

- ------------------
(1) THESE TABLES ARE INTENDED TO ASSIST INVESTORS IN UNDERSTANDING THE VARIOUS
COSTS AND EXPENSES ASSOCIATED WITH INVESTING IN THE FUND. THE "HYPOTHETICAL
EXAMPLE" IS NOT A REPRESENTATION OF PAST OR FUTURE EXPENSES. THE FUND'S
ACTUAL EXPENSES MAY BE MORE OR LESS THAN THOSE SHOWN. The tables and the
assumption in the example of a 5% annual return are required by regulations
of the SEC applicable to all mutual funds. The 5% annual return is not a
prediction of and does not represent the Fund's projected or actual
performance.

(2) Expenses are estimated based on the fees and expenses the Fund is expected
to incur during its initial year as an open-end fund and the Manager's and
GT Global's undertaking to limit the Fund's expenses (exclusive of brokerage
commissions, taxes, interest and extraordinary expenses) to the annual rate
of 1.50% of the average daily net assets of the Fund's Advisor Class shares.
Without waivers, "Other expenses" and "Total Fund Operating Expenses" are
estimated to be 0.65% and 1.63%, respectively, for Advisor Class shares.
"Other expenses" include custody, transfer agent, legal and audit fees and
other operating expenses. See "Management" herein and in the Statement of
Additional Information for more information. Investors purchasing Advisor
Class shares through financial planners, trust companies, bank trust
departments or registered investment advisers, or under a "wrap fee"
program, will be subject to additional fees charged by such entities or by
the sponsors of such programs. Where any account advised by one of the
companies composing or affiliated with Liechtenstein Global Trust invests in
Advisor Class shares of the Fund, such account shall not be subject to
duplicative advisory fees.

Prospectus Page 5
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND

FINANCIAL HIGHLIGHTS

- --------------------------------------------------------------------------------

GT GLOBAL DEVELOPING MARKETS FUND
(SUCCESSOR TO G.T. GLOBAL DEVELOPING MARKETS FUND, INC.)

(For the entire period shown, the Predecessor Fund operated as a closed-end
investment company traded on the NYSE)

<TABLE>
<CAPTION>
YEAR ENDED JANUARY 11, 1994
SIX MONTHS DECEMBER 31, (COMMENCEMENT
ENDED -------------------- OF OPERATIONS) TO
JUNE 30, 1997 1996 1995 DECEMBER 31, 1994
------------- --------- --------- ------------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period........................ $ 13.84 $ 11.60 $ 12.44 $ 15.00
------------- --------- --------- ----------
Income from investment operations:
Net investment income..................................... 0.20 0.53 0.72 0.35
Net realized and unrealized gain (loss) on investments.... 1.35 2.19 (0.84) (2.46)
------------- --------- --------- ----------
Net increase (decrease) from investment operations...... 1.55 2.72 (0.12) (2.11)
------------- --------- --------- ----------
Distributions to shareholders:
From net investment income................................ -- (0.48) (0.72) (0.35)
From net realized gain on investments..................... -- -- -- (0.10)
------------- --------- --------- ----------
Total distributions..................................... -- (0.48) (0.72) (0.45)
------------- --------- --------- ----------
Net asset value, end of period.............................. $ 15.39 $ 13.84 $ 11.60 $ 12.44
------------- --------- --------- ----------
------------- --------- --------- ----------
Total investment return (based on net asset value) (a)...... 11.20%+ 23.59% (0.95)% (14.07 )%+

Ratios and supplemental data:
Net assets, end of period (in 000's)........................ $ 560,599 $ 504,012 $ 422,348 $ 452,872
Ratio of net investment income to average net assets........ 2.75%++ 4.07% 6.33% 2.75% ++
Ratio of expenses to average net assets:
With expense reductions................................... 1.82%++ 1.82% 1.77% 2.01% ++
Without expense reductions................................ 1.85%++ 1.85% 1.80% 2.01% ++
Portfolio turnover rate..................................... 217%++ 138% 75% 56%
Average commission rate per share paid on portfolio
transactions............................................... $ 0.0019 $ 0.0022 N/A N/A
<FN>
- ------------------
</TABLE>

+ Not annualized

++ Annualized

N/A Not Applicable

(a) Total investment return differs from the Predecessor Fund's total investment
return based on market value.

Prospectus Page 6
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND

INVESTMENT OBJECTIVES
AND POLICIES

- --------------------------------------------------------------------------------

For purposes of the Fund's policy of normally investing substantially all of its
assets in issuers in emerging markets, the Fund will consider investment in the
following emerging markets:

In selecting investments, the Manager seeks to identify those countries and
industries where economic and political factors, including currency movements,
are likely to produce above-average growth

Prospectus Page 7
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND

rates over the long term. The Manager seeks those emerging markets that have
strongly developing economies and in which the markets are becoming more
sophisticated. The Manager then invests in those companies in such countries and
industries that it believes are best positioned and managed to take advantage of
these economic and political factors. The Manager believes that the issuers of
securities in emerging markets often have sales and earnings growth rates that
exceed those in developed countries and that such growth rates may in turn be
reflected in more rapid share price appreciation.

There is no limitation on the percentage of the Fund's assets that may be
invested in debt securities that are rated below investment grade. Investment in
below investment grade debt securities involves a high degree of risk and can be
speculative. These debt securities are the equivalent of high yield, high risk
bonds, commonly known as "junk bonds." Debt securities in which the Fund will
invest may not be rated; if rated, it is expected that such ratings will be
below investment grade. See "Risk Factors -- Risks Associated with Debt
Securities" and "-- Risks Associated with Below Investment Grade Debt
Securities."

Capital appreciation in debt securities may arise as a result of a favorable
change in relative foreign exchange rates, relative interest rate levels and/or
the creditworthiness of issuers.

ADDITIONAL INVESTMENT POLICIES

TEMPORARY DEFENSIVE STRATEGIES. In the interest of preserving shareholders'
capital, the Manager may employ a temporary defensive investment strategy for
the Fund if it determines such a strategy

Prospectus Page 8
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND
to be warranted due to market, economic or political conditions. Under a
defensive strategy, the Fund may hold cash (U.S. dollars, foreign currencies or
multinational currency units) and/or invest any portion or all of its assets in
high quality money market instruments of U.S. or foreign issuers. In addition,
for temporary defensive purposes, most or all of the Fund's investments may be
made in the United States and denominated in U.S. dollars. To the extent the
Fund adopts a temporary defensive posture, it will not be invested so as to
directly achieve its investment objectives. In addition, pending investment of
proceeds from new sales of Fund shares or in order to meet ordinary daily cash
needs, the Fund may hold cash (U.S. dollars, foreign currencies or multinational
currency units) and may invest in foreign or domestic high quality money market
instruments.

BORROWING AND REVERSE REPURCHASE AGREEMENTS. In connection with meeting requests
for the redemption of Fund shares, the Fund may borrow from banks or may borrow
through reverse repurchase agreements. The Fund also may borrow up to 5% of its
total assets for temporary or emergency purposes other than to meet redemptions
but total borrowings may not exceed 33 1/3% of its total assets. However, the
Fund will not purchase securities while borrowings in excess of 5% of its total
assets are outstanding. Any borrowing by the Fund may cause greater fluctuation
in the value of its shares than would be the case if it did not borrow.

SECURITIES LENDING. The Fund may lend its portfolio securities to broker/dealers
or to other institutional investors. Securities lending allows the Fund to
retain ownership of the securities loaned and, at the same time, enhances the
Fund's total return. The Fund limits its loans of portfolio securities to an
aggregate of 30% of the value of its total assets, measured at the time any such
loan is made. While a loan is outstanding the borrower must maintain with the
Fund's custodian collateral consisting of cash, U.S. government securities or
certain irrevocable letters of credit equal to at least 100% of the value of the
borrowed securities plus any accrued interest or such other collateral as
permitted by the Fund's investment program and regulatory agencies, and as
approved by the Board. The risks in lending portfolio securities, as with other
extensions of secured credit, consist of possible delays in receiving additional
collateral or in recovery of the securities and possible loss of rights in the
collateral if the borrower fails financially.

OPTIONS, FUTURES AND FORWARD CURRENCY TRANSACTIONS. To attempt to increase
return, the Fund may write call options on securities. This strategy will be
employed only when, in the opinion of the Manager, the size of the premium the
Fund receives for writing the option is adequate to compensate it against the
risk that appreciation in the underlying security may not be fully realized if
the option is exercised. The Fund also is authorized to write put options to
attempt to enhance return, although it does not currently intend to do so.

Prospectus Page 9
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND
not be able to effectively hedge its investment in such markets.

PRIVATIZATIONS. The governments in some emerging markets have been engaged in
programs of selling part or all of their stakes in government owned or
controlled enterprises ("privatizations"). The Manager believes that
privatizations may offer opportunities for significant capital appreciation and
intends to invest assets of the Fund in privatizations in appropriate
circumstances. In certain emerging markets, the ability of foreign entities such
as the Fund to participate in privatizations may be limited by local law or the
terms on which the Fund may be permitted to participate may be less advantageous
than those afforded local investors. There can be no assurance that governments
in emerging markets will continue to sell companies currently owned or
controlled by them or that privatization programs will be successful.

Prospectus Page 10
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND
Loans ("Participations") and assignments of portions of Loans from third parties
("Assignments"). Participations typically will result in the Fund having a
contractual relationship only with the Lender, not with the borrower. The Fund
will have the right to receive payments of principal, interest and any fees to
which it is entitled only from the Lender selling the Participation and only
upon receipt by the Lender of the payments from the borrower. In connection with
purchasing Participations, the Fund generally will have no right to enforce
compliance by the borrower with the terms of the loan agreement relating to the
loan nor any rights of set-off against the borrower, and the Fund may not
directly benefit from any collateral supporting the Loan in which it has
purchased the Participation. As a result, the Fund will assume the credit risk
of both the borrower and the Lender that is selling the Participation.

Prospectus Page 11
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND
same time, indexed securities are subject to the credit risks associated with
the issuer of the security, and their values may decline substantially if the
issuer's creditworthiness deteriorates. Indexed securities may be more volatile
than the underlying instruments. New forms of indexed securities continue to be
developed. The Fund may invest in such securities to the extent consistent with
its investment objectives.

OTHER INFORMATION. The Fund's investment objectives may not be changed without
the approval of a majority of its outstanding voting securities. The "majority
of its outstanding voting securities" means the lesser of (i) 67% of the shares
represented at a meeting at which more than 50% of the outstanding shares are
represented, or (ii) more than 50% of the outstanding shares. In addition, the
Fund has adopted certain investment limitations that also may not be changed
without shareholder approval. A complete description of these limitations is
included in the Statement of Additional Information. Unless specifically noted,
the Fund's investment policies described in this Prospectus and in the Statement
of Additional Information may be changed by a vote of a majority of the
Company's Board of Directors without shareholder approval. The Fund's policies
regarding lending, and the percentage of Fund assets that may be committed to
borrowing, are fundamental policies and may not be changed without shareholder
approval.

- --------------------------------------------------------------------------------

RISK FACTORS

- --------------------------------------------------------------------------------

Investing in the Fund entails a substantial degree of risk and an investment in
the Fund should be considered speculative. Investors are strongly advised to
consider carefully the special risks involved in investing in emerging markets,
which are in addition to the usual risks of investing in developed markets
around the world.
NON-DIVERSIFIED CLASSIFICATION. The Fund is classified under the 1940 Act as a
"non-diversified" fund. As a result, the Fund will be able to invest in a
smaller number of issuers than if it was classified under the 1940 Act as a
"diversified" fund. To the extent that the Fund invests in a smaller number of
issuers, the net asset value of its shares may fluctuate more widely and it may
be subject to greater investment and credit risk with respect to its portfolio.

Prospectus Page 12
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND
of inflation, rate of savings and capital reinvestment, currency depreciation,
resource self-sufficiency and balance of payments positions. Investments in
foreign government securities involve special risks, including the risk that the
government issuers may be unable or unwilling to repay principal or interest
when due.

Prospectus Page 13
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND
to be subject to greater risk than securities with higher ratings with regard to
a deterioration of general economic conditions. These foreign debt securities
are the equivalent of high yield, high risk bonds, commonly known as "junk
bonds."

The market values of lower quality debt securities tend to reflect individual
developments of the issuer to a greater extent than do higher quality
securities, which react primarily to fluctuations in the general level of
interest rates. In addition, lower quality debt securities tend to be more
sensitive to economic conditions and generally have more volatile prices than
higher quality securities. Issuers of lower quality securities are often highly
leveraged and may not have available to them more traditional methods of
financing. For example, during an economic downturn or a sustained period of
rising interest rates, highly leveraged issuers of lower quality securities may
experience financial stress. During such periods, such issuers may not have
sufficient revenues to meet their interest payment obligations. The issuer's
ability to service its debt obligations may also be adversely affected by
specific developments affecting it, such as its inability to meet specific
projected business forecasts or the unavailability of additional financing.
Similarly, certain emerging market governments that issue lower quality debt
securities are among the largest debtors to commercial banks, foreign
governments and supranational organizations such as the World Bank and may not
be able or willing to make principal and/or interest repayments as they come
due. The risk of loss due to default by the issuer is significantly greater for
the holders of lower quality securities because such securities are generally
unsecured and may be subordinated to the claims of other creditors of the
issuer.

Prospectus Page 14
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND

Prospectus Page 15
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND
sovereign debtor's policy toward principal international lenders and the
political constraints to which a sovereign debtor may be subject. Emerging
market governments could default on their sovereign debt. Such sovereign debtors
also may be dependent on expected disbursements from foreign governments,
multilateral agencies and other entities abroad to reduce principal and interest
arrearages on their debt. The commitment on the part of these governments,
agencies and others to make such disbursements may be conditioned on a sovereign
debtor's implementation of economic reforms and/or economic performance and the
timely service of such debtor's obligations. Failure to implement such reforms,
achieve such levels of economic performance or repay principal or interest when
due may result in the cancellation of such third parties' commitments to lend
funds to the sovereign debtor, which may further impair such debtor's ability or
willingness to timely service its debts.

The occurrence of political, social or diplomatic changes in one or more of the
countries issuing sovereign debt could adversely affect the Fund's investments.
Emerging markets are faced with social and political issues, and some of them
have experienced high rates of inflation in recent years and have extensive
internal debt. Among other effects, high inflation and internal debt service
requirements may adversely affect the cost and availability of future domestic
sovereign borrowing to finance governmental programs and may have other adverse
social, political and economic consequences. Political changes or a
deterioration of a country's domestic economy or balance of trade may affect its
willingness to service its sovereign debt. Although the Manager intends to
manage the Fund in a manner that will minimize the exposure to such risks, there
can be no assurance that adverse political changes will not cause the Fund to
suffer a loss of interest or principal on any of its holdings.

In recent years, some of the emerging market countries in which the Fund expect
to invest have encountered difficulties in servicing their sovereign debt
obligations. Some of these countries have withheld payments of interest and/or
principal of sovereign debt. These difficulties have also led to agreements to
restructure external debt obligations -- in particular, commercial bank loans --
typically by rescheduling principal payments, reducing interest rates and
extending new credits to finance interest payments on existing debt. In the
future, holders of emerging market sovereign debt securities may be requested to
participate in similar rescheduling of such debt. Certain emerging market
countries are among the largest debtors to commercial banks and foreign
governments. Currently, Brazil, Mexico and Argentina are the largest debtors
among developing countries. At times certain emerging market countries have
declared moratoria on the payment of principal and interest on external debt;
such a moratorium is currently in effect in certain emerging market countries.
There is no bankruptcy proceeding by which a creditor may collect in whole or in
part sovereign debt on which an emerging market government has defaulted.

Prospectus Page 16
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND

HOW TO INVEST

- --------------------------------------------------------------------------------

GENERAL. Advisor Class shares are offered through this Prospectus to (a)
trustees or other fiduciaries purchasing shares for employee benefit plans that
are sponsored by organizations that have at least 1,000 employees; (b) any
account with assets of at least $10,000 if (i) a financial planner, trust
company, bank trust department or registered investment adviser has investment
discretion over such account, and (ii) the account holder pays such person as
compensation for its advice and other services an annual fee of at least .50% on
the assets in the account ("Advisory Account"); (c) any account with assets of a
least $10,000 if (i) such account is established under a "wrap fee" program, and
(ii) the account holder pays the sponsor of such program an annual fee of at
least .50% on the assets in the account ("Wrap Fee Account"); (d) accounts
advised by one of the companies composing or affiliated with Liechtenstein
Global Trust; and (e) any of the companies composing or affiliated with
Liechtenstein Global Trust. Financial planners, trust companies, bank trust
companies and registered investment advisers referenced in subpart (b) and
sponsors of "wrap fee" programs referenced in subpart (c) are collectively
referred to as "Financial Advisors." Investors in Wrap Fee Accounts and Advisory
Accounts may only purchase Advisor Class shares through Financial Advisors who
have entered into agreements with GT Global and certain of its affiliates.
Investors may be charged a fee by their agents or brokers if they effect
transactions other than through a dealer.

All purchase orders will be executed at the public offering price next
determined after the purchase order is received. Orders received by GT Global
before the close of regular trading on the NYSE (currently 4:00 P.M. Eastern
time, unless weather, equipment failure or other factors contribute to an
earlier closing time) on any Business Day will be executed at the public
offering price for the applicable class of shares determined that day. A
"Business Day" is any day Monday through Friday on which the NYSE is open for
business. THE FUND AND GT GLOBAL RESERVE THE RIGHT TO REJECT ANY PURCHASE ORDER
AND TO SUSPEND THE OFFERING OF SHARES FOR A PERIOD OF TIME. In particular, the
Fund and GT Global may reject purchase orders or exchanges by investors who
appear to follow, in the Manager's judgment, a market-timing strategy or
otherwise engage in excessive trading. See "How to Make Exchanges -- Limitations
on Purchase Orders and Exchanges."

Fiduciaries and Financial Advisors may be required to provide information
satisfactory to GT Global concerning their eligibility to purchase Advisor Class
shares. For specific information on opening an account, please contact your
Financial Advisor or GT Global.

PURCHASE BY BANK WIRE. Shares of the Fund may also be purchased through GT
Global by bank wire. Bank wire purchases will be effected at the next determined
public offering price after the bank wire is received. A wire investment is
considered received when the Transfer Agent is notified that the bank wire has
been credited to the Fund. Prior telephonic or facsimile notice that a bank wire
is being sent must be provided to the Transfer Agent. A bank may charge a
service fee for wiring money to the Fund. The Transfer Agent currently does not
charge a service fee for facilitating wire purchases, but reserves the right to
do so in the future. For more information, please refer to the Shareholder
Account Manual in this Prospectus.

Prospectus Page 17
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND
Program, a shareholder may predesignate, on a percentage basis, how the total
value of his or her holdings in a minimum of two, and a maximum of ten, GT
Global Mutual Funds ("Personal Portfolio") is to be rebalanced on a monthly,
quarterly, semiannual, or annual basis.

Rebalancing under the Program will be effected through the exchange of shares of
one or more GT Global Mutual Funds in the shareholders' Personal Portfolio for
shares of the same class of one or more other GT Global Mutual Funds in the
shareholder's Personal Portfolio. See "How to Make Exchanges." If shares of the
GT Global Mutual Funds in a shareholder's Personal Portfolio have appreciated
during a rebalancing period, the Program will result in shares of GT Global
Mutual Fund(s) that have appreciated most during the period being exchanged for
shares of GT Global Mutual Fund(s) that have appreciated least. SUCH EXCHANGES
ARE NOT TAX-FREE AND MAY RESULT IN A SHAREHOLDER'S REALIZING A GAIN OR LOSS, AS
THE CASE MAY BE, FOR TAX PURPOSES. See "Dividends, Other Distributions and
Federal Income Taxation." Participation in the Program does not assure that a
shareholder will profit from purchases under the Program nor does it prevent or
lessen losses in a declining market.

The Program will automatically rebalance the shareholder's Personal Portfolio on
the 28th day of the last month of the period chosen (or the immediately
preceding business day if the 28th is not a business day), subject to any
limitations below. The Program will not execute an exchange if the variance in a
shareholder's Personal Portfolio for a particular Fund would be 2% or less. In
predesignating percentages, shareholders must use whole percentages and totals
must equal 100%. Shareholders participating in the Program may not request
issuance of physical certificates representing a Fund's shares. Exchanges made
under the Program are not subject to the four free exchanges per year
limitation. The Funds and GT Global reserve the right to modify, suspend, or
terminate the Program at any time on 60 days' prior written notice to
shareholders. A request to participate in the Program must be received in good
order at least five business days prior to the next rebalancing date. Once a
shareholder establishes the Program for his or her Personal Portfolio, a
shareholder cannot cancel or change which rebalancing frequency, which Funds or
what allocation percentages are assigned to the Program, unless canceled or
changed in writing and received by the Transfer Agent in good order at least
five business days prior to the rebalancing date. Certain broker/ dealers may
charge a fee for establishing accounts relating to the Program. Investors should
contact their broker/dealers or GT Global for more information.

Prospectus Page 18
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND

HOW TO MAKE EXCHANGES

- --------------------------------------------------------------------------------

Advisor Class shares of the Fund may be exchanged for Advisor Class shares of
any of the other GT Global Mutual Funds, based on their respective net asset
values, provided that the registration remains identical. EXCHANGES ARE NOT
TAX-FREE AND MAY RESULT IN A SHAREHOLDER'S REALIZING A GAIN OR LOSS, AS THE CASE
MAY BE, FOR TAX PURPOSES. See "Dividends, Other Distributions and Federal Income
Taxation." In addition to the Fund, the GT Global Mutual Funds currently
include:

Up to four exchanges each year may be made without charge. A $7.50 service
charge will be imposed on each subsequent exchange. Exchange requests received
in good order by the Transfer Agent before the close of regular trading on the
NYSE on any Business Day will be processed at the net asset value calculated on
that day. The terms of the exchange offer may be modified at any time, on 60
days' prior written notice.

EXCHANGES BY TELEPHONE. A shareholder may give exchange instructions to his or
her Financial Advisor. Exchange orders will be accepted by telephone provided
that the exchange involves only uncertificated shares on deposit in the
shareholder's account or for which certificates previously have been deposited.

Investors in Wrap Fee Accounts and Advisory Accounts interested in making an
exchange should contact their Financial Advisors to request the prospectuses of
the other GT Global Mutual Fund(s) being considered. Other investors should
contact GT Global. See the Shareholder Account Manual in this Prospectus.

Finally, as described above, each GT Global Mutual Fund and GT Global reserve
the right to reject any purchase order.

Prospectus Page 19
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND

HOW TO REDEEM SHARES

- --------------------------------------------------------------------------------

Fund shares may be redeemed at their net asset value and redemption proceeds
will be sent within seven days of the execution of a redemption request.

Redemption requests may be transmitted to the Transfer Agent by telephone or by
mail, in accordance with the instructions provided in the Shareholder Account
Manual. Redemptions will be effected at the net asset value next determined
after the Transfer Agent has received the request and any required supporting
documentation. Redemption requests will not require a signature guarantee if the
redemption proceeds are to be sent either: (i) to the redeeming shareholder at
the shareholder's address of record as maintained by the Transfer Agent,
provided the shareholder's address of record has not been changed within the
preceding thirty days; or (ii) directly to a pre-designated bank, savings and
loan or credit union account ("Pre-Designated Account"). ALL OTHER REDEMPTION
REQUESTS MUST BE ACCOMPANIED BY A SIGNATURE GUARANTEE OF THE REDEEMING
SHAREHOLDER'S SIGNATURE. A signature guarantee can be obtained from any bank,
U.S. trust company, a member firm of a U.S. stock exchange or a foreign branch
of any of the foregoing or other eligible guarantor institutions. A notary
public is not an acceptable guarantor.

Shareholders with Pre-Designated Accounts should request that redemption
proceeds be sent either by bank wire or by check. The minimum redemption amount
for a bank wire is $1,000. Shareholders requesting a bank wire should allow two
business days from the time the redemption request is effected for the proceeds
to be deposited in the shareholder's Pre-Designated Account. See "How to Redeem
Shares -- Other Important Redemption Information." Shareholders may change their
Pre-Designated Accounts only by a letter of instruction to the Transfer Agent
containing all account signatures, each of which must be guaranteed. The
Transfer Agent currently does not charge a bank wire service fee for each wire
redemption sent but reserves the right to do so in the future. The shareholder's
bank may charge a bank wire service fee.

Shareholders automatically have telephone privileges to authorize redemptions.
The Fund, GT Global and the Transfer Agent shall not be liable for any loss or
damage for acting in good faith upon instructions received by telephone and
reasonably believed to be genuine. The Fund employs reasonable procedures to
confirm that instructions communicated by telephone are genuine prior to acting
upon instructions received by telephone, including requiring some form of
personal identification, providing written confirmation of such transactions,
and/or tape recording of telephone instructions.

OTHER IMPORTANT REDEMPTION INFORMATION. A request for redemption will not be
processed until all of the necessary documentation has been received in good
order. A shareholder in a Wrap Fee Account or Advisory Account who is in doubt
as to what documents are required should contact his Financial Advisor.

Except in extraordinary circumstances and as permitted under the 1940 Act,
payment for shares

Prospectus Page 20
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND
redeemed by telephone or in writing will be made promptly after receipt of a
redemption request, if in good order, but not later than seven days after the
date the request is executed. Requests for redemption which are subject to any
special conditions or which specify a future or past effective date cannot be
accepted.

GT Global reserves the right to redeem the shares of any Advisory Account or
Wrap Fee Account if the amount invested in GT Global Mutual Funds through such
account is reduced to less than $500 through redemptions or other action by the
shareholder. Written notice will be given to the shareholder at least 60 days
prior to the date fixed for such redemption, during which time the shareholder
may increase the amount invested in GT Global Mutual Funds through such account
to an aggregate amount of $500 or more.

For more information on how to redeem Fund shares, see the Shareholder Account
Manual in this Prospectus, or contact your Financial Advisor.

Prospectus Page 21
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND

SHAREHOLDER ACCOUNT MANUAL

- --------------------------------------------------------------------------------

Purchase, exchange and redemption orders should be placed in accordance with
this Manual. It is recommended that investors in Wrap Fee Accounts and Advisory
Accounts make such orders through their Financial Advisor. INVESTORS SHOULD
REFERENCE "ADVISOR CLASS" IN ALL INSTRUCTIONS PROVIDED. See "How to Invest,"
"How to Make Exchanges," "How to Redeem Shares" and "Dividends, Other
Distributions and Federal Income Taxation" for more information.

The Fund's Transfer Agent is GT GLOBAL INVESTOR SERVICES, INC.

INVESTMENTS BY MAIL

Send completed Account Application (if initial purchase) or letter stating Fund
name, class of shares, shareholder's registered name and account number (if
subsequent purchase) with a check to:

GT Global Mutual Funds
P.O. Box 7345
San Francisco, California 94120-7345

INVESTMENTS BY BANK WIRE

A new account may be opened by calling 1-800-223-2138 to obtain an account
number. WITHIN SEVEN DAYS OF PURCHASE A COMPLETED ACCOUNT APPLICATION CONTAINING
THE INVESTOR'S CERTIFIED TAXPAYER IDENTIFICATION NUMBER MUST BE SENT TO GT
GLOBAL AT THE ADDRESS PROVIDED ABOVE UNDER "INVESTMENTS BY MAIL." Wire
instructions must state Fund name, class of shares, shareholder's registered
name and account number. Bank wires should be sent through the Federal Reserve
Bank Wire System to:

WELLS FARGO BANK N.A.
ABA 121000248
Attn: GT GLOBAL
Account No. 4023-050701

EXCHANGES BY TELEPHONE

Call the Transfer Agent at 1-800-223-2138

EXCHANGES BY MAIL

GT Global Mutual Funds
P.O. Box 7893
San Francisco, California 94120-7893

REDEMPTIONS BY TELEPHONE

Call the Transfer Agent at 1-800-223-2138

REDEMPTIONS BY MAIL

Send complete instructions, including name of Fund, class of shares, amount of
redemption, shareholder's registered name and account number, to:

GT Global Investor Services, Inc.
P.O. Box 7893
San Francisco, California 94120-7893

OVERNIGHT MAIL

Overnight mail services do not deliver to post office boxes. To send purchase,
exchange or redemption orders by overnight mail, follow the above instructions
but send to the following:

GT Global Investor Services, Inc,
California Plaza
2121 N. California Boulevard
Suite 450
Walnut Creek, California 94596

ADDITIONAL QUESTIONS

Shareholders with additional questions regarding purchase, exchange and
redemption procedures may call the Transfer Agent at 1-800-223-2138.

Prospectus Page 22
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND

CALCULATION OF NET ASSET VALUE

- --------------------------------------------------------------------------------

DIVIDENDS, OTHER DISTRIBUTIONS
AND FEDERAL INCOME TAXATION

- --------------------------------------------------------------------------------

/ / to have all dividends and other distributions automatically reinvested in
additional Advisor Class shares of the Fund (or other GT Global Mutual
Funds); or

/ / to receive dividends in cash and have other distributions automatically
reinvested in additional Advisor Class shares of the Fund (or other GT
Global Mutual Funds); or

Prospectus Page 23
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND

/ / to receive other distributions in cash and have dividends automatically
reinvested in additional Advisor Class shares of the Fund (or other GT
Global Mutual Funds); or

/ / to receive dividends and other distributions in cash.

Automatic reinvestments in additional Advisor Class shares are made at net asset
value without imposition of a sales charge. IF NO ELECTION IS MADE BY A
SHAREHOLDER, ALL DIVIDENDS AND OTHER DISTRIBUTIONS WILL BE AUTOMATICALLY
REINVESTED IN ADDITIONAL ADVISOR CLASS SHARES OF THE FUND. Reinvestments in
another GT Global Mutual Fund may only be directed to an account with the
identical shareholder registration and account number. These elections may be
changed by a shareholder at any time; to be effective with respect to a
distribution, the shareholder or the shareholder's broker must contact the
Transfer Agent by mail or telephone at least 15 Business Days prior to the
payment date. THE FEDERAL INCOME TAX CONSEQUENCES OF DIVIDENDS AND OTHER
DISTRIBUTIONS ARE THE SAME WHETHER THEY ARE RECEIVED IN CASH OR REINVESTED IN
ADDITIONAL SHARES.

Dividends from the Fund's investment company taxable income (whether paid in
cash or reinvested in additional shares) are taxable to its shareholders as
ordinary income to the extent of its earnings and profits. Distributions of the
Fund's net capital gain when designated as such, are taxable to its shareholders
as long-term capital gain, regardless of how long they have held their Fund
shares and whether paid in cash or reinvested in additional shares.

The Fund provides federal tax information to its shareholders annually,
including information about dividends and distributions paid during the
preceding capital gain year and, under certain circumstances, the shareholders'
respective shares of any foreign taxes paid by the Fund, in which event each
shareholder would be required to include in his or her gross income his or her
pro rata share of those taxes but might be entitled to claim a credit or
deduction for them.

A redemption of the Fund shares may result in taxable gain or loss to the
redeeming shareholder, depending upon whether the redemption proceeds are more
or less than the shareholder's adjusted basis for the redeemed shares. An
exchange of Fund shares for shares of another GT Global Mutual Fund generally
will have similar tax consequences. In addition, if Fund shares are purchased
within 30 days before or after

Prospectus Page 24
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND
redeeming other Fund shares (regardless of class) at a loss, all or a part of
the loss will not be deductible and instead will increase the basis of the newly
purchased shares.

- --------------------------------------------------------------------------------

MANAGEMENT

- --------------------------------------------------------------------------------

INVESTMENT MANAGEMENT AND ADMINISTRATION. Services provided by Chancellor LGT
Asset Management, Inc. (the Manager) as the Fund's investment manager and
administrator include determining the composition of the Fund's portfolio and
placing orders to buy, sell or hold particular securities; furnishing corporate
officers and clerical staff; providing office space, services and equipment; and
supervising all matters relating to the Fund's operation. For these services,
the Fund pays the Manager investment management and administration fees,
computed daily and paid monthly, based on its average daily net assets, at the
annualized rate of .975% on the first $500 million, .95% on the next $500
million, .925% on the next $500 million and .90% on amounts thereafter. This
rate is higher than that paid by most mutual funds. The Manager and GT Global
have undertaken to limit the Fund's expenses (exclusive of brokerage
commissions, taxes, interest and extraordinary expenses) to the annual rate of
1.50% of the average daily net assets of the Fund's Advisor Class shares. This
undertaking may be changed or eliminated in the future.

The Manager also serves as the Fund's pricing and accounting agent. For these
services the Manager receives a fee at an annual rate derived by applying 0.03%
to the first $5 billion of assets of GT Global Mutual Funds and 0.02% to the
assets in excess of $5 billion, and allocating the result according to the
Fund's average daily net assets.

Prospectus Page 25
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND
taking advantage of its investment resources around the world in seeking to
achieve the Fund's investment objective. Many of the GT Global Mutual Funds'
portfolio managers are natives of the countries in which they invest, speak
local languages and/or live or work in the markets they follow.

The investment professionals primarily responsible for the portfolio management
of the Fund are as follows:

DISTRIBUTION OF FUND SHARES. GT Global is the distributor of the Fund's Advisor
Class shares. GT Global is a subsidiary of Liechtenstein Global Trust with
offices at 50 California Street, 27th Floor, San Francisco, California 94111.

The Manager or an affiliate thereof may make ongoing payments to Financial
Advisors and others that facilitate the administration and servicing of Advisor
Class shareholder accounts.

The Fund reserves the right to suspend the offering of its shares upon the
advice of the Manager that doing so is in the best interest of the portfolio
management process.

GT Global, at its own expense, may provide promotional incentives to brokers
that sell shares of the Fund and/or shares of the other GT Global Mutual Funds.
In some instances additional compensation or promotional incentives may be

Prospectus Page 26
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND
offered to brokers that have sold or may sell significant amounts of shares
during specified periods of time. Such compensation and incentives may include,
but are not limited to, cash, merchandise, trips and financial assistance to
broker/dealers in connection with preapproved conferences or seminars, sales or
training programs for invited sales personnel, payment for travel expenses
(including meals and lodging) incurred by sales personnel and members of their
families or other invited guests to various locations for such seminars or
training programs, seminars for the public, advertising and sales campaigns
regarding one or more of the GT Global Mutual Funds, and/or other events
sponsored by the broker.

- --------------------------------------------------------------------------------

OTHER INFORMATION

- --------------------------------------------------------------------------------

CONFIRMATIONS AND REPORTS TO SHAREHOLDERS. Each time a transaction is made that
affects a shareholder's account in the Fund, the shareholder will receive from
the Transfer Agent a confirmation statement reflecting the transaction.
Confirmations for transactions effected pursuant to the Fund's automatic
dividend reinvestment program may be provided quarterly. Shortly after the end
of the Fund's fiscal year on October 31 and fiscal half-year on April 30 of each
year, shareholders receive an annual and semiannual report, respectively. In
addition, the federal income tax status of distributions made by the Fund to
shareholders is reported after the end of each calendar year on Form 1099-DIV.
Under certain circumstances, duplicate mailings of the foregoing reports to the
same household may be consolidated.

On any matter submitted to a vote of shareholders, shares of the Fund will be
voted by the Fund's shareholders individually when the matter affects the
specific interest of the Fund only, such as approval of its investment
management arrangements. The shares of the Company's funds will be voted in the
aggregate on other matters, such as the election of Directors and ratification
of the Board of Directors' selection of the Company's independent accountants.

Prospectus Page 27
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND
other purpose. The 1940 Act requires the Company to assist shareholders in
calling such a meeting.

The Fund offers Advisor Class shares through this prospectus to certain
investors. The Fund also offers Class A shares and Class B shares to investors
through a separate prospectus. Each class of shares will experience different
net asset values and dividends as a result of different expenses borne by each
class of shares. The per share net asset value and dividends of the Advisor
Class shares of the Fund generally will be higher than that of the Class A and B
shares of the Fund because of the higher expenses borne by the Class A and B
shares. The per share dividends on Advisor Class shares of the Fund will
generally be higher than the per share dividends on Class A and B shares of the
Fund as a result of the service and distribution fees applicable with respect to
Class A and B shares. Consequently, during comparable periods, the Fund expects
that the total return on an investment in shares of the Advisor Class will be
higher than the total return on Class A or Class B shares.

SHAREHOLDER INQUIRIES. Shareholder inquiries may be made by calling the Fund
toll free at (800) 223-2138 or by writing to the Fund at P.O. Box 7893, San
Francisco, California 94120-7893.

PERFORMANCE INFORMATION. The Fund, from time to time, may include information on
its investment results and/or comparisons of its investment results to various
unmanaged indices or results of other mutual funds or groups of mutual funds in
advertisements, sales literature or reports furnished to present or prospective
shareholders.

Prospectus Page 28
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND
"Investment Results" in the Statement of Additional Information.

The Fund's annual report contains additional information with respect to its
performance. The annual report is available to investors upon request and free
of charge.

CUSTODIAN. State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110 is custodian of the Fund's assets.

Prospectus Page 29
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND

NOTES

- --------------------------------------------------------------------------------

Prospectus Page 30
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND

NOTES

- --------------------------------------------------------------------------------

Prospectus Page 31
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND

NOTES

- --------------------------------------------------------------------------------

Prospectus Page 32
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND

NOTES

- --------------------------------------------------------------------------------

Prospectus Page 33
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND

GT GLOBAL FUNDS

GROWTH FUNDS

/ / GLOBALLY DIVERSIFIED FUNDS

GT GLOBAL NEW DIMENSION FUND

Captures global growth opportunities by investing directly in the six GT Global
Theme 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

GT GLOBAL DEVELOPING MARKETS FUND

Invests in debt and equity securities of developing market issuers

/ / GLOBAL THEME FUNDS

GT GLOBAL CONSUMER PRODUCTS AND
SERVICES FUND
Invests in companies that manufacture, market, retail, or distribute consumer
products or services

GT GLOBAL FINANCIAL SERVICES FUND
Focuses on the worldwide opportunities from the demand for financial services
and products

GT GLOBAL HEALTH CARE FUND
Invests in growing health care industries worldwide

GT GLOBAL INFRASTRUCTURE FUND
Seeks companies that build, improve or maintain a country's infrastructure

GT GLOBAL NATURAL RESOURCES FUND
Concentrates on companies that own, explore or develop natural resources

GT GLOBAL TELECOMMUNICATIONS FUND
Invests in companies worldwide that develop, manufacture or sell
telecommunications services or equipment

/ / REGIONALLY DIVERSIFIED FUNDS

GT GLOBAL NEW PACIFIC GROWTH FUND
Offers access to the emerging and established markets of the Pacific Rim,
excluding Japan

GT GLOBAL EUROPE GROWTH FUND
Focuses on investment opportunities in the new, unified Europe

GT GLOBAL LATIN AMERICA GROWTH FUND
Invests in the emerging markets of Latin America

/ / SINGLE COUNTRY FUNDS

GT GLOBAL AMERICA SMALL CAP GROWTH FUND
Invests in equity securities of small U.S. companies

GT GLOBAL AMERICA 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 bonds from around the world

INCOME FUNDS

GT GLOBAL GOVERNMENT INCOME FUND
Earns monthly income from global government securities

GT GLOBAL STRATEGIC INCOME FUND
Allocates its assets among debt securities from the U.S., developed foreign
countries and emerging markets

GT GLOBAL HIGH INCOME FUND
Invests in debt securities in emerging markets

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

[LOGO]

GTDPV711001M

<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND

50 California Street, 27th Floor
San Francisco, California 94111
(415) 392-6181
Toll Free: (800) 824-1580
Statement of Additional Information
November 1, 1997

- --------------------------------------------------------------------------------

This Statement of Additional Information relates to the Class A and Class B
shares of GT Global Developing Markets Fund (the "Fund"). The Fund is a
non-diversified series of G.T. Investment Funds, Inc. (the "Company"), a
registered open-end management investment company. On October 31, 1997, the
Fund, which had no previous operating history, acquired the assets and assumed
the liabilities of G.T. Global Developing Markets Fund, Inc. (the "Predecessor
Fund"), a closed-end investment company. This Statement of Additional
Information, which is not a prospectus, supplements and should be read in
conjunction with the Fund's current Class A and Class B Prospectus dated
November 1, 1997, a copy of which is available without charge by writing to the
above address or by calling the Fund at the toll-free telephone number listed
above.

Chancellor LGT Asset Management, Inc. (the "Manager") serves as the Fund's
investment manager and administrator. The distributor of the Fund's shares is GT
Global, Inc. ("GT Global"). The Fund's transfer agent is GT Global Investor
Services, Inc. ("GT Services" or the "Transfer Agent").

- --------------------------------------------------------------------------------

TABLE OF CONTENTS

- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Investment Objectives and Policies....................................................................................... 2
Options, Futures and Currency Strategies................................................................................. 7
Risk Factors............................................................................................................. 15
Investment Limitations................................................................................................... 21
Execution of Portfolio Transactions...................................................................................... 22
Directors and Executive Officers......................................................................................... 25
Management............................................................................................................... 27
Valuation of Fund Shares................................................................................................. 28
Information Relating to Sales and Redemptions............................................................................ 29
Taxes.................................................................................................................... 33
Additional Information................................................................................................... 35
Investment Results....................................................................................................... 36
Description of Debt Ratings.............................................................................................. 42
Financial Statements..................................................................................................... 44
</TABLE>

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Statement of Additional Information Page 1
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND

INVESTMENT OBJECTIVES AND
POLICIES

- --------------------------------------------------------------------------------

INVESTMENT OBJECTIVES

The primary investment objective of the Fund is long-term capital appreciation.
Its secondary investment objective is income, to the extent consistent with
seeking capital appreciation. The Fund normally invests substantially all of its
assets in issuers in the developing (or "emerging") markets of Asia, Europe,
Latin America and elsewhere. The Fund does not consider the following countries
to be emerging markets: Australia, Austria, Belgium, Canada, Denmark, England,
Finland, France, Germany, Ireland, Italy, Japan, the Netherlands, New Zealand,
Norway, Spain, Sweden, Switzerland and the United States. In determining which
countries constitute emerging markets, the Manager will consider, among other
things, data, analysis, and classification of countries published or
disseminated by the International Bank for Reconstruction and Development
(commonly known as the World Bank) and the International Finance Corporation
("IFC").

SELECTION OF EQUITY INVESTMENTS
For investment purposes, an issuer is typically considered as located in a
particular country if it (a) is incorporated under the laws of or has its
principal office in that country, or (b) it normally derives 50% or more of its
total revenue from business in that country. However, these are not absolute
requirements, and certain companies incorporated in a particular country and
considered by the Manager to be located in that country may have substantial
off-shore operations or subsidiaries and/or export sales exceeding in size the
assets or sales in that country.

In determining the appropriate distribution of investments among various
countries and geographic regions for the Fund, the Manager ordinarily considers
the following factors: prospects for relative economic growth among the
different countries in which the Fund may invest; expected levels of inflation;
government policies influencing business conditions; the outlook for currency
relationships; and the range of the individual investment opportunities
available to international investors.

In analyzing companies in emerging markets for investment by the Fund, the
Manager ordinarily looks for one or more of the following characteristics: an
above-average earnings growth per share; high return on invested capital;
healthy balance sheet; sound financial and accounting policies and overall
financial strength; strong competitive advantages; effective research and
product development and marketing; efficient service; pricing flexibility;
strength of management; and general operating characteristics which will enable
the companies to compete successfully in their respective marketplaces. In
certain countries, governmental restrictions and other limitations on investment
may affect the maximum percentage of equity ownership in any one company by the
Fund. In addition, in some instances only special classes of securities may be
purchased by foreigners and the market prices, liquidity and rights with respect
to those securities may vary from shares owned by nationals.

Although the Fund values its assets daily in terms of U.S. dollars, the Fund
does not intend to convert its holdings of foreign currencies into U.S. dollars
on a daily basis. The Fund will do so from time to time, and investors should be
aware of the costs of currency conversion. Although foreign exchange dealers do
not charge a fee for conversion, they do realize a profit based on the
difference ("spread") between the prices at which they are buying and selling
various currencies. Thus, a dealer may offer to sell a foreign currency to the
Fund at one rate, while offering a lesser rate of exchange should the Fund
desire to sell that currency to the dealer.

The Fund may be prohibited under the Investment Company Act of 1940, as amended
("1940 Act"), from purchasing the securities of any foreign company that, in its
most recent fiscal year, derived more than 15% of its gross revenues from
securities-related activities ("securities-related companies"). In a number of
countries, commercial banks act as securities broker/dealers, investment
advisers and underwriters or otherwise engage in securities-related activities,
which may limit the Fund's ability to hold securities issued by such banks. The
Fund has obtained an exemption from the Securities and Exchange Commission
("SEC") to permit it to invest in certain of these securities subject to certain
restrictions.

INVESTMENTS IN OTHER INVESTMENT COMPANIES
The Fund may invest in the securities of investment companies within the limits
of the 1940 Act. These limitations currently provide that, in general, the Fund
may purchase shares of a closed-end investment company unless (a) such a
purchase would cause the Fund to own in the aggregate more than 3 percent of the
total outstanding voting stock of the

Statement of Additional Information Page 2
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND
investment company or (b) such a purchase would cause the Fund to have more than
5 percent of its total assets invested in the investment company or more than 10
percent of its total assets invested in an aggregate of all such investment
companies. Investment in such investment companies may also involve the payment
of substantial premiums above the value of such companies' portfolio securities.
The Fund does not intend to invest in such investment companies unless, in the
judgment of the Manager, the potential benefits of such investments justify the
payment of any applicable premiums. The return on such securities will be
reduced by operating expenses of such companies including payments to the
investment managers of those investment companies.

DEPOSITORY RECEIPTS

The Fund may hold equity securities of foreign issuers in the form of American
Depository Receipts ("ADRs"), American Depository Shares ("ADSs"), Global
Depository Receipts ("GDRs") and European Depository Receipts ("EDRs"), or other
securities convertible into securities of eligible issuers. These securities may
not necessarily be denominated in the same currency as the securities for which
they may be exchanged. ADRs and ADSs typically are issued by an American bank or
trust company and evidence ownership of underlying securities issued by a
foreign corporation. EDRs, which are sometimes referred to as Continental
Depository Receipts ("CDRs"), are issued in Europe typically by foreign banks
and trust companies and evidence ownership of either foreign or domestic
securities. Generally, ADRs and ADSs in registered form are designed for use in
United States securities markets and EDRs in bearer form are designed for use in
European securities markets. For purposes of the Fund's investment policies, the
Fund's investments in ADRs, ADSs and EDRs will be deemed to be investments in
the equity securities representing securities of foreign issuers into which they
may be converted.

ADR facilities may be established as either "unsponsored" or "sponsored." While
ADRs issued under these two types of facilities are in some respects similar,
there are distinctions between them relating to the rights and obligations of
ADR holders and the practices of market participants. A depository may establish
an unsponsored facility without participation by (or even necessarily the
acquiescence of) the issuer of the deposited securities, although typically the
depository requests a letter of non-objection from such issuer prior to the
establishment of the facility. Holders of unsponsored ADRs generally bear all
the costs of such facilities. The depository usually charges fees upon the
deposit and withdrawal of the deposited securities, the conversion of dividends
into U.S. dollars, the disposition of non-cash distributions, and the
performance of other services. The depository of an unsponsored facility
frequently is under no obligation to distribute shareholder communications
received from the issuer of the deposited securities or to pass-through voting
rights to ADR holders in respect of the deposited securities. Sponsored ADR
facilities are created in generally the same manner as unsponsored facilities,
except that the issuer of the deposited securities enters into a deposit
agreement with the depository. The deposit agreement sets out the rights and
responsibilities of the issuer, the depository and the ADR holders. With
sponsored facilities, the issuer of the deposited securities generally will bear
some of the costs relating to the facility (such as dividend payment fees of the
depository), although ADR holders continue to bear certain other costs (such as
deposit and withdrawal fees). Under the terms of most sponsored arrangements,
depositories agree to distribute notices of shareholder meetings and voting
instructions, and to provide shareholder communications and other information to
the ADR holders at the request of the issuer of the deposited securities. The
Fund may invest in both sponsored and unsponsored ADRs.

WARRANTS OR RIGHTS
Warrants or rights may be acquired by the Fund in connection with other
securities or separately and provide the Fund with the right to purchase at a
later date other securities of the issuer. Warrants are securities permitting,
but not obligating, their holder to subscribe for other securities or
commodities. Warrants do not carry with them the right to dividends or voting
rights with respect to the securities that they entitle their holder to
purchase, and they do not represent any rights in the assets of the issuer. As a
result, warrants may be considered more speculative than certain other types of
investments. In addition, the value of a warrant does not necessarily change
with the value of the underlying securities and a warrant ceases to have value
if it is not exercised prior to its expiration date.

LENDING OF PORTFOLIO SECURITIES

For the purpose of realizing additional income, the Fund may make secured loans
of portfolio securities amounting to not more than 30% of its total assets.
Securities loans are made to broker/dealers or institutional investors pursuant
to agreements requiring that the loans continuously be secured by collateral at
least equal at all times to the value of the securities lent plus any accrued
interest, "marked to market" on a daily basis. The Fund may pay reasonable
administrative and custodial fees in connection with loans of its securities.
While the securities loan is outstanding, the Fund will continue to receive the
equivalent of the interest or dividends paid by the issuer on the securities, as
well as interest on the investment of the collateral or a fee from the borrower.
The Fund will have a right to call each loan and obtain the securities within
the stated settlement period. The Fund will not have the right to vote equity
securities while they are lent,

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GT GLOBAL DEVELOPING MARKETS FUND
but it may call in a loan in anticipation of any important vote. Loans will be
made only to firms deemed by the Manager to be of good standing and will not be
made unless, in the judgment of the Manager, the consideration to be earned from
such loans would justify the risk.

COMMERCIAL BANK OBLIGATIONS
For the purposes of the Fund's investment policies with respect to bank
obligations, obligations of foreign branches of U.S. banks and of foreign banks
are obligations of the issuing bank and may be general obligations of the parent
bank. Such obligations, however, may be limited by the terms of a specific
obligation and by government regulation. As with investment in non-U.S.
securities in general, investments in the obligations of foreign branches of
U.S. banks and of foreign banks may subject the Fund to investment risks that
are different in some respects from those of investments in obligations of
domestic issuers. Although the Fund typically will acquire obligations issued
and supported by the credit of U.S. or foreign banks having total assets at the
time of purchase in excess of $1 billion, this $1 billion figure is not an
investment policy or restriction of the Fund. For the purposes of calculation
with respect to the $1 billion figure, the assets of a bank will be deemed to
include the assets of its U.S. and non-U.S. branches.

REPURCHASE AGREEMENTS
A repurchase agreement is a transaction in which the Fund purchases a security
from a bank or recognized securities dealer and simultaneously commits to resell
that security to the bank or dealer at an agreed upon price, date, and market
rate of interest unrelated to the coupon rate or maturity of the purchased
security. Although repurchase agreements carry certain risks not associated with
direct investments in securities, including possible decline in the market value
of the underlying securities and delays and costs to the Fund if the other party
to the repurchase agreement becomes bankrupt, the Fund intends to enter into
repurchase agreements only with banks and dealers believed by the Manager to
present minimum credit risks in accordance with guidelines established by the
Company's Board of Directors. The Manager will review and monitor the
creditworthiness of such institutions under the Board's general supervision.

The Fund will invest only in repurchase agreements collateralized at all times
in an amount at least equal to the repurchase price plus accrued interest. To
the extent that the proceeds from any sale of such collateral upon a default in
the obligation to repurchase were less than the repurchase price, the Fund would
suffer a loss. If the financial institution which is party to the repurchase
agreement petitions for bankruptcy or otherwise becomes subject to bankruptcy or
other liquidation proceedings, there may be restrictions on the Fund's ability
to sell the collateral and the Fund could suffer a loss. However, with respect
to financial institutions whose bankruptcy or liquidation proceedings are
subject to the U.S. Bankruptcy Code, the Fund intends to comply with provisions
under the U.S. Bankruptcy Code that would allow it immediately to resell the
collateral. There is no limitation on the amount of the Fund's assets that may
be subject to repurchase agreements at any given time. The Fund will not enter
into a repurchase agreement with a maturity of more than seven days if, as a
result, more than 15% of the value of its net assets would be invested in such
repurchase agreements and other illiquid investments.

BORROWING AND REVERSE REPURCHASE AGREEMENTS
The Fund's borrowings will not exceed 33 1/3% of the Fund's total assets, i.e.,
the Fund's total assets at all times will equal at least 300% of the amount of
outstanding borrowings. If market fluctuations in the value of the Fund's
portfolio holdings or other factors cause the ratio of the Fund's total assets
to outstanding borrowings to fall below 300%, within three days (excluding
Sundays and holidays) of such event the Fund may be required to sell portfolio
securities to restore the 300% asset coverage, even though from an investment
standpoint such sales might be disadvantageous. The Fund also may borrow up to
5% of its total assets for temporary or emergency purposes other than to meet
redemptions. Any borrowing by the Fund may cause greater fluctuation in the
value of its shares than would be the case if the Fund did not borrow.

The Fund's fundamental investment limitations permit the Fund to borrow money
for leveraging purposes. The Fund, however, currently is prohibited, pursuant to
a non-fundamental investment policy, from borrowing money in order to purchase
securities. Nevertheless, this policy may be changed in the future by a vote of
a majority of the Company's Board of Directors. In the event that the Fund
employs leverage in the future, it would be subject to certain additional risks.
Use of leverage creates an opportunity for greater growth of capital but would
exaggerate any increases or decreases in the Fund's net asset value. When the
income and gains on securities purchased with the proceeds of borrowings exceed
the costs of such borrowings, the Fund's earnings or net asset value will
increase faster than otherwise would be the case; conversely, if such income and
gains fail to exceed such costs, the Fund's earnings or net asset value would
decline faster than would otherwise be the case.

The Fund may enter into reverse repurchase agreements. A reverse repurchase
agreement is a borrowing transaction in which the Fund transfers possession of a
security to another party, such as a bank or broker/dealer in return for cash,
and agrees to repurchase the security in the future at an agreed upon price,
which includes an interest component. The Fund

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GT GLOBAL DEVELOPING MARKETS FUND
will maintain, in a segregated account with a custodian, cash or liquid
securities in an amount sufficient to cover its obligations under reverse
repurchase agreements with broker/dealers. No segregation is required for
reverse repurchase agreements with banks.

SHORT SALES
The Fund is authorized to make short sales of securities, although it has no
current intention of doing so. A short sale is a transaction in which the Fund
sells a security in anticipation that the market price of that security will
decline. The Fund may make short sales (i) as a form of hedging to offset
potential declines in long positions in securities it owns, or anticipates
acquiring, and (ii) in order to maintain portfolio flexibility. The Fund may
only make short sales "against the box." In this type of short sale, at the time
of the sale the Fund owns the security it has sold short or has the immediate
and unconditional right to acquire the identical security at no additional cost.

In a short sale, the seller does not immediately deliver the securities sold and
does not receive the proceeds from the sale. To make delivery to the purchaser,
the executing broker borrows the securities being sold short on behalf of the
seller. The seller is said to have a short position in the securities sold until
it delivers the securities sold, at which time it receives the proceeds of the
sale. To secure its obligation to deliver securities sold short, the Fund will
deposit in a separate account with its custodian an equal amount of the
securities sold short or securities convertible into or exchangeable for such
securities at no cost. The Fund could close out a short position by purchasing
and delivering an equal amount of the securities sold short, rather than by
delivering securities already held by the Fund, because the Fund might want to
continue to receive interest and dividend payments on securities in its
portfolio that are convertible into the securities sold short.

The Fund might make a short sale "against the box" in order to hedge against
market risks when the Manager believes that the price of a security may decline,
causing a decline in the value of a security owned by the Fund or a security
convertible into or exchangeable for such security. In such case, any future
losses in the Fund's long position should be reduced by a gain in the short
position. Conversely, any gain in the long position should be reduced by a loss
in the short position. The extent to which such gains or losses in the long
position are reduced will depend upon the amount of the securities sold short
relative to the amount of the securities the Fund owns, either directly or
indirectly, and, in the case where the Fund owns convertible securities, changes
in the investment values or conversion premiums of such securities. There will
be certain additional transaction costs associated with short sales "against the
box," but the Fund will endeavor to offset these costs with income from the
investment of the cash proceeds of short sales.

YANKEE BONDS
The Fund may invest in U.S. dollar-denominated bonds sold in the United States
by non-U.S. issuers ("Yankee bonds"). As compared with bonds issued in the
United States, such bond issues normally carry a higher interest rate but are
less actively traded.

TEMPORARY DEFENSIVE STRATEGIES
The Fund may invest in the following types of money market instruments (i.e.,
debt instruments with less than 12 months remaining until maturity) denominated
in U.S. dollars or other currencies: (a) obligations issued or guaranteed by the
U.S. or foreign governments, their agencies, instrumentalities or
municipalities; (b) obligations of international organizations designed or
supported by multiple foreign governmental entities to promote economic
reconstruction or development; (c) finance company obligations, corporate
commercial paper and other short-term commercial obligations; (d) bank
obligations (including certificates of deposit, time deposits, demand deposits
and bankers' acceptances); (e) repurchase agreements with respect to the
foregoing; and (f) other substantially similar short-term debt securities with
comparable characteristics.

The Fund may invest in commercial paper rated as low as A-3 by Standard & Poor's
Ratings Group ("S&P") or P-3 by Moody's Investors Service, Inc. ("Moody's") or,
if not rated, determined by the Manager to be of comparable quality. Obligations
rated A-3 and P-3 are considered by S&P and Moody's, respectively, to have an
acceptable capacity for timely repayment. However, these securities may be more
vulnerable to adverse effects of changes in circumstances than obligations
carrying higher designations.

PREMIUM SECURITIES
The Fund may invest in income securities bearing coupon rates higher than
prevailing market rates. Such "premium" securities are typically purchased at
prices greater than the principal amounts payable on maturity. The Fund will not
amortize the premium paid for such securities in calculating its net investment
income. As a result, in such cases the purchase of such securities provides the
Fund a higher level of investment income distributable to shareholders on a
current basis than if the Fund purchased securities bearing current market rates
of interest. If securities purchased by the

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GT GLOBAL DEVELOPING MARKETS FUND
Fund at a premium are called or sold prior to maturity, the Fund will realize a
loss to the extent the call or sale price is less than the purchase price.
Additionally, the Fund will realize a loss if it holds such securities to
maturity.

INDEXED DEBT SECURITIES
The Fund may invest in debt securities issued by banks and other business
entities not located in developing market countries that are indexed to certain
specific foreign currency exchange rates, interest rates or other reference
rates. The terms of such securities provide that their principal amount is
adjusted upwards or downwards (but ordinarily not below zero) at maturity to
reflect changes in the exchange rate between two currencies (or other rates)
while the obligations are outstanding. While such securities offer the potential
for an attractive rate of return, they also entail the risk of loss of
principal. New forms of such securities continue to be developed. The Fund may
invest in such securities to the extent consistent with its investment
objectives.

STRUCTURED INVESTMENTS
The Fund may invest a portion of its assets in interests in entities organized
and operated solely for the purpose of restructuring the investment
characteristics of Sovereign Debt. This type of restructuring involves the
deposit with or purchase by an entity, such as a corporation or trust, of
specified instruments (such as commercial bank loans or Brady Bonds) and the
issuance by that entity of one or more classes of securities ("Structured
Investments") backed by, or representing interests in, the underlying
instruments. The cash flow on the underlying instruments may be apportioned
among the newly issued Structured Investments to create securities with
different investment characteristics such as varying maturities, payment
priorities and interest rate provisions, and the extent of the payments made
with respect to Structured Investments is dependent on the extent of the cash
flow on the underlying instruments. Because Structured Investments of the type
in which the Fund anticipates it will invest typically involve no credit
enhancement, their credit risk generally will be equivalent to that of the
underlying instruments.

The Fund is permitted to invest in a class of Structured Investments that is
either subordinated or not subordinated to the right of payment of another
class. Subordinated Structured Investments typically have higher yields and
present greater risks than unsubordinated Structured Investments.

Certain issuers of Structured Investments may be deemed to be "investment
companies" as defined in the 1940 Act. As a result, the Fund's investment in
these Structured Investments may be limited by the restrictions contained in the
1940 Act described above under "Investment Objectives and Policies --
Investments in Other Investment Companies." Structured Investments are typically
sold in private placement transactions, and there currently is no active trading
market for Structured Investments.

STRIPPED INCOME SECURITIES
Stripped income securities are obligations representing an interest in all or a
portion of the income or principal components of an underlying or related
security, a pool of securities or other assets. In the most extreme case, one
class will receive all of the interest (the interest only or "IO" class), while
the other class will receive all of the principal (the principal-only or "PO"
class). The market values of stripped income securities tend to be more volatile
in response to changes in interest rates than are conventional income
securities.

FLOATING AND VARIABLE RATE INCOME SECURITIES
Income securities may provide for floating or variable rate interest or dividend
payments. The floating or variable rate may be determined by reference to a
known lending rate, such as a bank's prime rate, a certificate of deposit rate
or the London Inter Bank Offered Rate (LIBOR). Alternatively, the rate may be
determined through an auction or remarketing process. The rate also may be
indexed to changes in the values of interest rate or securities indexes,
currency exchange rates or other commodities. The amount by which the rate paid
on an income security may increase or decrease may be subject to periodic or
lifetime caps. Floating and variable rate income securities include securities
whose rates vary inversely with changes in market rates of interest. Such
securities may also pay a rate of interest determined by applying a multiple to
the variable rate. The extent of increases and decreases in the value of
securities whose rates vary inversely with changes in market rates of interest
generally will be larger than comparable changes in the value of an equal
principal amount of a fixed rate security having similar credit quality,
redemption provisions and maturity.

SWAPS, CAPS, FLOORS AND COLLARS

The Fund may enter into interest rate, currency and index swaps and may purchase
or sell related caps, floors and collars and other derivative instruments. The
Fund expects to enter into these transactions primarily to preserve a return or
spread on a particular investment or portion of its portfolio, to protect
against currency fluctuations, as a technique for managing the portfolio's
duration (I.E., the price sensitivity to changes in interest rates) or to
protect against any increase in the price of securities the Fund anticipates
purchasing at a later date. The Fund intends to use these transactions as

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GT GLOBAL DEVELOPING MARKETS FUND
hedges and will not sell interest rate caps, floors or collars if it does not
own securities or other instruments providing an income stream roughly
equivalent to what the Fund may be obligated to pay.

Interest rate swaps involve the exchange by the Fund with another party of their
respective commitments to pay or receive interest (for example, an exchange of
floating rate payments for fixed rate payments) with respect to a notional
amount of principal. A currency swap is an agreement to exchange cash flows on a
notional amount based on changes in the values of the reference indices.

The purchase of a cap entitles the purchaser to receive payments on a notional
principal amount from the party selling the cap to the extent that a specified
index exceeds a predetermined interest rate. The purchase of an interest rate
floor entitles the purchaser to receive payments on a notional principal amount
from the party selling the floor to the extent that a specified index falls
below a predetermined interest rate or amount. A collar is a combination of a
cap and a floor that preserves a certain return within a predetermined range of
interest rates or values.

- --------------------------------------------------------------------------------

OPTIONS, FUTURES AND CURRENCY
STRATEGIES

- --------------------------------------------------------------------------------

SPECIAL RISKS OF OPTIONS, FUTURES AND CURRENCY STRATEGIES
The use of options, futures contracts and forward currency contracts ("Forward
Contracts") involves special considerations and risks, as described below. Risks
pertaining to particular instruments are described in the sections that follow.

(1) Successful use of most of these instruments depends upon the
Manager's ability to predict movements of the overall securities and
currency markets, which requires different skills than predicting changes in
the prices of individual securities. While the Manager is experienced in the
use of these instruments, there can be no assurance that any particular
strategy adopted will succeed.

(2) There might be imperfect correlation, or even no correlation,
between price movements of an instrument and price movements of the
investments being hedged. For example, if the value of an instrument used in
a short hedge increased by less than the decline in value of the hedged
investment, the hedge would not be fully successful. Such a lack of
correlation might occur due to factors unrelated to the value of the
investments being hedged, such as speculative or other pressures on the
markets in which the hedging instrument is traded. The effectiveness of
hedges using hedging instruments on indices will depend on the degree of
correlation between price movements in the index and price movements in the
investments being hedged.

(3) Hedging strategies, if successful, can reduce risk of loss by wholly
or partially offsetting the negative effect of unfavorable price movements
in the investments being hedged. However, hedging strategies can also reduce
opportunity for gain by offsetting the positive effect of favorable price
movements in the hedged investments. For example, if a Fund entered into a
short hedge because the Manager projected a decline in the price of a
security in the Fund's portfolio, and the price of that security increased
instead, the gain from that increase might by wholly or partially offset by
a decline in the price of the hedging instrument. Moreover, if the price of
the hedging instrument declined by more than the increase in the price of
the security, the Fund could suffer a loss. In either such case, the Fund
would have been in a better position had it not hedged at all.

(4) As described below, the Fund might be required to maintain assets as
"cover," maintain segregated accounts or make margin payments when it takes
positions in instruments involving obligations to third parties (i.e.,
instruments other than purchased options). If the Fund were unable to close
out its positions in such instruments, it might be required to continue to
maintain such assets or accounts or make such payments until the position
expired or matured. The requirements might impair the Fund's ability to sell
a portfolio security or make an investment at a time when it would otherwise
be favorable to do so, or require that the Fund sell a portfolio security at
a disadvantageous time. The Fund's ability to close out a position in an
instrument prior to expiration or maturity depends on the existence of a
liquid secondary market or, in the absence of such a market, the ability and
willingness of the other party to the transaction ("contra party") to enter
into a transaction closing out the position. Therefore, there is no
assurance that any position can be closed out at a time and price that is
favorable to the Fund.

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GT GLOBAL DEVELOPING MARKETS FUND

WRITING CALL OPTIONS
The Fund may write (sell) call options on securities, indices and currencies.
Call options generally will be written on securities and currencies that, in the
opinion of the Manager are not expected to make any major price moves in the
near future but that, over the long term, are deemed to be attractive
investments for the Fund.

A call option gives the holder (buyer) the right to purchase a security or
currency at a specified price (the exercise price) at any time until (American
Style) or on (European Style) a certain date (the expiration date). So long as
the obligation of the writer of a call option continues, he may be assigned an
exercise notice, requiring him to deliver the underlying security or currency
against payment of the exercise price. This obligation terminates upon the
expiration of the call option, or such earlier time at which the writer effects
a closing purchase transaction by purchasing an option identical to that
previously sold.

Portfolio securities or currencies on which call options may be written will be
purchased solely on the basis of investment considerations consistent with the
Fund's investment objective. When writing a call option, the Fund, in return for
the premium, gives up the opportunity for profit from a price increase in the
underlying security or currency above the exercise price, and retains the risk
of loss should the price of the security or currency decline. Unlike one who
owns securities or currencies not subject to an option, the Fund has no control
over when it may be required to sell the underlying securities or currencies,
since most options may be exercised at any time prior to the option's
expiration. If a call option that the Fund has written expires, the Fund will
realize a gain in the amount of the premium; however, such gain may be offset by
a decline in the market value of the underlying security or currency during the
option period. If the call option is exercised, the Fund will realize a gain or
loss from the sale of the underlying security or currency, which will be
increased or offset by the premium received. The Fund does not consider a
security or currency covered by a call option to be "pledged" as that term is
used in the Fund's policy that limits the pledging or mortgaging of its assets.

Writing call options can serve as a limited short hedge because declines in the
value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security or currency
appreciates to a price higher than the exercise price of the call option, it can
be expected that the option will be exercised and the Fund will be obligated to
sell the security or currency at less than its market value.

The premium that the Fund receives for writing a call option is deemed to
constitute the market value of an option. The premium the Fund will receive from
writing a call option will reflect, among other things, the current market price
of the underlying investment, the relationship of the exercise price to such
market price, the historical price volatility of the underlying investment, and
the length of the option period. In determining whether a particular call option
should be written, the Manager will consider the reasonableness of the
anticipated premium and the likelihood that a liquid secondary market will exist
for those options.

Closing transactions will be effected in order to realize a profit on an
outstanding call option, to prevent an underlying security or currency from
being called, or to permit the sale of the underlying security or currency.
Furthermore, effecting a closing transaction will permit the Fund to write
another call option on the underlying security or currency with either a
different exercise price, expiration date or both.

The Fund will pay transaction costs in connection with the writing of options
and in entering into closing purchase contracts. Transaction costs relating to
options activity normally are higher than those applicable to purchases and
sales of portfolio securities.

The exercise price of the options may be below, equal to or above the current
market values of the underlying securities or currencies at the time the options
are written. From time to time, the Fund may purchase an underlying security or
currency for delivery in accordance with the exercise of an option, rather than
delivering such security or currency from its portfolio. In such cases,
additional costs will be incurred.

The Fund will realize a profit or loss from a closing purchase transaction if
the cost of the transaction is less or more, respectively, than the premium
received from writing the option. Because increases in the market price of a
call option generally will reflect increases in the market price of the
underlying security or currency, any loss resulting from the repurchase of a
call option is likely to be offset in whole or in part by appreciation of the
underlying security or currency owned by the Fund.

WRITING PUT OPTIONS
The Fund may write put options on securities, indices and currencies. A put
option gives the purchaser of the option the right to sell, and the writer
(seller) the obligation to buy, the underlying security or currency at the
exercise price at any

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GT GLOBAL DEVELOPING MARKETS FUND
time until (American style) or on (European style) the expiration date. The
operation of put options in other respects, including their related risks and
rewards, is substantially identical to that of call options.

The Fund generally would write put options in circumstances where the Manager
wishes to purchase the underlying security or currency for the Fund's portfolio
at a price lower than the current market price of the security or currency. In
such event, the Fund would write a put option at an exercise price that, reduced
by the premium received on the option, reflects the lower price it is willing to
pay. Since the Fund also would receive interest on debt securities or currencies
maintained to cover the exercise price of the option, this technique could be
used to enhance current return during periods of market uncertainty. The risk in
such a transaction would be that the market price of the underlying security or
currency would decline below the exercise price less the premium received.

Writing put options can serve as a limited long hedge because increases in the
value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security or currency
depreciates to a price lower than the exercise price of the put option, it can
be expected that the put option will be exercised and the Fund will be obligated
to purchase the security or currency at greater than its market value.

PURCHASING PUT OPTIONS
The Fund may purchase put options on securities, indices and currencies. As the
holder of a put option, the Fund has the right to sell the underlying security
or currency at the exercise price at any time until (American style) or on
(European style) the expiration date. The Fund may enter into closing sale
transactions with respect to such options, exercise them or permit them to
expire.

The Fund may purchase a put option on an underlying security or currency
("protective put") owned by the Fund in order to protect against an anticipated
decline in the value of the security or currency. Such hedge protection is
provided only during the life of the put option when the Fund, as the holder of
the put option, is able to sell the underlying security or currency at the put
exercise price regardless of any decline in the underlying security's market
price or currency's exchange value. For example, a put option may be purchased
in order to protect unrealized appreciation of a security or currency when the
Manager deems it desirable to continue to hold the security or currency because
of tax considerations. The premium paid for the put option and any transaction
costs would reduce any profit otherwise available for distribution when the
security or currency is eventually sold.

The Fund also may purchase put options at a time when the Fund does not own the
underlying security or currency. By purchasing put options on a security or
currency it does not own, the Fund seeks to benefit from a decline in the market
price of the underlying security or currency. If the put option is not sold when
it has remaining value, and if the market price of the underlying security or
currency remains equal to or greater than the exercise price during the life of
the put option, the Fund will lose its entire investment in the put option. In
order for the purchase of a put option to be profitable, the market price of the
underlying security or currency must decline sufficiently below the exercise
price to cover the premium and transaction costs, unless the put option is sold
in a closing sale transaction.

PURCHASING CALL OPTIONS
The Fund may purchase call options on securities, indices and currencies. As the
holder of a call option, the Fund would have the right to purchase the
underlying security or currency at the exercise price at any time until
(American style) or on (European style) the expiration date. The Fund may enter
into closing sale transactions with respect to such options, exercise them or
permit them to expire.

Call options may be purchased by the Fund for the purpose of acquiring the
underlying security or currency for its portfolio. Utilized in this fashion, the
purchase of call options would enable the Fund to acquire the security or
currency at the exercise price of the call option plus the premium paid. At
times, the net cost of acquiring the security or currency in this manner may be
less than the cost of acquiring the security or currency directly. This
technique also may be useful to the Fund in purchasing a large block of
securities that would be more difficult to acquire by direct market purchases.
So long as it holds such a call option, rather than the underlying security or
currency itself, the Fund is partially protected from any unexpected decline in
the market price of the underlying security or currency and, in such event,
could allow the call option to expire, incurring a loss only to the extent of
the premium paid for the option.

The Fund also may purchase call options on underlying securities or currencies
it owns in order to protect unrealized gains on call options previously written
by it. A call option could be purchased for this purpose where tax
considerations make it inadvisable to realize such gains through a closing
purchase transaction. Call options also may be purchased at times to avoid
realizing losses that would result in a reduction of the Fund's current return.
For example, where the Fund has written a call option on an underlying security
or currency having a current market value below the price at which such security
or currency was purchased by the Fund, an increase in the market price could
result in the exercise of the call

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GT GLOBAL DEVELOPING MARKETS FUND
option written by the Fund and the realization of a loss on the underlying
security or currency. Accordingly, the Fund could purchase a call option on the
same underlying security or currency, which could be exercised to fulfill the
Fund's delivery obligations under its written call (if it is exercised). This
strategy could allow the Fund to avoid selling the portfolio security or
currency at a time when it has an unrealized loss; however, the Fund would have
to pay a premium to purchase the call option plus transaction costs.

Aggregate premiums paid for put and call options will not exceed 5% of the
Fund's total assets at the time of purchase.

The Fund may attempt to accomplish objectives similar to those involved in using
Forward Contracts by purchasing put or call options on currencies. A put option
gives the Fund as purchaser the right (but not the obligation) to sell a
specified amount of currency at the exercise price at any time until (American
style) or on (European style) the expiration date. A call option gives the Fund
as purchaser the right (but not the obligation) to purchase a specified amount
of currency at the exercise price at any time until (American style) or an
(European style) the expiration date. The Fund might purchase a currency put
option, for example, to protect itself against a decline in the dollar value of
a currency in which it holds or anticipates holding securities. If the
currency's value should decline against the dollar, the loss in currency value
should be offset, in whole or in part, by an increase in the value of the put.
If the value of the currency instead should rise against the dollar, any gain to
the Fund would be reduced by the premium it had paid for the put option. A
currency call option might be purchased, for example, in anticipation of, or to
protect against, a rise in the value against the dollar of a currency in which
the Fund anticipates purchasing securities.

Options may be either listed on an exchange or traded in over-the-counter
("OTC") markets. Listed options are third-party contracts (I.E., performance of
the obligations of the purchaser and seller is guaranteed by the exchange or
clearing corporation), and have standardized strike prices and expiration dates.
OTC options are two-party contracts with negotiated strike prices and expiration
dates. The Fund will not purchase an OTC option unless it believes that daily
valuations for such options are readily obtainable. OTC options differ from
exchange-traded options in that OTC options are transacted with dealers directly
and not through a clearing corporation (which guarantees performance).
Consequently, there is a risk of non-performance by the dealer. Since no
exchange is involved, OTC options are valued on the basis of an average of the
last bid prices obtained from dealers, unless a quotation from only one dealer
is available, in which case only that dealer's price will be used. In the case
of OTC options, there can be no assurance that a liquid secondary market will
exist for any particular option at any specific time.

The staff of the SEC considers purchased OTC options to be illiquid securities.
The Fund may also sell OTC options and, in connection therewith, segregate
assets or cover its obligations with respect to OTC options written by the Fund.
The assets used as cover for OTC options written by the Fund will be considered
illiquid unless the OTC options are sold to qualified dealers who agree that the
Fund may repurchase any OTC option it writes at a maximum price to be calculated
by a formula set forth in the option agreement. The cover for an OTC option
written subject to this procedure would be considered illiquid only to the
extent that the maximum repurchase price under the formula exceeds the intrinsic
value of the option.

The Fund's ability to establish and close out positions in exchange-listed
options depends on the existence of a liquid market. The Fund intends to
purchase or write only those exchange-traded options for which there appears to
be a liquid secondary market. However, there can be no assurance that such a
market will exist at any particular time. Closing transactions can be made for
OTC options only by negotiating directly with the contra party or by a
transaction in the secondary market if any such market exists. Although the Fund
will enter into OTC options only with contra parties that are expected to be
capable of entering into closing transactions with the Fund, there is no
assurance that the Fund will in fact be able to close out an OTC option position
at a favorable price prior to expiration. In the event of insolvency of the
contra party, the Fund might be unable to close out an OTC option position at
any time prior to its expiration.

INDEX OPTIONS
Puts and calls on indices are similar to puts and calls on securities or futures
contracts except that all settlements are in cash and gain or loss depends on
changes in the index in question (and thus on price movements in the securities
market or a particular market sector generally) rather than on price movements
in individual securities or futures contracts. When the Fund writes a call on an
index, it receives a premium and agrees that, prior to the expiration date, the
purchaser of the call, upon exercise of the call, will receive from the Fund an
amount of cash if the closing level of the index upon which the call is based is
greater than the exercise price of the call. The amount of cash is equal to the
difference between the closing price of the index and the exercise price of the
call times a specified multiple (the "multiplier"), which determines the total
dollar value for each point of such difference. When the Fund buys a call on an
index, it pays a premium and has the same rights as to such call as are
indicated above. When the Fund buys a put on an index, it pays a premium and has
the right, prior to the expiration date, to require the seller of the put, upon
the Fund's exercise of the put, to deliver to the Fund an

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GT GLOBAL DEVELOPING MARKETS FUND
amount of cash if the closing level of the index upon which the put is based is
less than the exercise price of the put, which amount of cash is determined by
the multiplier, as described above for calls. When the Fund writes a put on an
index, it receives a premium and the purchaser has the right, prior to the
expiration date, to require the Fund to deliver to it an amount of cash equal to
the difference between the closing level of the index and the exercise price
times the multiplier, if the closing level is less than the exercise price.

The risks of investment in index options may be greater than options on
securities. Because index options are settled in cash, when the Fund writes a
call on an index it cannot provide in advance for its potential settlement
obligations by acquiring and holding the underlying securities. The Fund can
offset some of the risk of writing a call index option position by holding a
diversified portfolio of securities similar to those on which the underlying
index is based. However, the Fund cannot, as a practical matter, acquire and
hold a portfolio containing exactly the same securities as underlie the index
and, as a result, bears a risk that the value of the securities held will vary
from the value of the index.

Even if the Fund could assemble a securities portfolio that exactly reproduced
the composition of the underlying index, it still would not be fully covered
from a risk standpoint because of the "timing risk" inherent in writing index
options. When an index option is exercised, the amount of cash that the holder
is entitled to receive is determined by the difference between the exercise
price and the closing index level on the date when the option is exercised. As
with other kinds of options, the Fund as the call writer will not know that it
has been assigned until the next business day at the earliest. The time lag
between exercise and notice of assignment poses no risk for the writer of a
covered call on a specific underlying security, such as common stock, because
there the writer's obligation is to deliver the underlying security, not to pay
its value as of a fixed time in the past. So long as the writer already owns the
underlying security, it can satisfy its settlement obligations by simply
delivering it, and the risk that its value may have declined since the exercise
date is borne by the exercising holder. In contrast, even if the writer of an
index call holds securities that exactly match the composition of the underlying
index, it will not be able to satisfy its assignment obligations by delivering
those securities against payment of the exercise price. Instead, it will be
required to pay cash in an amount based on the closing index value on the
exercise date; and by the time it learns that it has been assigned, the index
may have declined, with a corresponding decline in the value of its securities
portfolio. This "timing risk" is an inherent limitation on the ability of index
call writers to cover their risk exposure by holding securities positions.

If the Fund has purchased an index option and exercises it before the closing
index value for that day is available, it runs the risk that the level of the
underlying index may subsequently change. If such a change causes the exercised
option to fall out-of-the-money, the Fund will be required to pay the difference
between the closing index value and the exercise price of the option (times the
applicable multiplier) to the assigned writer.

INTEREST RATE, CURRENCY AND STOCK INDEX FUTURES CONTRACTS
The Fund may enter into interest rate, currency or stock index futures contracts
(collectively, "Futures" or "Futures Contracts") as a hedge against changes in
prevailing levels of interest rates, currency exchange rates or stock price
levels, respectively, in order to establish more definitely the effective return
on securities or currencies held or intended to be acquired by it. The Fund's
hedging may include sales of Futures as an offset against the effect of expected
increases in interest rates and decreases in currency exchange rates or stock
prices, and purchases of Futures as an offset against the effect of expected
declines in interest rates, and increases in currency exchange rates or stock
prices.

The Fund only will enter into Futures Contracts that are traded on futures
exchanges and are standardized as to maturity date and underlying financial
instrument. Futures exchanges and trading thereon in the United States are
regulated under the Commodity Exchange Act by the Commodity Futures Trading
Commission ("CFTC"). Futures are exchanged in London at the London International
Financial Futures Exchange.

Although techniques other than sales and purchases of Futures Contracts could be
used to reduce the Fund's exposure to interest rate, currency exchange rate and
stock market fluctuations, the Fund may be able to hedge its exposure more
effectively and at a lower cost through using Futures Contracts.

A Futures Contract provides for the future sale by one party and purchase by
another party of a specified amount of a specific financial instrument (security
or currency) for a specified price at a designated date, time and place. A stock
index Futures Contract provides for the delivery, at a designated date, time and
place, of an amount of cash equal to a specified dollar amount times the
difference between the stock index value at the close of trading on the contract
and the price at which the Futures Contract is originally struck; no physical
delivery of stocks comprising the index is made. Brokerage fees are incurred
when a Futures Contract is bought or sold, and margin deposits must be
maintained at all times the Futures Contract is outstanding.

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GT GLOBAL DEVELOPING MARKETS FUND

Although Futures Contracts typically require future delivery of and payment for
financial instruments or currencies, Futures Contracts usually are closed out
before the delivery date. Closing out an open Futures Contract sale or purchase
is effected by entering into an offsetting Futures Contract purchase or sale,
respectively, for the same aggregate amount of the identical financial
instrument or currency and the same delivery date. If the offsetting purchase
price is less than the original sale price, the Fund realizes a gain; if it is
more, the Fund realizes a loss. Conversely, if the offsetting sale price is more
than the original purchase price, the Fund realizes a gain; if it is less, the
Fund realizes a loss. The transaction costs also must be included in these
calculations. There can be no assurance, however, that the Fund will be able to
enter into an offsetting transaction with respect to a particular Futures
Contract at a particular time. If the Fund is not able to enter into an
offsetting transaction, the Fund will continue to be required to maintain the
margin deposits on the Futures Contract.

As an example of an offsetting transaction, the contractual obligations arising
from the sale of one Futures Contract of September Deutschemarks on an exchange
may be fulfilled at any time before delivery under the Futures Contract is
required (I.E., on a specified date in September, the "delivery month") by the
purchase of another Futures Contract of September Deutschemarks on the same
exchange. In such instance the difference between the price at which the Futures
Contract was sold and the price paid for the offsetting purchase, after
allowance for transaction costs, represents the profit or loss to the Fund.

The Fund's Futures transactions will be entered into for hedging purposes; that
is, Futures Contracts will be sold to protect against a decline in the price of
securities or currencies that the Fund owns, or Futures Contracts will be
purchased to protect the Fund against an increase in the price of securities or
currencies it has committed to purchase or expects to purchase.

"Margin" with respect to Futures Contracts is the amount of funds that must be
deposited by the Fund in order to initiate Futures trading and to maintain the
Fund's open positions in Futures Contracts. A margin deposit made when the
Futures Contract is entered into ("initial margin") is intended to assure the
Fund's performance under the Futures Contract. The margin required for a
particular Futures Contract is set by the exchange on which the Futures Contract
is traded, and may be modified significantly from time to time by the exchange
during the term of the Futures Contract.

Subsequent payments, called "variation margin," to and from the futures
commission merchant through which the Fund entered into the Futures Contract
will be made on a daily basis as the price of the underlying security, currency
or index fluctuates making the Futures Contract more or less valuable, a process
known as marking-to-market.

RISKS OF USING FUTURES CONTRACTS. The prices of Futures Contracts are
volatile and are influenced, among other things, by actual and anticipated
changes in interest rates and currency exchange rates, and in stock market
movements, which in turn are affected by fiscal and monetary policies and
national and international political and economic events.

There is a risk of imperfect correlation between changes in prices of Futures
Contracts and prices of the securities or currencies in the Fund's portfolio
being hedged. The degree of imperfection of correlation depends upon
circumstances such as: variations in speculative market demand for futures and
for securities or currencies, including technical influences in Futures trading;
and differences between the financial instruments being hedged and the
instruments underlying the standard Futures Contracts available for trading. A
decision of whether, when, and how to hedge involves skill and judgment, and
even a well-conceived hedge may be unsuccessful to some degree because of
unexpected market behavior or interest or currency rate trends.

Because of the low margin deposits required, Futures trading involves an
extremely high degree of leverage. As a result, a relatively small price
movement in a Futures Contract may result in immediate and substantial loss, as
well as gain, to the investor. For example, if at the time of purchase, 10% of
the value of the Futures Contract is deposited as margin, a subsequent 10%
decrease in the value of the Futures Contract would result in a total loss of
the margin deposit, before any deduction for the transaction costs, if the
account were then closed out. A 15% decrease would result in a loss equal to
150% of the original margin deposit, if the Futures Contract were closed out.
Thus, a purchase or sale of a Futures Contract may result in losses in excess of
the amount invested in the Futures Contract.

Most U.S. Futures exchanges limit the amount of fluctuation permitted in Futures
Contract and options on Futures Contract prices during a single trading day. The
daily limit establishes the maximum amount that the price of a Futures Contract
or option may vary either up or down from the previous day's settlement price at
the end of a trading session. Once the daily limit has been reached in a
particular type of Futures Contract or option, no trades may be made on that day
at a price beyond that limit. The daily limit governs only price movement during
a particular trading day and therefore does not limit potential losses, because
the limit may prevent the liquidation of unfavorable positions. Futures Contract
and option prices occasionally have moved to the daily limit for several
consecutive trading days with little or no trading, thereby preventing prompt
liquidation of positions and subjecting some traders to substantial losses.

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GT GLOBAL DEVELOPING MARKETS FUND

If the Fund were unable to liquidate a Futures or option on Futures position due
to the absence of a liquid secondary market or the imposition of price limits,
it could incur substantial losses. The Fund would continue to be subject to
market risk with respect to the position. In addition, except in the case of
purchased options, the Fund would continue to be required to make daily
variation margin payments and might be required to maintain the position being
hedged by the Future or option or to maintain cash or securities in a segregated
account.

Certain characteristics of the Futures market might increase the risk that
movements in the prices of Futures Contracts or options on Futures might not
correlate perfectly with movements in the prices of the investments being
hedged. For example, all participants in the Futures and options on Futures
markets are subject to daily variation margin calls and might be compelled to
liquidate Futures or options on Futures positions whose prices are moving
unfavorably to avoid being subject to further calls. These liquidations could
increase price volatility of the instruments and distort the normal price
relationship between the Futures or options and the investments being hedged.
Also, because initial margin deposit requirements in the Futures market are less
onerous than margin requirements in the securities markets, there might be
increased participation by speculators in the Futures markets. This
participation also might cause temporary price distortions. In addition,
activities of large traders in both the Futures and securities markets involving
arbitrage, "program trading" and other investment strategies might result in
temporary price distortions.

OPTIONS ON FUTURES CONTRACTS
Options on Futures Contracts are similar to options on securities or currencies
except that options on Futures Contracts give the purchaser the right, in return
for the premium paid, to assume a position in a Futures Contract (a long
position if the option is a call and a short position if the option is a put) at
a specified exercise price at any time during the period of the option. Upon
exercise of the option, the delivery of the Futures position by the writer of
the option to the holder of the option will be accompanied by delivery of the
accumulated balance in the writer's Futures margin account, which represents the
amount by which the market price of the Futures Contract, at exercise, exceeds
(in the case of a call) or is less than (in the case of a put) the exercise
price of the option on the Futures Contract. If an option is exercised on the
last trading day prior to the expiration date of the option, the settlement will
be made entirely in cash equal to the difference between the exercise price of
the option and the closing level of the securities, currencies or index upon
which the Futures Contract is based on the expiration date. Purchasers of
options who fail to exercise their options prior to the exercise date suffer a
loss of the premium paid.

The purchase of call options on Futures can serve as a long hedge, and the
purchase of put options on Futures can serve as a short hedge. Writing call
options on Futures can serve as a limited short hedge, and writing put options
on Futures can serve as a limited long hedge, using a strategy similar to that
used for writing options on securities, foreign currencies or indices.

If the Fund writes an option on a Futures Contract, it will be required to
deposit initial and variation margin pursuant to requirements similar to those
applicable to Futures Contracts. Premiums received from the writing of an option
on a Futures Contract are included in the initial margin deposit.

The Fund may seek to close out an option position by selling an option covering
the same Futures Contract and having the same exercise price and expiration
date. The ability to establish and close out positions on such options is
subject to the maintenance of a liquid secondary market.

LIMITATIONS ON USE OF FUTURES, OPTIONS ON FUTURES AND CERTAIN OPTIONS ON
CURRENCIES
To the extent that the Fund enters into Futures Contracts, options on Futures
Contracts, and options on foreign currencies traded on a CFTC-regulated
exchange, in each case other than for BONA FIDE hedging purposes (as defined by
the CFTC), the aggregate initial margin and premiums required to establish those
positions (excluding the amount by which options are "in-the-money") will not
exceed 5% of the liquidation value of the Fund's portfolio, after taking into
account unrealized profits and unrealized losses on any contracts the Fund has
entered into. In general, a call option on a Futures Contract is
"in-the-money"if the value of the underlying Futures Contract exceeds the
strike, i.e., exercise, price of the call; a put option on a Futures Contract is
"in-the-money" if the value of the underlying Futures Contract is exceeded by
the strike price of the put. This guideline may be modified by the Company's
Board of Directors without a shareholder vote. This limitation does not limit
the percentage of the Fund's assets at risk to 5%.

FORWARD CURRENCY CONTRACTS
A Forward Contract is an obligation, usually arranged with a commercial bank or
other currency dealer, to purchase or sell a currency against another currency
at a future date and price as agreed upon by the parties. The Fund either may
accept or make delivery of the currency at the maturity of the Forward Contract.
The Fund may also, if its contra party agrees, prior to maturity, enter into a
closing transaction involving the purchase or sale of an offsetting contract.

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GT GLOBAL DEVELOPING MARKETS FUND

The Fund engages in forward currency transactions in anticipation of, or to
protect itself against, fluctuations in exchange rates. The Fund might sell a
particular foreign currency forward, for example, when it holds bonds
denominated in a foreign currency but anticipates, and seeks to be protected
against, a decline in the currency against the U.S. dollar. Similarly, the Fund
might sell the U.S. dollar forward when it holds bonds denominated in U.S.
dollars but anticipates, and seeks to be protected against, a decline in the
U.S. dollar relative to other currencies. Further, the Fund might purchase a
currency forward to "lock in" the price of securities denominated in that
currency that it anticipates purchasing.

Forward Contracts are traded in the interbank market conducted directly between
currency traders (usually large commercial banks) and their customers. A Forward
Contract generally has no deposit requirement and no commissions are charged at
any stage for trades. The Fund will enter into such Forward Contracts with major
U.S. or foreign banks and securities or currency dealers in accordance with the
guidelines approved by the Company's Board of Directors.

The Fund may enter into Forward Contracts either with respect to specific
transactions or with respect to the Fund's portfolio positions. The precise
matching of the Forward Contract amounts and the value of specific securities
generally will not be possible because the future value of such securities in
foreign currencies will change as a consequence of market movements in the value
of those securities between the date the Forward Contract is entered into and
the date it matures. Accordingly, it may be necessary for the Fund to purchase
additional foreign currency on the spot (I.E., cash) market (and bear the
expense of such purchase) if the market value of the security is less than the
amount of foreign currency the Fund is obligated to deliver and if a decision is
made to sell the security and make delivery of the foreign currency. Conversely,
it may be necessary to sell on the spot market some of the foreign currency the
Fund is obligated to deliver. The projection of short-term currency market
movements is extremely difficult, and the successful execution of a short-term
hedging strategy is highly uncertain. Forward Contracts involve the risk that
anticipated currency movements will not be predicted accurately, causing the
Fund to sustain losses on these contracts and transaction costs.

At or before the maturity of a Forward Contract requiring the Fund to sell a
currency, the Fund either may sell a portfolio security and use the sale
proceeds to make delivery of the currency or retain the security and offset its
contractual obligation to deliver the currency by purchasing a second contract
pursuant to which the Fund will obtain, on the same maturity date, the same
amount of the currency that it is obligated to deliver. Similarly, the Fund may
close out a Forward Contract requiring it to purchase a specified currency by,
if its contra party agrees entering, into a second contract entitling it to sell
the same amount of the same currency on the maturity date of the first contract.
The Fund would realize a gain or loss as a result of entering into such an
offsetting Forward Contract under either circumstance to the extent the exchange
rate or rates between the currencies involved moved between the execution dates
of the first contract and the offsetting contract.

The cost to the Fund of engaging in Forward Contracts varies with factors such
as the currencies involved, the length of the contract period and the market
conditions then prevailing. Because Forward Contracts usually are entered into
on a principal basis, no fees or commissions are involved. The use of Forward
Contracts does not eliminate fluctuations in the prices of the underlying
securities the Fund owns or intends to acquire, but it does establish a rate of
exchange in advance. In addition, while Forward Contract sales limit the risk of
loss due to a decline in the value of the hedged currencies, they also limit any
potential gain that might result should the value of the currencies increase.

FOREIGN CURRENCY STRATEGIES -- SPECIAL CONSIDERATIONS
The Fund may use options on foreign currencies, Futures on foreign currencies,
options on Futures on foreign currencies and Forward Contracts to hedge against
movements in the values of the foreign currencies in which the Fund's securities
are denominated. Such currency hedges can protect against price movements in a
security that the Fund owns or intends to acquire that are attributable to
changes in the value of the currency in which it is denominated. Such hedges do
not, however, protect against price movements in the securities that are
attributable to other causes.

The Fund might seek to hedge against changes in the value of a particular
currency when no Futures Contract, Forward Contract or option involving that
currency is available or one of such contracts is more expensive than certain
other contracts. In such cases, the Fund may hedge against price movements in
that currency by entering into a contract on another currency or basket of
currencies, the values of which the Manager believes will have a positive
correlation to the value of the currency being hedged. The risk that movements
in the price of the contract will not correlate perfectly with movements in the
price of the currency being hedged is magnified when this strategy is used.

The value of Futures Contracts, options on Futures Contracts, Forward Contracts,
and options on foreign currencies depends on the value of the underlying
currency relative to the U.S. dollar. Because foreign currency transactions
occurring in the interbank market might involve substantially larger amounts
than those involved in the use of Futures

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GT GLOBAL DEVELOPING MARKETS FUND
Contracts, Forward Contracts or options, the Fund could be disadvantaged by
dealing in the odd lot market (generally consisting of transactions of less than
$1 million) for the underlying foreign currencies at prices that are less
favorable than for round lots.

There is no systematic reporting of last sale information for foreign currencies
or any regulatory requirements that quotations available through dealers or
other market sources be firm or revised on a timely basis. Quotation information
generally is representative of very large transactions in the interbank market
and thus might not reflect odd-lot transactions where rates might be less
favorable. The interbank market in foreign currencies is a global,
round-the-clock market. To the extent the U.S. options or Futures markets are
closed while the markets for the underlying currencies remain open, significant
price and rate movements might take place in the underlying markets that cannot
be reflected in the markets for the Futures contracts or options until they
reopen.

Settlement of Futures Contracts, Forward Contracts and options involving foreign
currencies might be required to take place within the country issuing the
underlying currency. Thus, the Fund might be required to accept or make delivery
of the underlying foreign currency in accordance with any U.S. or foreign
regulations regarding the maintenance of foreign banking arrangements by U.S.
residents and might be required to pay any fees, taxes and charges associated
with such delivery assessed in the issuing country.

COVER
Transactions using Forward Contracts, Futures Contracts and options (other than
options that the Fund has purchased) expose the Fund to an obligation to another
party. The Fund will not enter into any such transactions unless it owns either
(1) an offsetting ("covered") position in securities, currencies, or other
options, Forward Contracts or Futures Contracts, or (2) cash, receivables and
short-term debt securities with a value sufficient at all times to cover its
potential obligations not covered as provided in (1) above. The Fund will comply
with SEC guidelines regarding cover for these instruments and, if the guidelines
so require, set aside cash or liquid securities.

Assets used as cover or held in a segregated account cannot be sold while the
position in the corresponding Forward Contract, Futures Contract or option is
open, unless they are replaced with other appropriate assets. If a large portion
of the Fund's assets are used for cover or otherwise set aside, it could affect
portfolio management or the Fund's ability to meet redemption requests or other
current obligations.

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RISK FACTORS

- --------------------------------------------------------------------------------

ILLIQUID SECURITIES

The Fund may invest up to 15% of its net assets in illiquid securities.
Securities may be considered illiquid if the Fund cannot reasonably expect
within seven days to sell the security for approximately the amount at which the
Fund values such securities. The sale of illiquid securities, if they can be
sold at all, generally will require more time and result in higher brokerage
charges or dealer discounts and other selling expenses than the sale of liquid
securities, such as securities eligible for trading on U.S. securities exchanges
or in the over-the-counter markets. Moreover, restricted securities which may be
illiquid for purposes of this limitation, often sell, if at all, at a price
lower than similar securities that are not subject to restrictions on resale.

Illiquid securities include those that are subject to restrictions contained in
the securities laws of other countries. However, securities that are freely
marketable in the country where they are principally traded, but would not be
freely marketable in the United States, will not be considered illiquid. Where
registration is required, the Fund may be obligated to pay all or part of the
registration expenses and a considerable period may elapse between the time of
the decision to sell and the time the Fund may be permitted to sell a security
under an effective registration statement. If, during such a period, adverse
market conditions were to develop, the Fund might obtain a less favorable price
than prevailed when it decided to sell.

Not all restricted securities are illiquid. In recent years a large
institutional market has developed for certain securities that are not
registered under the Securities Act of 1933, as amended ("1933 Act"), including
private placements, repurchase agreements, commercial paper, foreign securities
and corporate bonds and notes. These instruments are often restricted

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GT GLOBAL DEVELOPING MARKETS FUND
securities because the securities are sold in transactions not requiring
registration. Institutional investors generally will not seek to sell these
instruments to the general public, but instead will often depend either on an
efficient institutional market in which such unregistered securities can be
readily resold or on an issuer's ability to honor a demand for repayment.
Therefore, the fact that there are contractual or legal restrictions on resale
to the general public or certain institutions is not dispositive of the
liquidity of such investments.

Rule 144A under the 1933 Act establishes a "safe harbor" from the registration
requirements of the 1933 Act for resales of certain securities to qualified
institutional buyers. Institutional markets for restricted securities have
developed as a result of Rule 144A, providing both readily ascertainable values
for restricted securities and the ability to liquidate an investment to satisfy
share redemption orders. Such markets include automated systems for the trading,
clearance and settlement of unregistered securities of domestic and foreign
issuers, such as the PORTAL System sponsored by the National Association of
Securities Dealers, Inc. An insufficient number of qualified institutional
buyers interested in purchasing Rule 144A-eligible restricted securities held by
the Fund, however, could affect adversely the marketability of such portfolio
securities and the Fund might be unable to dispose of such securities promptly
or at favorable prices.

With respect to liquidity determinations generally, the Company's Board of
Directors has the ultimate responsibility for determining whether specific
securities, including restricted securities pursuant to Rule 144A under the 1933
Act, are liquid or illiquid. The Board has delegated the function of making
day-to-day determinations of liquidity to the Manager in accordance with
procedures approved by the Board. The Manager takes into account a number of
factors in reaching liquidity decisions, including (i) the frequency of trading
in the security, (ii) the number of dealers who make quotes for the security,
(iii) the number of dealers who have undertaken to make a market in the
security, (iv) the number of other potential purchasers and (v) the nature of
the security and how trading is effected (e.g., the time needed to sell the
security, how offers are solicited and the mechanics of transfer). The Manager
monitors the liquidity of securities in the Fund's portfolio and periodically
reports on such decisions to the Board.

FOREIGN SECURITIES
POLITICAL, SOCIAL AND ECONOMIC RISKS. Investing in securities of non-U.S.
companies may entail additional risks due to the potential political, social and
economic instability of certain countries and the risks of expropriation,
nationalization, confiscation or the imposition of restrictions on foreign
investment, convertibility of currencies into U.S. dollars and on repatriation
of capital invested. In the event of such expropriation, nationalization or
other confiscation by any country, the Fund could lose its entire investment in
any such country.

In addition, even though opportunities for investment may exist in emerging
markets, any change in the leadership or policies of the governments of those
countries or in the leadership or policies of any other government which
exercises a significant influence over those countries, may halt the expansion
of or reverse the liberalization of foreign investment policies now occurring
and thereby eliminate any investment opportunities which may currently exist.

Investors should note that upon the accession to power of authoritarian regimes,
the governments of a number of Latin American countries previously expropriated
large quantities of real and personal property similar to the property which
will be represented by the securities purchased by the Fund. The claims of
property owners against those governments were never finally settled. There can
be no assurance that any property represented by securities purchased by the
Fund will not also be expropriated, nationalized, or otherwise confiscated. If
such confiscation were to occur, the Fund could lose its entire investment in
such countries. The Fund's investments would similarly be adversely affected by
exchange control regulation in any of those countries.

RELIGIOUS AND ETHNIC STABILITY. Certain countries in which the Fund may
invest may have groups that advocate radical religious or revolutionary
philosophies or support ethnic independence. Any disturbance on the part of such
individuals could carry the potential for widespread destruction or confiscation
of property owned by individuals and entities foreign to such country and could
cause the loss of the Fund's investment in those countries. Instability may also
result from, among other things, (i) authoritarian governments or military
involvement in political and economic decision-making, including changes in
government through extra-constitutional means, (ii) popular unrest associated
with demands for improved political, economic and social conditions and (iii)
hostile relations with neighboring or other countries. Such political, social
and economic instability could disrupt the principal financial markets in which
the Fund invests and adversely affect the value of the Fund's assets.

FOREIGN INVESTMENT RESTRICTIONS. Certain countries prohibit or impose
substantial restrictions on investments in their capital markets, particularly
their equity markets, by foreign entities such as the Fund. These restrictions
or controls may at times limit or preclude investment in certain securities and
may increase the cost and expenses of the Fund. For example, certain countries
require prior governmental approval before investments by foreign persons may be
made or may limit

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GT GLOBAL DEVELOPING MARKETS FUND
the amount of investment by foreign persons in a particular company, or limit
the investment by foreign persons to only a specific class of securities of a
company that may have less advantageous terms than securities of the company
available for purchase by nationals. Moreover, the national policies of certain
countries may restrict investment opportunities in issuers or industries deemed
sensitive to national interests. In addition, some countries require
governmental approval for the repatriation of investment income, capital or the
proceeds of securities sales by foreign investors. If there is a deterioration
in a country's balance of payments or for other reasons, a country may impose
restrictions on foreign capital remittances abroad. The Fund could be adversely
affected by delays in, or a refusal to grant, any required governmental approval
for repatriation, as well as by the application to it of other restrictions on
investments.

NON-UNIFORM CORPORATE DISCLOSURE STANDARDS AND GOVERNMENTAL
REGULATION. Foreign companies are subject to accounting, auditing and financial
standards and requirements that differ in some cases significantly from those
applicable to U.S. companies. In particular, the assets, liabilities and profits
appearing on the financial statements of such a company may not reflect its
financial position or results of operations in the way they would be reflected
had such financial statements been prepared in accordance with U.S. generally
accepted accounting principles. Most of the securities held by the Fund will not
be registered with the SEC or regulators of any foreign country, nor will the
issuers thereof be subject to the SEC's reporting requirements. Thus, there will
be less available information concerning most foreign issuers of securities held
by the Fund than is available concerning U.S. issuers. In instances where the
financial statements of an issuer are not deemed to reflect accurately the
financial situation of the issuer, the Manager will take appropriate steps to
evaluate the proposed investment, which may include on-site inspection of the
issuer, interviews with its management and consultations with accountants,
bankers and other specialists. There is substantially less publicly available
information about foreign companies than there are reports and ratings published
about U.S. companies and the U.S. government. In addition, where public
information is available, it may be less reliable than such information
regarding U.S. issuers. Issuers of securities on foreign jurisdictions are
generally not subject to the same degree of regulation as are U.S. issuers with
respect to such matters as restrictions on market manipulation, insider trading
rules, shareholder proxy requirements and timely disclosure of information.

CURRENCY FLUCTUATIONS. Because the Fund, under normal circumstances, will
invest a substantial portion of its total assets in the securities of foreign
issuers which are denominated in foreign currencies, the strength or weakness of
the U.S. dollar against such foreign currencies will account for part of the
Fund's investment performance. A decline in the value of any particular currency
against the U.S. dollar will cause a decline in the U.S. dollar value of the
Fund's holdings of securities and cash denominated in such currency and,
therefore, will cause an overall decline in the Fund's net asset value and any
net investment income and capital gains derived from such securities to be
distributed in U.S. dollars to shareholders of the Fund. Moreover, if the value
of the foreign currencies in which the Fund receives its income falls relative
to the U.S. dollar between receipt of the income and the making of Fund
distributions, the Fund may be required to liquidate securities in order to make
distributions if the Fund has insufficient cash in U.S. dollars to meet
distribution requirements.

The rate of exchange between the U.S. dollar and other currencies is determined
by several factors including the supply and demand for particular currencies,
central bank efforts to support particular currencies, the movement of interest
rates, the pace of business activity in certain other countries and the United
States, and other economic and financial conditions affecting the world economy.

Although the Fund values its assets daily in terms of U.S. dollars, it does not
intend to convert its holdings of foreign currencies into U.S. dollars on a
daily basis. The Fund will do so from time to time, and investors should be
aware of the costs of currency conversion. Although foreign exchange dealers do
not charge a fee for conversion, they do realize a profit based on the
difference ("spread") between the prices at which they are buying and selling
various currencies. Thus, a dealer may offer to sell a foreign currency to the
Fund at one rate, while offering a lesser rate of exchange should the Fund
desire to sell that currency to the dealer.

ADVERSE MARKET CHARACTERISTICS. Securities of many foreign issuers may be
less liquid and their prices more volatile than securities of comparable U.S.
issuers. In addition, foreign securities markets and brokers generally are
subject to less governmental supervision and regulation than in the United
States and foreign securities transactions usually are subject to fixed
commissions, which generally are higher than negotiated commissions on U.S.
transactions. In addition, foreign securities transactions may be subject to
difficulties associated with the settlement of such transactions. Delays in
settlement could result in temporary periods when assets of the Fund are
uninvested and no return is earned thereon. The inability of the Fund to make
intended security purchases due to settlement problems could cause the Fund to
miss attractive opportunities. Inability to dispose of a portfolio security due
to settlement problems either could result in losses to the Fund due to
subsequent declines in value of the portfolio security or, if the Fund has
entered into a contract to sell

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GT GLOBAL DEVELOPING MARKETS FUND
the security, could result in possible liability to the purchaser. The Manager
will consider such difficulties when determining the allocation of the Fund's
assets, although the Manager does not believe that such difficulties will have a
material adverse effect on the Fund's portfolio trading activities.

The Fund may use foreign custodians, which may involve risks in addition to
those related to the use of U.S. custodians. Such risks include uncertainties
relating to (i) determining and monitoring the financial strength, reputation
and standing of the foreign custodian, (ii) maintaining appropriate safeguards
to protect the Fund's investments and (iii) possible difficulties in obtaining
and enforcing judgments against such custodians.

WITHHOLDING TAXES. The Fund's net investment income from securities of
foreign issuers may be subject to withholding taxes by the foreign issuer's
country, thereby reducing that income or delaying the receipt of income where
those taxes may be recaptured. See "Taxes."

CONCENTRATION. To the extent the Fund invests a significant portion of its
assets in securities of issuers located in a particular country or region of the
world, it may be subject to greater risks and may experience greater volatility
than a fund that is more broadly diversified geographically.

SPECIAL CONSIDERATIONS AFFECTING EMERGING MARKETS. Investing in equity
securities of companies in emerging markets may entail greater risks than
investing in equity securities in developed countries. These risks include (i)
less social, political and economic stability; (ii) the small current size of
the markets for such securities and the currently low or nonexistent volume of
trading, which result in a lack of liquidity and in greater price volatility;
(iii) certain national policies which may restrict the Fund's investment
opportunities, including restrictions on investment in issuers or industries
deemed sensitive to national interests; (iv) foreign taxation; and (v) the
absence of developed structures governing private or foreign investment or
allowing for judicial redress for injury to private property.

Investing in the securities of companies in emerging markets may entail special
risks relating to potential political and economic instability and the risks of
expropriation, nationalization, confiscation or the imposition of restrictions
on foreign investment, convertibility into U.S. dollars and on repatriation of
capital invested. In the event of such expropriation, nationalization or other
confiscation by any country, the Fund could lose its entire investment in any
such country.

Emerging securities markets are substantially smaller, less developed, less
liquid and more volatile than the major securities markets. The limited size of
emerging securities markets and limited trading value in issuers compared to the
volume of trading in U.S. securities could cause prices to be erratic for
reasons apart from factors that affect the quality of the securities. For
example, limited market size may cause prices to be unduly influenced by traders
who control large positions. Adverse publicity and investors' perceptions,
whether or not based on fundamental analysis, may decrease the value and
liquidity of portfolio securities, especially in these markets. In addition,
securities traded in certain emerging markets may be subject to risks due to the
inexperience of financial intermediaries, a lack of modern technology, the lack
of a sufficient capital base to expand business operations, and the possibility
of permanent or temporary termination of trading.

Settlement mechanisms in emerging securities markets may be less efficient and
reliable than in more developed markets. In such emerging securities there may
be share registration and delivery delays or failures.

Many emerging market countries have experienced substantial, and in some periods
extremely high, rates of inflation for many years. Inflation and rapid
fluctuations in inflation rates and corresponding currency devaluations have had
and may continue to have negative effects on the economies and securities
markets of certain emerging market countries.

SPECIAL CONSIDERATIONS AFFECTING WESTERN EUROPEAN COUNTRIES. The countries
that are members of the European Economic Community ("Common Market") (Belgium,
Denmark, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands,
Portugal, Spain, and the United Kingdom) eliminated certain import tariffs and
quotas and other trade barriers with respect to one another over the past
several years. The Manager believes that this deregulation should improve the
prospects for economic growth in many Western European countries. Among other
things, the deregulation could enable companies domiciled in one country to
avail themselves of lower labor costs existing in other countries. In addition,
this deregulation could benefit companies domiciled in one country by opening
additional markets for their goods and services in other countries. Since,
however, it is not clear what the exact form or effect of these Common Market
reforms will be on business in Western Europe, it is impossible to predict the
long-term impact of the implementation of these programs on the securities owned
by the Fund.

SPECIAL CONSIDERATIONS AFFECTING RUSSIA AND EASTERN EUROPEAN COUNTRIES.
Investing in Russia and Eastern European countries involves a high degree of
risk and special considerations not typically associated with investing in the
U.S. securities markets and should be considered highly speculative. Such risks
include the following: (1) delays in settling

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GT GLOBAL DEVELOPING MARKETS FUND
portfolio transactions and risk of loss arising out of the system of share
registration and custody; (2) the risk that it may be impossible or more
difficult than in other countries to obtain and/or enforce a judgement; (3)
pervasiveness of corruption and crime in the economic system; (4) currency
exchange rate volatility and the lack of available currency hedging instruments;
(5) higher rates of inflation (including the risk of social unrest associated
with periods of hyper-inflation) and high unemployment; (6) controls on foreign
investment and local practices disfavoring foreign investors and limitations on
repatriation of invested capital, profits and dividends, and on the Fund's
ability to exchange local currencies for U.S. dollars; (7) political instability
and social unrest and violence; (8) the risk that the governments of Russia and
Eastern European countries may decide not to continue to support the economic
reform programs implemented recently and could follow radically different
political and/or economic policies to the detriment of investors, including
non-market-oriented policies such as the support of certain industries at the
expense of other sectors or investors, or a return to the centrally planned
economy that existed when such countries had a communist form of government; (9)
the financial condition of companies in these countries, including large amounts
of inter-company debt which may create a payments crisis on a national scale;
(10) dependency on exports and the corresponding importance of international
trade; (11) the risk that the tax system in these countries will not be reformed
to prevent inconsistent, retroactive and/or exorbitant taxation; and (12) the
underdeveloped nature of the securities markets.

SPECIAL CONSIDERATIONS AFFECTING JAPAN. Japan's economic growth has declined
significantly since 1990. The general government position has deteriorated as a
result of weakening economic growth and stimulative measures taken to support
economic activity and to restore financial stability. Although the decline in
interest rates and fiscal stimulation packages have helped to contain
recessionary forces, uncertainties remain. Japan is also heavily dependent upon
international trade, so its economy is especially sensitive to trade barriers
and disputes. Japan has had difficult relations with its trading partners,
particularly the United States, where the trade imbalance is the greatest. It is
possible that trade sanctions and other protectionist measures could impact
Japan adversely in both the short and the long term.

The common stocks of many Japanese companies trade at high price-earnings
ratios. Differences in accounting methods make it difficult to compare the
earnings of Japanese companies with those of companies in other countries,
especially in the United States. In general, however, reported net income in
Japan is understated relative to U.S. accounting standards and this is one
reason why price-earnings ratios of the stocks of Japanese companies have tended
historically to be higher than those for U.S. stocks. In addition, Japanese
companies have tended to have higher growth rates than U.S. companies and
Japanese interest rates have generally been lower than in the United States,
both of which factors tend to result in lower discount rates and higher
price-earnings ratios in Japan than in the United States.

The Japanese securities markets are less regulated than those in the United
States. Evidence has emerged from time to time of distortion of market prices to
serve political or other purposes. Shareholders' rights are not always equally
enforced. In addition, Japan's banking industry is undergoing problems related
to bad loans and declining values in real estate.

SPECIAL CONSIDERATIONS AFFECTING PACIFIC REGION COUNTRIES. Certain of the
risks associated with international investments are heightened for investments
in Pacific region countries. For example, some of the currencies of Pacific
region countries have experienced steady devaluations relative to the U.S.
dollar, and major adjustments have been made periodically in certain of such
currencies. Certain countries, such as India, face serious exchange constraints.

Many of the Asia Pacific region countries may be subject to a greater degree of
social, political and economic instability than is the case in the United
States. Such instability may result from, among other things, the following: (i)
authoritarian governments or military involvement in political and economic
decision making, and changes in government through extra-constitutional means;
(ii) popular unrest associated with demands for improved political, economic and
social conditions; (iii) internal insurgencies; (iv) hostile relations with
neighboring countries; and (v) ethnic, religious and racial disaffection. Such
social, political and economic instability could significantly disrupt the
principal financial markets in which the Fund invests and adversely affect the
value of the Fund's assets. In addition, asset expropriations or future
confiscatory levels of taxation possibly may affect the Fund.

Several of the Asia Pacific region countries have, or in the past have had,
hostile relationships with neighboring nations or have experienced internal
insurgency. Thailand has experienced border conflicts with Laos and Cambodia,
and India is engaged in border disputes with several of its neighbors, including
China and Pakistan. An uneasy truce exists between North Korea and South Korea,
and the recurrence of hostilities remains possible. Reunification of North Korea
and South Korea could have a detrimental effect on the economy of South Korea.
Also, China continues to claim sovereignty over Taiwan and recently has
conducted military maneuvers near Taiwan.

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GT GLOBAL DEVELOPING MARKETS FUND

The economies of most of the Asia Pacific region countries are heavily dependent
upon international trade and are accordingly affected by protective trade
barriers and the economic conditions of their trading partners, principally the
United States, Japan, China and the European Community. The enactment by the
United States or other principal trading partners of protectionist trade
legislation, reduction of foreign investment in the local economies and general
declines in the international securities markets could have a significant
adverse effect upon the securities markets of the Asia Pacific region countries.
In addition, the economies of some of the Asia Pacific region countries,
Australia and Indonesia, for example, are vulnerable to weakness in world prices
for their commodity exports, including crude oil.

China recently assumed sovereignty over Hong Kong in July 1997. Although China
has committed by treaty to preserve the economic and social freedoms enjoyed in
Hong Kong for fifty years, the continuation of the current form of the economic
system in Hong Kong will depend on the actions of the government of China. In
addition, such assumption of sovereignty has increased sensitivity in Hong Kong
to political developments and statements by public figures in China. Business
confidence in Hong Kong, therefore, can be significantly affected by such
developments and statements, which in turn can affect markets and business
performance.

In addition, the Chinese sovereignty over Hong Kong also presents a risk that
the Hong Kong dollar will be devalued and a risk of possible loss of investor
confidence in the Hong Kong markets and dollar. However, factors exist that are
likely to mitigate this risk. First, China has stated its intention to implement
a "one country, two systems" policy, which would preserve monetary sovereignty
and leave control in the hands of the Hong Kong Monetary Authority ("HKMA").

Second, fixed rate parity with the U.S. dollar is seen as critical to
maintaining investors' confidence in the transition to Chinese rule, and,
therefore, it is anticipated that, if international investors lose confidence in
Hong Kong dollar assets, the HKMA would intervene to support the currency,
though such intervention cannot be assured. Third, Hong Kong's and China's
sizable combined foreign exchange reserve may be used to support the value of
the Hong Kong dollar, provided that China does not appropriate such reserves for
other uses, which is not anticipated but cannot be assured. Finally, China would
be likely to experience significant adverse political and economic consequences
if confidence in the Hong Kong dollar and the territory assets were to be
endangered.

SPECIAL CONSIDERATIONS AFFECTING LATIN AMERICAN COUNTRIES. Most Latin
American countries have experienced substantial, and in some periods extremely
high, rates of inflation for many years. Inflation and rapid fluctuations in
inflation rates have had and may continue to have very negative effects on the
economies and securities markets of certain Latin American countries. Certain
Latin American countries are also among the largest debtors to commercial banks
and foreign governments. At times certain Latin American countries have declared
moratoria on the payment of principal and/or interest on external debt. In
addition, certain Latin American securities markets have experienced high
volatility in recent years.

Latin American countries may also close certain sectors of their economies to
equity investments by foreigners. Further due to the absence of securities
markets and publicly owned corporations and due to restrictions on direct
investment by foreign entities, investments may only be made in certain Latin
American countries solely or primarily through governmentally approved
investment vehicles or companies.

Certain Latin American countries may have managed currencies that are maintained
at artificial levels to the U.S. dollar rather than at levels determined by the
market. This type of system can lead to sudden and large adjustments in the
currency which, in turn, can have a disruptive and negative effect on foreign
investors. For example, in late 1994, the value of the Mexican peso lost more
than one-third of its value relative to the U.S. dollar.

SOVEREIGN DEBT. Sovereign Debt generally offers high yields, reflecting not
only perceived credit risk, but also the need to compete with other local
investments in domestic financial markets. Certain Latin American countries are
among the largest debtors to commercial banks and foreign governments. A
sovereign debtor's willingness or ability to repay principal and interest due in
a timely manner may be affected by, among other factors, its cash flow
situation, the extent of its foreign reserves, the availability of sufficient
foreign exchange on the date a payment is due, the relative size of the debt
service burden to the economy as a whole, the sovereign debtor's policy towards
the International Monetary Fund and the political constraints to which a
sovereign debtor may be subject. Sovereign debtors may default on their
Sovereign Debt. Sovereign debtors may also be dependent on expected
disbursements from foreign governments, multilateral agencies and others abroad
to reduce principal and interest arrearages on their debt. The commitment on the
part of these governments, agencies and others to make such disbursements may be
conditioned on a sovereign debtor's implementation of economic reforms and/or
economic performance and the timely service of such debtor's obligations.
Failure to implement such reforms, achieve such levels of economic performance
or repay principal or interest when due, may result

Statement of Additional Information Page 20
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GT GLOBAL DEVELOPING MARKETS FUND
in the cancellation of such third parties' commitments to lend funds to the
sovereign debtor, which may further impair such debtor's ability or willingness
to timely service its debts.

In recent years, some of the Latin American countries in which the Fund expects
to invest have encountered difficulties in servicing their Sovereign Debt. Some
of these countries have withheld payments of interest and/or principal of
Sovereign Debt. These difficulties have also led to agreements to restructure
external debt obligations -- in particular, commercial bank loans, typically by
rescheduling principal payments, reducing interest rates and extending new
credits to finance interest payments on existing debt. In the future, holders of
Sovereign Debt may be requested to participate in similar reschedulings of such
debt.

The ability of Latin American governments to make timely payments on their
Sovereign Debt is likely to be influenced strongly by a country's balance of
trade and its access to trade and other international credits. A country whose
exports are concentrated in a few commodities could be vulnerable to a decline
in the international prices of one or more of such commodities. Increased
protectionism on the part of a country's trading partners could also adversely
affect its exports.

NON-UNIFORM CORPORATE DISCLOSURE STANDARDS AND GOVERNMENTAL
REGULATION. Foreign companies are subject to accounting, auditing and financial
standards and requirements that differ, in some cases significantly, from those
applicable to U.S. companies. In particular, the assets, liabilities and profits
appearing on the financial statements of such a company may not reflect its
financial position or results of operations in the way they would be reflected
had such financial statements been prepared in accordance with U.S. generally
accepted accounting principles. Most of the securities held by the Fund will not
be registered with the SEC or regulators of any foreign country, nor will the
issuers thereof be subject to the SEC's reporting requirements. Thus, there will
be less available information concerning most foreign issuers of securities held
by the Fund than is available concerning U.S. issuers. In instances where the
financial statements of an issuer are not deemed to reflect accurately the
financial situation of the issuer, the Manager will take appropriate steps to
evaluate the proposed investment, which may include on-site inspection of the
issuer, interviews with its management and consultations with accountants,
bankers and other specialists. There is substantially less publicly available
information about foreign companies than there are reports and ratings published
about U.S. companies and the U.S. government. In addition, where public
information is available, it may be less reliable than such information
regarding U.S. issuers. In addition, for companies that keep accounting records
in local currency, inflation accounting rules in some Latin American countries
require, for both tax and accounting purposes, that certain assets and
liabilities be restated on the company's balance sheet in order to express items
in terms of currency of constant purchasing power. Inflation accounting may
indirectly generate losses or profits. There is substantially less publicly
available information about foreign companies, including Latin American
companies, and the governments of Latin American countries than there are
reports and ratings published about U.S. companies and the U.S. government.
Issuers of securities in foreign jurisdictions are generally not subject to the
same degree of regulation as are U.S. issuers with respect to such matters as
restrictions on market manipulation, insider trading rules, shareholder proxy
requirements and timely disclosure of information.

- --------------------------------------------------------------------------------

INVESTMENT LIMITATIONS

- --------------------------------------------------------------------------------

The Fund's investment objectives may not be changed without the approval of a
majority of its outstanding voting securities. As defined in the 1940 Act and as
used in this Statement of Additional Information a "majority of the Fund's
outstanding voting securities" means the lesser of (i) 67% of the shares
represented at a meeting at which more than 50% of the outstanding shares are
represented and (ii) more than 50% of the outstanding shares. In addition, the
Fund has adopted the following fundamental investment limitations that may not
be changed without approval of a majority of its outstanding voting securities.

The Fund may not:

(1) issue senior securities or borrow money in amounts in excess of
those permitted under the 1940 Act;

(2) make an investment in any one industry if the investment would cause
the aggregate value of all investments in such industry to equal 25% or more
of the Fund's total assets; provided that this limitation does not apply to
investments in securities issued or guaranteed by the U.S. government, its
agencies or instrumentalities;

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GT GLOBAL DEVELOPING MARKETS FUND

(3) purchase securities on margin, except for short-term credits
necessary for clearance of portfolio transactions and except that the Fund
may make margin deposits in connection with its use of options, futures
contracts, options on futures contracts, forward currency contracts and
other financial instruments;

(4) engage in the business of underwriting securities of other issuers,
except to the extent that, in connection with the disposition of portfolio
securities, the Fund may be deemed an underwriter under federal securities
laws and except that the Fund may write options;

(5) make short sales of securities or maintain a short position, except
that the Fund may maintain short positions in connection with its use of
options, futures contracts, options on futures contracts and forward
currency contracts and may sell short "against the box;"

(6) purchase or sell real estate (including real estate limited
partnership interest), provided that the Fund may invest in securities
secured by, or issued by companies that invest in real estate or interests
therein;

(7) purchase or sell commodities or commodity contracts, except that the
Fund may sell commodities received upon the exercise of warrants, may
purchase or sell financial and currency futures contracts and options
thereon, may purchase and sell forward contracts, may engage in transactions
in foreign currencies and may purchase or sell options on foreign
currencies; or

(8) make loans, except through loans or portfolio instruments and
repurchase agreements, provided that for purposes of this restriction the
acquisition of bonds, debentures or other debt instruments or interests
therein and investment in government obligations, short-term commercial
paper, certificates of deposit and bankers' acceptances shall not be deemed
to be the making of a loan.

For purposes of the concentration policy of the Fund contained in limitation (2)
above, the Fund intends to comply with the SEC staff position that securities
issued or guaranteed as to principal and interest by any one single foreign
government, or by all supranational organizations in the aggregate, are
considered to be securities of issuers in the same industry.

In addition, to comply with federal tax requirements for qualification as a
"regulated investment company" ("RIC"), the Fund's investments will be limited
so that, at the close of each quarter of its taxable year, (a) not more than 25%
of the value of its total assets is invested in the securities (other than U.S
government securities or the securities of other RICs) of any one issuer and (b)
at least 50% of the value of its total assets is represented by cash and cash
items, U.S. government securities, securities of other RICs and other
securities, with these other securities limited, in respect of any one issuer,
to an amount that does not exceed 5% of the value of its total assets and that
does not represent more than 10% of the issuer's outstanding voting securities
("Diversification Requirements"). These tax-related limitations may be changed
by the Company's Board of Directors to the extent necessary to comply with
changes to applicable tax requirements.

The Fund's other investment policies and limitations described herein may be
changed by the Company's Board of Directors without shareholder approval,
provided that any such policies and limitations as so amended do not conflict
with the Fund's fundamental investment limitations.

- --------------------------------------------------------------------------------

EXECUTION OF PORTFOLIO
TRANSACTIONS

- --------------------------------------------------------------------------------

Subject to policies established by the Company's Board of Directors, the Manager
is responsible for the execution of the Fund's portfolio transactions and the
selection of broker/dealers who execute such transactions on behalf of the Fund.
In executing portfolio transactions, the Manager seeks the best net results for
the Fund, taking into account such factors as the price (including the
applicable brokerage commission or dealer spread), size of the order, difficulty
of execution and operational facilities of the firm involved. Although the
Manager generally seeks reasonably competitive commission rates and spreads,
payment of the lowest commission or spread is not necessarily consistent with
the best net results. While the Fund may engage in soft dollar arrangements for
research services, as described below, the Fund has no obligation to deal with
any broker/dealer or group of broker/dealers in the execution of portfolio
transactions.

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Debt securities generally are traded on a "net" basis with a dealer acting as
principal for its own account without a stated commission, although the price of
the security usually includes a profit to the dealer. U.S. and foreign
government securities and money market instruments generally are traded in the
OTC markets. In underwritten offerings, securities usually are purchased at a
fixed price which includes an amount of compensation to the underwriter. On
occasion, securities may be purchased directly from an issuer, in which case no
commissions or discounts are paid. Broker/dealers may receive commissions on
futures, currency and options transactions.

Consistent with the interests of the Fund, the Manager may select brokers to
execute the Fund's portfolio transactions, on the basis of the research and
brokerage services they provide to the Manager for its use in managing the Fund
and its other advisory accounts. Such services may include furnishing analyses,
reports and information concerning issuers, industries, securities, geographic
regions, economic factors and trends, portfolio strategy, and performance of
accounts; and effecting securities transactions and performing functions
incidental thereto (such as clearance and settlement). Research and brokerage
services received from such brokers are in addition to, and not in lieu of, the
services required to be performed by the Manager under the Management Contract
(defined below). A commission paid to such brokers may be higher than that which
another qualified broker would have charged for effecting the same transaction,
provided that the Manager determines in good faith that such commission is
reasonable in terms either of that particular transaction or the overall
responsibility of the Manager to the Fund and its other clients and that the
total commissions paid by the Fund will be reasonable in relation to the
benefits received by the Fund over the long term. Research services may also be
received from dealers who execute Fund transactions in OTC markets.

The Manager may allocate brokerage transactions to broker/dealers who have
entered into arrangements under which the broker/dealer allocates a portion of
the commissions paid by the Fund toward payment of the Fund's expenses, such as
transfer agent and custodian fees.

Investment decisions for the Fund and for other investment accounts managed by
the Manager are made independently of each other in light of differing
conditions. However, the same investment decision occasionally may be made for
two or more of such accounts including the Fund. In such cases, simultaneous
transactions may occur. Purchases or sales are then allocated as to price or
amount in a manner deemed fair and equitable to all accounts involved. While in
some cases this practice could have a detrimental effect upon the price or value
of the security as far as the Fund is concerned, in other cases, the Manager
believes that coordination and the ability to participate in volume transactions
will be beneficial to the Fund.

Under a policy adopted by the Company's Board of Directors, and subject to the
policy of obtaining the best net results, the Manager may consider a
broker/dealer's sale of the shares of the Fund and the other funds for which the
Manager serves as investment manager in selecting brokers and dealers for the
execution of portfolio transactions. This policy does not imply a commitment to
execute portfolio transactions through all broker/dealers that sell shares of
the Fund and such other funds.

The Fund contemplates purchasing most foreign equity securities in
over-the-counter markets or stock exchanges located in the countries in which
the respective principal offices of the issuers of the various securities are
located, if that is the best available market. The fixed commissions paid in
connection with most such foreign stock transactions generally are higher than
negotiated commissions on U.S. transactions. There generally is less government
supervision and regulation of foreign stock exchanges and brokers than in the
United States. Foreign security settlements may in some instances be subject to
delays and related administrative uncertainties.

Foreign equity securities may be held by the Fund in the form of ADRs, ADSs,
EDRs, CDRs or securities convertible into foreign equity securities. ADRs, ADSs,
EDRs and CDRs may be listed on stock exchanges, or traded in the OTC markets in
the United States or Europe, as the case may be. ADRs, like other securities
traded in the United States, will be subject to negotiated commission rates. The
foreign and domestic debt securities and money market instruments in which the
Fund may invest generally are traded in the OTC markets.

The Fund contemplates that, consistent with the policy of obtaining the best net
results, brokerage transactions may be conducted through certain companies that
are members of the Liechtenstein Global Trust. The Company's Board of Directors
has adopted procedures in conformity with Rule 17e-1 under the 1940 Act to
ensure that all brokerage commissions paid to such affiliates are reasonable and
fair in the context of the market in which they are operating. Any such
transactions will be effected and related compensation paid only in accordance
with applicable SEC regulations.

For the fiscal years ended December 31, 1996, 1995 and 1994, the Predecessor
Fund paid aggregate brokerage commissions of $1,580,879, $1,311,090, and
$2,832,000, respectively.

Statement of Additional Information Page 23
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND

PORTFOLIO TRADING AND TURNOVER

The Fund engages in portfolio trading when the Manager has concluded that the
sale of a security owned by the Fund and/ or the purchase of another security of
better value can enhance principal and/or increase income. A security may be
sold to avoid any prospective decline in market value, or a security may be
purchased in anticipation of a market rise. Consistent with the Fund's
investment objective, a security also may be sold and a comparable security
purchased coincidentally in order to take advantage of what is believed to be a
disparity in the normal yield and price relationship between the two securities.
Although the Fund does not intend generally to trade for short-term profits, the
securities in the Fund's portfolio will be sold whenever management believes it
is appropriate to do so, without regard to the length of time a particular
security may have been held. Portfolio turnover rate is calculated by dividing
the lesser of sales or purchases of portfolio securities by the Fund's average
month-end portfolio values, excluding short-term investments. The portfolio
turnover rate will not be a limiting factor when the Manager deems portfolio
changes appropriate. Higher portfolio turnover involves correspondingly greater
brokerage commissions and other transaction costs that the Fund will bear
directly and may result in the realization of net capital gains that are taxable
when distributed to the Fund's shareholders. For the fiscal years ended December
31, 1996 and 1995, the Predecessor Fund's portfolio turnover rates were 138% and
75%, respectively.

Statement of Additional Information Page 24
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND

DIRECTORS AND EXECUTIVE
OFFICERS

- --------------------------------------------------------------------------------

The Company's Directors and Executive Officers are listed below.

<TABLE>
<CAPTION>
NAME, POSITION(S) WITH THE PRINCIPAL OCCUPATIONS AND BUSINESS
COMPANY AND ADDRESS EXPERIENCE FOR PAST 5 YEARS
- --------------------------------------- ------------------------------------------------------------------------------------------
<S> <C>
William J. Guilfoyle*, 39 President, GT Global since 1995; Director, GT Global since 1991; Senior Vice President and
Trustee, Chairman of the Board and Director of Sales and Marketing, GT Global from May 1992 to April 1995; Vice President and
President Director of Marketing, GT Global from 1987 to 1992; Director, Liechtenstein Global Trust
50 California Street AG (holding company of the various international LGT companies) Advisory Board since
San Francisco, CA 94111 January 1996; Director, G.T. Global Insurance Agency ("G.T. Insurance") since 1996;
President and Chief Executive Officer, G.T. Insurance since 1995; Senior Vice President
and Director, Sales and Marketing, G.T. Insurance from April 1995 to November 1995; Senior
Vice President, Retail Marketing, G.T. Insurance from 1992 to 1993. Mr. Guilfoyle is also
a director or trustee of each of the other investment companies registered under the 1940
Act that is managed or administered by the Manager.

C. Derek Anderson, 56 President, Plantagenet Capital Management, LLC (an investment partnership); Chief
Trustee Executive Officer, Plantagenet Holdings, Ltd. (an investment banking firm); Director,
220 Sansome Street Anderson Capital Management, Inc., since 1988; Chief Executive Officer, Anderson Capital
Suite 400 Management, Inc., from 1991 to July 1997; Director, PremiumWear, Inc. (formerly
San Francisco, CA 94104 Munsingwear, Inc.) (a casual apparel company), and Director, "R" Homes, Inc. and various
other companies. Mr. Anderson is also a director or trustee of each of the other
investment companies registered under the 1940 Act that is managed or administered by the
Manager.

Frank S. Bayley, 58 Partner with Baker & McKenzie (a law firm); Director and Chairman, C.D. Stimson Company (a
Trustee private investment company). Mr. Bayley also is a director or trustee of each of the other
Two Embarcadero Center investment companies registered under the 1940 Act that is managed or administered by the
Suite 2400 Manager.
San Francisco, CA 94111

Arthur C. Patterson, 54 Managing Partner, Accel Partners (a venture capital firm). He also serves as a director of
Trustee various computing and software companies. Mr. Patterson also is a director or trustee of
One Embarcadero Center each of the other investment companies registered under the 1940 Act that is managed or
Suite 3820 administered by the Manager.
San Francisco, CA 94111

Ruth H. Quigley, 62 Private investor, and President, Quigley Friedlander & Co., Inc. (a financial advisory
Trustee services firm) from 1984 to 1986. Miss Quigley also is a director or trustee of each of
1055 California Street the other investment companies registered under the 1940 Act that is managed or
San Francisco, CA 94108 administered by the Manager.

Robert G. Wade, Jr.,* 70 Consultant to the Manager; Chairman of the Board of Chancellor Capital Management, Inc.
Trustee from January 1995 to October 1996; President, Chief Executive Officer and Chairman of the
1166 Avenue of the Americas Board of Chancellor Capital Management, Inc. from 1988 to January 1995. Mr. Wade also is a
New York, NY 10036 director or trustee of each of the other investment companies registered under the 1940
Act that is managed or administered by the Manager.
</TABLE>

- --------------

* Mr. Guilfoyle and Mr. Wade are "interested persons" of the Trust as defined
by the 1940 Act due to their affiliation with the LGT companies.

Statement of Additional Information Page 25
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND

<TABLE>
<S> <C>
Helge K. Lee, 51 Executive Vice President, Asset Management Division, Liechtenstein
Vice President and Secretary Global Trust since October 1996; Senior Vice President, General Counsel
1166 Avenue of the Americas and Secretary, LGT Asset Management, the Manager, GT Global, GT Services
New York, NY 10036 and G.T. Insurance from February 1996 to October 1996; Vice President,
General Counsel and Secretary, LGT Asset Management, Inc., Chancellor
LGT Asset Management, Inc., GT Global, GT Services and G.T. Insurance
from May 1994 to February 1996; Senior Vice President, General Counsel
and Secretary, Strong/Corneliuson Management, Inc.; and Secretary, each
of the Strong Funds from October 1991 to May 1994.

Kenneth W. Chancey, 52 Vice President -- Mutual Fund Accounting, the Manager since 1992; and
Vice President and Vice President, Putnam Fiduciary Trust Company from 1989 to 1992.
Principal Accounting Officer
50 California Street
San Francisco, CA 94111
</TABLE>

------------------------------

The Board of Directors has a Nominating and Audit Committee, comprised of Miss
Quigley and Messrs. Anderson, Bayley and Patterson, which is responsible for
nominating persons to serve as Directors, reviewing audits of the Company and
its funds and recommending firms to serve as independent auditors for the
Company. Each of the Directors and officers of the Company is also a Director
and officer of G.T. Investment Portfolios, Inc. and GT Global Floating Rate
Fund, Inc., a Trustee and officer of G.T. Global Growth Series and a Trustee of
G.T. Global Eastern Europe Fund, G.T. Global Variable Investment Trust, G.T.
Global Variable Investment Series, Global High Income Portfolio and Global
Investment Portfolio, which are also registered investment companies managed by
the Manager. Each Director and officer serves in total as a Director or Trustee
and Officer, respectively, of 11 registered investment companies with 41 series
managed or administered by the Manager. The Company pays each Director, who is
not a director, officer or employee of the Manager or any affiliated company,
$5,000 per annum, plus $300 per Fund for each meeting of the Board attended, and
reimburses travel and other expenses incurred in connection with attendance at
such meetings. Other Directors and Officers receive no compensation or expense
reimbursement from the Company. For the fiscal year ended October 31, 1996, Mr.
Anderson, Mr. Bayley, Mr. Patterson and Miss Quigley, who are not directors,
officers or employees of the Manager or any affiliated company, received total
compensation of $30,200, $30,200, $26,600 and $30,200, respectively, from the
Company for which he or she serves as a Director. For the fiscal year ended
October 31, 1996, Mr. Anderson, Mr. Bayley, Mr. Patterson and Miss Quigley
received total compensation of $80,100, $80,100, $72,600 and $80,100,
respectively, from the investment companies managed or administered by the
Manager for which he or she serves as a Director or Trustee. Fees and expenses
disbursed to the Directors contained no accrued or payable pension or retirement
benefits. As of October 1, 1997, the Officers and Directors and their families
as a group owned in the aggregate beneficially or of record less than 1% of the
outstanding shares of the Fund or of all the Company's funds in the aggregate.

Statement of Additional Information Page 26
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND

MANAGEMENT

- --------------------------------------------------------------------------------

INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES
The Manager serves as the Fund's investment manager and administrator under an
Investment Management and Administration Contract ("Management Contract")
between the Company and the Manager. As investment manager and administrator,
the Manager makes all investment decisions for the Fund and administers the
Fund's affairs. Among other things, the Manager furnishes the services and pays
the compensation and travel expenses of persons who perform the executive,
administrative, clerical and bookkeeping functions of the Company and the Fund,
and provides suitable office space, necessary small office equipment and
utilities. For these services, the Fund pays the Manager investment management
and administration fees, based on the Fund's average daily net assets, computed
daily and paid monthly, at the annualized rate of .975% on the first $500
million, .95% on the next $500 million, .925% on the next $500 million, and .90%
on amounts thereafter.

The Management Contract may be renewed for one-year terms, provided that any
such renewal has been specifically approved at least annually by (i) the
Company's Board of Directors, or by the vote of a majority of the Fund's
outstanding voting securities (as defined in the 1940 Act) and (ii) a majority
of Directors who are not parties to the Management Contract or "interested
persons" of any such party (as defined in the 1940 Act), cast in person at a
meeting called for the specific purpose of voting on such approval. The
Management Contract provides that with respect to the Fund, the Company or the
Manager may terminate the Contract without penalty upon sixty days' written
notice. The Management Contract terminates automatically in the event of its
assignment (as defined in the 1940 Act).

The following table discloses the amount of investment management and
administration fees paid by the Predecessor Fund to the Manager during the
Predecessor Fund's last three fiscal years:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, AMOUNT PAID
- ----------------------------------------------------------------------------------------------------------- -------------
<S> <C>
1996....................................................................................................... $ 7,864,840
1995....................................................................................................... $ 6,878,640
1994....................................................................................................... $ 7,377,360
</TABLE>

DISTRIBUTION SERVICES

The Fund's Class A and Class B shares are offered continuously through the
Fund's principal underwriter and distributor, GT Global, on a "best efforts"
basis pursuant to a Distribution Contract between the Company and GT Global.

As described in the Prospectus, the Company has adopted a separate Distribution
Plan with respect to each class of the Fund in accordance with Rule 12b-1 under
the 1940 Act (the "Class A Plan" and "Class B Plan," respectively, and
collectively, "Plans"). The rate of payments by the Fund under the Plans, as
described in the Prospectus, may not be increased without the approval of the
majority of the outstanding voting securities of the Fund. All expenses for
which GT Global is reimbursed under the Class A Plan will have been incurred
within one year of such reimbursement. The Fund makes no payments to any party
other than GT Global, which is the distributor (principal underwriter) of the
Fund's shares.

In approving the Plans, the Directors determined that the adoption of each Plan
was in the best interests of the shareholders of the Fund. Agreements related to
the Plans must also be approved by such vote of the Directors, including a
majority of Directors who are not "interested persons" of the Company (as
defined in the 1940 Act) and who have no direct or indirect financial interests
in the operation of the Plans, or in any agreement related thereto.

Each Plan requires that, at least quarterly, the Directors review the amounts
expended thereunder and the purposes for which such expenditures were made. Each
Plan requires that so long as it is in effect the selection and nomination of
Directors who are not "interested persons" of the Company will be committed to
the discretion of the Directors who are not "interested persons" of the Company,
as defined in the 1940 Act.

As discussed in the Prospectus, GT Global collects sales charges on sales of
Class A shares of the Fund, retains certain amounts of such charges and reallows
other amounts of such charges to broker/dealers who sell shares.

Statement of Additional Information Page 27
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND

GT Global receives any contingent deferred sales charges payable with respect to
redemptions of Class B shares and certain Class A shares.

TRANSFER AGENCY AND ACCOUNTING AGENCY SERVICES
The Transfer Agent has been retained by the Fund to perform shareholder
servicing, reporting and general transfer agent functions for the Fund. For
these services, the Transfer Agent 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.
The Transfer Agent 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 serves as the Fund's pricing and accounting agent.

EXPENSES OF THE FUND
The Fund pays all expenses not assumed by the Manager, GT Global and other
agents. These expenses include, in addition to the advisory, distribution,
transfer agency, pricing and accounting agency and brokerage fees discussed
above, legal and audit expenses, custodian fees, directors' fees, organizational
fees, fidelity bond and other insurance premiums, taxes, extraordinary expenses
and the expenses of reports and prospectuses sent to existing investors. The
allocation of general Company expenses and expenses shared among the Fund and
other funds organized as series of the Company are allocated on a basis deemed
fair and equitable, which may be based on the relative net assets of the Fund or
the nature of the services performed and relative applicability to the Fund.
Expenditures, including costs incurred in connection with the purchase or sale
of portfolio securities, which are capitalized in accordance with generally
accepted accounting principles applicable to investment companies, are accounted
for as capital items and not as expenses. The ratio of the Fund's expenses to
its relative net assets can be expected to be higher than the expense ratios of
funds investing solely in domestic securities, since the cost of maintaining the
custody of foreign securities and the rate of investment management fees paid by
the Fund generally are higher than the comparable expenses of such other funds.

- --------------------------------------------------------------------------------

VALUATION OF FUND SHARES

- --------------------------------------------------------------------------------

As described in the Prospectus, the Fund's net asset value per share for each
class of shares is determined at the close of regular trading on the New York
Stock Exchange ("NYSE") (currently 4:00 p.m. Eastern time, unless weather,
equipment failure or other factors contribute to an earlier closing time) on
each business day the NYSE is open for business. Currently, the NYSE is closed
on weekends and on certain days relating to the following holidays: New Year's
Day, Presidents' Day, Good Friday, Memorial Day, July 4th, Labor Day,
Thanksgiving Day and Christmas Day.

The Fund's portfolio securities and other assets are valued as follows:

Equity securities that are traded on stock exchanges, are valued at the last
sale price on the exchange 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 the Manager to be the
primary market.

Long-term debt obligations are valued at the mean of representative quoted bid
and asked prices for such securities or, if such prices are not available, at
prices for securities of comparable maturity, quality and type; however, when
the Manager deems it appropriate, prices obtained for the day of valuation from
a bond pricing service will be used. Short-term investments are amortized to
maturity based on their cost, adjusted for foreign exchange translation,
provided such valuations represent fair value.

Options on indices, securities and currencies purchased by the Fund are valued
at their last bid price in the case of listed options or, in the case of OTC
options, at the average of the last bid prices obtained from dealers unless a
quotation from only one dealer is available, in which case only that dealer's
price will be used. The value of each security denominated in a currency other
than U.S. dollars will be translated into U.S. dollars at the prevailing market
rate as determined by the Manager on that day. When market quotations for
futures and options on futures held by the Fund are readily available, those
positions will be valued based upon such quotations.

Statement of Additional Information Page 28
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND

Securities and other assets for which market quotations are not readily
available (including restricted securities which are subject to limitations as
to their sale) are valued at fair value as determined in good faith by or under
the direction of the Company's Board of Directors. The valuation procedures
applied in any specific instance are likely to vary from case to case. However,
consideration generally is given to the financial position of the issuer and
other fundamental analytical data relating to the investment and to the nature
of the restrictions on disposition of the securities (including any registration
expenses that might be borne by the Fund in connection with such disposition).
In addition, specific factors also generally are considered, such as the cost of
the investment, the market value of any unrestricted securities of the same
class (both at the time of purchase and at the time of valuation), the size of
the holding, the prices of any recent transactions or offers with respect to
such securities and any available analysts' reports regarding the issuer.

The fair value of any other assets is added to the value of all securities
positions to arrive at the value of the Fund's total assets. The Fund's
liabilities, including accruals for expenses, are deducted from its total
assets. Once the total value of the Fund's net assets is so determined, that
value is then divided by the total number of shares outstanding (excluding
treasury shares), and the result, rounded to the nearer cent, is the net asset
value per share.

Any assets or liabilities initially expressed in terms of foreign currencies are
translated into U.S. dollars at the official exchange rate or at the mean of the
current bid and asked prices of such currencies against the U.S. dollar last
quoted by a major bank that is a regular participant in the foreign exchange
market or on the basis of a pricing service that takes into account the quotes
provided by a number of such major banks. If none of these alternatives are
available, or none are deemed to provide a suitable methodology for converting a
foreign currency into U.S. dollars, the Board of Directors, in good faith, will
establish a conversion rate for such currency.

European, Far Eastern, or Latin American securities trading may not take place
on all days on which the NYSE is open. Further, trading takes place in Japanese
markets on certain Saturdays and in various foreign markets on days on which the
NYSE is not open. In addition, trading in securities on European and Far Eastern
securities exchanges and OTC markets generally is completed well before the
close of the business day in New York. Consequently, the calculation of the
Fund's net asset value may not take place contemporaneously with the
determination of the prices of securities held by the Fund. Events affecting the
values of portfolio securities that occur between the time their prices are
determined and the close of regular trading on the NYSE will not be reflected in
the Fund's net asset value unless the Manager, under the supervision of the
Company's Board of Directors, determines that the particular event would
materially affect net asset value. As a result, the Fund's net asset value may
be significantly affected by such trading on days when a shareholder cannot
purchase or redeem shares of the Fund.

- --------------------------------------------------------------------------------

INFORMATION RELATING TO SALES
AND REDEMPTIONS

- --------------------------------------------------------------------------------

PAYMENT AND TERMS OF OFFERING
Payment for Class A or Class B shares purchased should accompany the purchase
order, or funds should be wired to the Transfer Agent as described in the
Prospectus. Payment for Fund shares, other than by wire transfer, must be made
by check or money order drawn on a U.S. bank. Checks or money orders must be
payable in U.S. dollars.

As a condition of this offering, if an order to purchase either class of shares
is cancelled due to nonpayment (for example, on account of a check returned for
"not sufficient funds"), the person who made the order will be responsible for
any loss incurred by the Fund by reason of such cancellation, and if such
purchaser is a shareholder, the Fund shall have the authority as agent of the
shareholder to redeem shares in his or her account at their then-current net
asset value per share to reimburse the Fund for the loss incurred. Investors
whose purchase orders have been cancelled due to nonpayment may be prohibited
from placing future orders.

The Fund reserves the right at any time to waive or increase the minimum
requirements applicable to initial or subsequent investments with respect to any
person or class of persons. An order to purchase shares is not binding on the
Fund until it has been confirmed in writing by the Transfer Agent (or other
arrangements made with the Fund, in the case of orders utilizing wire transfer
of funds, as described above) and payment has been received. To protect existing
shareholders, the Fund reserves the right to reject any offer for a purchase of
shares by any individual.

Statement of Additional Information Page 29
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND

SALES OUTSIDE THE UNITED STATES
Sales of Fund shares made through brokers outside the United States will be at
net asset value plus a sales commission, if any, established by that broker or
by local law. Such a commission, if any, may be more or less than the sales
charges listed in the sales charge table included in the Prospectus.

LETTER OF INTENT -- CLASS A SHARES
A Letter of Intent ("LOI") is not a binding obligation to purchase the indicated
amount. During such time as Class A shares are held in escrow under an LOI to
assure payment of applicable sales charges if the indicated amount is not met,
all dividends and capital gain distributions on escrowed shares will be
reinvested in additional Class A shares or paid in cash, as specified by the
shareholder. If the intended investment is not completed within the specified
13-month period, the purchaser must remit to GT Global the difference between
the sales charge actually paid and the sales charge which would have been
applicable if the total Class A purchases had been made at a single time. If
this amount is not paid to GT Global within 20 business days after written
request, the appropriate number of escrowed shares will be redeemed and the
proceeds paid to GT Global.

A registered investment adviser, trust company or trust department seeking to
execute an LOI as a single purchaser with respect to accounts over which it
exercises investment discretion is required to provide the Transfer Agent with
information establishing that it has discretionary authority with respect to the
money invested (e.g., by providing a copy of the pertinent investment advisory
agreement). Class A shares purchased in this manner must be restrictively
registered with the Transfer Agent so that only the investment adviser, trust
company or trust department, and not the beneficial owner, will be able to place
purchase, redemption and exchange orders.

AUTOMATIC INVESTMENT PLAN -- CLASS A SHARES AND CLASS B SHARES
To establish participation in the GT Global Automatic Investment Plan ("AIP"),
investors or their brokers should specify whether investment will be in Class A
shares or Class B shares and send the following documents to the Transfer Agent:
(1) an AIP Application; (2) a Bank Authorization Form; and (3) a voided personal
check from the pertinent bank account. The necessary forms are included at the
back of the Fund's prospectus. Providing that an investor's bank accepts the
Bank Authorization Form, investment amounts will be drawn on the designated
dates (monthly on the 25th day or beginning quarterly on the 25th day of the
month the investor first selects) in order to purchase full and fractional
shares of the Fund at the public offering price determined on that day. In the
event that the 25th day falls on a Saturday, Sunday or holiday, shares will be
purchased on the next business day. If an investor's check is returned because
of insufficient funds, a stop payment order or the account is closed, the AIP
may be discontinued, and any share purchase made upon deposit of such check may
be cancelled. Furthermore, the shareholder will be liable for any loss incurred
by the Fund by reason of such cancellation. Investors should allow one month for
the establishment of an AIP. An AIP may be terminated by the Transfer Agent or
the Fund upon 30 days' written notice or by the participant, at any time,
without penalty, upon written notice to the Fund or the Transfer Agent.

INDIVIDUAL RETIREMENT ACCOUNTS ("IRAs") AND OTHER TAX-DEFERRED PLANS

Class A or Class B shares may be purchased as the underlying investment for an
IRA meeting the requirements of sections 408(a), 408A or 530 of the Internal
Revenue Code of 1986, as amended ("Code"), as well as for qualified retirement
plans described in Code Section 401 and custodial accounts complying with Code
Section 403(b)(7).

IRAs: If you have earned income from employment (including self-employment), you
can contribute each year to an IRA up to the lesser of (1) $2,000 for yourself
or $4,000 for you and your spouse, regardless of whether your spouse is
employed, or (2) 100% of compensation. Some individuals may be able to take an
income tax deduction for the contribution. Regular contributions may not be made
for the year you become 70 1/2 or thereafter. Effective for taxable years
beginning after 1997, unless you and your spouse's earnings exceed a certain
level, you may also establish an "education IRA" and/or a "Roth IRA." Although
contributions to these new types of IRAs are nondeductible, withdrawals from
them will be tax-free under certain circumstances. Please consult your tax
advisor for more information. IRA applications are available from brokers or GT
Global.

ROLLOVER IRAs: Individuals who receive distributions from qualified retirement
plans (other than required distributions) and who wish to keep their savings
growing tax-deferred can roll over (or make a direct transfer of) their
distribution to a Rollover IRA. These accounts can also receive rollovers or
transfers from an existing IRA. If an "eligible rollover distribution" from a
qualified employer-sponsored retirement plan is not directly rolled over to an
IRA (or certain qualified plans), withholding at the rate of 20% will be
required for federal income tax purposes. A distribution from a qualified plan
that is not an "eligible rollover distribution," including a distribution that
is one of a series of substantially equal periodic payments, generally is
subject to regular wage withholding or withholding at the rate of 10% (depending

Statement of Additional Information Page 30
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND

on the type and amount of the distribution), unless you elect to to have any
withholding apply. Please consult your tax advisor for more information.

SEP-IRAs: Simplified employee pension plans ("SEPs" or "SEP-IRAs") provide
self-employed individuals (and any eligible employees) with benefits similar to
Keogh plans (i.e., self-employed individual retirement plans) or Code Section
401(k) plans but with fewer administrative requirements and therefore potential
lower annual administration expenses.

CODE SECTION 403(b)(7) CUSTODIAL ACCOUNTS: Employees of public schools and most
other tax-exempt organizations can make pre-tax salary reduction contributions
to these accounts.

PROFIT-SHARING (INCLUDING SECTION 401(k)) AND MONEY PURCHASE PENSION
PLANS: Corporations and other employers can sponsor these qualified defined
contribution plans for their employees. A section 401(k) plan, a type of
profit-sharing plan, additionally permits the eligible, participating employees
to make pre-tax salary reduction contributions to the plan (up to certain
limits).

SIMPLE RETIREMENT PLANS: Employers with no more than 100 employees that do not
maintain another retirement plan may establish a Savings Incentive Match Plan
for Employees ("SIMPLE") either as separate IRAs or as part of a Code Section
401(k) plan. SIMPLEs are not subject to the complicated nondiscrimination rules
that generally apply to qualified retirement plans.

EXCHANGES

Shares of the Fund may be exchanged for shares of other GT Global Mutual Funds,
based on their respective net asset values without imposition of any sales
charges provided that the registration remains identical. Class A shares may be
exchanged only for Class A shares of other GT Global Mutual Funds. Class B
shares may be exchanged only for Class B shares of other GT Global Mutual Funds.
The exchange privilege is not an option or right to purchase shares but is
permitted under the current policies of the respective GT Global Mutual Funds.
The privilege may be discontinued or changed at any time by any of the funds
upon 60 days prior notice to the shareholders of such fund and is available only
in states where the exchange may be legally made. Before purchasing shares
through the exercise of the exchange privilege, a shareholder should obtain and
read a copy of the prospectus of the fund to be purchased and should consider
the investment objective(s) of the fund.

TELEPHONE REDEMPTIONS
A corporation or partnership wishing to utilize telephone redemption services
must submit a "Corporate Resolution" or "Certificate of Partnership" indicating
the names, titles and the required number of signatures of persons authorized to
act on its behalf. The certificate must be signed by a duly authorized
officer(s) and, in the case of a corporation, the corporate seal must be
affixed. All shareholders may request that redemption proceeds be transmitted by
bank wire upon request directly to the shareholder's predesignated account at a
domestic bank or savings institution, if the proceeds are at least $1,000. Costs
in connection with the administration of this service, including wire charges,
currently are borne by the Fund. Proceeds of less than $1,000 will be mailed to
the shareholder's registered address of record. The Fund and the Transfer Agent
reserve the right to refuse any telephone instructions and may discontinue the
aforementioned redemption options upon 30 days' written notice.

SYSTEMATIC WITHDRAWAL PLAN
Shareholders owning Class A or Class B shares of the Fund with a value of
$10,000 or more may establish a Systematic Withdrawal Plan ("SWP"). Under a SWP,
a shareholder will receive monthly or quarterly payments, in amounts of not less
than $100 per payment, through the automatic redemption of the necessary number
of shares on the designated dates (monthly on the 25th day or beginning
quarterly on the 25th day of the month the investor first selects). In the event
that the 25th day falls on a Saturday, Sunday or holiday, the redemption will
take place on the prior business day. Certificates, if any, for the shares being
redeemed must be held by the Transfer Agent. Checks will be made payable to the
designated recipient and mailed within seven days. If the recipient is other
than the registered shareholder, the signature of each shareholder must be
guaranteed on the SWP application (see "How to Redeem Shares" in the
Prospectus). A corporation (or partnership) also must submit a "Corporation
Resolution" or "Certification of Partnership" indicating the names, titles, and
signatures of the individuals authorized to act on its behalf, and the SWP
application must be signed by a duly authorized officer(s) and the corporate
seal affixed.

With respect to a SWP, the maximum annual SWP withdrawal is 12% of the initial
account value. Withdrawals in excess of 12% of the initial account value
annually may result in assessment of a contingent deferred sales charge. See
"How to Invest" in the Prospectus.

Statement of Additional Information Page 31
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND

Shareholders should be aware that such systematic withdrawals may deplete or use
up entirely the initial investment and result in realized long-term or
short-term capital gains or losses. The SWP may be terminated at any time by the
Transfer Agent or the Fund upon 30 days' written notice or by a shareholder upon
written notice to the Fund or its Transfer Agent. Applications and further
details regarding establishment of a SWP are provided at the back of the Fund's
Prospectus.

SUSPENSION OF REDEMPTION PRIVILEGES
The Fund may suspend redemption privileges or postpone the date of payment for
more than seven days after a redemption order is received during any period (1)
when the NYSE is closed other than customary weekend and holiday closings, or
trading on the NYSE is restricted as determined by the SEC, (2) when an
emergency exists, as defined by the SEC, which would prohibit the Fund from
disposing of its portfolio securities or in fairly determining the value of its
assets, or (3) as the SEC may otherwise permit.

REDEMPTIONS IN KIND

It is possible that conditions may arise in the future which would, in the
opinion of the Company's Board of Directors, make it undesirable for the Fund to
pay for all redemptions in cash. In such cases, the Board may authorize payment
to be made in portfolio securities or other property of the Fund, so called
"redemptions in kind." Payment of redemptions in kind will be made in readily
marketable securities. Such securities would be valued at the same value
assigned to them in computing the net asset value per share. Shareholders
receiving such securities would incur brokerage costs in selling any such
securities so received. However, despite the foregoing, the Company has filed
with the SEC an election pursuant to Rule 18f-1 under the 1940 Act. This means
that the Fund will pay in cash all requests for redemption made by any
shareholder of record, limited in amount with respect to each shareholder during
any ninety-day period to the lesser of $250,000 or 1% of the value of the net
assets of the Fund at the beginning of such period. This election is irrevocable
so long as Rule 18f-1 remains in effect, unless the SEC by order upon
application permits the withdrawal of such election.

Statement of Additional Information Page 32
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND

TAXES

- --------------------------------------------------------------------------------

GENERAL

To continue to qualify for treatment as a RIC under the Code, the Fund must
distribute to its shareholders for each taxable year at least 90% of its
investment company taxable income (consisting generally of net investment
income, net short-term capital gain and net gains from certain foreign currency
transactions) ("Distribution Requirement") and must meet several additional
requirements. These requirements include the Diversification Requirements
described under "Investment Limitations" and the requirement that the Fund
derive at least 90% of its gross income each taxable year from dividends,
interest, payments with respect to securities loans and gains from the sale or
other disposition of securities or foreign currencies, or other income
(including gains from options, Futures or Forward Contracts) derived with
respect to its business of investing in securities or those currencies ("Income
Requirement").

Dividends and other distributions declared by the Fund in, and payable to
shareholders of record as of a date in, October, November or December of any
year will be deemed to have been paid by the Fund and received by the
shareholders on December 31 of that year if the distributions are paid by the
Fund during the following January. Accordingly, those distributions will be
taxed to shareholders for the year in which that December 31 falls.

A portion of the dividends from the Fund's investment company taxable income
(whether paid in cash or reinvested in additional shares) may be eligible for
the dividends-received deduction allowed to corporations. The eligible portion
may not exceed the aggregate dividends received by the Fund from U.S.
corporations. However, dividends received by a corporate shareholder and
deducted by it pursuant to the dividends-received deduction are subject
indirectly to the alternative minimum tax.

If Fund shares are sold at a loss after being held for six months or less, the
loss will be treated as long-term, instead of short-term, capital loss to the
extent of any capital gain distributions received on those shares. Investors
also should be aware that if shares are purchased shortly before the record date
for any dividend or other distribution, the shareholder will pay full price for
the shares and receive some portion of the price back as a taxable distribution.

The Fund will be subject to a nondeductible 4% excise tax ("Excise Tax") to the
extent it fails to distribute by the end of any calendar year substantially all
of its ordinary income for that year and capital gain net income for the
one-year period ending on October 31 of that year, plus certain other amounts.

FOREIGN TAXES

Dividends and interest received by the Fund, and gains realized thereby, may be
subject to income, withholding or other taxes imposed by foreign countries and
U.S. possessions ("foreign taxes") that would reduce the yield and/or total
return on its securities. Tax conventions between certain countries and the
United States may reduce or eliminate foreign taxes, however, and many foreign
countries do not impose taxes on capital gains in respect of investments by
foreign investors. If more than 50% of the value of the Fund's total assets at
the close of its taxable year consists of securities of foreign corporations,
the Fund will be eligible to, and may, file an election with the Internal
Revenue Service that will enable its shareholders, in effect, to receive the
benefit of the foreign tax credit with respect to any foreign taxes paid by it.
Pursuant to the election, the Fund would treat those taxes as dividends paid to
its shareholders and each shareholder would be required to (1) include in gross
income, and treat as paid by him, his share of those taxes, (2) treat his share
of those taxes and of any dividend paid by the Fund that represents income from
foreign and U.S. possessions sources as his own income from those sources and
(3) either deduct the taxes deemed paid by him in computing his taxable income
or, alternatively, use the foregoing information in calculating the foreign tax
credit against his federal income tax. The Fund will report to its shareholders
shortly after each taxable year their respective shares of the Fund's income
from sources within, and taxes paid to, foreign countries and U.S. possessions
if it makes this election. Pursuant to the Taxpayer Relief Act of 1997 ("Tax
Act"), after 1997 individuals who have no more than $300 ($600 for married
persons filing jointly) of creditable foreign taxes included on Forms 1099 and
have no foreign source non-passive income will be able to claim a foreign tax
credit without having to file the detailed Form 1116.

Statement of Additional Information Page 33
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND

PASSIVE FOREIGN INVESTMENT COMPANIES

The Fund may invest in the stock of "passive foreign investment companies"
("PFICs"). A PFIC is a foreign corporation -- other than a "controlled foreign
corporation" (I.E., a foreign corporation in which, on any day during its
taxable year, more than 50% of the total voting power of all voting stock
therein or the total value of all stock therein is owned, directly, indirectly
or constructively, by "U.S. shareholders," defined in the singular as a U.S.
person that owns, directly, indirectly or constructively, at least 10% of that
voting power) as to which the Fund is a U.S. shareholder (effective after
October 31, 1998) -- that, in general, meets either of the following tests: (1)
at least 75% of its gross income is passive or (2) an average of at least 50% of
its assets produce, or are held for the production of, passive income. Under
certain circumstances, the Fund will be subject to federal income tax on a
portion of any "excess distribution" received on, or of any gain from the
disposition of, stock of a PFIC (collectively "PFIC income"), plus interest
thereon, even if the Fund distributes the PFIC income as a taxable dividend to
its shareholders. The balance of the PFIC income will be included in the Fund's
investment company taxable income and, accordingly, will not be taxable to it to
the extent that income is distributed to its shareholders.

If the Fund invests in a PFIC and elects to treat the PFIC as a "qualified
electing fund" ("QEF"), then in lieu of the foregoing tax and interest
obligation, the Fund would be required to include in income each taxable year
its pro rata share of the QEF's ordinary earnings and net capital gain (the
excess of net long-term capital gain over net short-term capital loss) -- which
most likely would have to be distributed by the Fund to satisfy the Distribution
Requirement and avoid imposition of the Excise Tax -- even if those earnings and
gain were not received by the Fund from the QEF. In most instances it will be
very difficult, if not impossible, to make this election because of certain
requirements thereof.

Effective for its taxable year beginning November 1, 1998, the Fund may elect to
"mark to market" its stock in any PFIC. "Marking-to-market," in this context,
means including in ordinary income each taxable year the excess, if any, of the
fair market value of the PFIC's stock over the Fund's adjusted basis therein as
of the end of that year. Pursuant to the election, the Fund also would be
allowed to deduct (as an ordinary, not capital, loss) the excess, if any, of its
adjusted basis in PFIC stock over the fair market value thereof as of the
taxable year-end, but only to the extent of any net mark-to-market gains with
respect to that stock included by the Fund for prior taxable years. The Fund's
adjusted basis in each PFIC's stock with respect to which it makes this election
will be adjusted to reflect the amounts of income included and deductions taken
under the election. Regulations proposed in 1992 would provide a similar
election with respect to the stock of certain PFICs.

NON-U.S. SHAREHOLDERS

Dividends paid by the Fund to a shareholder who, as to the United States, is a
nonresident alien individual, nonresident alien fiduciary of a trust or estate,
foreign corporation or foreign partnership ("foreign shareholder") generally
will be subject to U.S. withholding tax (at a rate of 30% or lower treaty rate).
Withholding will not apply if a dividend paid by the Fund to a foreign
shareholder is "effectively connected with the conduct of a U.S. trade or
business," in which case the reporting and withholding requirements applicable
to domestic shareholders will apply. A distribution of net capital gain by the
Fund to a foreign shareholder generally will be subject to U.S. federal income
tax (at the rates applicable to domestic persons) only if the distribution is
"effectively connected" or the foreign shareholder is treated as a nonresident
alien individual for federal income tax purposes.

OPTIONS, FUTURES AND FOREIGN CURRENCY TRANSACTIONS

The use of hedging transactions, such as selling (writing) and purchasing
options and Futures Contracts and entering into Forward Contracts, involves
complex rules that will determine, for federal income tax purposes, the amount,
character and timing of recognition of the gains and losses the Fund realizes in
connection therewith. Gains from the disposition of foreign currencies (except
certain gains that may be excluded by future regulations), and gains from
options, Futures and Forward Contracts derived by the Fund with respect to its
business of investing in securities or foreign currencies, will qualify as
permissible income under the Income Requirement.

Futures and Forward Contracts that are subject to section 1256 of the Code
(other than those that are part of a "mixed straddle") ("Section 1256
Contracts") and that are held by the Fund at the end of its taxable year
generally will be deemed to have been sold at market value for federal income
tax purposes. Sixty percent of any net gain or loss recognized on these deemed
sales, and 60% of any net gain or loss realized from any actual sales of Section
1256 Contracts, will be treated as long-term capital gain or loss, and the
balance will be treated as short-term capital gain or loss. It is not entirely
clear, as of the date of this Statement of Additional Information, whether the
60% portion of that capital gain that is treated as long-term capital gain will
qualify for the reduced maximum tax rates on net capital gain enacted by the Tax
Act -- 20% (10% for taxpayers in the 15% marginal tax bracket) on capital assets
held for more than 18 months -- instead of the maximum rate in effect before
that legislation, 28%, which now applies to gain on capital assets held for more
than one year but not more than 18 months. Section 1256 contracts also may be
marked-to-market for purposes of the Excise Tax.

Statement of Additional Information Page 34
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND

Section 988 of the Code also may apply to gains and losses from transactions in
foreign currencies, foreign-currency-denominated debt securities and options,
Futures and Forward Contracts on foreign currencies ("Section 988" gains and
losses). Each Section 988 gain or loss generally is computed separately and
treated as ordinary income or loss. In the case of overlap between sections 1256
and 988, special provisions determine the character and timing of any income,
gain or loss. The Fund attempts to monitor section 988 transactions to minimize
any adverse tax impact.

If the Fund has an "appreciated financial position" -- generally, an interest
(including an interest through an option, Futures or Forward Contract or short
sale) with respect to any stock, debt instrument (other than "straight debt") or
partnership interest the fair market value of which exceeds its adjusted basis
- -- and enters into a "constructive sale" of the same or substantially similar
property, the Fund will be treated as having made an actual sale thereof, with
the result that gain will be recognized at that time. A constructive sale
generally consists of a short sale, an offsetting notional principal contract or
Futures or Forward Contract entered into by the Fund or a related person with
respect to the same or substantially similar property. In addition, if the
appreciated financial position is itself a short sale or such a contract,
acquisition of the underlying property or substantially similar property will be
deemed a constructive sale.

The foregoing is a general and abbreviated summary of certain federal tax
considerations affecting the Fund and its shareholders. Investors are urged to
consult their own tax advisers for more detailed information and for information
regarding any foreign, state and local taxes applicable to distributions
received from the Fund.

- --------------------------------------------------------------------------------

ADDITIONAL INFORMATION

- --------------------------------------------------------------------------------

LIECHTENSTEIN GLOBAL TRUST

Liechtenstein Global Trust, AG, is composed of the Manager and its worldwide
affiliates. Other worldwide affiliates of Liechtenstein Global Trust include LGT
Bank in Liechtenstein, an international financial services institution founded
in 1920. LGT Bank in Liechtenstein has principal offices in Vaduz,
Liechtenstein. Its subsidiaries currently include LGT Bank in Liechtenstein
(Deutschland) GmbH, and LGT Asset Management AG, in Zurich, Switzerland.

Worldwide asset management affiliates also currently include LGT Asset
Management PLC, in London, England; LGT Asset Management Ltd., in Hong Kong; LGT
Asset Management Ltd., in Tokyo; LGT Asset Management Pte. Ltd., in Singapore;
LGT Asset Management Ltd., in Sydney; and LGT Asset Management GmbH, in
Frankfurt, Germany.

CUSTODIAN
State Street Bank and Trust Company ("State Street"), 225 Franklin Street,
Boston, Massachusetts 02110, acts as custodian of the Fund's assets. State
Street is authorized to establish and has established separate accounts in
foreign currencies and to cause securities of the Fund to be held in separate
accounts outside the United States in the custody of non-U.S. banks.

INDEPENDENT ACCOUNTANTS
The Fund's independent accountants are Coopers & Lybrand L.L.P., One Post Office
Square, Boston, Massachusetts 02109. Coopers & Lybrand L.L.P. conducts an annual
audit of the Fund, assists in the preparation of the Fund's federal and state
income tax returns and consults with the Company and the Fund as to matters of
accounting, regulatory filings, and federal and state income taxation.

The audited financial statements of the Company included in this Statement of
Additional Information have been examined by Coopers & Lybrand L.L.P., as stated
in their opinion appearing herein and are included in reliance upon such opinion
given upon the authority of that firm as experts in accounting and auditing.

USE OF NAME
The Manager has granted the Company the right to use the "GT" and "GT Global"
names and has reserved the right to withdraw its consent to the use of such
names by the Company and/or the Fund at any time, or to grant the use of such
names to any other company.

Statement of Additional Information Page 35
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND

INVESTMENT RESULTS

- --------------------------------------------------------------------------------

STANDARDIZED RETURNS
The Fund's "Standardized Returns," as referred to in the Prospectus (see "Other
Information -- Performance Information" in the Prospectus), are calculated
separately for Class A, and Class B shares of the Fund, as follows: Standardized
Return (average annual total return ("T")) is computed by using the ending
redeeming value ("ERV") of a hypothetical initial investment of $1,000 ("P")
over a period of years ("n") according to the following formula as required by
the SEC: P(1+T) to the (n)th power = ERV. The following assumptions will be
reflected in computations made in accordance with this formula: (1) for Class A
shares, deduction of the maximum sales charge of 4.75% from the $1,000 initial
investment; (2) for Class B shares, deduction of the applicable contingent
deferred sales charge imposed on a redemption of Class B shares held for the
period; (3) reinvestment of dividends and other distributions at net asset value
on the reinvestment date determined by the Company's Board of Directors; and (4)
a complete redemption at the end of any period illustrated.

The Standardized Returns of the Predecessor Fund (recomputed for Class A and
Class B shares to reflect the deduction of the maximum sales charge of 4.75% for
Class A shares and the deduction of the applicable contingent deferred sales
charge for Class B shares), stated as average annualized total returns for the
periods shown, were:

<TABLE>
<CAPTION>
DEVELOPING
MARKETS FUND
PERIOD (CLASS A)
- ----------------------------------------------------------------------------------------------------- ---------------
<S> <C>
Fiscal period ended June 30, 1997.................................................................... 14.78%
January 11, 1994 (commencement of operations) through June 30, 1997.................................. 3.17%

<CAPTION>
DEVELOPING

MARKETS FUND

PERIOD (CLASS B)

- ----------------------------------------------------------------------------------------------------- ---------------

<S> <C>
Fiscal period ended June 30, 1997.................................................................... 15.50%

January 11, 1994 (commencement of operations) through June 30, 1997.................................. 3.85%

</TABLE>

NON-STANDARDIZED RETURNS
In addition to Standardized Returns, the Fund may also include in
advertisements, sales literature and shareholder reports other total return
performance data ("Non-Standardized Return"). Non-Standardized Return is
calculated separately for Class A and Class B shares of the Fund and may be
calculated according to several different formulas. Non-Standardized Returns may
be quoted for the same or different time periods for which Standardized Returns
are quoted. Non-Standardized Returns may or may not take sales charges into
account; performance data calculated without taking the effect of sales charges
into account will be higher than data including the effect of such charges.

Average annual Non-Standardized Return ("T") is computed by using the ending
redeeming value ("ERV") of a hypothetical initial investment of $1,000 ("P")
over a period of years ("n") according to the following formula as required by
the SEC: P(1+T) to the (n)th power = ERV. The following assumptions will be
reflected in computations made in accordance with this formula: (1) no deduction
of sales charges; (2) reinvestment of dividends and other distributions at net
asset value on the reinvestment date determined by the Board; and (3) a complete
redemption at the end of any period illustrated.

The average annual Non-Standardized Returns of the Predecessor Fund, stated as
average annualized total returns for the periods shown, were:

<TABLE>
<CAPTION>
PERIOD
- ---------------------------------------------------------------------------------------------------------------------
<S> <C>
Fiscal period ended June 30, 1997....................................................................................
January 11, 1994 (commencement of operations) through June 30, 1997..................................................

<CAPTION>
PERIOD
- ---------------------------------------------------------------------------------------------------------------------
<S> <C>

Fiscal period ended June 30, 1997.................................................................................... 20.50%

January 11, 1994 (commencement of operations) through June 30, 1997.................................................. 4.63%

</TABLE>

Aggregate Non-Standardized Return ("T") is computed by using the ending value of
the account ("VOA") of a hypothetical initial investment of $1,000 ("P")
according to the following formula: T = (VOA/P)-1. Aggregate Non-Standardized
Return assumes reinvestment of dividends and other distributions and, as set
forth below, may or may not take sales charge into account.

The aggregate Non-Standardized Return of the Predecessor Fund (not recomputed to
take sales charges into account) for the period January 11, 1994 (commencement
of operations) through June 30, 1997 was 16.98%.

Statement of Additional Information Page 36
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND

The aggregate Non-Standardized Returns of the Predecessor Fund (recomputed to
take sales charges into account) stated as aggregate total returns for the
periods shown, were:

<TABLE>
<CAPTION>
DEVELOPING
MARKETS FUND
PERIOD (CLASS A)
- ----------------------------------------------------------------------------------------------------- ---------------
<S> <C>
January 11, 1994 (commencement of operations) through June 30, 1997.................................. 11.42%

<CAPTION>
DEVELOPING

MARKETS FUND

PERIOD (CLASS B)

- ----------------------------------------------------------------------------------------------------- ---------------

<S> <C>
January 11, 1994 (commencement of operations) through June 30, 1997.................................. 13.98%

</TABLE>

OTHER INFORMATION REGARDING STANDARDIZED AND NON-STANDARDIZED RETURNS

The Standardized and Non-Standardized Return Data are based on the performance
of the Predecessor Fund as a closed-end investment company. The Standardized
Return Data, however, have been recomputed to reflect the deduction of the
current maximum sales charge of 4.75% for Class A shares and the deduction of
the applicable deferred sales charge of 5.00% for Class B shares, both of which
went into effect on November 1, 1997. Future performance of the Fund will be
effected by expenses that it will incur as a series of an open-end investment
company. An investor's actual return may also be affected by the Fund's 2%
redemption fee, which will be imposed on certain redemptions and exchanges until
May 1, 1998.

IMPORTANT POINTS TO NOTE ABOUT DATA RELATING TO WORLD EQUITY AND BOND MARKETS

Information relating to foreign market performance, capitalization and
diversification is based on sources believed to be reliable, but which may be
subject to revision and which has not been independently verified by the Company
or GT Global. The authors and publishers of such material are not to be
considered as "experts" under the Securities Act of 1933, on account of the
inclusion of such information herein. Stocks chosen by Morgan Stanley Capital
International or the IFC for inclusion in its various international market
indices may not necessarily constitute a representative cross-section of the
particular markets.

GT Global believes that this information may be useful to investors considering
whether and to what extent to diversify their investments through the purchase
of mutual funds investing in securities on a global basis. However, this data is
not a representation of the past performance of the Fund, nor is it a prediction
of such performance. The performance of the Fund will differ from the historical
performance of relevant indices. The performance of indices does not take
expenses into account, while the Fund incurs expenses in its operations, which
will reduce performance. The Fund is actively managed, I.E., the Manager, as the
Fund's investment manager, actively purchases and sells securities in seeking
the Fund's investment objective. Moreover, the Fund may invest a portion of its
assets in corporate bonds, while certain indices relate only to government
bonds. Each of these factors will cause the performance of the Fund to differ
from relevant indices.

In addition, GT Global may in its radio, television and other advertising,
employ the use of sound effects such as, for example, sounds of electronic data
being communicated.

The Fund and GT Global may from time to time compare the Fund with, among
others, the following:

(1) Various Salomon Brothers World Bond Indices, which measure the total
return performance of high quality non-U.S. dollar denominated securities in
major sectors of the worldwide bond markets.

(2) The Lehman Brothers Government/Corporate Bond Index, which is a
comprehensive measure of all public obligations of the U.S. Treasury
(excluding flower bonds and foreign targeted issues), all publicly issued
debt of agencies of the U.S. government (excluding mortgage-backed
securities), and all public, fixed rate, non-convertible investment grade
domestic corporate debt rated at least Baa by Moody's or BBB by S&P, or, in
the case of nonrated bonds, BBB by Fitch Investors Service, Inc. ("Fitch")
(excluding Collateralized Mortgage Obligations).

(3) Average of Savings Accounts, which is a measure of all kinds of
savings deposits, including longer-term certificates. Savings accounts offer
a guaranteed rate of return on principal, but no opportunity for capital
growth. During a portion of the period, the maximum rates paid on some
savings deposits were fixed by law.

(4) The Consumer Price Index, which is a measure of the average change
in prices over time in a fixed market basket of goods and services (e.g.,
food, clothing, shelter, fuels, transportation fares, charges for doctors'
and dentists' services, prescription medicines, and other goods and services
that people buy for day-to-day living).

Statement of Additional Information Page 37
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND
performance. Morningstar ratings are calculated from a fund's three, five
and ten year average annual returns with appropriate fee adjustments and a
risk factor that reflects fund performance relative to the three-month U.S.
Treasury bill monthly returns. Ten percent of the funds in an investment
category receive five stars and 22.5% receive four stars. The ratings are
subject to change each month.

(6) Bear Stearns Foreign Bond Index, which provides simple average
returns for individual countries and gross national product ("GNP") weighted
index, beginning in 1975. The returns are broken down by local market and
currency.

(7) Ibbotson Associates International Bond Index, which provides a
detailed breakdown of local market and currency returns since 1960.

(8) Standard & Poor's 500 Composite Stock Price Index, which is a widely
recognized index composed of the capitalization-weighted average of the
price of 500 of the largest publicly traded stocks in the United States.

(9) Salomon Brothers Broad Investment Grade Index, which is a widely
used index composed of U.S. domestic government, corporate and
mortgage-backed fixed income securities.

(10) Dow Jones Industrial Average.

(11) CNBC/Financial News Composite Index.

(12) Morgan Stanley Capital International World Indices, including, among
others, the Morgan Stanley Capital International Europe, Australia, Far East
Index ("EAFE Index"). The EAFE index is an unmanaged index of more than
1,000 companies in Europe, Australia and the Far East.

(13) Salomon Brothers World Government Bond Index and Salomon Brothers
World Government Bond Index-Non-U.S., each of which is a widely used index
composed of world government bonds.

(14) The World Bank Publication of Trends in Developing Countries (TIDE),
which provides brief reports on most of the World Bank's borrowing members.
The World Development Report is published annually and looks at global and
regional economic trends and their implications for the developing
economies.

(15) Salomon Brothers Global Telecommunications Index, which is composed
of telecommunications companies in the developing and emerging countries.

(16) Datastream and Worldscope, each of which is an on-line database
retrieval service for information including international financial and
economic data.

(17) International Financial Statistics, which is produced by the
International Monetary Fund.

(18) Various publications and reports produced by the World Bank and its
affiliates.

(19) Various publications from the International Bank for Reconstruction
and Development/The World Bank.

(20) Various publications of ratings agencies such as Moody's, S&P and
Fitch.

(21) Wilshire Associates, which is an on-line database for international
financial and economic data including performance measure for a wide range
of securities.

(22) Bank Rate National Monitor Index, which is an average of the quoted
rates for 100 leading banks and thrifts in ten U.S. cities.

(23) International Finance Corporation ("IFC") Emerging Markets Data
Base, which provides detailed statistics on stock and bond markets in
developing countries.

(24) Various publications from the Organization for Economic Cooperation
and Development (OECD).

(25) Micropal Inc.

Statement of Additional Information Page 38
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND

Mutual Fund Magazine, Smart Money, Global Finance, EuroMoney, Financial World,
Forbes, Fortune, Business Week, Latin Finance, the Wall Street Journal, Emerging
Markets Weekly, Kiplinger's Guide To Personal Finance, Barron's, The Financial
Times, USA Today, The New York Times, Far Eastern Economic Review, The Economist
and Investors Business Digest. The Fund may compare its performance to that of
other compilations or indices of comparable quality to those listed above and
other indices that may be developed and made available in the future.

From time to time, the Fund and GT Global may refer to the number of
shareholders in the Fund or the aggregate number of shareholders in all GT
Global Mutual Funds or the dollar amount of Fund assets under management or
rankings by DALBAR Surveys, Inc. in advertising materials.

GT Global believes the Fund is an appropriate investment for long-term
investment goals including funding retirement, paying for education or
purchasing a house. The Fund does not represent a complete investment program,
and investors should consider the Fund as appropriate for a portion of their
overall investment portfolio with regard to their long-term investment goals.

GT Global believes that a growing number of consumer products, including home
appliances, automobiles and clothing, purchased by Americans are manufactured
abroad. GT Global believes that investing globally in the companies that produce
products for U.S. consumers can help U.S. investors seek protection of the value
of their assets against the potentially increasing costs of foreign manufactured
goods. Of course, there can be no assurance that there will be any correlation
between global investing and the costs of such foreign goods unless there is a
corresponding change in value of the U.S. dollar to foreign currencies. From
time to time, GT Global may refer to or advertise the names of such companies
although there can be no assurance that any GT Global Mutual Fund may own the
securities of these companies.

The Fund may be compared in advertising to certificates of deposit (CDs), the
Bank Rate Monitor National Index (an average of the quoted rates for 100 leading
banks and thrifts in ten U.S. cities chosen to represent the ten largest
Consumer Metropolitan statistical areas) or other investments issued by banks.
The Fund differs from bank investments in several respects. The Fund may offer
greater liquidity or higher potential returns than CDs; but unlike CDs, the Fund
will have a fluctuating share price and return and is not FDIC insured.

The Fund's performance may be compared to the performance of other mutual funds
in general or to the performance of particular types of mutual funds. These
comparisons may be expressed as mutual fund rankings prepared by Lipper, an
independent service that monitors the performance of mutual funds. Lipper
generally ranks funds on the basis of total return, assuming reinvestment of
distributions, but does not take sales charges or redemption fees into
consideration, and its rankings are prepared without regard to tax consequences.
In addition to the mutual fund rankings, the Fund's performance may be compared
to mutual fund performance indices prepared by Lipper.

GT Global may provide information designed to help individuals understand their
investment goals and explore various financial strategies. For example, GT
Global may describe general principles of investing, such as asset allocation,
diversification and risk tolerance.

Ibbotson Associates of Chicago, Illinois (Ibbotson) provides historical returns
of the capital markets in the United States, including common stocks, small
capitalization stocks, long-term corporate bonds, intermediate-term government
bonds, long-term government bonds, Treasury bills, the U.S. rate of inflation
(based on the CPI), and combinations of various capital markets. The performance
of these capital markets is based on the returns of different indices.

GT Global Mutual Funds may use the performance of these capital markets in order
to demonstrate general risk-versus-reward investment scenarios. Performance
comparisons may also include the value of a hypothetical investment in any of
these capital markets. The risks associated with the security types in any
capital market may or may not correspond directly to those of the Fund. Ibbotson
calculates total returns in the same method as the Fund.

In advertising materials, GT Global may reference or discuss its products and
services, which may include retirement investing, the effects of dollar-cost
averaging and saving for college or a home. In addition, GT Global may quote
financial or business publications and periodicals, including model portfolios
or allocations, as they relate to fund management, investment philosophy and
investment techniques.

The Fund may discuss its Quotron number, CUSIP number, and its current portfolio
management team.

Statement of Additional Information Page 39
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND

investment philosophy and investment techniques. Rankings that compare the
performance of GT Global Mutual Funds to one another in appropriate categories
over specific periods of time may also be quoted in advertising.

The Fund may quote various measures of volatility and benchmark correlation such
as beta, standard deviation and R(2) in advertising. In addition, the Fund may
compare these measures to those of other funds. Measures of volatility seek to
compare the Fund's historical share price fluctuations or total returns compared
to those of a benchmark. All measures of volatility and correlation are
calculated using averages of historical data.

The Fund may advertise examples of the effects of periodic investment plans,
including the principle of dollar cost averaging. In such a program, an investor
invests a fixed dollar amount in the Fund at periodic intervals, thereby
purchasing fewer shares when prices are high and more shares when prices are
low. While such a strategy does not assure a profit or guard against loss in a
declining market, the investor's average cost per share can be lower than if
fixed numbers of shares are purchased at the same intervals. In evaluating such
a plan, investors should consider their ability to continue purchasing shares
through periods of low price levels.

The Fund may describe in its sales material and advertisements how an investor
may invest in the GT Global Mutual Funds through various retirement plans or
other programs that offer deferral of income taxes on investment earnings and to
which an investor may make deductible contributions. Because of their
advantages, these retirement plans and programs may produce returns superior to
comparable non-retirement investments. For example, a $10,000 investment earning
a taxable return of 10% annually would have an after-tax value of $17,976 after
ten years, assuming tax was deducted from the return each year at a 39.6% rate.
An equivalent tax-deferred investment would have an after-tax value of $19,626
after ten years, assuming tax was deducted at a 39.6% rate from the deferred
earnings at the end of the ten-year period. In sales material and
advertisements, the Fund may also discuss these plans and programs. See
"Information Relating to Sales and Redemptions -- Individual Retirement Accounts
("IRAs") and Other Tax-Deferred Plans."

GT Global may from time to time in its sales methods and advertising discuss the
risks inherent in investing. The major types of investment risk are market risk,
industry risk, credit risk, interest rate risk and inflation risk. Risk
represents the possibility that you may lose some or all of your investment over
a period of time. A basic tenet of investing is the greater the potential
reward, the greater the risk.

From time to time, the Fund and GT Global will quote data regarding individual
countries, regions, world stock exchanges and economic and demographic
statistics from sources GT Global deems reliable, including the economic and
financial data of financial organizations such as:

1) Stock market capitalization: Morgan Stanley Capital International World
Indices, IFC and Datastream.

2) Stock market trading volume: Morgan Stanley Capital International Industry
Indices and IFC.

3) The number of listed companies: IFC, G.T. Guide to World Equity Markets,
Salomon Brothers, Inc., and S.G. Warburg.

4) Wage rates: U.S. Department of Labor Statistics and Morgan Stanley Capital
International World Indices.

5) International industry performance: Morgan Stanley Capital International
World Indices, Wilshire Associates and Salomon Brothers, Inc.

6) Stock market performance: Morgan Stanley Capital International World
Indices, IFC and Datastream.

7) The Consumer Price Index and inflation rate: The World Bank, Datastream and
IFC.

8) Gross Domestic Product (GDP): Datastream and The World Bank.

9) GDP growth rate: IFC, The World Bank and Datastream.

10) Population: The World Bank, Datastream and United Nations.

11) Average annual growth rate (%) of population: The World Bank, Datastream and
United Nations.

12) Age distribution within populations: Organization for Economic Cooperation
and Development and United Nations.

13) Total exports and imports by year: IFC, The World Bank and Datastream.

14) Top three companies by country, industry or market: IFC, G.T. Guide to World
Equity Markets, Salomon Brothers, Inc., and S.G. Warburg.

Statement of Additional Information Page 40
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND

15) Foreign direct investments to developing countries: The World Bank and
Datastream.

16) Standard deviation and performance returns for U.S. and non-U.S. equity and
bond markets: Morgan Stanley Capital International.

17) Countries restructuring their debt, including those under the Brady Plan:
the Manager.

18) Political and economic structure of countries: Economist Intelligence Unit.

19) Government and corporate bonds -- credit ratings, yield to maturity and
performance returns: Salomon Brothers, Inc.

20) Dividend yields for U.S. and non-U.S. companies: Bloomberg.

21) Supply, consumption, demand and growth in demand of certain products,
services and industries, including, but not limited to, electricity, water,
transportation, construction materials, natural resources, technology, other
basic infrastructure, financial services, health care services and supplies,
consumer products and services and telecommunications equipment and services
(sources of such information may include, but would not be limited to, The
World Bank, OECD, IMF, Bloomberg and Datastream).

In advertising and sales materials, GT Global may make reference to or discuss
its products, services and accomplishments. Among these accomplishments are that
in 1983 the Manager provided assistance to the government of Hong Kong in
linking its currency to the U.S. dollar, and that in 1987 Japan's Ministry of
Finance licensed LGT Asset Management Ltd. as one of the first foreign
discretionary investment managers for Japanese investors. Such accomplishments,
however, should not be viewed as an endorsement of the Manager by the government
of Hong Kong, Japan's Ministry of Finance or any other government or government
agency. Nor do any such accomplishments of the Manager provide any assurance
that the GT Global Mutual Funds' investment objectives will be achieved.

GT GLOBAL ADVANTAGE
As part of Liechtenstein Global Trust, GT Global continues a 75-year tradition
of service to individuals and institutions. Today we bring investors a
combination of experience, worldwide resources, a global perspective, investment
talent and a time tested investment discipline. With investment professionals in
nine offices worldwide, we witness world events and economic developments
firsthand.

The key to achieving consistent results is following a disciplined investment
process. Our approach to asset allocation takes advantage of GT Global's
worldwide presence and global perspective. Our "macroeconomic" worldview
determines our overall strategy of regional, country and sector allocations. Our
bottom up process of security selection combines fundamental research with
quantitative analysis through our proprietary models.

Built-in checks and balances strengthen the process, enhancing professional
experience and judgment with an objective assessment of risk. Ultimately, each
security we select has passed a ranking system that helps our portfolio teams
determine when to buy and when to sell. With respect to stocks, a global stock
research (GSR) database developed by GT Global is utilized in the selection
process. All stocks within the GSR database are systematically ranked by our
analysts on a 1-5 basis with 1 representing the most favored. The rankings along
with our quantitative, fundamental research, determine which stocks are bought
and sold.

Statement of Additional Information Page 41
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND

DESCRIPTION OF DEBT RATINGS

- --------------------------------------------------------------------------------

DESCRIPTION OF BOND RATINGS
Moody's rates the debt securities issued by various entities from "Aaa" to "C".
Investment grade ratings are the first four categories:

Aaa -- Best quality. These securities carry the smallest degree of
investment risk and are generally referred to as "gilt edge." Interest
payments are protected by a large or exceptionally stable margin, and
principal is secure. While the various protective elements are likely to
change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.

Aa -- High quality by all standards. They are rated lower than the best
bond because margins of protection may not be as large as in Aaa securities,
fluctuation of protective elements may be of greater amplitude or there may
be other elements present which make the long-term risk appear somewhat
greater.

A -- Upper medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.

Baa -- Medium grade obligations. Interest payments and principal
security appear adequate for the present but certain protective elements may
be lacking or may be characteristically unreliable over any great length of
time. Such bonds lack outstanding investment characteristics and in fact
have speculative characteristics as well.

Ba -- Have speculative elements and their future cannot be considered to
be well assured. Often the protection of interest and principal payments may
be very moderate, and thereby not well safeguarded during other good and bad
times over the future. Uncertainty of position characterizes bonds in this
class.

B -- Generally lack characteristics of the desirable investment.
Assurance of interest and principal payments or of maintenance of other
terms of the contract over any long period of time may be small.

Caa -- Poor standing. Such issues may be in default or there may be
present elements of danger with respect to principal or interest.

Ca -- Speculative in a high degree. Such issues are often in default or
have other marked shortcomings.

C -- Lowest rated class of bonds. Issues so rated can be regarded as
having extremely poor prospects of ever attaining any real investment
standing.

ABSENCE OF RATING: Where no rating has been assigned or where a rating has been
suspended or withdrawn, it may be for reasons unrelated to the quality of the
issue.

Should no rating be assigned, the reason may be one of the following:

1. An application for rating was not received or accepted.

2. The issue or issuer belongs to a group of securities or companies that
are not rated as a matter of policy.

3. There is a lack of essential data pertaining to the issue or issuer.

4. The issue was privately placed, in which case the rating is not published
in Moody's publications.

Suspension or withdrawal may occur if new and material circumstances arise, the
effects of which preclude satisfactory analysis; if there is no longer available
reasonable up-to-date data to permit a judgment to be formed; if a bond is
called for redemption; or for other reasons.

Note: Moody's applies numerical modifiers 1, 2 and 3 in each generic rating
classification from Aa to B in its corporate bond rating system. The modifier 1
indicates that the Company ranks in the higher end of its generic rating
category; the modifier 2 indicates a mid-range ranking; and the modifier 3
indicates that the issue ranks in the lower end of its generic rating category.

Statement of Additional Information Page 42
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND

S&P rates the securities debt of various entities in categories ranging from
"AAA" to "DD" according to quality. Investment grade ratings are the first four
categories:

AAA -- Highest rating. Capacity to pay interest and repay principal is
extremely strong.

AA -- High grade. Very strong capacity to pay interest and repay
principal. Generally, these bonds differ from AAA issues only in a small
degree.

A -- Have a strong capacity to pay interest and repay principal although
they are somewhat more susceptible to the adverse effects of change in
circumstances and economic conditions than debt in higher rated categories.

BBB -- Regarded as having adequate capacity to pay interest and repay
principal. These bonds normally exhibit adequate protection parameters, but
adverse economic conditions or changing circumstances are more likely to
lead to a weakened capacity to pay interest and repay principal than for
debt in higher rated categories.

BB, B, CCC, CC, C -- Debt rated "BB," "B," "CCC," "CC," and "C" are
regarded, on balance, as predominantly speculative with respect to capacity
to pay interest and repay principal in accordance with the terms of this
obligation. "BB" indicates the lowest degree of speculation and "C" the
highest degree of speculation. While such debt will likely have some quality
and protective characteristics, these are outweighed by large uncertainties
or major risk exposures to adverse conditions.

BB -- Has less near-term vulnerability to default than other speculative
issues; however, it faces major ongoing uncertainties or exposure to adverse
business, financial or economic conditions which could lead to inadequate
capacity to meet timely interest and principal payments. The "BB" rating
category is also used for debt subordinated to senior debt that is assigned
an actual or implied "BBB-" rating.

B -- Has a greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse
business, financial or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The "B" rating category is
also used for debt subordinated to senior debt that is assigned an actual or
implied "BB" or "BB-" rating.

CCC -- Has a currently indefinable vulnerability to default, and is
dependent upon favorable business, financial and economic conditions to meet
timely payment of interest and repayment of principal. In the event of
adverse business, financial or economic conditions, it is not likely to have
the capacity to pay interest and repay principal. The "CCC" rating category
is also used for debt subordinated to senior debt that is assigned an actual
or implied "B" or "B-" rating.

CC -- Typically applied to debt subordinated to senior debt that is
assigned an actual or implied "CCC" rating.

C -- Typically applied to debt subordinated to senior debt which is
assigned an actual or implied "CCC-" debt rating. The "C" rating may be used
to cover a situation where a bankruptcy petition has been filed, but debt
service payments are continued.

C -- Reserved for income bonds on which no interest is being paid.

D -- In payment default. The "D" rating is used when interest payments
are not made on the date due even if the applicable grace period has not
expired, unless S&P believes that such payments will be made during such
grace period. The "D" rating also will be used upon the filing of a
bankruptcy petition if debt service payments are jeopardized.

PLUS (+) OR MINUS (-): The ratings from "AA" to "CCC" may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.

NR: Indicates that no public rating has been requested, that there is
insufficient information on which to base a rating, or that S&P does not rate a
particular type of obligation as a matter of policy.

DESCRIPTION OF COMMERCIAL PAPER RATINGS
Moody's employs the designations "Prime-1" and "Prime-2" to indicate commercial
paper having the highest capacity for timely repayment. Issuers rated Prime-1
have a superior capacity for repayment of short-term promissory obligations.
Prime-1 repayment capacity normally will be evidenced by the following
characteristics: leading market positions in well-established industries; high
rates of return on funds employed; conservative capitalization structures with
moderate reliance on debt and ample asset protections; broad margins in earnings
coverage of fixed financial charges and high internal cash generation; and
well-established access to a range of financial markets and assured sources of
alternate liquidity. Issues rated Prime-2 have a strong capacity for repayment
of short-term promissory obligations. This normally will be evidenced by many of
the characteristics cited above, but to a lesser degree. Earnings trends and
coverage ratios,

Statement of Additional Information Page 43
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND
while sound, will be more subject to variation. Capitalization characteristics,
while still appropriate, may be more affected by external conditions. Ample
alternate liquidity is maintained.

S&P ratings of commercial paper are graded into four categories ranging from "A"
for the highest quality obligations to "D" for the lowest. A -- Issues assigned
its highest rating are regarded as having the greatest capacity for timely
payment. Issues in this category are delineated with numbers 1, 2, and 3 to
indicate the relative degree of safety. A-1 -- This designation indicates that
the degree of safety regarding timely payment is either overwhelming or very
strong. Those issues determined to possess overwhelming safety characteristics
will be denoted with a plus (++) sign designation. A-2 -- Capacity for timely
payments on issues with this designation is strong; however, the relative degree
of safety is not as high as for issues designated "A-1."

COMMERCIAL PAPER RATINGS
The Fund may invest only in high quality commercial paper, i.e. commercial paper
rated Prime-1 by Moody's, A-1 by S&P, or, if unrated, judged by the Manager to
be of comparable quality. Issuers rated Prime-1 by Moody's have, in Moody's
judgment, a superior capacity for repayment of short-term debt obligations.
Prime-1 repayment capacity will normally be evidenced by the following
characteristics: leading market positions in well-established industries; high
rates of return on funds employed; conservative capitalization structures with
moderate reliance on debt and ample asset protections; broad margins in earnings
coverage of fixed financial charges and high internal cash generation; and
well-established access to a range of financial markets and assured sources of
alternate liquidity. Issues assigned the A-1 rating by S&P are regarded by S&P
as having the greatest capacity for timely payment. This designation indicates
that the degree of safety regarding timely payment is either overwhelming or
very strong.

- --------------------------------------------------------------------------------

FINANCIAL STATEMENTS

- --------------------------------------------------------------------------------

The audited financial statements of the Fund as of December 31, 1996, and for
its fiscal year then-ended, and as of June 30, 1997, and for the period
then-ended, appear on the following pages.

Statement of Additional Information Page 44
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.

REPORT OF INDEPENDENT ACCOUNTANTS

- --------------------------------------------------------------------------------

To the Shareholders and Board of Directors of G.T. Global Developing Markets
Fund, Inc. ("Fund"):

We have audited the accompanying statement of assets and liabilities of G.T.
Global Developing Markets Fund, Inc., including the portfolio of investments, as
of December 31, 1996, the related statement of operations for the year then
ended, the statements of changes in net assets for each of the two years in the
period then ended, and the financial highlights for each of the 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
December 31, 1996, by correspondence with the custodians and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements and the financial highlights referred
to above present fairly, in all material respects, the financial position of
G.T. Global Developing Markets Fund, Inc. as of December 31, 1996, the results
of its operations for the year then ended, the changes in its net assets for
each of the two years in the period then ended, and the financial highlights for
each of the periods indicated herein, in conformity with generally accepted
accounting principles.

COOPERS & LYBRAND L.L.P.

BOSTON, MASSACHUSETTS
FEBRUARY 14, 1997

F1
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.

PORTFOLIO OF INVESTMENTS

December 31, 1996

- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (23.8%)
Banco LatinoAmericano de Exportaciones S.A. (Bladex)
"E"{\/} .................................................. PAN 277,800 $ 14,098,350 2.8
OTHER FINANCIAL
Peregrine Investment Holdings Ltd. ........................ HK 7,955,000 13,628,620 2.7
INVESTMENT MANAGEMENT
Uniao Bancos Brasileiras "A" Preferred .................... BRZL 334,200,000 10,905,169 2.2
BANKS-MONEY CENTER
Banco Totta & Acores "B" - Registered ..................... PORT 570,814 10,768,130 2.1
BANKS-MONEY CENTER
Tai Cheung Holdings Ltd. .................................. HK 10,000,000 9,438,841 1.9
REAL ESTATE
Banco Itau S.A. Preferred ................................. BRZL 20,890,000 9,048,513 1.8
BANKS-REGIONAL
Banco Ganadero S.A. - ADR{\/} ............................. COL 402,500 8,653,750 1.7
BANKS-REGIONAL
Suramericana de Seguros S.A. .............................. COL 464,609 8,496,974 1.7
INSURANCE - MULTI-LINE
Ayala Land, Inc. "B" ...................................... PHIL 6,895,200 7,877,228 1.6
REAL ESTATE
State Bank of India Ltd. - GDR-/- {\/} .................... IND 361,000 6,270,570 1.2
BANKS-MONEY CENTER
Administradora de Fondos de Pensiones Provida S.A. -
ADR{\/} .................................................. CHLE 248,400 4,657,500 0.9
INVESTMENT MANAGEMENT
Malaysian Assurance Alliance Bhd. ......................... MAL 892,000 4,345,188 0.9
INSURANCE - MULTI-LINE
Bank Gdanski S.A. - GDR{\/} ............................... POL 337,100 4,239,033 0.8
BANKS-REGIONAL
PSIL Bangkok Bank Co., Ltd. (Entitlement
Certificates){\/} ........................................ THAI 500,000 3,685,000 0.7
OTHER FINANCIAL
Banco de Colombia: ........................................ COL -- -- 0.7
BANKS-MONEY CENTER
144A GDR{.} {\/} ........................................ -- 357,200 2,634,350 --
Common .................................................. -- 2,365,000 952,018 --
Banco Commercial S.A. - Reg. S GDR{c} {\/} ................ URGY 29,300 476,125 0.1
BANKS-REGIONAL
------------
120,175,359
------------
Energy (10.8%)
LUKoil Holding - ADR{\/} .................................. RUS 269,400 12,392,400 2.5
GAS PRODUCTION & DISTRIBUTION
C.A. La Electricidad de Caracas ........................... VENZ 10,188,891 10,343,943 2.1
ELECTRICAL & GAS UTILITIES
Companhia Energetica de Minas Gerais (Cemig) - ADR{\/} .... BRZL 275,350 9,086,550 1.8
ELECTRICAL & GAS UTILITIES
Triton Energy Ltd.-/- ..................................... US 165,100 8,007,350 1.6
OIL
Benton Oil & Gas Co.-/- ................................... US 321,600 7,276,200 1.4
OIL
Czeske Energeticke Zavody (CEZ AS)-/- ..................... CZCH 134,030 4,827,289 1.0
ELECTRICAL & GAS UTILITIES
</TABLE>

The accompanying notes are an integral part of the financial statements.

F2
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.

PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1996

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Energy (Continued)
Empresa Nacional de Electricidad S.A. - ADR{\/} ........... CHLE 135,800 $ 2,104,900 0.4
ELECTRICAL & GAS UTILITIES
------------
54,038,632
------------
Materials/Basic Industry (7.7%)
General Mining Union Corp. (Gencor) ....................... SAFR 2,750,000 9,997,861 2.0
METALS - NON-FERROUS
Kimberly-Clark de Mexico, S.A. de C.V. "A" ................ MEX 504,000 9,962,120 2.0
PAPER/PACKAGING
Gujarat Ambuja Cements - GDR{\/} .......................... IND 1,053,040 8,687,580 1.7
CEMENT
Anglo American Corporation of South Africa Ltd. ........... SAFR 74,900 4,124,626 0.8
GOLD
Oryx Gold Holdings Ltd.-/- ................................ SAFR 2,235,600 3,231,962 0.6
GOLD
Industrias Penoles S.A. "CP" .............................. MEX 871,000 3,088,967 0.6
METALS - NON-FERROUS
------------
39,093,116
------------
Services (6.5%)
Dickson Concepts International Ltd. ....................... HK 3,122,800 11,709,491 2.3
WHOLESALE & INTERNATIONAL TRADE
SPT Telecom-/- ............................................ CZCH 62,453 7,779,628 1.5
TELEPHONE NETWORKS
Amway Asia Pacific Ltd.{\/} ............................... HK 160,000 6,780,000 1.4
WHOLESALE & INTERNATIONAL TRADE
South China Morning Post (Holdings) Ltd. .................. HK 7,940,000 6,570,468 1.3
BROADCASTING & PUBLISHING
------------
32,839,587
------------
Consumer Non-Durables (4.0%)
Companhia Cervejaria Brahma Preferred ..................... BRZL 17,020,000 9,305,381 1.9
BEVERAGES - ALCOHOLIC
Panamerican Beverages, Inc. "A"{\/} ....................... MEX 115,400 5,409,375 1.1
BEVERAGES - NON-ALCOHOLIC
Bavaria ................................................... COL 1,249,459 5,091,722 1.0
BEVERAGES - ALCOHOLIC
Noble China-/- {/\} ....................................... CHNA 103,700 206,764 --
BEVERAGES - ALCOHOLIC
------------
20,013,242
------------
Consumer Durables (2.0%)
Johnson Electric Holdings Ltd. ............................ HK 3,500,000 9,684,510 1.9
AUTO PARTS
Tata Engineering and Locomotive Co., Ltd. - GDR{\/} ....... IND 48,000 510,000 0.1
AUTOMOBILES
------------
10,194,510
------------
</TABLE>

The accompanying notes are an integral part of the financial statements.

F3
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.

PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1996

TOTAL EQUITY INVESTMENTS (cost $252,541,405) ................ 286,641,946 56.9
------------ -----
<CAPTION>

PRINCIPAL VALUE % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Government & Government Agency Obligations (26.1%)
Argentina (4.4%)
Republic of Argentina:
Discount Bond, 6.375% due 3/31/23+ .................... USD 11,237,000 8,673,559 1.7
Par Bond, 5.25% due 3/31/23++ ......................... USD 8,470,000 5,399,625 1.1
BOCON Pre 4, 5.375% due 9/1/02[.] + ................... USD 4,443,000 4,777,336 0.9
Floating Rate Bond, 6.625% due 3/31/05+ ............... USD 4,194,400 3,656,993 0.7
Brazil (4.0%)
Federal Republic of Brazil:
C Bond, 4.5% due 4/15/14 (Effective rate at year end is
7.08125%, including "payment-in-kind" bonds.)[.]
++ ................................................... USD 24,899,773 18,363,746 3.6
MYDFA Floating Rate Note, 6.6875% due 9/15/07 - 144A+
{.} .................................................. USD 2,346,000 2,011,695 0.4
Bulgaria (1.3%)
Bulgaria, Discount Bond Series A, 6.6875% due 7/28/24 -
EURO+ .................................................. USD 11,344,000 6,444,810 1.3
Costa Rica (0.1%)
Banco Central de Costa Rica, Principal Bond Series A,
6.25% due 5/21/10 ...................................... USD 900,000 735,750 0.1
Ecuador (2.9%)
Ecuador:
Past Due Interest Bond, 3% due 2/27/15 - Bearer
(Effective rate at year end is 5.1525%, including
"payment-in-kind" bonds).[.] + ....................... USD 17,527,297 10,779,287 2.1
Discount Bond, 6.5% due 2/28/25 - EURO+ ............... USD 4,650,000 3,208,500 0.6
Past Due Interest Bond, 3% due 2/27/15 - Registered
(Effective rate at year end is 5.1525%, including
"payment-in-kind" bonds.)[.] + ....................... USD 1,321,738 812,869 0.2
Kazakhstan (0.2%)
Republic of Kazakhstan, 9.25% due 12/20/99 - 144A{.} .... USD 820,000 826,663 0.2
</TABLE>

The accompanying notes are an integral part of the financial statements.

F4
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.

PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1996

- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
PRINCIPAL VALUE % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Government & Government Agency Obligations (Continued)
Mexico (3.0%)
United Mexican States:
Global Bond, 11.5% due 5/15/26 ........................ USD 2,926,000 $ 3,094,245 0.6
11.375% due 9/15/16 - 144A{.} ......................... USD 2,380,000 2,487,100 0.5
7.5625% due 8/6/01 - 144A+ {.} ........................ USD 2,109,000 2,113,956 0.4
Discount Bond Series C, 6.375% due 12/31/19+ +/+ ...... USD 2,331,000 2,010,488 0.4
Banco Nacional de Comercio Exterior, S.N.C. (BNCE) Trust
Division, 11.25% due 5/30/06 - 144A{.} ................. USD 4,394,000 4,679,610 0.9
Petroleos Mexicanos (PEMEX), 6.5% due 3/8/99+ ........... USD 1,000,000 986,250 0.2
Nigeria (2.5%)
Central Bank of Nigeria, Par Bond, 6.25% due
11/15/20+/+ ............................................ USD 18,000,000 12,420,000 2.5
Panama (1.6%)
Panama, Interest Reduction Bond, 3.5% due 7/17/14 -
144A++ {.} ............................................. USD 11,525,000 7,981,063 1.6
Philippines (0.6%)
Republic of Philippines, 8.75% due 10/7/16 - 144A{.} .... USD 3,127,000 3,254,034 0.6
Poland (1.3%)
Poland, Past Due Interest Bond, 4% due 10/27/14 -
EURO++ ................................................. USD 7,500,000 6,337,500 1.3
Venezuela (4.2%)
Republic of Venezuela:
Debt Conversion Bond, 6.5% due 12/18/07+ .............. USD 9,500,000 8,383,750 1.7
Front Loaded Interest Reduction Bond Series A, 6.625%
due 3/31/07+ ......................................... USD 6,750,000 6,024,375 1.2
Par Bond Series A, 6.75% due 3/31/20+/+ ............... USD 5,500,000 4,207,500 0.8
Front Loaded Interest Reduction Bond Series B, 6.4375%
due 3/31/07+ ......................................... USD 2,750,000 2,454,375 0.5
------------
Total Government & Government Agency Obligations (cost
$113,935,636) .............................................. 132,125,079
------------
Sovereign Debt (6.1%)
Morocco (2.0%)
Kingdom of Morocco, Tranche A Loan Agreement, 6.375% due
1/1/09+ ................................................ USD 12,250,000 10,106,250 2.0
Russia (4.1%)
Bank for Foreign Economic Affairs (Vnesheconombank)
Loan Agreement - Assignment ** -/- {j} ................. USD 22,635,000 18,023,119 3.6
Bank for Foreign Economic Affairs (Vnesheconombank)
Loan Agreement - Assignment ** -/- ..................... DEM 4,186,000 2,299,850 0.5
------------
Total Sovereign Debt (cost $22,218,547) ..................... 30,429,219
------------
Corporate Bonds (4.9%)
Argentina (0.8%)
Banco de Credito Argentina, 8.5% due 12/18/98 -
144A{.} ................................................ USD 3,000,000 2,996,250 0.6
Central Termica Guemes S.A., 12% due 11/26/01 -
144A{.} ................................................ USD 1,020,000 1,037,850 0.2
Brazil (0.4%)
Tevecap S.A., 12.625% due 11/26/04 - 144A{.} ............ USD 840,000 858,900 0.2
TV Filme, Inc., 12.875% due 12/15/04 - 144A{.} .......... USD 844,000 848,748 0.2
</TABLE>

The accompanying notes are an integral part of the financial statements.

F5
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.

PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1996

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Corporate Bonds (Continued)
China (0.3%)
AES China Generating Co., Ltd., 10.125% due 12/15/06 .... USD 1,385,000 $ 1,433,475 0.3
Colombia (0.4%)
Celcaribe S.A. Units, 13.5% due 3/15/04 - 144A++ {.} {F}
-/- .................................................... USD 200 2,120,000 0.4
India (0.4%)
Reliance Industries Ltd., Convertible Bond, 3.5% due
11/03/99 ............................................... USD 1,690,000 1,795,625 0.4
Indonesia (1.4%)
PT Tjiwi Kimia, 13.25% due 8/1/01 ....................... USD 2,000,000 2,270,000 0.4
PT Polysindo International Finance, 13% due 6/15/01:
EURO .................................................. USD 1,380,000 1,549,050 0.3
DTC ................................................... USD 280,000 314,300 0.1
Tri Polyta Finance BV, 11.375% due 12/1/03 .............. USD 1,537,000 1,610,008 0.3
FSW International Finance Co., 12.5% due 11/1/06 -
144A{.} ................................................ USD 1,350,000 1,436,063 0.3
Luxembourg (0.2%)
Millicom International Cellular, effective yield 13.5%,
due 6/1/06 - 144A{.} ................................... USD 1,500,000 937,500 0.2
Mexico (0.4%)
Grupo Industrial Durango, S.A., 12.625% due 8/1/03 ...... USD 1,933,000 2,104,554 0.4
Philippines (0.1%)
CE Casecnan Water & Energy Series B, 11.95% due 11/15/10
- Reg. S{c} ............................................ USD 365,000 420,663 0.1
Filinvest Capital, Convertible Bond, 3.75% due 2/1/02 -
144A{.} ................................................ USD 137,000 132,205 --
Poland (0.2%)
Poland Communications, Inc., 9.875% due 11/01/03 -
144A{.} ................................................ USD 866,000 866,000 0.2
Turkey (0.3%)
Sultan Ltd., 8.33984% due 6/11/99+ ...................... USD 1,700,000 1,636,250 0.3
------------
Total Corporate Bonds (cost $24,039,360) .................... 24,367,441
------------ -----

TOTAL FIXED INCOME INVESTMENTS (cost $160,193,543) .......... 186,921,739 37.1
------------ -----

UNDERLYING
NOMINAL VALUE % OF NET
OPTIONS CURRENCY AMOUNT (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Brazil C Bond, due 4/15/14, Call Options, strike price
$74.1875, expire 3/3/97-/- ............................... USD 48,575,486 754,183 0.2
GOVERNMENT & GOVERNMENT AGENCY OBLIGATIONS
Venezuela Debt Conversion Bond, due 12/18/07, Call Options,
strike price $87.188, expire 3/5/97-/- ................... USD 11,250,000 222,255 --
GOVERNMENT & GOVERNMENT AGENCY OBLIGATIONS
------------ -----

TOTAL OPTIONS (cost $1,389,128) ............................. 976,438 0.2
------------ -----
</TABLE>

The accompanying notes are an integral part of the financial statements.

F6
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.

PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1996

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE % OF NET
SHORT-TERM INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Treasury Bills (1.4%)
Mexico (1.4%)
Mexican Cetes: .......................................... MXN -- -- 1.4
Current yield 22.53%, due 1/16/97 ..................... -- 27,865,770 $ 3,509,167 --
Current yield 23.64%, due 1/23/97 ..................... -- 20,438,200 2,560,971 --
Current yield 24.21%, due 1/30/97 ..................... -- 5,558,850 693,086 --
Current yield 24.96%, due 2/20/97 ..................... -- 1,454,930 178,745 --
Current yield 24.56%, due 2/6/97 ...................... -- 606,220 75,212 --
------------
Total Treasury Bills (cost $6,887,783) ...................... 7,017,181
------------
Structured Notes (1.3%)
Russia (1.3%)
Russian Federation GKO (Treasury Bills) Linked Notes with
cancellable currency forwards attached: ................ USD -- -- 1.3
Due 7/2/97 ............................................ -- 4,761,328 4,025,560 --
Due 7/30/97 ........................................... -- 3,238,274 2,674,944 --
(Notes issued by Credit Suisse First Boston (Cayman)
Ltd. These notes are linked to the local price in
Russian rubles of 26,330 and 17,896 Titles of Russian
treasury bills maturing 7/2/97 and 7/30/97,
respectively. These 7/2/97 and 7/30/97 notes include
options to sell the Russian ruble proceeds at maturity
for US dollars at the contracted forward rates of
6,333.41 and 6,399.46, respectively.)
------------
Total Structured Notes (cost $6,667,343) .................... 6,700,504
------------
Commercial Paper - Indexed (0.5%)
Philippines (0.5%)
National Westminster Bank PLC, Currency-Linked CD,
12.3798% due 2/28/97 (cost $2,500,000) ................. USD 2,500,000 2,445,750 0.5
------------
Commercial Paper - Discounted (0.2%)
Thailand (0.2%)
Phatra Thanakit Co., Ltd., current yield 10.41%, due
5/9/97
(cost $947,326) ........................................ THB 25,000,000 941,068 0.2
------------ -----

TOTAL SHORT-TERM INVESTMENTS (cost $17,002,452) ............. 17,104,503 3.4
------------ -----
</TABLE>

The accompanying notes are an integral part of the financial statements.

F7
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.

PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1996

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated December 31, 1996, with State Street Bank & Trust
Co., due
January 2, 1997, for an effective yield of 6.25%,
collateralized by $2,210,000 U.S. Treasury Bonds, 8.125%
due 8/15/19 (market value of collateral is $2,651,106,
including accrued interest). (cost $2,598,452) ........... $ 2,598,452 0.5
------------ -----

TOTAL INVESTMENTS (cost $433,724,980) * .................... 494,243,078 98.1
Other Assets and Liabilities ................................ 9,769,301 1.9
------------ -----

NET ASSETS .................................................. $504,012,379 100.0
------------ -----
------------ -----
</TABLE>

- --------------

{\/} 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.
{/\} Security is denominated in CAD.
-/- Non-income producing security.
{c} Security issued under Regulation S. Rule 144A and additional
restrictions may apply in the resale of such securities.
+ The coupon rate shown on floating rate note represents the rate at
period end.
** Underlying loan agreement currently in default.
{j} All or part of the Fund's holdings in this security is segregated
as collateral for when-issued securities. See Note 1 to the
Financial Statements.
++ The coupon rate shown on step-up coupon bond represents the rate at
period end.
{F} The principal amount should be read as units.
[.] Bond pays stated or additional interest with "payment-in-kind"
(PIK) bonds.
+/+ Issued with detachable warrants or value recovery rights. The
current market value of each warrant or right is zero.
* For Federal income tax purposes, cost is $434,696,083 and
appreciation (depreciation) is as follows:

<TABLE>
<S> <C>
Unrealized appreciation: $ 75,166,464
Unrealized depreciation: (15,619,469)
-------------
Net unrealized appreciation: $ 59,546,995
-------------
-------------
</TABLE>

Abbreviations:
ADR--American Depository Receipt
GDR--Global Depository Receipt

The accompanying notes are an integral part of the financial statements.

F8
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.

PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1996

- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at December 31, 1996, was concentrated in
the following countries:

<TABLE>
<CAPTION>
PERCENTAGE OF NET ASSETS {D}
-------------------------------------------
FIXED INCOME,
RIGHTS & SHORT-TERM
COUNTRY (COUNTRY CODE/CURRENCY CODE) EQUITY WARRANTS & OTHER TOTAL
- -------------------------------------- ------ ------------- ---------- -----
<S> <C> <C> <C> <C>
Argentina (ARG/ARS) .................. 5.2 5.2
Brazil (BRZL/BRL) .................... 7.7 4.4 0.2 12.3
Bulgaria (BUL/LEV) ................... 1.3 1.3
Chile (CHLE/CLP) ..................... 1.3 1.3
China (CHNA/RMB) ..................... 0.3 0.3
Colombia (COL/COP) ................... 5.1 0.4 5.5
Costa Rica (CR/CRI) .................. 0.1 0.1
Czech Republic (CZCH/CSK) ............ 2.5 2.5
Ecuador (ECDR/ECS) ................... 2.9 2.9
Hong Kong (HK/HKD) ................... 11.5 11.5
India (IND/INR) ...................... 3.8 0.4 4.2
Indonesia (INDO/IDR) ................. 1.4 1.4
Kazakhstan (KAZ/KTS) ................. 0.2 0.2
Luxembourg (LUX/LUF) ................. 0.2 0.2
Malaysia (MAL/MYR) ................... 0.9 0.9
Mexico (MEX/MXN) ..................... 3.7 3.4 1.4 8.5
Morocco (MOR/MAD) .................... 2.0 2.0
Nigeria (NGE/NEN) .................... 2.5 2.5
Panama (PAN/PND) ..................... 2.8 1.6 4.4
Philippines (PHIL/PHP) ............... 1.6 0.7 0.5 2.8
Poland (POL/PLZ) ..................... 0.8 1.5 2.3
Portugal (PORT/PTE) .................. 3.3 3.3
Russia (RUS/SUR) ..................... 2.6 4.1 1.3 8.0
South Africa (SAFR/ZAR) .............. 3.4 3.4
Thailand (THAI/THB) .................. 0.7 0.2 0.9
Turkey (TRKY/TRL) .................... 0.3 0.3
United States & Other (US/USD) ....... 3.0 2.4 5.4
Uruguay (URGY/UYP) ................... 0.1 0.1
Venezuela (VENZ/VEB) ................. 2.1 4.2 6.3
------ ----- ----- -----
Total ............................... 56.9 37.1 6.0 100.0
------ ----- ----- -----
------ ----- ----- -----
</TABLE>

- --------------

{d} Percentages indicated are based on net assets of $504,012,379.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
DECEMBER 31, 1996

<TABLE>
<CAPTION>
MARKET VALUE CONTRACT DELIVERY UNREALIZED
CONTRACTS TO SELL: (U.S. DOLLARS) PRICE DATE APPRECIATION
- ---------------------------------------- -------------- ----------- -------- --------------
<S> <C> <C> <C> <C>
Deutsche Marks.......................... 3,038,782 1.48850 02/13/97 $ 91,886
--------------
THE VALUE OF CONTRACTS TO SELL AS A
PERCENTAGE OF NET ASSETS IS 0.60%.
Total Open Forward Foreign Currency
Contracts (Receivable amount
$3,130,668).......................... $ 91,886
--------------
--------------
</TABLE>

- ----------------
See Note 1 to the financial statements.

The accompanying notes are an integral part of the financial statements.

F9
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.

STATEMENT OF ASSETS
AND LIABILITIES
December 31, 1996

- --------------------------------------------------------------------------------

<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $433,724,980) (Note 1).... $ 494,243,078
U.S. currency............................................. $134,479
Foreign currencies (cost $4,165).......................... 4,060 138,539
--------
Segregated cash (Note 1)............................................ 4,000,000
Receivable for securities sold...................................... 8,220,070
Interest receivable................................................. 2,831,350
Dividends and dividend withholding tax reclaims receivable.......... 269,354
Unamortized organizational costs (Note 1)........................... 144,242
Receivable for open forward foreign currency contracts, net (Note
1)................................................................. 91,886
Miscellaneous receivable............................................ 2,700
Cash held as collateral for securities loaned (Note 1).............. 21,260,009
-------------
Total assets...................................................... 531,201,228
-------------
Liabilities:
Payable for securities purchased.................................... 4,954,775
Payable for investment management and administration fees (Note
2)................................................................. 682,328
Payable for professional fees....................................... 43,323
Payable for custodian fees.......................................... 39,778
Payable for printing and postage expenses........................... 36,934
Payable for Directors' fees and expenses (Note 2)................... 12,149
Payable for fund accounting fees (Note 2)........................... 9,825
Payable for registration and filing fees............................ 2,127
Payable for transfer agent fees (Note 2)............................ 1,664
Other accrued expenses.............................................. 145,937
Collateral for securities loaned (Note 1)........................... 21,260,009
-------------
Total liabilities................................................. 27,188,849
-------------
Net assets............................................................ $ 504,012,379
-------------
-------------
Net asset value per share ($504,012,380 DIVIDED BY 36,416,667 shares
outstanding)......................................................... $ 13.84
-------------
-------------
Net assets consist of:
Paid in capital (Note 4)............................................ $ 545,109,494
Undistributed net investment income................................. 363,782
Accumulated net realized loss on investments and foreign currency
transactions....................................................... (102,069,253)
Net unrealized appreciation on translation of assets and liabilities
in foreign currencies.............................................. 90,258
Net unrealized appreciation of investments.......................... 60,518,098
-------------
Total -- representing net assets applicable to capital shares
outstanding.......................................................... $ 504,012,379
-------------
-------------
</TABLE>

The accompanying notes are an integral part of the financial statements.

F10
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.

STATEMENT OF OPERATIONS

Year ended December 31, 1996

- --------------------------------------------------------------------------------

<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Interest income........................................................ $20,641,051
Dividend income (net of foreign withholding tax of $420,409)........... 7,351,830
Other income........................................................... 74,487
-----------
Total investment income.............................................. 28,067,368
-----------
Expenses:
Investment management fees (Note 2).................................... 6,673,159
Administration fees (Note 2)........................................... 1,191,681
Custodian fees (Note 1)................................................ 332,166
Transfer agent fees (Note 2)........................................... 190,834
Fund accounting fees (Note 2).......................................... 119,321
Professional fees...................................................... 101,382
Amortization of organization costs (Note 1)............................ 70,949
Printing and postage expenses.......................................... 65,880
Directors' fees and expenses (Note 2).................................. 38,064
Registration and filing fees........................................... 3,000
Other expenses......................................................... 37,139
-----------
Total expenses before reductions..................................... 8,823,575
-----------
Expense reductions (Notes 1 & 5)................................... (162,760)
-----------
Total net expenses................................................... 8,660,815
-----------
Net investment income.................................................... 19,406,553
-----------
Net realized and unrealized gain on investments and foreign
currencies: (Note 1)
Net realized gain on investments.......................... $ 1,845,666
Net realized loss on foreign currency transactions........ (900,512)
-----------
Net realized gain during the year.................................... 945,154
Net change in unrealized appreciation on translation of
assets and liabilities in foreign currencies............. 91,835
Net change in unrealized appreciation of investments...... 78,628,364
-----------
Net unrealized appreciation during the year.......................... 78,720,199
-----------
Net realized and unrealized gain on investments and foreign currencies... 79,665,353
-----------
Net increase in net assets resulting from operations..................... $99,071,906
-----------
-----------
</TABLE>

The accompanying notes are an integral part of the financial statements.

F11
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.

STATEMENTS OF CHANGES IN NET ASSETS

- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1996 DECEMBER 31, 1995
----------------- -----------------
<S> <C> <C>
Increase (Decrease) in net assets
Operations:
Net investment income..................................... $ 19,406,553 $ 26,375,900
Net realized gain (loss) on investments and foreign
currency transactions.................................... 945,154 (78,379,558)
Net change in unrealized appreciation (depreciation) on
translation of assets and liabilities in foreign
currencies............................................... 91,835 (3,021)
Net change in unrealized appreciation of investments...... 78,628,364 47,401,359
----------------- -----------------
Net increase (decrease) in net assets resulting from
operations............................................. 99,071,906 (4,605,320)
----------------- -----------------
Distributions to shareholders: (Note 1)
From net investment income................................ (17,407,047) (26,292,834)
Capital share transactions: (Note 4)
Adjustment to estimate of initial offering expenses....... -- 373,757
----------------- -----------------
Total increase (decrease) in net assets................. 81,664,859 (30,524,397)
Net assets:
Beginning of year......................................... 422,347,520 452,871,917
----------------- -----------------
End of year*.............................................. $504,012,379 $422,347,520
----------------- -----------------
----------------- -----------------
--------------
*Includes undistributed/accumulated net investment
income/(loss) of......................................... $ 363,782 $ (7,034)
----------------- -----------------
</TABLE>

The accompanying notes are an integral part of the financial statements.

F12
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.

FINANCIAL HIGHLIGHTS

- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding,
total investment return, ratios and supplemental data. This information has been
derived from information provided in the financial statements and market price
data for the shares.

<TABLE>
<CAPTION>
JANUARY 11, 1994
(COMMENCEMENT
YEAR ENDED OF OPERATIONS)
DECEMBER 31, TO
---------------------- DECEMBER 31,
1996 1995 1994
---------- ---------- ----------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 11.60 $ 12.44 $ 15.00
---------- ---------- ----------------
Income from investment operations:
Net investment income................. 0.53 0.72 0.35
Net realized and unrealized gain
(loss) on investments................ 2.19 (0.84) (2.46)
---------- ---------- ----------------
Net increase (decrease) from
investment operations.............. 2.72 (0.12) (2.11)
---------- ---------- ----------------
Distributions to shareholders:
From net investment income............ (0.48) (0.72) (0.35)
From net realized gain on
investments.......................... -- -- (0.10)
---------- ---------- ----------------
Total distributions................. (0.48) (0.72) (0.45)
---------- ---------- ----------------
Net asset value, end of period.......... $ 13.84 $ 11.60 $ 12.44
---------- ---------- ----------------
---------- ---------- ----------------
Market value, end of period............. $ 11.63 $ 9.75 $ 9.75
---------- ---------- ----------------
---------- ---------- ----------------

Total investment return (based on market
value)................................. 24.18% 6.60% (32.16)%+
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 504,012 $ 422,348 $ 452,872
Ratio of net investment income to
average net assets..................... 4.07% 6.33% 2.75 %++
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 1.82% 1.77% 2.01 %++
Without expense reductions............ 1.85% 1.80% 2.01 %++
Portfolio turnover rate................. 138% 75% 56 %
Average commission rate per share paid
on portfolio transactions.............. $ 0.0022 N/A N/A
</TABLE>

- ----------------

+ Not annualized
++ Annualized
N/A Not Applicable

The accompanying notes are an integral part of the financial statements.

F13
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.

NOTES TO FINANCIAL STATEMENTS

December 31, 1996

- --------------------------------------------------------------------------------

1. SIGNIFICANT ACCOUNTING POLICIES
G.T. Global Developing Markets Fund, Inc. ("Fund") is organized as a Maryland
corporation and is registered under the Investment Company Act of 1940, as
amended ("1940 Act") as a non-diversified, closed-end management investment
company. 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
Equity securities are valued at the last sale price on the exchange on which
such securities are traded or on the principal over-the-counter market on which
such securities are traded, as of the close of business on the day the
securities are being valued, or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by Chancellor LGT Asset
Management, Inc. (the "Manager") to be the primary market.

Fixed income investments are valued at the mean of representative quoted bid and
asked prices for securities or, if such prices are not available, at prices for
securities of comparative maturity, quality and type; however, when the Manager
deems it appropriate, prices obtained for the day of valuation from a bond
pricing service will be used. Short-term investments with a maturity of 60 days
or less are valued at amortized cost, adjusted for foreign exchange translation
and market fluctuation, if any.

Investments for which market quotations are not readily available (including
restricted securities which are subject to limitations on their sale) are valued
at fair value as determined in good faith by or under the direction of the
Fund'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 Fund's Board of Directors.

(B) FOREIGN CURRENCY TRANSLATION
The accounting records of the Fund are maintained in U.S. dollars. The market
values of foreign securities, currency holdings, 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
existing from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.

Reported net realized foreign exchange gains and losses arise from sales and
maturities of short-term investments, forward foreign currency contracts, sales
of foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the differences between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains and losses arise from changes in the
value of assets and liabilities other than investments in securities at year
end, resulting from changes in exchange rates.

(C) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by the Fund, it is the Fund's
policy to always receive, as collateral, United States government securities or
other high quality debt securities of which the value, including accrued
interest, is at least equal to the amount to be repaid to the Fund under each
agreement at its maturity.

(D) FORWARD FOREIGN CURRENCY CONTRACTS
A forward foreign currency contract ("Forward Contract") is an agreement between
two parties to buy and sell a currency at a set price on a future date. The
market value of the Forward Contract fluctuates with changes in currency
exchange rates. The Forward Contract is marked-to-market daily and the change in
market value is recorded by the Fund as an unrealized gain or loss. When the
Forward Contract is closed, the Fund records a realized gain or loss equal to
the difference between the value at the time it was opened and the value at the
time it was closed. The Fund could be exposed to risk if a counterparty is
unable to meet the terms of a contract or if the value of the currency changes
unfavorably. The Fund may enter into Forward Contracts in connection with
planned purchases or sales of securities or to hedge against adverse
fluctuations in exchange rates between currencies.

(E) OPTION ACCOUNTING PRINCIPLES
When the Fund writes a call or put option, an amount equal to the premium
received is included in the Fund's "Statement of Assets and Liabilities" as an
asset and an equivalent liability. The amount of the liability is subsequently
marked-to-market to reflect the current market value of the option. The current
market value of an option listed on a traded exchange is valued at its last bid
price, or, in the case of an over-the-counter option, is valued at the average
of the last bid prices obtained from brokers, unless a quotation from only one
broker is available, in which case only that broker's price will be used. If an
option expires on its stipulated expiration date or if the Fund enters into a
closing purchase transaction, a gain or loss is

F14
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.

realized without regard to any unrealized gain or loss on the underlying
security, and the liability related to such option is extinguished. If a written
call option is exercised, a gain or loss is realized from the sale of the
underlying security and the proceeds of the sale are increased by the premium
originally received. If a written put option is exercised, the cost of the
underlying security purchased would be decreased by the premium originally
received. The Fund can write options only on a covered basis, which, for a call,
requires that the Fund hold the underlying security, and, for a put, requires
the Fund to set aside cash, U.S. government securities or other liquid
securities in an amount not less than the exercise price or otherwise provide
adequate cover at all times while the put option is outstanding. The Fund may
use options to manage its exposure to the stock and bond markets and to
fluctuations in currency values or interest rates.

The premium paid by the Fund for the purchase of a call or put option is
included in the Fund's "Statement of Assets and Liabilities" as an investment
and subsequently "marked-to-market" to reflect the current market value of the
option. If an option which the Fund has purchased expires on the stipulated
expiration date, the Fund realizes a loss in the amount of the cost of the
option. If the Fund enters into a closing sale transaction, the Fund realizes a
gain or loss, depending on whether proceeds from the closing sale transaction
are greater or less than the cost of the option. If the Fund exercises a call
option, the cost of the securities acquired by exercising the call is increased
by the premium paid to buy the call. If the Fund exercises a put option, it
realizes a gain or loss from the sale of the underlying security, and the
proceeds from such sale are decreased by the premium originally paid.

The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Fund may forego the
opportunity of profit if the market value of the underlying security or index
increases and the option is exercised. The risk in writing a put option is that
the Fund may incur a loss if the market value of the underlying security or
index decreases and the option is exercised. In addition, there is the risk the
Fund may not be able to enter into a closing transaction because of an illiquid
secondary market.

(F) FUTURES CONTRACTS
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract the
Fund is required to pledge to the broker an amount of cash or securities equal
to the minimum "initial margin" requirements of the exchange on which the
contract is traded. Pursuant to the contract, the Fund agrees to receive from or
pay to the broker an amount of cash equal to the daily fluctuation in value of
the contract. Such receipts or payments are known as "variation margin" and are
recorded by the Fund as unrealized gains or losses. When the contract is closed,
the Fund records a realized gain or loss equal to the difference between the
value of the contract at the time it was opened and the value at the time it was
closed. The potential risk to the Fund is that the change in value of the
underlying securities may not correlate to the change in value of the contracts.
The Fund may use futures contracts to manage its exposure to the stock and bond
markets and to fluctuations in currency values or interest rates.

(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 collection of income on securities, 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 market risk if the other party to the transaction fails to deliver
and causes the Fund to subsequently invest at less advantageous prices.

(H) PORTFOLIO SECURITIES LOANED
At December 31, 1996, stocks with an aggregate value of approximately
$19,925,944 were on loan to brokers. The loans were secured by cash collateral
of $21,260,009 received by the Fund. For international securities, cash
collateral is received by the Fund against loaned securities in an amount at
least equal to 105% of the market value of the loaned securities at the
inception of each loan. This collateral must be maintained at not less than 103%
of the market value of the loaned securities during the period of the loan. For
domestic securities, cash collateral is received by the Fund against loaned
securities in an amount at least equal to 102% of the market value of the loaned
securities at the inception of each loan. This collateral must be maintained at
not less than 100% of the market value of the loaned securities during the
period of each loan. For the year ended December 31, 1996, the Fund received
securities lending income of $96,761 which was used to reduce the Fund's
custodian fees.

(I) TAXES
It is the policy of the Fund to meet the requirements for qualification as a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended ("Code"). It is also the intention of the Fund to make distributions
sufficient to avoid imposition of any excise tax under Section 4982 of the Code.
Therefore, no provision has been made for Federal taxes on income, capital
gains, and unrealized appreciation of securities held, or excise tax on income
and capital gains. The Fund currently has a capital loss carryforward of
$96,686,329 of which $18,650,929 expires in 2002 and $78,035,400 expires in
2003.

(J) DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders are recorded by the Fund on the ex-date. Income
and capital gain distributions are determined in accordance with Federal income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund and timing differences.

F15
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.

(K) DEFERRED ORGANIZATIONAL EXPENSES
Expenses incurred by the Fund in connection with its organization, its
registration with the Securities and Exchange Commission and with various states
aggregated $353,775. These expenses are being amortized on a straightline basis
over a five-period 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) SECURITIES PURCHASED ON A WHEN-ISSUED OR FORWARD COMMITMENT BASIS
The Fund may trade securities on a when-issued or forward commitment basis, with
payment and delivery scheduled for a future date. These transactions are subject
to market fluctuations and are subject to the risk that the value at delivery
may be more or less than the trade date purchase price. Although the Fund will
generally purchase these securities with the intention of acquiring such
securities, they may sell such securities before the settlement date. These
securities are identified on the accompanying Portfolio of Investments. The Fund
has purchased and sold when-issued securities during the year and has set aside
sufficient cash and liquid securities as collateral for these commitments.

(P) LINE OF CREDIT
The Fund, along with certain other funds advised by the Manager, has a line of
credit with the Bank of Boston. The arrangement with the bank allows all
specified funds to borrow an aggregate maximum amount of $100,000,000.

2. RELATED PARTIES
Chancellor LGT Asset Management, Inc. is the Fund's investment manager and
administrator. On October 31, 1996, Chancellor Capital Management, Inc. merged
with LGT Asset Management, Inc., and the surviving entity was renamed Chancellor
LGT Asset Management, Inc. The Fund pays the Manager investment management fees,
which are computed weekly and paid monthly, at the annualized rate of 1.40% of
the Fund's average weekly net assets. The Manager also acts as administrator of
the Fund. The Fund pays the Manager administration fees, which are computed and
paid monthly, at an annualized rate of 0.25% of the Fund's average weekly net
assets.

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 Fund pays each of its Directors who is not an employee, officer or director
of the Manager or any of its affiliated companies $5,000 per period plus $300
for each meeting of the board attended by the Director.

3. PURCHASES AND SALES OF SECURITIES
For the year ended December 31, 1996, purchases and sales of investment
securities by the Fund, other than U.S. government obligations and short-term
investments, aggregated $618,009,486 and $638,476,610, respectively. There were
no purchases or sales of U.S. government obligations by the Fund for the year.

4. CAPITAL SHARES
At December 31, 1996, the Fund is authorized to issue 100 million shares of
capital stock, $0.001 par value, all of which is classified as Common Stock.

5. EXPENSE REDUCTIONS
The Manager has directed certain portfolio trades to brokers who paid a portion
of the Fund's expenses. For the year ended December 31, 1996, the Fund's
expenses were reduced by $65,999 under these arrangements.

6. WRITTEN OPTIONS
The Fund's written options contract activity for the year ended December 31,
1996, was as follows:

<TABLE>
<CAPTION>
UNDERLYING NOMINAL
AMOUNT IN USD PREMIUMS
----------------------- -------------
<S> <C> <C>
Options outstanding at December 31,
1995................................... $ 0 $ 0
Options written during the year ended
December 31, 1996...................... 10,390,000 235,750
Options cancelled in closing purchase
transactions (loss of $309,650
realized).............................. (7,390,000) (172,750)
Options expired prior to exercise (gain
of $63,000 realized)................... (3,000,000) (63,000)
Options exercised....................... 0 0
----------------------- -------------
Options outstanding at December 31,
1996................................... $ 0 $ 0
----------------------- -------------
----------------------- -------------
</TABLE>

F16
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.

PROXY RESULTS (UNAUDITED)
During the year ended December 31, 1996, G.T. Global Developing Markets Fund,
Inc. stockholders voted on the following proposals. The proposals were approved
at the second annual meeting of the stockholders on July 16, 1996. The
description of the proposals and number of shares voted are as follows:
<TABLE>
<CAPTION>
SHARES VOTED
SHARES VOTED WITHHELD
FOR AUTHORITY
--------------- ---------------
<S> <C> <C> <C> <C>
1. To elect the Fund's Board of Directors: C. Derek Anderson...................... 32,386,034 2,536,607
Frank S. Bayley........................ 32,417,943 2,504,698
David A. Minella....................... 32,461,231 2,461,409
Arthur C. Patterson.................... 32,378,462 2,541,779
Ruth H. Quigley........................ 32,421,181 2,501,459

SHARES VOTED SHARES VOTED SHARES VOTED
FOR AGAINST ABSTAIN
--------------- --------------- ---------------
<S> <C> <C> <C> <C>
2. To elect Coopers & Lybrand L.L.P. as the Fund's independent accountants: 33,391,569 1,238,086 292,986
<CAPTION>

SHARES VOTED SHARES VOTED SHARES VOTED
FOR AGAINST ABSTAIN
--------------- --------------- ---------------
<S> <C> <C> <C> <C>
3. To take all necessary legal and other action to convert the Fund from 8,997,665 10,004,687 1,178,792
closed-end to open-end status:
</TABLE>

F17
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.

REPORT OF INDEPENDENT ACCOUNTANTS

- --------------------------------------------------------------------------------

To the Shareholders and Board of Directors of G.T. Global Developing Markets
Fund, Inc. ("Fund"):

We have audited the accompanying statement of assets and liabilities of G.T.
Global Developing Markets Fund, Inc., including the portfolio of investments, as
of June 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 December 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 June
30, 1997, by correspondence with the custodians and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements and the financial highlights referred
to above present fairly, in all material respects, the financial position of
G.T. Global Developing Markets Fund, Inc. as of June 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 December 31, 1996, and the
financial highlights for the periods indicated herein, in conformity with
generally accepted accounting principles.

COOPERS & LYBRAND L.L.P.

BOSTON, MASSACHUSETTS
AUGUST 15, 1997

F1
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.

PORTFOLIO OF INVESTMENTS

June 30, 1997

- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ----------------------------------------------------------- -------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (16.4%)
Malayan Banking Bhd. .................................... MAL 736,600 $ 7,735,249 1.4
BANKS-MONEY CENTER
Banco LatinoAmericano de Exportaciones S.A. (Bladex)
"E"{\/} ................................................ PAN 176,831 7,647,941 1.4
OTHER FINANCIAL
Rashid Hussain Bhd. ..................................... MAL 1,021,000 6,473,549 1.2
SECURITIES BROKER
Uniao Bancos Brasileiras "A" Preferred .................. BRZL 142,972,483 5,244,759 0.9
BANKS-MONEY CENTER
Amalgamated Banks of South Africa-/- .................... SAFR 672,136 4,823,730 0.9
BANKS-REGIONAL
Malaysian Resources Corp., Bhd. ......................... MAL 1,565,000 4,310,184 0.8
REAL ESTATE
China Resources Enterprise Ltd. ......................... HK 828,000 4,061,548 0.7
REAL ESTATE INVESTMENT TRUST
Turkiye Is Bankasi (Isbank) "C" ......................... TRKY 7,423,000 2,901,173 0.5
BANKS-MONEY CENTER
State Bank of India Ltd.: ............................... IND -- -- 0.5
BANKS-MONEY CENTER
Common ................................................ -- 216,000 2,055,776 --
GDR{\/} ............................................... -- 27,640 732,460 --
Kookmin Bank - GDR-/- {\/} .............................. KOR 128,480 2,730,200 0.5
BANKS-MONEY CENTER
Administradora de Fondos de Pensiones Provida S.A. -
ADR{\/} ................................................ CHLE 123,166 2,694,256 0.5
INVESTMENT MANAGEMENT
Metroplex Bhd. .......................................... MAL 2,512,000 2,608,060 0.5
REAL ESTATE
Thai Farmers Bank Ltd. - Foreign ........................ THAI 588,200 2,500,077 0.4
BANKS-REGIONAL
PSIL Bangkok Bank Co., Ltd. (Entitlement
Certificates){\/} ...................................... THAI 500,000 2,461,000 0.4
OTHER FINANCIAL
Yapi ve Kredi Bankasi AS ................................ TRKY 102,500,000 2,348,383 0.4
BANKS-MONEY CENTER
PT Lippo Bank - Foreign ................................. INDO 2,057,500 2,115,899 0.4
BANKS-MONEY CENTER
Banco de A. Edwards - ADR{\/} ........................... CHLE 100,934 2,106,997 0.4
BANKS-MONEY CENTER
Siam Commercial Bank PLC - Foreign ...................... THAI 493,800 2,022,519 0.4
BANKS-MONEY CENTER
Akbank T.A.S. ........................................... TRKY 23,390,000 2,009,586 0.4
BANKS-REGIONAL
Malaysian Assurance Alliance Bhd. ....................... MAL 341,200 1,987,573 0.4
INSURANCE - MULTI-LINE
Bank Negara Indonesia - Foreign ......................... INDO 2,820,000 1,798,026 0.3
BANKS-REGIONAL
Global Menkul Degerler AS-/- ............................ TRKY 69,103,256 1,722,925 0.3
SECURITIES BROKER
Commercial International Bank: .......................... EGPT -- -- 0.3
BANKS-MONEY CENTER
144A GDR{.} {\/} ...................................... -- 58,000 1,209,300 --
Common ................................................ -- 23,940 500,996 --
</TABLE>

The accompanying notes are an integral part of the financial statements.

F2
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.

PORTFOLIO OF INVESTMENTS (cont'd)

June 30, 1997

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ----------------------------------------------------------- -------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (Continued)
Ayala Land, Inc. "B" .................................... PHIL 1,723,800 $ 1,586,419 0.3
REAL ESTATE
Turkiye Garanti Bankasi AS .............................. TRKY 41,290,000 1,558,113 0.3
BANKS-REGIONAL
Bank Hapoalim Ltd.-/- ................................... ISRL 703,576 1,468,776 0.3
BANKS-REGIONAL
Korea Exchange Bank ..................................... KOR 219,900 1,451,936 0.3
BANKS-MONEY CENTER
Commercial Bank of Korea ................................ KOR 211,300 1,135,201 0.2
BANKS-REGIONAL
Aksigorta ............................................... TRKY 15,080,000 955,202 0.2
INSURANCE - MULTI-LINE
Ergo Bank S.A. .......................................... GREC 13,218 793,917 0.1
BANKS-MONEY CENTER
BPI-SGPS S.A. ........................................... PORT 40,637 790,805 0.1
BANKS-MONEY CENTER
Banco Frances del Rio de la Plata S.A. - ADR{\/} ........ ARG 24,268 788,710 0.1
BANKS-MONEY CENTER
Alpha Credit Bank ....................................... GREC 11,465 780,026 0.1
BANKS-REGIONAL
Bank Leumi Le - Israel-/- ............................... ISRL 406,668 618,340 0.1
BANKS-REGIONAL
Bank Slaski S.A. ........................................ POL 7,316 523,367 0.1
BANKS-MONEY CENTER
Banco de Colombia - 144A GDR{.} {\/} .................... COL 77,200 453,550 0.1
BANKS-MONEY CENTER
PT Jaya Real Property - Foreign ......................... INDO 336,000 452,653 0.1
REAL ESTATE
Banco Ganadero S.A. - ADR{\/} ........................... COL 16,800 436,800 0.1
BANKS-REGIONAL
Egyptian American Bank SAE-/- ........................... EGPT 2,663 105,031 --
BANKS-MONEY CENTER
Phatra Thanakit Co., Ltd. - Foreign ..................... THAI 77,000 95,209 --
INVESTMENT MANAGEMENT
------------
90,796,221
------------
Energy (12.1%)
Petroleo Brasileiro S.A. (Petrobras) Preferred-/- ....... BRZL 23,852,040 6,625,173 1.2
OIL
LUKoil Holding - ADR{\/} ................................ RUS 78,379 6,113,562 1.1
GAS PRODUCTION & DISTRIBUTION
Centrais Eletricas Brasileiras S.A.-Eletrobras "B" -
ADR{\/} ................................................ BRZL 220,958 6,102,860 1.1
ELECTRICAL & GAS UTILITIES
Sasol Ltd. .............................................. SAFR 429,556 5,635,229 1.0
ENERGY SOURCES
Surgutneftegaz - ADR{\/} ................................ RUS 90,368 4,789,504 0.9
OIL
Empresa Nacional de Electricidad S.A. - ADR{\/} ......... CHLE 202,653 4,572,358 0.8
ELECTRICAL & GAS UTILITIES
</TABLE>

The accompanying notes are an integral part of the financial statements.

F3
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.

PORTFOLIO OF INVESTMENTS (cont'd)

June 30, 1997

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ----------------------------------------------------------- -------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Energy (Continued)
Chilgener S.A. - ADR-/- {\/} ............................ CHLE 152,401 $ 4,267,228 0.8
ELECTRICAL & GAS UTILITIES
Companhia Energetica de Minas Gerais (Cemig) -
ADR{\/} ................................................ BRZL 82,874 4,216,629 0.8
ELECTRICAL & GAS UTILITIES
C.A. La Electricidad de Caracas ......................... VENZ 2,486,529 3,987,926 0.7
ELECTRICAL & GAS UTILITIES
Korea Electric Power Corp. - ADR{\/} .................... KOR 190,870 3,566,883 0.6
ELECTRICAL & GAS UTILITIES
Light - Participacoes S.A.-/- ........................... BRZL 7,485,850 2,983,214 0.5
ELECTRICAL & GAS UTILITIES
Light - Servicos de Electricidade S.A. .................. BRZL 5,322,290 2,648,735 0.5
ELECTRICAL & GAS UTILITIES
Enersis S.A. ADR{\/} .................................... CHLE 62,748 2,231,476 0.4
ELECTRICAL & GAS UTILITIES
Manila Electric Co. "B" ................................. PHIL 361,110 1,781,567 0.3
ELECTRICAL & GAS UTILITIES
PTT Exploration and Production Public Co., Ltd. -
Foreign ................................................ THAI 112,200 1,630,108 0.3
OIL
Belle Corp.-/- .......................................... PHIL 4,710,000 1,376,357 0.2
OIL
Bombay Suburban Electric Supply (BSES) Ltd.-/- .......... IND 200,000 1,332,867 0.2
ELECTRICAL & GAS UTILITIES
Yukong Ltd. ............................................. KOR 53,680 1,302,619 0.2
OIL
YPF S.A. - ADR{\/} ...................................... ARG 37,760 1,161,120 0.2
OIL
Perez Companc S.A. "B"-/- ............................... ARG 100,460 806,855 0.1
OIL
Guangdong Electric Power Development Co., Ltd. "B" ...... CHNA 833,160 682,936 0.1
ENERGY SOURCES
Electricity Generating Public Co., Ltd. - Foreign ....... THAI 136,200 334,185 0.1
ELECTRICAL & GAS UTILITIES
EDP-Electricidade de Portugal S.A. ...................... PORT 9,030 165,721 --
ELECTRICAL & GAS UTILITIES
------------
68,315,112
------------
Services (11.7%)
Telecomunicacoes Brasileiras S.A. (Telebras): ........... BRZL -- -- 4.1
TELEPHONE NETWORKS
ADR{\/} ............................................... -- 115,091 17,465,059 --
Common ................................................ -- 40,244,258 5,458,116 --
Telefonos de Mexico, S.A. de C.V. "L" - ADR{\/} ......... MEX 142,738 6,815,740 1.2
TELEPHONE NETWORKS
Pick'n Pay Stores Ltd. .................................. SAFR 3,640,456 5,458,075 1.0
RETAILERS-OTHER
Compania de Telefonos de Chile S.A. - ADR{\/} ........... CHLE 128,402 4,237,266 0.8
TELEPHONE NETWORKS
Cifra S.A. de C.V.: ..................................... MEX -- -- 0.5
RETAILERS-OTHER
"B" ADR{\/} ........................................... -- 1,000,000 1,580,000 --
"B" ................................................... -- 592,636 1,104,522 --
</TABLE>

The accompanying notes are an integral part of the financial statements.

F4
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.

PORTFOLIO OF INVESTMENTS (cont'd)

June 30, 1997

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ----------------------------------------------------------- -------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Services (Continued)
Telecomunicacoes de Sao Paulo S.A. (TELESP) Preferred ... BRZL 7,715,118 $ 2,519,149 0.4
TELEPHONE NETWORKS
Konsortium Perkapalan Berhad ............................ MAL 370,000 2,184,664 0.4
TRANSPORTATION - SHIPPING
Mahanagar Telephone Nigam Ltd. .......................... IND 233,600 1,984,783 0.4
TELECOM - OTHER
Advanced Info. Service "L" .............................. THAI 221,100 1,930,781 0.3
WIRELESS COMMUNICATIONS
PT Telekomunikasi Indonesia - Foreign ................... INDO 1,173,500 1,918,825 0.3
TELECOM - OTHER
Telecomasia (Local)-/- .................................. THAI 1,361,600 1,644,127 0.3
TELEPHONE NETWORKS
Compania Anonima Nacional Telefonos de Venezuela (CANTV)
- ADR{\/ } ............................................. VENZ 37,626 1,622,621 0.3
TELEPHONE NETWORKS
SM Prime Holdings, Inc. ................................. PHIL 4,441,000 1,314,603 0.2
RETAILERS-APPAREL
Telefonica de Argentina S.A. "B" - ADR{\/} .............. ARG 32,028 1,108,970 0.2
TELEPHONE NETWORKS
PT Matahari Putra Prima - Foreign ....................... INDO 517,500 1,043,089 0.2
RETAILERS-APPAREL
Migros Turk T.A.S. ...................................... TRKY 1,305,000 923,349 0.2
RETAILERS-FOOD
Portugal Telecom S.A. - Registered ...................... PORT 20,551 829,046 0.1
TELEPHONE NETWORKS
Sonae Investimentos-Sociedade Gestora de Participacoes
Sociais S.A. ........................................... PORT 18,602 777,796 0.1
RETAILERS-OTHER
Hellenic Telecommunications Organization S.A. ........... GREC 30,660 719,876 0.1
TELEPHONE NETWORKS
PT Steady Safe Transportation - Foreign ................. INDO 554,500 650,072 0.1
TRANSPORTATION - ROAD & RAIL
Danubius Hotel and Spa Rt.-/- ........................... HGRY 21,940 648,360 0.1
LEISURE & TOURISM
Philippine Long Distance Telephone Co. .................. PHIL 15,610 506,510 0.1
TELEPHONE - LONG DISTANCE
Investec-Consultoria Internacional S.A.-/- .............. PORT 14,612 498,053 0.1
BROADCASTING & PUBLISHING
Indian Hotels Co., Ltd. ................................. IND 25,850 471,446 0.1
LEISURE & TOURISM
Blue Square Chain Investments & Properties Ltd.-/- ...... ISRL 29,644 288,626 0.1
RETAILERS-FOOD
Estabelecimentos Jeronimo Martins & Filho, Sociedade
Gestora de Participacoes Sociais S.A. .................. PORT 3,854 269,233 --
RETAILERS - OTHER
PT Indosat - Foreign .................................... INDO 58,000 173,571 --
TELECOM - OTHER
------------
66,146,328
------------
</TABLE>

The accompanying notes are an integral part of the financial statements.

F5
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.

PORTFOLIO OF INVESTMENTS (cont'd)

June 30, 1997

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ----------------------------------------------------------- -------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Materials/Basic Industry (11.0%)
General Mining Union Corp. (Gencor) ..................... SAFR 1,662,487 $ 7,660,893 1.4
METALS - NON-FERROUS
Kimberly-Clark de Mexico, S.A. de C.V. "A" .............. MEX 1,389,779 5,600,419 1.0
PAPER/PACKAGING
SA Iron & Steel Industrial Corp., Ltd. (ISCOR) .......... SAFR 7,933,404 5,247,539 0.9
METALS - STEEL
PT Gudang Garam - Foreign ............................... INDO 949,500 3,983,916 0.7
MISC. MATERIALS & COMMODITIES
Sappi Ltd. .............................................. SAFR 398,303 3,600,578 0.6
FOREST PRODUCTS
Suez Cement Co. - Reg S GDR-/- {c} {\/} ................. EGPT 158,195 3,195,539 0.6
CEMENT
Pohang Iron & Steel Co., Ltd. - ADR{\/} ................. KOR 88,870 2,843,840 0.5
METALS - STEEL
Apasco S.A. ............................................. MEX 369,933 2,655,356 0.5
CEMENT
Helwan Portland Cement Co.-/- ........................... EGPT 124,280 2,630,822 0.5
CEMENT
Industrias Penoles S.A. "CP" ............................ MEX 548,803 2,619,271 0.5
METALS - NON-FERROUS
Cosco Pacific Ltd. ...................................... HK 994,000 2,303,183 0.4
PAPER/PACKAGING
Anglo American Corporation of South Africa Ltd. ......... SAFR 37,760 2,274,924 0.4
GOLD
Siam Cement Co., Ltd. - Foreign ......................... THAI 117,100 2,027,079 0.4
CEMENT
Ameriyah Cement Co.-/- .................................. EGPT 67,800 1,652,344 0.3
CEMENT
Maanshan Iron and Steel Co. "H" ......................... CHNA 7,091,000 1,482,860 0.3
METALS - STEEL
Torah Portland Cement Co.-/- ............................ EGPT 50,650 1,282,090 0.2
CEMENT
Eregli Demir Ve Celik Fabrikalari T.A.S. ................ TRKY 6,806,621 1,135,201 0.2
METALS - STEEL
Titan Cement Co., S.A. .................................. GREC 22,586 1,114,049 0.2
BUILDING MATERIALS & COMPONENTS
Paints & Chemical Industry-/- ........................... EGPT 31,400 1,058,219 0.2
CHEMICALS
Pannonplast Rt. ......................................... HGRY 20,732 1,040,474 0.2
MISC. MATERIALS & COMMODITIES
Turk Sise ve Cam Fabrikalari AS-/- ...................... TRKY 16,264,000 1,030,199 0.2
GLASS
Helioplis Housing-/- .................................... EGPT 8,000 946,814 0.2
BUILDING MATERIALS & COMPONENTS
Cahya Mata Sarawak Bhd. ................................. MAL 97,000 791,837 0.1
BUILDING MATERIALS & COMPONENTS
North Cairo Flour Mills-/- .............................. EGPT 15,170 790,313 0.1
MISC. MATERIALS & COMMODITIES
Israel Chemicals Ltd.-/- ................................ ISRL 654,789 772,596 0.1
CHEMICALS
</TABLE>

The accompanying notes are an integral part of the financial statements.

F6
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.

PORTFOLIO OF INVESTMENTS (cont'd)

June 30, 1997

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ----------------------------------------------------------- -------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Materials/Basic Industry (Continued)
Oryx Gold Holdings Ltd.-/- .............................. SAFR 698,990 $ 708,930 0.1
GOLD
Cimpor-Cimentos de Portugal, SGPS S.A. .................. PORT 21,964 511,911 0.1
CEMENT
Agros Holding S.A.-/- ................................... POL 16,123 429,456 0.1
MISC. MATERIALS & COMMODITIES
------------
61,390,652
------------
Multi-Industry/Miscellaneous (7.5%)
Barlow Ltd. ............................................. SAFR 657,524 7,154,406 1.3
CONGLOMERATE
Sime Darby Bhd. ......................................... MAL 1,245,000 4,144,244 0.7
MISCELLANEOUS
Bimantara Citra - Foreign ............................... INDO 2,369,500 4,142,483 0.7
CONGLOMERATE
Delta Corporation Ltd. (subdivision)-/- ................. ZBBW 2,472,400 3,797,016 0.7
MULTI-INDUSTRY
Renong Bhd. ............................................. MAL 2,519,000 3,294,115 0.6
MULTI-INDUSTRY
Shanghai Industrial Holdings Ltd. ....................... HK 520,000 3,235,400 0.6
MULTI-INDUSTRY
Haci Omer Sabanci Holding Reg S - ADR-/- {c} {\/} ....... TRKY 343,073 3,087,657 0.6
MULTI-INDUSTRY
Suramericana de Seguros S.A. ............................ COL 102,214 2,644,436 0.5
CONGLOMERATE
ITC Ltd.-/- ............................................. IND 136,000 2,140,811 0.4
MULTI-INDUSTRY
San Luis "CPO"-/- ....................................... MEX 248,277 1,841,521 0.3
CONGLOMERATE
Koc Holding AS .......................................... TRKY 7,535,000 1,777,123 0.3
CONGLOMERATE
Koor Industries Ltd.: ................................... ISRL -- -- 0.2
CONGLOMERATE
Common ................................................ -- 5,700 504,688 --
ADR{\/} ............................................... -- 22,043 388,508 --
Mosenergo: .............................................. RUS -- -- 0.2
MISCELLANEOUS
Reg S ADR{c} {\/} ..................................... -- 10,964 455,006 --
144A ADR{.} {\/} ...................................... -- 10,000 415,000 --
GT Taiwan Fund{\/}+X+ ................................... TWN 49,751 762,687 0.1
COUNTRY FUNDS
Graboplast Rt. .......................................... HGRY 13,452 632,021 0.1
MISCELLANEOUS
Banco Comercial Portugues "A", Convertible Preferred, 8%
till 6/30/03{\/ } ...................................... PORT 6,615 453,128 0.1
MISCELLANEOUS
Discount Investment Corp. ............................... ISRL 3,871 309,507 0.1
MULTI-INDUSTRY
------------
41,179,757
------------
</TABLE>

The accompanying notes are an integral part of the financial statements.

F7
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.

PORTFOLIO OF INVESTMENTS (cont'd)

June 30, 1997

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ----------------------------------------------------------- -------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Consumer Non-Durables (4.7%)
South African Breweries Ltd. ............................ SAFR 197,892 $ 6,075,727 1.1
BEVERAGES - ALCOHOLIC
Gruma S.A. "B"-/- ....................................... MEX 1,021,073 4,757,550 0.8
FOOD
Companhia Cervejaria Brahma Preferred ................... BRZL 4,662,721 3,551,724 0.6
BEVERAGES - ALCOHOLIC
Fomento Economico Mexicano, S.A. de C.V. "B"-/- ......... MEX 387,105 2,305,763 0.4
BEVERAGES - ALCOHOLIC
San Miguel Corp. "B" .................................... PHIL 851,600 2,246,156 0.4
BEVERAGES - ALCOHOLIC
Hindustan Lever Ltd.-/- ................................. IND 40,650 1,636,802 0.3
PERSONAL CARE/COSMETICS
Eastern Tobacco Co.-/- .................................. EGPT 64,075 1,621,913 0.3
TOBACCO
Embotelladora Andina S.A.: .............................. CHLE -- -- 0.3
BEVERAGES - NON-ALCOHOLIC
"B" ADR{\/} ........................................... -- 41,497 866,250 --
"A" ADR{\/} ........................................... -- 34,400 737,450 --
Bavaria ................................................. COL 106,425 764,503 0.1
BEVERAGES - ALCOHOLIC
A-Ahram Beverages Co. S.A.E. - GDR-/- {\/} .............. EGPT 36,514 746,711 0.1
BEVERAGES - ALCOHOLIC
Ng Fung Hong Ltd. ....................................... HK 462,000 691,795 0.1
FOOD
La Tondena Distillers, Inc. ............................. PHIL 137,900 332,321 0.1
BEVERAGES - NON-ALCOHOLIC
Zaklady Piwowarskie w Zywcu S.A. (Zywiec) ............... POL 4,461 285,178 0.1
BEVERAGES - ALCOHOLIC
------------
26,619,843
------------
Consumer Durables (2.9%)
Johnson Electric Holdings Ltd. .......................... HK 1,375,500 4,101,571 0.7
AUTO PARTS
Samsung Electronics Co. - 144A GDR{.} -/- {\/} .......... KOR 55,070 3,221,595 0.6
CONSUMER ELECTRONICS
Arcelik AS .............................................. TRKY 16,609,500 2,238,477 0.4
APPLIANCES & HOUSEHOLD
PT Astra International - Foreign ........................ INDO 405,000 1,665,981 0.3
AUTO PARTS
Qingling Motors Co., Ltd.-/- ............................ CHNA 2,708,000 1,398,255 0.3
AUTOMOBILES
Bajaj Auto Ltd. ......................................... IND 52,800 1,360,246 0.2
AUTOMOBILES
Tata Engineering and Locomotive Co., Ltd.: .............. IND -- -- 0.2
AUTOMOBILES
GDR{\/} ............................................... -- 48,000 736,800 --
Common ................................................ -- 25,000 316,084 --
BEC World Public Co., Ltd. .............................. THAI 77,800 667,372 0.1
CONSUMER ELECTRONICS
</TABLE>

The accompanying notes are an integral part of the financial statements.

F8
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.

PORTFOLIO OF INVESTMENTS (cont'd)

June 30, 1997

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ----------------------------------------------------------- -------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Consumer Durables (Continued)
Mahindra & Mahindra Ltd.-/- ............................. IND 43,300 $ 524,445 0.1
AUTOMOBILES
------------
16,230,826
------------
Capital Goods (2.9%)
United Engineers Ltd. ................................... MAL 659,000 4,752,843 0.8
CONSTRUCTION
Hindalco Industries Ltd.: ............................... IND -- -- 0.8
INDUSTRIAL COMPONENTS
144A GDR{.} {\/} ...................................... -- 73,400 2,594,690 --
Common ................................................ -- 63,600 1,739,883 --
ECI Telecommunications Ltd.{\/} ......................... ISRL 73,000 2,171,750 0.4
TELECOM EQUIPMENT
Cheung Kong Infrastructure Holdings ..................... HK 471,000 1,364,944 0.2
CONSTRUCTION
New World Infrastructure Ltd.-/- ........................ HK 482,000 1,362,601 0.2
INDUSTRIAL COMPONENTS
IJM Corporation Bhd. .................................... MAL 589,000 1,237,052 0.2
CONSTRUCTION
Irkutskenergo - ADR{\/} ................................. RUS 36,412 609,901 0.1
ELECTRICAL PLANT/EQUIPMENT
C & P Homes, Inc. ....................................... PHIL 1,382,000 519,233 0.1
CONSTRUCTION
Elektrim Spolka Akcyjna S.A. ............................ POL 58,947 513,207 0.1
ELECTRICAL PLANT/EQUIPMENT
Sungmi Telecom Electronics Co. .......................... KOR 1,400 186,561 --
ELECTRICAL PLANT/EQUIPMENT
------------
17,052,665
------------
Technology (2.0%)
Asustek Computer Inc. Reg. S - GDR-/- {c} {\/} .......... TWN 956,400 10,831,230 1.9
COMPUTERS & PERIPHERALS
Clal Electronics Industries Ltd. ........................ ISRL 2,754 356,681 0.1
SEMICONDUCTORS
------------
11,187,911
------------
Health Care (1.2%)
Teva Pharmaceutical Industries Ltd. ..................... ISRL 28,162 1,826,178 0.3
MEDICAL TECHNOLOGY & SUPPLIES
Richter Gedeon Rt. - GDR{\/} ............................ HGRY 17,552 1,614,784 0.3
PHARMACEUTICALS
Ranbaxy Laboratories Ltd. ............................... IND 79,850 1,522,734 0.3
MEDICAL TECHNOLOGY & SUPPLIES
Egypt International Pharmaceuticals-/- .................. EGPT 19,000 1,175,847 0.2
PHARMACEUTICALS
</TABLE>

The accompanying notes are an integral part of the financial statements.

F9
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.

PORTFOLIO OF INVESTMENTS (cont'd)

June 30, 1997

TOTAL EQUITY INVESTMENTS (cost $381,434,874) .............. 405,699,232 72.4
------------ -----
<CAPTION>

PRINCIPAL VALUE % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- ----------------------------------------------------------- -------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Government & Government Agency Obligations (14.6%)
Argentina (4.2%)
Republic of Argentina:
BOCON Pro 1, 3.2424% due 4/1/07+ .................... ARS 9,345,700 9,845,220 1.7
Global Bond, 11% due 10/9/06 ........................ USD 7,657,000 8,529,898 1.5
Global Bond, 11.375% due 1/30/17 .................... USD 3,849,000 4,292,597 0.8
Discount Bond, 6.875% due 3/31/23+ .................. USD 600,000 519,375 0.1
BOCON Pre 1, 3.2424% due 4/1/01+ .................... ARS 298,800 356,091 0.1
Brazil (1.7%)
Federal Republic of Brazil:
Debt Conversion Bond Series L, 6.9375% due
4/15/12+ ........................................... USD 6,377,000 5,265,011 0.9
Debt Conversion Bond Registered, 6.9375% due
4/15/12+ ........................................... USD 5,623,000 4,642,489 0.8
Bulgaria (3.2%)
Republic of Bulgaria:
Interest Arrears Bond, 6.5625% due 7/28/11 -
Euro+ .............................................. USD 13,583,000 9,822,207 1.7
Discount Bond Series A, 6.6875% due 7/28/24 -
Euro+ .............................................. USD 11,442,000 8,438,475 1.5
Ecuador (1.0%)
Republic of Ecuador, Discount Bond, 6.4375% due 2/28/25
- Euro+ .............................................. USD 7,542,000 5,416,099 1.0
Mexico (1.2%)
United Mexican States:
Global Bond, 11.5% due 5/15/26 ...................... USD 3,336,000 3,818,886 0.7
Par Bond Series A, 6.25% due 12/31/19+/+ ............ USD 3,534,000 2,736,641 0.5
Poland (1.4%)
Republic of Poland:
12% due 6/12/01 ..................................... PLZ 15,923,000 3,950,455 0.7
Past Due Interest Bond, 4% due 10/27/14 - Euro++
{j} ................................................ USD 4,300,000 3,695,313 0.7
Russia (0.0%)
City of St. Petersburg, 9.5% due 6/18/02 - 144A{.} .... USD 250,000 250,313 --
South Africa (0.7%)
Republic of South Africa, 13% due 8/31/10 ............. ZAR 20,173,000 4,072,762 0.7
Venezuela (1.2%)
Republic of Venezuela:
Debt Conversion Bond, 6.75% due 12/18/07+ ........... USD 4,000,000 3,710,000 0.7
Par Bond Series B, 6.75% due 3/31/20+/+ ............. USD 3,750,000 2,957,813 0.5
------------
Total Government & Government Agency Obligations (cost
$79,921,652) ............................................. 82,319,645
------------
</TABLE>

The accompanying notes are an integral part of the financial statements.

F10
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.

PORTFOLIO OF INVESTMENTS (cont'd)

June 30, 1997

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- ----------------------------------------------------------- -------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Sovereign Debt (4.1%)
Russia (4.1%)
Bank for Foreign Economic Affairs (Vnesheconombank)
Loan Agreement ** -/- {j} ............................ USD 22,635,000 $ 20,757,963 3.7
Bank for Foreign Economic Affairs (Vnesheconombank)
Loan Agreement ** -/- ................................ DEM 4,186,000 2,338,053 0.4
------------
Total Sovereign Debt (cost $12,011,123) ................... 23,096,016
------------
Corporate Bonds (2.8%)
Argentina (0.5%)
Supermercados Norte, 10.875% due 2/9/04 - 144A{.} ..... USD 1,193,000 1,222,706 0.2
Central Termica Guemes S.A., 12% due 11/26/01 -
144A{.} .............................................. USD 1,020,000 1,068,144 0.2
Acindar Industrial Argentina, 11.25% due 2/15/04 ...... USD 661,000 697,355 0.1
Brazil (0.6%)
RBS Participacoes S.A., 11% due 4/1/07 - 144A{.} ...... USD 1,107,000 1,162,350 0.2
Tevecap S.A., 12.625% due 11/26/04 - 144A{.} .......... USD 840,000 908,250 0.2
TV Filme, Inc., 12.875% due 12/15/04 - 144A{.} ........ USD 844,000 887,255 0.2
China (0.7%)
Panda Global Energy Co., 12.5% due 4/15/04 -
144A{.} .............................................. USD 2,139,000 2,074,830 0.4
Greater Beijing First, 9.5% due 6/15/07 - 144A{.} ..... USD 960,000 974,400 0.2
Road King Infrastructure, 9.5% due 7/15/07 -
144A{.} .............................................. USD 700,000 704,375 0.1
Indonesia (0.4%)
PT Tjiwi Kimia, 13.25% due 8/1/01 ..................... USD 1,507,000 1,716,096 0.3
Indah Kiat Financial Mauritius, 10% due 7/1/07 -
144A{.} .............................................. USD 530,000 529,338 0.1
Mexico (0.3%)
Copamex Industrias S.A., 11.375% due 4/30/04 -
144A{.} .............................................. USD 996,000 1,068,210 0.2
Grupo Mexico de Desarrollo, 8.25% due 2/17/01 ......... USD 860,000 597,700 0.1
Russia (0.3%)
Lukinter Finance, 3.5% due 5/6/02 - 144A{.} ........... USD 1,213,000 1,522,315 0.3
------------
Total Corporate Bonds (cost $14,421,367) .................. 15,133,324
------------ -----

TOTAL FIXED INCOME INVESTMENTS (cost $106,354,142) ........ 120,548,985 21.5
------------ -----

UNDERLYING
NOMINAL VALUE % OF NET
OPTIONS CURRENCY AMOUNT (NOTE 1) ASSETS
- ----------------------------------------------------------- -------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Republic of Bulgaria Floating Interest Rate Bond 'A'
7/28/12, Call Option, strike 45.9375 expires 7/17/97 ... USD 10,115,000 1,118,972 0.2
GOVERNMENT & GOVERNMENT AGENCY OBLIGATIONS
Republic of Brazil Debt Conversion Bond 4/15/12, Call
Option, strike 80.222, expires 9/16/97 ................. USD 17,370,000 464,422 0.1
GOVERNMENT & GOVERNMENT AGENCY OBLIGATIONS
</TABLE>

The accompanying notes are an integral part of the financial statements.

F11
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.

PORTFOLIO OF INVESTMENTS (cont'd)

June 30, 1997

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
UNDERLYING
NOMINAL VALUE % OF NET
OPTIONS CURRENCY AMOUNT (NOTE 1) ASSETS
- ----------------------------------------------------------- -------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Republic of Venezuela Debt Conversion Bond 12/18/07, Call
Option, strike 91, expires 8/26/97 ..................... USD 9,250,000 $ 187,683 --
GOVERNMENT & GOVERNMENT AGENCY OBLIGATIONS
------------ -----

TOTAL OPTIONS (cost $772,565) ............................. 1,771,077 0.3
------------ -----

NO. OF VALUE % OF NET
RIGHTS COUNTRY RIGHTS (NOTE 1) ASSETS
- ----------------------------------------------------------- -------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Chilgener S.A. Rights, expire 7/7/97{\/} ................ CHLE 31,143 104,329 --
ELECTRICAL & GAS UTILITIES
Hellenic Telecommunication Organization S.A. Rights,
expire 7/18/97 ......................................... GREC 30,660 3,767 --
TELEPHONE NETWORKS
Rashid Hussain Bhd. Rights for Warrants, expire
8/5/97 ................................................. MAL 145,857 -- --
OTHER FINANCIAL
------------ -----

TOTAL RIGHTS (cost $0) .................................... 108,096 --0.0
------------ -----
<CAPTION>

PRINCIPAL VALUE % OF NET
SHORT-TERM INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- ----------------------------------------------------------- -------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Structured Notes (1.4%)
Russia (1.4%)
Russian Federation GKO (Treasury Bills) Linked Notes
withcancellable currency forwards attached:
Due 4/15/98 ........................................ USD 5,446,000 8,191,637 1.4
(Notes issued by Credit Suisse First Boston (Cayman)
Ltd. These notes are linked to the local price in
Russian rubles of 54,460 Titles of Russian treasury
bills maturing 4/8/98.) (cost $7,178,464)
Government & Government Agency Obligations (0.3%)
Indonesia (0.3%)
Dharmala Intiutama International Promissory Note,
effective yield 15.19% due 10/27/97 (cost
$1,610,308) .......................................... IDR 4,000,000,000 1,567,393 0.3
------------ -----

TOTAL SHORT-TERM INVESTMENTS (cost $8,788,772) ............ 9,759,030 1.7
------------ -----
</TABLE>

The accompanying notes are an integral part of the financial statements.

F12
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.

PORTFOLIO OF INVESTMENTS (cont'd)

June 30, 1997

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- ----------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated June 30, 1997, with State Street Bank & Trust Co.,
due July 1, 1997, for an effective yield of 5.75%,
collateralized by $9,360,000 U.S. Treasury Bills, 6.125%
due 3/31/98 (market value of collateral is $9,525,366,
including accrued interest). (cost $9,334,491) ......... $ 9,334,491 1.7
------------ -----

TOTAL INVESTMENTS (cost $506,684,844) * .................. 547,220,911 97.6
Other Assets and Liabilities .............................. 13,377,933 2.4
------------ -----

NET ASSETS ................................................ $560,598,844 100.0
------------ -----
------------ -----
</TABLE>

- --------------

{\/} U.S. currency denominated.
-/- Non-income producing security.
{.} 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.
{c} Security issued under Regulation S. Rule 144A and additional
restrictions may apply in the resale of such securities.
** Underlying loan agreement currently in default.
+ The coupon rate shown on floating rate note represents the rate at
period end.
+/+ Issued with detachable warrants or value recovery rights. The
current market value of each warrant or right is zero.
{j} All or part of the Fund's holdings in this security is segregated
as collateral for when-issued securities. See Note 1 to the
Financial Statements.
++ The coupon rate shown on step-up coupon bond represents the rate at
period end.
+X+ The G.T. Global Developing Markets Fund, Inc. (the "Fund") has
invested in the GT Global Taiwan Fund, a fund managed by LGT Asset
Management Ltd. who is an affiliate of the Fund's manager,
Chancellor LGT Asset Management, Inc.
* For Federal income tax purposes, cost is $507,655,947 and
appreciation (depreciation) is as follows:

<TABLE>
<S> <C>
Unrealized appreciation: $ 51,174,996
Unrealized depreciation: (11,610,032)
-------------
Net unrealized appreciation: $ 39,564,964
-------------
-------------
</TABLE>

Abbreviations:
ADR--American Depository Receipt
GDR--Global Depository Receipt

The accompanying notes are an integral part of the financial statements.

F13
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.

PORTFOLIO OF INVESTMENTS (cont'd)

June 30, 1997

- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at June 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) .................. 0.6 4.7 5.3
Brazil (BRZL/BRL) .................... 10.1 2.3 0.1 12.5
Bulgaria (BUL/LEV) ................... 3.2 0.2 3.4
Chile (CHLE/CLP) ..................... 4.0 4.0
China (CHNA/RMB) ..................... 0.7 0.7 1.4
Colombia (COL/COP) ................... 0.8 0.8
Ecuador (ECDR/ECS) ................... 1.0 1.0
Egypt (EGPT/EGP) ..................... 3.0 3.0
Greece (GREC/GRD) .................... 0.5 0.5
Hong Kong (HK/HKD) ................... 2.9 2.9
Hungary (HGRY/HUF) ................... 0.7 0.7
India (IND/INR) ...................... 3.5 3.5
Indonesia (INDO/IDR) ................. 3.2 0.4 0.3 3.9
Israel (ISRL/ILS) .................... 1.7 1.7
Korea (KOR/KRW) ...................... 2.9 2.9
Malaysia (MAL/MYR) ................... 7.1 7.1
Mexico (MEX/MXN) ..................... 5.2 1.5 6.7
Panama (PAN/PND) ..................... 1.4 1.4
Philippines (PHIL/PHP) ............... 1.7 1.7
Poland (POL/PLZ) ..................... 0.4 1.4 1.8
Portugal (PORT/PTE) .................. 0.6 0.6
Russia (RUS/SUR) ..................... 2.3 4.4 1.4 8.1
South Africa (SAFR/ZAR) .............. 8.7 0.7 9.4
Taiwan (TWN/TWD) ..................... 2.0 2.0
Thailand (THAI/THB) .................. 2.7 2.7
Turkey (TRKY/TRL) .................... 4.0 4.0
United States & Other (US/USD) ....... 4.1 4.1
Venezuela (VENZ/VEB) ................. 1.0 1.2 2.2
Zimbabwe (ZBBW/ZWD) .................. 0.7 0.7
------ ----- ----- -----
Total ............................... 72.4 21.5 6.1 100.0
------ ----- ----- -----
------ ----- ----- -----
</TABLE>

- --------------

{d} Percentages indicated are based on net assets of $560,598,844.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
JUNE 30, 1997

<TABLE>
<CAPTION>
MARKET VALUE CONTRACT DELIVERY UNREALIZED
CONTRACTS TO SELL: (U.S. DOLLARS) PRICE DATE APPRECIATION
- ---------------------------------------- -------------- ----------- -------- --------------
<S> <C> <C> <C> <C>
Deutsche Marks.......................... 1,667,986 1.67438 08/13/97 $ 64,004
--------------
THE VALUE OF CONTRACTS TO SELL AS A
PERCENTAGE OF NET ASSETS IS 0.30%.
Total Open Forward Foreign Currency
Contracts (Receivable amount
$1,731,990).......................... $ 64,004
--------------
--------------
</TABLE>

- ----------------
See Note 1 to the financial statements.

The accompanying notes are an integral part of the financial statements.

F14
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.

STATEMENT OF ASSETS
AND LIABILITIES
June 30, 1997

- --------------------------------------------------------------------------------

<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $506,684,844) (Note 1)................. $547,220,911
U.S. currency....................................................... $ 598
Foreign currencies (cost $14,877,210)............................... 15,209,832 15,210,430
-----------
Receivable for securities sold................................................... 19,797,548
Interest receivable.............................................................. 2,470,017
Dividends and dividend withholding tax reclaims receivable....................... 1,012,312
Unamortized organizational costs (Note 1)........................................ 109,155
Receivable for open forward foreign currency contracts (Note 1).................. 64,004
Cash held as collateral for securities loaned (Note 1)........................... 38,768,656
------------
Total assets................................................................... 624,653,033
------------
Liabilities:
Payable for securities purchased................................................. 24,293,241
Payable for investment management and administration fees (Note 2)............... 730,616
Payable for printing and postage expenses........................................ 68,122
Payable for professional fees.................................................... 47,957
Payable for Directors' fees and expenses (Note 2)................................ 12,750
Payable for transfer agent fees.................................................. 10,250
Payable for custodian fees....................................................... 10,195
Payable for fund accounting fees (Note 2)........................................ 9,246
Payable for registration and filing fees......................................... 2,127
Other accrued expenses........................................................... 101,029
Collateral for securities loaned (Note 1)........................................ 38,768,656
------------
Total liabilities.............................................................. 64,054,189
------------
Net assets......................................................................... $560,598,844
------------
------------
Net asset value per share ($560,598,844 DIVIDED BY 36,416,667 shares
outstanding)...................................................................... $ 15.39
------------
------------
Net assets consist of:
Paid in capital (Note 4)......................................................... $545,109,494
Undistributed net investment income.............................................. 7,627,240
Accumulated net realized loss on investments and foreign currency transactions... (32,738,231)
Net unrealized appreciation on translation of assets and liabilities in foreign
currencies...................................................................... 64,274
Net unrealized appreciation of investments....................................... 40,536,067
------------
Total -- representing net assets applicable to capital shares outstanding.......... $560,598,844
------------
------------
</TABLE>

The accompanying notes are an integral part of the financial statements.

F15
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.

STATEMENT OF OPERATIONS

Six months ended June 30, 1997

- --------------------------------------------------------------------------------

<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Interest income............................................................................ $ 8,297,254
Dividend income (net of foreign withholding tax of $184,613)............................... 3,761,245
-----------
Total investment income.................................................................. 12,058,499
-----------
Expenses:
Investment management fees (Note 2)........................................................ 3,689,362
Administration fees (Note 2)............................................................... 659,522
Custodian fees............................................................................. 134,669
Professional fees.......................................................................... 68,418
Fund accounting fees (Note 2).............................................................. 65,953
Amortization of organization costs (Note 1)................................................ 35,087
Printing and postage expenses.............................................................. 31,856
Transfer agent fees........................................................................ 19,910
Directors' fees and expenses (Note 2)...................................................... 15,204
Other expenses............................................................................. 167,974
-----------
Total expenses before reductions......................................................... 4,887,955
Expense reductions (Notes 1 & 5)....................................................... (92,914)
-----------
Total net expenses....................................................................... 4,795,041
-----------
Net investment income........................................................................ 7,263,458
-----------
Net realized and unrealized gain (loss) on investments and foreign currencies:
(Note 1)
Net realized gain on investments.............................................. $69,561,832
Net realized loss on foreign currency transactions............................ (230,810)
-----------
Net realized gain during the period...................................................... 69,331,022
Net change in unrealized appreciation on translation of assets and liabilities
in foreign currencies........................................................ (25,984)
Net change in unrealized appreciation of investments.......................... (19,982,031)
-----------
Net unrealized depreciation during the period............................................ (20,008,015)
-----------
Net realized and unrealized gain on investments and foreign currencies....................... 49,323,007
-----------
Net increase in net assets resulting from operations......................................... $56,586,465
-----------
-----------
</TABLE>

The accompanying notes are an integral part of the financial statements.

F16
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.

STATEMENTS OF CHANGES IN NET ASSETS

- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, DECEMBER 31,
1997 1996
------------ ------------
<S> <C> <C>
Increase in net assets
Operations:
Net investment income............................................... $ 7,263,458 $19,406,553
Net realized gain on investments and foreign currency
transactions....................................................... 69,331,022 945,154
Net change in unrealized appreciation (depreciation) on translation
of assets and liabilities in foreign currencies.................... (25,984 ) 91,835
Net change in unrealized appreciation (depreciation) of
investments........................................................ (19,982,031 ) 78,628,364
------------ ------------
Net increase in net assets resulting from operations.............. 56,586,465 99,071,906
Distributions to shareholders: (Note 1)
From net investment income.......................................... -- (17,407,047 )
------------ ------------
Total increase in net assets.................................... 56,586,465 81,664,859
Net assets:
Beginning of period................................................. 504,012,379 422,347,520
------------ ------------
End of period *..................................................... $560,598,844 $504,012,379
------------ ------------
------------ ------------
* Includes undistributed net investment income of.................... $ 7,627,240 $ 363,782
------------ ------------
------------ ------------
</TABLE>

The accompanying notes are an integral part of the financial statements.

F17
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
JANUARY 11, 1994
(COMMENCEMENT
SIX MONTHS YEAR ENDED OF OPERATIONS)
ENDED DECEMBER 31, TO
JUNE 30, ---------------------- DECEMBER 31,
1997 1996 1995 1994
------------ ---------- ---------- ----------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 13.84 $ 11.60 $ 12.44 $ 15.00
------------ ---------- ---------- ----------------
Income from investment operations:
Net investment income................. 0.20 0.53 0.72 0.35
Net realized and unrealized gain
(loss) on investments................ 1.35 2.19 (0.84) (2.46)
------------ ---------- ---------- ----------------
Net increase (decrease) from
investment operations.............. 1.55 2.72 (0.12) (2.11)
------------ ---------- ---------- ----------------
Distributions to shareholders:
From net investment income............ -- (0.48) (0.72) (0.35)
From net realized gain on
investments.......................... -- -- -- (0.10)
------------ ---------- ---------- ----------------
Total distributions................. -- (0.48) (0.72) (0.45)
------------ ---------- ---------- ----------------
Net asset value, end of period.......... $ 15.39 $ 13.84 $ 11.60 $ 12.44
------------ ---------- ---------- ----------------
------------ ---------- ---------- ----------------
Market value, end of period............. $ 14.06 $ 11.63 $ 9.75 $ 9.75
------------ ---------- ---------- ----------------
------------ ---------- ---------- ----------------

Total investment return (based on market
value)................................. 20.90 %+ 24.18% 6.60% (32.16)%+
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 560,599 $ 504,012 $ 422,348 $ 452,872
Ratio of net investment income to
average net assets..................... 2.75 %++ 4.07% 6.33% 2.75 %++
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 1.82 %++ 1.82% 1.77% 2.01 %++
Without expense reductions............ 1.85 %++ 1.85% 1.80% 2.01 %++
Portfolio turnover rate................. 217 %++ 138% 75% 56 %
Average commission rate per share paid
on portfolio transactions.............. $ 0.0019 $ 0.0022 N/A N/A
</TABLE>

- ----------------

+ Not annualized
++ Annualized
N/A Not Applicable

The accompanying notes are an integral part of the financial statements.

F18
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.

NOTES TO FINANCIAL STATEMENTS

June 30, 1997

- --------------------------------------------------------------------------------

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of
significant accounting policies in conformity with generally accepted accounting
principles consistently followed by the Fund in the preparation of the financial
statements.

F19
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.

case of an over-the-counter option, is valued at the average of the last bid
prices obtained from brokers, unless a quotation from only one broker is
available, in which case only that broker's price will be used. If an option
expires on its stipulated expiration date or if the Fund enters into a closing
purchase transaction, a gain or loss is realized without regard to any
unrealized gain or loss on the underlying security, and the liability related to
such option is extinguished. If a written call option is exercised, a gain or
loss is realized from the sale of the underlying security and the proceeds of
the sale are increased by the premium originally received. If a written put
option is exercised, the cost of the underlying security purchased would be
decreased by the premium originally received. The Fund can write options only on
a covered basis, which, for a call, requires that the Fund hold the underlying
security, and, for a put, requires the Fund to set aside cash, U.S. government
securities or other liquid securities in an amount not less than the exercise
price or otherwise provide adequate cover at all times while the put option is
outstanding. The Fund may use options to manage its exposure to the stock and
bond markets and to fluctuations in currency values or interest rates.

(H) PORTFOLIO SECURITIES LOANED
At June 30, 1997, stocks with an aggregate value of approximately $36,477,608
were on loan to brokers. The loans were secured by cash collateral of
$38,768,656 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 June 30, 1997, the Fund received securities lending income of
$86,176 which was used to reduce the Fund's custodian fees and administrative
expenses.

F20
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.

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.

(O) SECURITIES PURCHASED ON A WHEN-ISSUED OR FORWARD COMMITMENT BASIS
The Fund may trade securities on a when-issued or forward commitment basis, with
payment and delivery scheduled for a future date. These transactions are subject
to market fluctuations and are subject to the risk that the value at delivery
may be more or less than the trade date purchase price. Although the Fund will
generally purchase these securities with the intention of acquiring such
securities, they may sell such securities before the settlement date. These
securities are identified on the accompanying Portfolio of Investments. The Fund
has purchased and sold when-issued securities during the period and has set
aside liquid securities as collateral for these commitments.

(P) LINE OF CREDIT
The Fund, along with certain other Funds advised by the Manager, has a line of
credit with BankBoston and State Street Bank. The arrangements with the banks
allow the Fund to borrow an aggregate maximum amount of $200,000,000. The Fund
is limited to borrowing up to 33 1/3% of the value of the Fund's total assets.
For the period ended June 30, 1997, the Fund had no outstanding loan balance.

2. RELATED PARTIES
Chancellor LGT Asset Management, Inc. is the Fund's investment manager and
administrator. The Fund pays the Manager investment management fees, which are
computed weekly and paid monthly, at the annualized rate of 1.40% of the Fund's
average weekly net assets. The Manager also acts as administrator of the Fund.
The Fund pays the Manager administration fees, which are computed and paid
monthly, at an annualized rate of 0.25% of the Fund's average weekly net assets.

3. PURCHASES AND SALES OF SECURITIES
For the six months ended June 30, 1997, purchases and sales of investment
securities by the Fund, other than U.S. government obligations and short-term
investments, aggregated $530,548,719 and $525,917,109, respectively. There were
no purchases or sales of U.S. government obligations by the Fund for the period.

4. CAPITAL SHARES
At June 30, 1997, the Fund is authorized to issue 100 million shares of capital
stock, $0.001 par value, all of which is classified as Common Stock.

5. EXPENSE REDUCTIONS
The Manager has directed certain portfolio trades to brokers who paid a portion
of the Fund's expenses. For the six months ended June 30, 1997, the Fund's
expenses were reduced by $6,738 under these arrangements.

6. SUBSEQUENT EVENT
On August 13, 1997, the Fund's Board of Directors approved certain matters
required to convert the Fund from a closed-end investment company to an open-end
mutual fund. A shareholder meeting has been called for October 20, 1997 at which
shareholders as of August 22, 1997 may vote on a plan to convert the Fund into a
newly organized GT Global Mutual Fund also to be named GT Global Developing
Markets Fund. If the Fund's shareholders approve the conversion to a mutual
fund, the conversion is expected to occur soon after the shareholder meeting.

F21
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.

NOTES

- --------------------------------------------------------------------------------
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND

GT GLOBAL FUNDS

GROWTH FUNDS

/ / GLOBALLY DIVERSIFIED FUNDS

GT GLOBAL NEW DIMENSION FUND

Captures global growth opportunities by investing directly in the six GT Global
Theme 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

GT GLOBAL DEVELOPING MARKETS FUND

Invests in debt and equity securities of developing market issuers

/ / GLOBAL THEME FUNDS

GT GLOBAL CONSUMER PRODUCTS AND
SERVICES FUND
Invests in companies that manufacture, market, retail, or distribute consumer
products or services

GT GLOBAL FINANCIAL SERVICES FUND
Focuses on the worldwide opportunities from the demand for financial services
and products

GT GLOBAL HEALTH CARE FUND
Invests in growing health care industries worldwide

GT GLOBAL INFRASTRUCTURE FUND
Seeks companies that build, improve or maintain a country's infrastructure

GT GLOBAL NATURAL RESOURCES FUND
Concentrates on companies that own, explore or develop natural resources

GT GLOBAL TELECOMMUNICATIONS FUND
Invests in companies worldwide that develop, manufacture or sell
telecommunications services or equipment

/ / REGIONALLY DIVERSIFIED FUNDS

GT GLOBAL NEW PACIFIC GROWTH FUND
Offers access to the emerging and established markets of the Pacific Rim,
excluding Japan

GT GLOBAL EUROPE GROWTH FUND
Focuses on investment opportunities in the new, unified Europe

GT GLOBAL LATIN AMERICA GROWTH FUND
Invests in the emerging markets of Latin America

/ / SINGLE COUNTRY FUNDS

GT GLOBAL AMERICA SMALL CAP GROWTH FUND
Invests in equity securities of small U.S. companies

GT GLOBAL AMERICA 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 bonds from around the world

INCOME FUNDS

GT GLOBAL GOVERNMENT INCOME FUND
Earns monthly income from global government securities

GT GLOBAL STRATEGIC INCOME FUND
Allocates its assets among debt securities from the U.S., developed foreign
countries and emerging markets

GT GLOBAL HIGH INCOME FUND
Invests in debt securities in emerging markets

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

[LOGO]

NO DEALER, SALES REPRESENTATIVE OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS
STATEMENT OF ADDITIONAL INFORMATION AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY G.T.
INVESTMENT FUNDS, INC., GT GLOBAL DEVELOPING MARKETS FUND, CHANCELLOR LGT
ASSET MANAGEMENT, INC. OR GT GLOBAL, INC. THIS STATEMENT OF ADDITIONAL
INFORMATION DOES NOT CONSTITUTE AN OFFER TO SELL OR SOLICITATION OF ANY
OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY
PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION.

GROSA703 MC
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND:
ADVISOR CLASS

50 California Street, 27th Floor
San Francisco, California 94111
(415) 392-6181
Toll Free: (800) 824-1580

Statement of Additional Information
November 1, 1997

- --------------------------------------------------------------------------------

This Statement of Additional Information relates to the Advisor Class shares of
GT Global Developing Markets Fund (the "Fund"). The Fund is a non-diversified
series of G.T. Investment Funds, Inc. (the "Company"), a registered open-end
management investment company. On October 31, 1997, the Fund, which had no
previous operating history, acquired the assets and assumed the liabilities of
G.T. Global Developing Markets Fund, Inc. (the "Predecessor Fund"), a closed-end
investment company. This Statement of Additional Information, which is not a
prospectus, supplements and should be read in conjunction with the Fund's
current Advisor Class Prospectus dated November 1, 1997, a copy of which is
available without charge by writing to the above address or by calling the Fund
at the toll-free telephone number listed above.

- --------------------------------------------------------------------------------

TABLE OF CONTENTS

- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Investment Objectives and Policies....................................................................................... 2
Options, Futures and Currency Strategies................................................................................. 7
Risk Factors............................................................................................................. 15
Investment Limitations................................................................................................... 21
Execution of Portfolio Transactions...................................................................................... 23
Directors and Executive Officers......................................................................................... 25
Management............................................................................................................... 27
Valuation of Fund Shares................................................................................................. 28
Information Relating to Sales and Redemptions............................................................................ 29
Taxes.................................................................................................................... 31
Additional Information................................................................................................... 34
Investment Results....................................................................................................... 35
Description of Debt Ratings.............................................................................................. 41
Financial Statements..................................................................................................... 43
</TABLE>

[LOGO]

Statement of Additional Information Page 1
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND

INVESTMENT OBJECTIVES AND
POLICIES

- --------------------------------------------------------------------------------

INVESTMENT OBJECTIVES

DEPOSITORY RECEIPTS

LENDING OF PORTFOLIO SECURITIES

SWAPS, CAPS, FLOORS AND COLLARS

The Fund may enter into interest rate, currency and index swaps, and may
purchase or sell related caps, floors and collars and other derivative
instruments. The Fund expects to enter into these transactions primarily to
preserve a return or spread on a particular investment or portion of its
portfolio, to protect against currency fluctuations, as a technique for managing
the portfolio's duration (I.E., the price sensitivity to changes in interest
rates) or to protect against any increase in the price of securities the Fund
anticipates purchasing at a later date. The Fund intends to use these
transactions as

Statement of Additional Information Page 6
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND

hedges and will not sell interest rate caps, floors or collars if it does not
own securities or other instruments providing an income stream roughly
equivalent to what the Fund may be obligated to pay.

- --------------------------------------------------------------------------------

OPTIONS, FUTURES AND CURRENCY
STRATEGIES

- --------------------------------------------------------------------------------

(3) Hedging strategies, if successful, can reduce risk of loss by wholly
or partially offsetting the negative effect of unfavorable price movements
in the investments being hedged. However, hedging strategies can also reduce
opportunity for gain by offsetting the positive effect of favorable price
movements in the hedged investments. For example, if a Fund entered into a
short hedge because the Manager projected a decline in the price of a
security in the Fund's portfolio, and the price of that security increased
instead, the gain from that increase might be wholly or partially offset by
a decline in the price of the hedging instrument. Moreover, if the price of
the hedging instrument declined by more than the increase in the price of
the security, the Fund could suffer a loss. In either such case, the Fund
would have been in a better position had it not hedged at all.

Statement of Additional Information Page 7
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND

A call option gives the holder (buyer) the right to purchase a security or
currency at a specified price (the exercise price) at any time until (American
style) or on (European style) a certain date (the expiration date). So long as
the obligation of the writer of a call option continues, he may be assigned an
exercise notice, requiring him to deliver the underlying security or currency
against payment of the exercise price. This obligation terminates upon the
expiration of the call option, or such earlier time at which the writer effects
a closing purchase transaction by purchasing an option identical to that
previously sold.

PURCHASING PUT OPTIONS
The Fund may purchase put options on securities, indices and currencies. As the
holder of a put option, the Fund has the right to sell the underlying security
or currency at the exercise price any any time until (American style) or
(European style) the expiration date. The Fund may enter into closing sale
transactions with respect to such options, exercise them or permit them to
expire.

PURCHASING CALL OPTIONS

The Fund may purchase call options on securities, indices and currencies. As the
holder of a call option, the Fund would have the right to purchase the
underlying security or currency at the exercise price at any time until
(American style) or on (European style) the expiration date. The Fund may enter
into closing sale transactions with respect to such options, exercise them or
permit them to expire.

Aggregate premiums paid for put and call options will not exceed 5% of the
Fund's total assets at the time of purchase.

The Fund may attempt to accomplish objectives similar to those involved in using
Forward Contracts by purchasing put or call options on currencies. A put option
gives the Fund as purchaser the right (but not the obligation) to sell a
specified amount of currency at the exercise price at any time until (American
style) or on (European style) the expiration date. A call option gives the Fund
as purchaser the right (but not the obligation) to purchase a specified amount
of currency at the exercise price at any time until (American style) or on
(European style) the expiration date. The Fund might purchase a currency put
option, for example, to protect itself against a decline in the dollar value of
a currency in which it holds or anticipates holding securities. If the
currency's value should decline against the dollar, the loss in currency value
should be offset, in whole or in part, by an increase in the value of the put.
If the value of the currency instead should rise against the dollar, any gain to
the Fund would be reduced by the premium it had paid for the put option. A
currency call option might be purchased, for example, in anticipation of, or to
protect against, a rise in the value against the dollar of a currency in which
the Fund anticipates purchasing securities.

Options may be either listed on an exchange or traded in over-the-counter
("OTC") Markets. Listed options are third-party contracts (I.E., performance of
the obligations of the purchaser and seller is guaranteed by the exchange or
clearing corporation), and have standardized strike prices and expiration dates.
OTC options are two-party contracts with negotiated strike prices and expiration
dates. The Fund will not purchase an OTC option unless it believes that daily
valuations for such options are readily obtainable. OTC options differ from
exchange-traded options in that OTC options are transacted with dealers directly
and not through a clearing corporation (which guarantees performance).
Consequently, there is a risk of non-performance by the dealer. Since no
exchange is involved, OTC options are valued on the basis of an average of the
last bid prices obtained from dealers, unless a quotation from only one dealer
is available, in which case only that dealer's price will be used. In the case
of OTC options, there can be no assurance that a liquid secondary market will
exist for any particular option at any specific time.

The Fund's ability to establish and close out positions in exchange-listed
options depends on the existence of a liquid market. The Fund intends to
purchase or write only those exchange-traded options for which there appears to
be a liquid secondary market. However, there can be no assurance that such a
market will exist at any particular time. Closing transactions can be made for
OTC options only by negotiating directly with the contra party or by a
transaction in the secondary market if any such market exists. Although the Fund
will enter into OTC options only with contra parties that are expected to be
capable of entering into closing transactions with the Fund, there is no
assurance that the Fund will in fact be able to close out an OTC option position
at a favorable price prior to expiration. In the extent of insolvency of the
contra party, the Fund might be unable to close out an OTC option position at
any time prior to its expiration.

INDEX OPTIONS
Puts and calls on indices are similar to puts and calls on securities or futures
contracts except that all settlements are in cash and gain or loss depends on
changes in the index in question (and thus on price movements in the securities
market or a particular market sector generally) rather than on price movements
in individual securities or futures contracts. When the Fund writes a call on an
index, it receives a premium and agrees that, prior to the expiration date, the
purchaser of the call, upon exercise of the call, will receive from the Fund an
amount of cash if the closing level of the index upon which the call is based is
greater than the exercise price of the call. The amount of cash is equal to the
difference between the closing price of the index and the exercise price of the
call times a specified multiple (the "multiplier"), which determines the total
dollar value for each point of such difference. When the Fund buys a call on an
index, it pays a premium and has the same rights as to such calls as are
indicated above. When the Fund buys a put on an index, it pays a premium and has
the right, prior to the expiration date, to require the seller of the put, upon
the Fund's exercise of the put, to deliver to the Fund an

INTEREST RATE, CURRENCY AND STOCK INDEX FUTURES CONTRACTS
The Fund may enter into interest rate, currency or stock index futures contracts
(collectively, "Futures" or "Futures Contracts"), as a hedge against changes in
prevailing levels of interest rates, currency exchange rates or stock price
levels, respectively, in order to establish more definitely the effective return
on securities or currencies held or intended to be acquired by it. The Fund's
hedging may include sales of Futures as an offset against the effect of expected
increases in interest rates and decreases in currency exchange rates or stock
prices, and purchases of Futures as an offset against the effect of expected
declines in interest rates, and increases in currency exchange rates or stock
prices.

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GT GLOBAL DEVELOPING MARKETS FUND

As an example of an offsetting transaction, the contractual obligations arising
from the sale of one Futures Contract of September Deutschemarks on an exchange
may be fulfilled at any time before delivery under the Futures Contract is
required (i.e., on a specified date in September, the "delivery month") by the
purchase of another Futures Contract of September Deutschemarks on the same
exchange. In such instance the difference between the price at which the Futures
Contract was sold and the price paid for the offsetting purchase, after
allowance for transaction costs, represents the profit or loss to the Fund.

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GT GLOBAL DEVELOPING MARKETS FUND

LIMITATIONS ON USE OF FUTURES, OPTIONS ON FUTURES AND CERTAIN OPTIONS ON
CURRENCIES
To the extent that the Fund enters into Futures Contracts, options on Futures
Contracts, and options on foreign currencies traded on a CFTC-regulated
exchange, in each case other than for BONA FIDE hedging purposes (as defined by
the CFTC), the aggregate initial margin and premiums required to establish those
positions (excluding the amount by which options are "in-the-money") will not
exceed 5% of the liquidation value of the Fund's portfolio, after taking into
account unrealized profits and unrealized losses on any contracts the Fund has
entered into. In general, a call option on a Futures Contract is "in-the-money"
if the value of the underlying Futures Contract exceeds the strike, i.e.,
exercise, price of the call; a put option on a futures contract is
"in-the-money" if the value of the underlying Futures Contract is exceeded by
the strike price of the put. This guideline may be modified by the Company's
Board of Directors without a shareholder vote. This limitation does not limit
the percentage of the Fund's assets at risk to 5%.

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GT GLOBAL DEVELOPING MARKETS FUND

The Fund may enter into Forward Contracts either with respect to specific
transactions or with respect to the Fund's portfolio positions. The precise
matching of the Forward Contract amounts and the value of specific securities
generally will not be possible because the future value of such securities in
foreign currencies will change as a consequence of market movements in the value
of those securities between the date the Forward Contract is entered into and
the date it matures. Accordingly, it may be necessary for the Fund to purchase
additional foreign currency on the spot (i.e., cash) market (and bear the
expense of such purchase) if the market value of the security is less than the
amount of foreign currency the Fund is obligated to deliver and if a decision is
made to sell the security and make delivery of the foreign currency. Conversely,
it may be necessary to sell on the spot market some of the foreign currency the
Fund is obligated to deliver. The projection of short-term currency market
movements is extremely difficult, and the successful execution of a short-term
hedging strategy is highly uncertain. Forward Contracts involve the risk that
anticipated currency movements will not be predicted accurately, causing the
Fund to sustain losses on these contracts and transaction costs.

At or before the maturity of a Forward Contract requiring the Fund to sell a
currency, the Fund either may sell a portfolio security and use the sale
proceeds to make delivery of the currency or retain the security and offset its
contractual obligation to deliver the currency by purchasing a second contract
pursuant to which the Fund will obtain, on the same maturity date, the same
amount of the currency that it is obligated to deliver. Similarly, the Fund may
close out a Forward Contract requiring it to purchase a specified currency by,
if its contra party agrees, entering into a second contract entitling it to sell
the same amount of the same currency on the maturity date of the first contract.
The Fund would realize a gain or loss as a result of entering into such an
offsetting Forward Contract under either circumstance to the extent the exchange
rate or rates between the currencies involved moved between the execution dates
of the first contract and the offsetting contract.

The value of Futures Contracts, options on Futures Contracts, Forward Contracts
and options on foreign currencies depends on the value of the underlying
currency relative to the U.S. dollar. Because foreign currency transactions
occurring in the interbank market might involve substantially larger amounts
than those involved in the use of Futures

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RISK FACTORS

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ILLIQUID SECURITIES
The Fund may invest up to 15% of its net assets in illiquid securities.
Securities may be considered illiquid if the Fund cannot reasonably expect
within seven days to sell the securities for approximately the amount at which
the Fund values such securities. The sale of illiquid securities, if they can be
sold at all, generally will require more time and result in higher brokerage
charges or dealer discounts and other selling expenses than the sale of liquid
securities, such as securities eligible for trading on U.S. securities exchanges
or in the over-the-counter markets. Moreover, restricted securities which may be
illiquid for purposes of this limitation, often sell, if at all, at a price
lower than similar securities that are not subject to restrictions on resale.

With respect to liquidity determinations generally, the Company's Board of
Directors has the ultimate responsibility for determining whether specific
securities, including restricted securities pursuant to Rule 144A under the 1933
Act, are liquid or illiquid. The Board has delegated the function of making
day-to-day determinations of liquidity to the Manager in accordance with
procedures approved by the Board. The Manager takes into account a number of
factors in reaching liquidity decisions, including (i) the frequency of trading
in the security, (ii) the number of dealers who make quotes for the security,
(iii) the number of dealers who have undertaken to make a market in the
security, (iv) the number of other potential purchasers, and (v) the nature of
the security and how trading is effected (e.g., the time needed to sell the
security, how offers are solicited and the mechanics of transfer). The Manager
monitors the liquidity of securities in the Fund's portfolio and periodically
reports on such decisions to the Board.

RELIGIOUS AND ETHNIC STABILITY. Certain countries in which the Fund may
invest may have groups that advocate radical religious or revolutionary
philosophies or support ethnic independence. Any disturbance on the part of such
individuals could carry the potential for widespread destruction or confiscation
of property owned by individuals and entities foreign to such country and could
cause the loss of the Fund's investment in those countries. Instability may also
result from, among other things, (i) authoritarian governments or military
involvement in political and economic decision-making, including changes in
government through extra-constitutional means, (ii) popular unrest associated
with demands for improved political, economic and social conditions, and (iii)
hostile relations with neighboring or other countries. Such political, social
and economic instability could disrupt the principal financial markets in which
the Fund invests and adversely affect the value of the Fund's assets.

NON-UNIFORM CORPORATE DISCLOSURE STANDARDS AND GOVERNMENTAL
REGULATION. Foreign companies are subject to accounting, auditing and financial
standards and requirements that differ in some cases significantly from those
applicable to U.S. companies. In particular, the assets, liabilities and profits
appearing on the financial statements of such a company may not reflect its
financial position or results of operations in the way they would be reflected
had such financial statements been prepared in accordance with U.S. generally
accepted accounting principles. Most of the securities held by the Fund will not
be registered with the SEC or regulators of any foreign country, nor will the
issuers thereof be subject to the SEC's reporting requirements. Thus, there will
be less available information concerning most foreign issuers of securities held
by the Fund than is available concerning U.S. issuers. In instances where the
financial statements of an issuer are not deemed to reflect accurately the
financial situation of the issuer, the Manager will take appropriate steps to
evaluate the proposed investment, which may include on-site inspection of the
issuer, interviews with its management and consultations with accountants,
bankers and other specialists. There is substantially less publicly available
information about foreign companies than there are reports and ratings published
about U.S. companies and the U.S. government. In addition, where public
information is available, it may be less reliable than such information
regarding U.S. issuers. Issuers of securities in foreign jurisdictions are
generally not subject to the same degree of regulation as are U.S. issuers with
respect to such matters as restrictions on market manipulation, insider trading
rules, shareholder proxy requirements and timely disclosure of information.

ADVERSE MARKET CHARACTERISTICS. Securities of many foreign issuers may be
less liquid and their prices more volatile than securities of comparable U.S.
issuers. In addition, foreign securities markets and brokers generally are
subject to less governmental supervision and regulation than in the United
States, and foreign securities transactions usually are subject to fixed
commissions, which generally are higher than negotiated commissions on U.S.
transactions. In addition, foreign securities transactions may be subject to
difficulties associated with the settlement of such transactions. Delays in
settlement could result in temporary periods when assets of the Fund are
uninvested and no return is earned thereon. The inability of the Fund to make
intended security purchases due to settlement problems could cause the Fund to
miss attractive opportunities. Inability to dispose of a portfolio security due
to settlement problems either could result in losses to the Fund due to
subsequent declines in value of the portfolio security or, if the Fund has
entered into a contract to sell

SPECIAL CONSIDERATIONS AFFECTING RUSSIA AND EASTERN EUROPEAN
COUNTRIES. Investing in Russia and Eastern European countries involves a high
degree of risk and special considerations not typically associated with
investing in the U.S. securities markets and should be considered highly
speculative. Such risks include the following: (1) delays in settling

The common stocks of many Japanese companies trade at high price-earnings
ratios. Differences in accounting methods make it difficult to compare the
earnings of Japanese companies with those of companies in other countries,
especially in the United States In general, however, reported net income in
Japan is understated relative to U.S. accounting standards and this is one
reason why price-earnings ratios of the stocks of Japanese companies have tended
historically to be higher than those for U.S. stocks. In addition, Japanese
companies have tended to have higher growth rates than U.S. companies and
Japanese interest rates have generally been lower than in the United States,
both of which factors tend to result in lower discount rates and higher
price-earnings ratios in Japan than in the United States.

Statement of Additional Information Page 19
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GT GLOBAL DEVELOPING MARKETS FUND

NON-UNIFORM CORPORATE DISCLOSURE STANDARDS AND GOVERNMENTAL
REGULATION. Foreign companies are subject to accounting, auditing and financial
standards and requirements that differ, in some cases significantly, from those
applicable to U.S. companies. In particular, the assets, liabilities and profits
appearing on the financial statements of such a company may not reflect its
financial position or results of operations in the way they would be reflected
had such financial statements been prepared in accordance with U.S. generally
accepted accounting principles. Most of the securities held by the Fund will not
be registered with the SEC or regulators of any foreign country, nor will the
issuers thereof be subject to the SEC's reporting requirements. Thus, there will
be less available information concerning most foreign issuers of securities held
by the Fund than is available concerning U.S. issuers. In instances where the
financial statements of an issuer are not deemed to reflect accurately the
financial situation of the issuer, the Manager will take appropriate steps to
evaluate the proposed investment, which may include on-site inspection of the
issuer, interviews with its management and consultations with accountants,
bankers and other specialists. There is substantially less publicly available
information about foreign companies than there are reports and ratings published
about U.S. companies and the U.S. government. In addition, where public
information is available, it may be less reliable than such information
regarding U.S. issuers. In addition, for companies that keep accounting records
in local currency, inflation accounting rules in some Latin American countries
require, for both tax and accounting purposes, that certain assets and
liabilities be restated on the company's balance sheet in order to express items
in terms of currency of constant purchasing power. Inflation accounting may
indirectly generate losses or profits. There is substantially less publicly
available information about foreign companies, including Latin American
companies, and the governments of Latin American countries than there are
reports and ratings published about U.S. companies and the U.S. government.
Issuers of securities in foreign jurisdictions are generally not subject to the
same degree of regulation as are U.S. issuers with respect to such matters as
restrictions on market manipulation, insider trading rules, shareholder proxy
requirements and timely disclosure of information.

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INVESTMENT LIMITATIONS

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The Fund may not:

(1) issue senior securities or borrow money in amounts in excess of
those permitted under the 1940 Act;

Statement of Additional Information Page 21
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GT GLOBAL DEVELOPING MARKETS FUND

Statement of Additional Information Page 22
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GT GLOBAL DEVELOPING MARKETS FUND

EXECUTION OF PORTFOLIO
TRANSACTIONS

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Statement of Additional Information Page 23
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND
of foreign stock exchanges and brokers than in the United States. Foreign
security settlements may in some instances be subject to delays and related
administrative uncertainties.

For the fiscal years ended December 31, 1996, 1995 and 1994, the Predecessor
Fund paid aggregate brokerage commissions of $1,580,879, $1,311,090 and
$2,832,000, respectively. ["Affiliated" brokerage commissions?].

PORTFOLIO TRADING AND TURNOVER

Statement of Additional Information Page 24
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GT GLOBAL DEVELOPING MARKETS FUND

DIRECTORS AND EXECUTIVE
OFFICERS

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The Company's Directors and Executive Officers are listed below.

- --------------

* Mr. Guilfoyle and Mr. Wade are "interested persons" of the Trust as defined
by the 1940 Act due to their affiliation with the LGT companies.

Statement of Additional Information Page 25
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GT GLOBAL DEVELOPING MARKETS FUND

------------------------------

The Board of Directors has a Nominating and Audit Committee, comprised of Miss
Quigley and Messrs. Anderson, Bayley and Patterson, which is responsible for
nominating persons to serve as Directors, reviewing audits of the Company and
its funds and recommending firms to serve as independent auditors for the
Company. Each of the Directors and officers of the Company is also a Director
and officer of G.T. Investment Portfolios, Inc., and GT Global Floating Rate
Fund, Inc., a Trustee and officer of G.T. Global Growth Series and a Trustee of
G.T. Global Eastern Europe Fund, G.T. Global Variable Investment Trust, G.T.
Global Variable Investment Series, Global High Income Portfolio and Global
Investment Portfolio, which are also registered investment companies managed by
the Manager. Each Director and Officer serves in total as a Director or Trustee
and Officer, respectively, of 11 registered investment companies with 41 series
managed or administered by the Manager. The Company pays each Director, who is
not a director, officer or employee of the Manager or any affiliated company,
$5,000 per annum, plus $300 per Fund for each meeting of the Board attended, and
reimburses travel and other expenses incurred in connection with attendance at
such meetings. Other Directors and officers receive no compensation or expense
reimbursement from the Company. For the fiscal year ended October 31, 1996, Mr.
Anderson, Mr. Bayley, Mr. Patterson and Miss Quigley, who are not directors,
officers or employees of the Manager or other affiliated company, received total
compensation of $30,200, $30,200, $26,600 and 30,200, respectively, from the
Company for which he or she serves as a Director. For the fiscal year ended
October 31, 1996, Mr. Anderson, Mr. Bayley, Mr. Patterson and Miss Quigley
received total compensation of $80,100, $80,100, $72,600 and $80,100,
respectively, from the investment companies managed or administered by the
Manager for which he or she serves as a Director or Trustee. Fees and expenses
disbursed to the Directors contained no accrued or payable pension or retirement
benefits. As of October 1, 1997, the Officers and Directors and their families
as a group owned in the aggregate beneficially or of record less than 1% of the
outstanding shares of the Fund or of all the Company's funds in the aggregate.

Statement of Additional Information Page 26
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GT GLOBAL DEVELOPING MARKETS FUND

MANAGEMENT

- --------------------------------------------------------------------------------

The Management Contract may be renewed for one-year terms, provided that any
such renewal has been specifically approved at least annually by (i) the
Company's Board of Directors, or by the vote of a majority of the Fund's
outstanding voting securities (as defined in the 1940 Act), and (ii) a majority
of Directors who are not parties to the Management Contract or "interested
persons" of any such party (as defined in the 1940 Act), cast in person at a
meeting called for the specific purpose of voting on such approval. The
Management Contract provides that with respect to the Fund, the Company or the
Manager may terminate the Contract without penalty upon sixty days' written
notice. The Management Contract terminates automatically in the event of its
assignment (as defined in the 1940 Act).

The following table discloses the amount of investment management and
administration fees paid by the Predecessor Fund to the Manager during the
Predecessor Fund's last three fiscal years:

DISTRIBUTION SERVICES
The Fund's Advisor Class shares are offered continuously through the Fund's
principal underwriter and distributor, GT Global, on a "best efforts" basis
without a sales charge or a contingent deferred sales charge.

Statement of Additional Information Page 27
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GT GLOBAL DEVELOPING MARKETS FUND

VALUATION OF FUND SHARES

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The Fund's portfolio securities and other assets are valued as follows:

Statement of Additional Information Page 28
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GT GLOBAL DEVELOPING MARKETS FUND
net asset value may not take place contemporaneously with the determination of
the prices of securities held by the Fund. Events affecting the values of
portfolio securities that occur between the time their prices are determined and
the close of regular trading on the NYSE will not be reflected in the Fund's net
asset value unless the Manager, under the supervision of the Company's Board of
Directors, determines that the particular event would materially affect net
asset value. As a result, the Fund's net asset value may be significantly
affected by such trading on days when a shareholder cannot purchase or redeem
shares of the Fund.

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INFORMATION RELATING TO SALES
AND REDEMPTIONS

- --------------------------------------------------------------------------------

PAYMENT AND TERMS OF OFFERING
Payment for Advisor Class shares purchased should accompany the purchase order,
or funds should be wired to the Transfer Agent as described in the Prospectus.
Payment for Fund shares, other than by wire transfer, must be made by check or
money order drawn on a U.S. bank. Checks or money orders must be payable in U.S.
dollars.

As a condition of this offering, if an order to purchase Advisor Class shares is
cancelled due to nonpayment (for example, on account of a check returned for
"not sufficient funds"), the person who made the order will be responsible for
any loss incurred by the Fund by reason of such cancellation, and if such
purchaser is a shareholder, the Fund shall have the authority as agent of the
shareholder to redeem shares in his or her account at their then-current net
asset value per share to reimburse the Fund for the loss incurred. Investors
whose purchase orders have been cancelled due to nonpayment may be prohibited
from placing future orders.

INDIVIDUAL RETIREMENT ACCOUNTS ("IRAs") AND OTHER TAX-DEFERRED PLANS

IRAs: If you have earned income from employment (including self-employment), you
can contribute each year to an IRA up to the lesser of (1) $2,000 for yourself
or $4,000 for you and your spouse, regardless of whether your spouse is
employed, or (2) 100% of compensation. Some individuals may be able to take an
income tax deduction for the contribution. Regular contributions may not be made
for the year you become 70 1/2 or thereafter. Effective for taxable years
beginning after 1997, unless you and your spouse's earnings exceed a certain
level, you may also establish an "Education IRA" and/or a "Roth IRA." Although
contributions to these new types of IRAs are nondeductible, withdrawals from
them will be tax-free under certain circumstances. Please consult your tax
advisor for more information.

ROLLOVER IRAs: Individuals who receive distributions from qualified retirement
plans (other than required distributions) and who wish to keep their savings
growing tax-deferred can rollover (or make a direct transfer of) their
distribution to a Rollover IRA. These accounts can also receive rollovers or
transfers from an existing IRA. If an "eligible rollover distribution" from a
qualified employer-sponsored retirement plan is not directly rolled over to an
IRA (or certain qualified plans), withholding at the rate of 20% will be
required for federal income tax purposes. A distribution from a qualified plan
that is not an "eligible rollover distribution," including a distribution that
is one of a series of substantially equal periodic payments, generally is
subject to regular wage withholding or withholding at the rate of 10% (depending
on the type and amount of the distribution), unless you elect not to have any
withholding apply. Please consult your tax advisor for more information.

Statement of Additional Information Page 29
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GT GLOBAL DEVELOPING MARKETS FUND

Section 401(k) plans but with fewer administrative requirements and therefore
potential lower annual administration expenses.

CODE SECTION 403(b)(7) CUSTODIAL ACCOUNTS: Employees of public schools and most
other tax-exempt organizations can make pre-tax salary reduction contributions
to these accounts.

EXCHANGES

Shares of the Fund may be exchanged for shares of other GT Global Mutual Funds,
based on their respective net asset values without imposition of any sales
charges provided that the registration remains identical. Advisor Class shares
may be exchanged only for Advisor Class shares of other GT Global Mutual Funds.
The exchange privilege is not an option or right to purchase shares but is
permitted under the current policies of the respective GT Global Mutual Funds.
The privilege may be discontinued or changed at any time by any of the funds
upon 60 days prior notice to the shareholders of such fund and is available only
in states where the exchange may be legally made. Before purchasing shares
through the exercise of the exchange privilege, a shareholder should obtain and
read a copy of the prospectus of the fund to be purchased and should consider
the investment objective(s) of the fund.

REDEMPTIONS IN KIND
It is possible that conditions may arise in the future which would, in the
opinion of the Company's Board of Directors, make it undesirable for the Fund to
pay for all redemptions in cash. In such cases, the Board may authorize payment
to be made in portfolio securities or other property of the Fund, so called
"redemptions in kind." Payment of redemptions in kind will be made in readily
marketable securities. Such securities would be valued at the same value
assigned to them in computing the net asset value per share. Shareholders
receiving such securities would incur brokerage costs in selling any such
securities so received. However, despite the foregoing, the Company has filed
with the SEC an election pursuant to Rule 18f-1 under the 1940 Act. This means
that the Fund will pay in cash all requests for redemption made by any
shareholder of record, limited in amount with respect to each shareholder during
any ninety-day period to the lesser of $250,000 or 1% of the value of the net
assets of the Fund at the beginning of such period. This election is irrevocable
so long as Rule 18f-1 remains in effect, unless the SEC by order upon
application permits the withdrawal of such election.

Statement of Additional Information Page 30
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GT GLOBAL DEVELOPING MARKETS FUND

TAXES

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GENERAL

To continue to qualify for treatment as a RIC under the Internal Revenue Code of
1986, as amended ("Code"), the Fund must distribute to its shareholders for each
taxable year at least 90% of its investment company taxable income (consisting
generally of net investment income, net short-term capital gain and net gains
from certain foreign currency transactions) ("Distribution Requirement") and
must meet several additional requirements. These requirements include the
Diversification Requirements described under "Investment Limitations" and the
requirement that the Fund derive at least 90% of its gross income each taxable
year from dividends, interest, payments with respect to securities loans and
gains from the sale or other disposition of securities or foreign currencies, or
other income (including gains from options, Futures or Forward Contracts)
derived with respect to its business of investing in securities or those
currencies ("Income Requirement").

FOREIGN TAXES

Dividends and interest received by the Fund, and gains realized thereby, may be
subject to income, withholding or other taxes imposed by foreign countries and
U.S. possessions ("foreign taxes") that would reduce the yield and/or total
return on its securities. Tax conventions between certain countries and the
United States may reduce or eliminate foreign taxes, however, and many foreign
countries do not impose taxes on capital gains in respect of investments by
foreign investors. If more than 50% of the value of the Fund's total assets at
the close of its taxable year consists of securities of foreign corporations,
the Fund will be eligible to, and may, file an election with the Internal
Revenue Service that will enable its shareholders, in effect, to receive the
benefit of the foreign tax credit with respect to any foreign taxes paid by it.
Pursuant to the election, the Fund would treat those taxes as dividends paid to
its shareholders and each shareholder would be required to (1) include in gross
income, and treat as paid by him, his share of those taxes, (2) treat his share
of those taxes and of any dividend paid by the Fund that represents income from
foreign and U.S. possessions sources as his own income from those sources, and
(3) either deduct the taxes deemed paid by him in computing his taxable income
or, alternatively, use the foregoing information in calculating the foreign tax
credit against his federal income tax. The Fund will report to its shareholders
shortly after each taxable year their respective shares of the Fund's income
from sources within, and taxes paid to, foreign countries and U.S. possessions
if it makes this election. Pursuant to the Taxpayer Relief Act of 1997 ("Tax
Act"), after 1997 individuals who have no more than $300 ($600 for married
persons filing jointly) of creditable foreign taxes included on Forms 1099 and
have no foreign source non-passive income will be able to claim a foreign tax
credit without having to file the detailed Form 1116.

Statement of Additional Information Page 31
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GT GLOBAL DEVELOPING MARKETS FUND

PASSIVE FOREIGN INVESTMENT COMPANIES

Effective for its taxable year beginning November 1, 1998, the Fund may elect to
"mark to market" its stock in any PFIC. "Marking-to-market," in this context,
means including in ordinary income each taxable year the excess, if any, of the
fair market value of the PFIC's stock over the Fund's adjusted basis therein as
of the end of that year. Pursuant to the election, the Fund also would be
allowed to deduct (as an ordinary, not capital, loss) the excess, if any, of its
adjusted basis in PFIC stock over the fair market value thereof as of the
taxable year-end, but only to the extent of any net mark-to-market gains with
respect to that stock included by the Fund for prior taxable years. The Fund's
adjusted basis is each PFIC's stock with respect to which is makes this election
will be adjusted to reflect the amounts of income included and deductions taken
under the election. Regulations proposed in1992 would provide a similar election
with respect to the stock of certain PFICs.

NON-U.S. SHAREHOLDERS

OPTIONS, FUTURES AND FOREIGN CURRENCY TRANSACTIONS

Futures and Forward Contracts that are subject to Section 1256 of the Code
(other than those that are part of a "mixed straddle") ("Section 1256
Contracts") and that are held by the Fund at the end of its taxable year
generally will be deemed to have been sold at market value for federal income
tax purposes. Sixty percent of any net gain or loss recognized on these deemed
sales, and 60% of any net gain or loss realized from any actual sales of Section
1256 Contracts, will be treated as long-term capital gain or loss, and the
balance will be treated as short-term capital gain or loss. It is not entirely
clear, as of the date of this Statement of Additional Information, whether the
60% portion of that capital gain that is treated as long-term capital gain will
qualify for the reduced maximum tax rates on net capital gain enacted by the Tax
Act -- 20% (10% for taxpayers in the 15% marginal tax bracket) on capital assets
held for more than 18 months -- instead of the

Statement of Additional Information Page 32
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND

maximum rate in effect before that legislation, 28%, which now applies to gain
on capital assets held for more than one year but not more than 18 months.
Section 1256 contracts also may be marked-to-market for purposes of the Excise
Tax.

Statement of Additional Information Page 33
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND

ADDITIONAL INFORMATION

- --------------------------------------------------------------------------------

LIECHTENSTEIN GLOBAL TRUST

INDEPENDENT ACCOUNTANTS
The Fund's independent accountants are Coopers & Lybrand L.L.P., One Post Office
Square, Boston, Massachusetts 02109. Coopers & Lybrand L.L.P., conducts an
annual audit of the Fund, assists in the preparation of the Fund's federal and
state income tax returns and consults with the Company and the Fund as to
matters of accounting, regulatory filings, and federal and state income
taxation.

Statement of Additional Information Page 34
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND

INVESTMENT RESULTS

- --------------------------------------------------------------------------------

STANDARDIZED RETURNS
The Fund's "Standardized Returns," as referred to in the Prospectus (see "Other
Information -- Performance Information" in the Prospectus), are calculated
separately for Class A, Class B and Advisor Class shares of the Fund, as
follows: Standardized Return (average annual total return ("T")) is computed by
using the ending redeeming value ("ERV") of a hypothetical initial investment of
$1,000 ("P") over a period of years ("n") according to the following formula as
required by the SEC: P(1+T) to the (n)th power = ERV. The following assumptions
will be reflected in computations made in accordance with this formula: (1) for
Class A shares, deduction of the maximum sales charge of 4.75% from the $1,000
initial investment; (2) for Class B shares, deduction of the applicable
contingent deferred sales charge imposed on a redemption of Class B shares held
for the period; (3) for Advisor Class shares, deduction of a sales charge is not
applicable; (4) reinvestment of dividends and other distributions at net asset
value on the reinvestment date determined by the Company's Board of Directors;
and (5) a complete redemption at the end of any period illustrated.

<TABLE>
<CAPTION>
DEVELOPING DEVELOPING
MARKETS FUND MARKETS FUND
PERIOD (CLASS A) (CLASS B)
- ------------------------------------------------------------------------------------ --------------- ---------------
<S> <C> <C>
Fiscal period ended June 30, 1997................................................... 14.78% 15.50%
January 11, 1994 (commencement of operations) through June 30, 1997................. 3.17% 3.85%

<CAPTION>
DEVELOPING
MARKETS FUND
PERIOD (ADVISOR CLASS)
- ------------------------------------------------------------------------------------ ---------------
<S> <C>
Fiscal period ended June 30, 1997................................................... 20.50%
January 11, 1994 (commencement of operations) through June 30, 1997................. 4.63%
</TABLE>

NON-STANDARDIZED RETURNS
In addition to Standardized Returns, the Fund may also include in
advertisements, sales literature and shareholder reports other total return
performance data ("Non-Standardized Return"). Non-Standardized Return is
calculated separately for Class A, Class B and Advisor Class shares of the Fund
and may be calculated according to several different formulas. Non-Standardized
Returns may be quoted for the same or different time periods for which
Standardized Returns are quoted. Non-Standardized Returns may or may not take
sales charges into account; performance data calculated without taking the
effect of sales charges into account will be higher than data including the
effect of such charges. Advisor Class shares are not subject to sales charges.

Aggregate Non-Standardized Return ("T") is computed by using the ending value of
the account ("VOA") of a hypothetical initial investment of $1,000 ("P")
according to the following formula: T=(VOA/P)-1. Aggregate Non-Standardized
Return assumes reinvestment of dividends and other distributions.

OTHER INFORMATION REGARDING STANDARDIZED AND NON-STANDARDIZED RETURNS

The Standardized and Non-Standardized Return Data are based on the performance
of the Predecessor Fund as a closed-end investment company. The Standardized
Return Data, however, have been recomputed to reflect the deduction of the
current maximum sales charge of 4.75% for Class A shares and the deduction of
the applicable deferred sales charge of 5.00% for Class B shares both of which
went into effect on November 1, 1997. Future performance of the Fund will be
effected by expenses that it will incur as a series of an open-end investment
company.

IMPORTANT POINTS TO NOTE ABOUT DATA RELATING TO WORLD EQUITY AND BOND MARKETS

Information relating to foreign market performance, capitalization and
diversification is based on sources believed to be reliable, but which may be
subject to revision and which has not been independently verified by the Company
or GT Global. The authors and publishers of such material are not to be
considered as "experts" under the Securities Act of 1933 on account of the
inclusion of such information herein. Stocks chosen by Morgan Stanley Capital
International or the IFC for inclusion in its various international market
indices may not necessarily constitute a representative cross-section of the
particular markets.

Statement of Additional Information Page 35
<PAGE>
GT GLOBAL DEVELOPING MARKETS FUND

GT Global believes that this information may be useful to investors considering
whether and to what extent to diversify their investments through the purchase
of mutual funds investing in securities on a global basis. However, this data is
not a representation of the past performance of the Fund, nor is it a prediction
of such performance. The performance of the Fund will differ from the historical
performance of such relevant indices. The performance of indices does not take
expenses into account, while the Fund incurs expenses in its operations which
will reduce performance. The Fund is actively managed, I.E. the Manager, as the
Fund's investment manager, actively purchases and sells securities in seeking
the Fund's investment objective. Moreover, the Fund may invest a portion of its
assets in corporate bonds, while certain indices relate only to government
bonds. Each of these factors will cause the performance of the Fund to differ
from relevant indices.

In addition, GT Global may in its radio, television and other advertising,
employ the use of sound effects such as, for example, sounds of electronic data
being communicated.

The Fund and GT Global may from time to time compare the Fund with, among
others, the following:

(1) Various Salomon Brothers World Bond Indices, which measure the total
return performance of high quality non-U.S. dollar denominated securities in
major sectors of the worldwide bond markets.

(5) Data and mutual fund rankings and comparisons published or prepared
by Lipper Analytical Data Services, Inc. ("Lipper"), CDA/Wiesenberger
Investment Company Services ("CDA/Wiesenberger") and/or other companies that
rank or compare mutual funds by overall performance, investment objectives,
assets, expense levels, periods of existence and/or other factors. In this
regard, the Fund may be compared to its "peer group" as defined by Lipper,
CDA/Wiesenberger and/or other firms, as applicable, or to specific funds or
groups of funds within or without such peer group. Morningstar is a mutual
fund rating service that also rates mutual funds on the basis of
risk-adjusted performance. Morningstar ratings are calculated from a fund's
three, five and ten year average annual returns with appropriate fee
adjustments and a risk factor that reflects fund performance relative to the
three-month U.S. Treasury bill monthly returns. Ten percent of the funds in
an investment category receive five stars and 22.5% receive four stars. The
ratings are subject to change each month.

(6) Bear Stearns Foreign Bond Index, which provides simple average
returns for individual countries and gross national product ("GNP")-weighted
index, beginning in 1975. The returns are broken down by local market and
currency.