<PAGE>
CHANCELLOR LGT
ASSET MANAGEMENT
OVER 25 YEARS
OF INVESTING
WORLDWIDE
GT GLOBAL
INCOME FUNDS
SEMIANNUAL REPORT
APRIL 30, 1997
[LOGO]
<PAGE>
GT Global
INCOME FUNDS
TABLE OF CONTENTS
Message from the Chairman ..................1
Market Overview.............................2
GT Global
Government Income Fund......................4
GT Global
High Income Fund............................7
GT Global
Strategic Income Fund......................10
Report of
Independent Accountants...................F-1
Financials................................F-2
Inside Back
List of Funds...........................cover
The views of the Funds' management as described in this report are as of the
date it was written. Portfolio holdings and allocations are as of April 30,
1997, unless otherwise noted. Views, portfolio holdings and allocations may
have changed subsequent to these dates.
<PAGE>
GT GLOBAL INCOME FUND
MESSAGE FROM THE CHAIRMAN
Dear Investor,
These reports are written in a style we hope you find enjoyable to read and
easy to understand. Our intention is to provide our shareholders with
meaningful information about the relative performance of GT Global Mutual
Funds. We think it is important to help investors develop a global
perspective about their investments, including developments in individual
economies around the world. Specifically, we address how macroeconomic and
political events within countries influence investment results and,
ultimately, Fund performance.
In each semiannual report, we describe our management process and offer
insights into the Fund's investment strategy. Companies and countries in
which the Fund invests are discussed, as well as issues pertinent to
decisions affecting the Funds. Biographical information on portfolio
managers' background and experience is also included, and through our
question and answer format, we make it possible for shareholders to be
included in the thought processes that form the basis of their investment
decisions. Additionally, we have included performance illustrations that show
the historical returns of a hypothetical investment and compare it to an
appropriate benchmark.
We make every effort to communicate as clearly as possible because we want
you, our shareholders, to have a useful understanding of what is happening
with your investments in GT Global Mutual Funds, and why.
We would also like to emphasize that today--as global investing continues to
become increasingly complex, information travels as quickly as a keystroke,
and critical decisions must be made within shorter time frames--prudent
advice, professional management, global diversification and investing for the
long term have never been more important.
As always, we appreciate and value our shareholders in GT Global Mutual Funds.
Sincerely,
[SIGNATURE]
William J. Guilfoyle
CHAIRMAN OF THE BOARD AND PRESIDENT
GT GLOBAL MUTUAL FUNDS
<PAGE>
MARKET OVERVIEW
FUND MANAGEMENT
As part of our commitment to enhance Fund performance, we have recently
appointed Cheng-Hock Lau as Chief Investment Officer, Global Fixed Income
North America (N.A.). Prior to joining Chancellor LGT Asset Management in
1995, Mr. Lau spent a total of 13 years with Fiduciary Trust, Bankers Trust
and Glaxo Enterprises as a Fund Manager for Global Fixed Income. He received
his B.B.A. in finance from the University of Oregon.
We are also pleased to announce Michael Mabbutt as Head of Global Emerging
Market Debt. From 1992 to 1996, Mr. Mabbutt was a Senior Fixed Income Manager
at Barings Asset Management, and, from 1986 to 1992, he was a Fixed Income
Investment Manager at Norwich Life. He joined Chancellor LGT Asset Management
in 1997. Mr. Mabbutt holds a B.Sc. from the University of Capetown.
In this report, Mr. Lau and Mr. Mabbutt discuss their views and expectations
for global fixed income markets.
ESTABLISHED MARKETS
The predominant overall investment theme was contrasting economic growth
patterns between the U.S., Germany and Japan. U.S. GDP growth continued to
accelerate from its brief summer 1996 pause, and in the first quarter of
1997, the U.S. economy grew at a 5.8% annualized rate. Unemployment in the
U.S. is at a two-decade low of 4.9%. The demand side of the economy continues
to exhibit strength, evidenced by strong retail sales, robust housing
indicators, and rises in personal disposable income. Inflation, however, has
not surfaced as companies have been able to absorb wage increases through
increased productivity. While inflation was positive, the Federal Reserve
focused on demand growth as a leading indicator of future inflationary
pressures, and in March the Federal Open Markets Committee (FOMC) tightened
the Fed funds rate by 25 basis points, to 5.5%. U.S. bond investors sold
bonds in response to strong economic growth indicators, and 10-year yields
rose from a low of 6% to a high of 6.9%.
Conversely, economic growth in Europe, led by Germany, continued to be
anemic. Real GDP growth for 1996 was a disappointing 1.5%, and early
indicators in 1997 point to a continuation of that trend. Unemployment has
soared to post-war highs of 9.8%, and domestic demand has been
correspondingly weak as consumers preferred to save their earnings. GDP
growth has been generated by the export sector of the economy, the direct
beneficiary of the weaker deutschemark. Export orders have grown at
double-digit rates, while domestic orders are barely above 1%. Overlaying
this gloomy economic landscape were the clouds of government fiscal policy
retrenchment, in an effort to meet 1998 European Monetary Union deficit
goals.
The UK, where growth was a healthy 3.7% in 1996 and appears to be continuing
so far in 1997, was the exception. However, inflation has trended lower and
while unemployment is falling, unlike in the U.S., it is not at excessively
low levels. These factors supported UK bond prices despite the selloff in
U.S. bonds. Investors saw German and UK bond yields fall from 6% to 5.8% and
from 7.7% to 7.4%, respectively.
GERMAN BONDS OUTPERFORM U.S.
U.S. 10-yr. bonds German 10-yr. bonds
11/1 6.38 6.03
6.25 5.919
6.18 5.81
6.14 5.813
6.05 5.644
6.24 5.866
12/13 6.32 5.866
6.36 5.824
6.29 5.803
6.5 5.945
6.61 5.914
6.54 5.744
1/24 6.62 5.786
6.5 5.74
6.4 5.63
6.27 5.493
6.37 5.528
6.55 5.518
6.54 5.691
6.69 5.706
3/21 6.76 5.921
6.91 5.931
6.91 6.031
6.97 5.958
6.83 5.828
4/25 6.94 5.934
While yields on U.S. 10-yr bonds rose to nearly 7% at the end of April,
yields on German 10-yr bonds tracked sideways over the period, causing the
spread to widen to 101 basis points.
Source: Bloomberg, June 1997
2
<PAGE>
Although Japanese 1996 GDP growth, led by strong consumer demand, was a
robust 3.6%, most analysts and investors are anticipating a fall in Japan's
GDP growth rate in the latter half of 1997. A hike in the consumption tax and
lower government spending are likely to precipitate a decline. Bond investors
chose to focus on the anticipated downturn in economic activity and on the
very fragile state of the Japanese financial system, which was highlighted by
several high-profile bank failures and scandals. Ten-year bond yields fell to
an all-time low of 2.3%, as market sentiment turned excessively negative on
Japan's future growth prospects.
EMERGING MARKETS
Emerging market debt performed well in the final months of 1996 through to
the third week in February of this year, driven largely by favorable trends
in international capital flows and improvements in the political and economic
situations of many emerging countries.
Beginning in late February, however, with expectations of a rise in U.S.
interest rates, emerging market debt witnessed a correction. Many emerging
economies remain dependent on capital inflows from established markets. When
U.S. Treasuries started rising in yield, reaching nearly 7% by the time the
Fed tightened rates, many investors switched into better-quality instruments
and cash.
As it became clearer that this period was not in fact similar to 1994 when
the Fed touched off a series of interest rate hikes, investor sentiment began
to improve. Thus, despite the February correction, emerging market debt
performed well overall for the six month-period to the end of April. Bulgaria
was the top-performing emerging debt market as it moved closer to an accord
with the International Monetary Fund (IMF). Fundamentals also improved
somewhat after a particularly painful 1996. In general, we are enthusiastic
about political changes there and believe the new, reform-minded government
will accelerate economic progress. Moreover, the introduction of a currency
board should boost consumer confidence. Support from multilateral
organizations also appears forthcoming, which could help Bulgaria overcome
their debt servicing problems, implement the currency board and improve
infrastructure.
The three core Latin markets--Mexico, Argentina and Brazil--also enjoyed
relatively strong positive returns over the six months. Their economic growth
prospects remain quite good and industrial production is starting to improve
after several volatile years. In Mexico, the recovery has largely been
export-- and investment-led. By contrast, the Argentine rebound has been
driven primarily by a pickup in consumer confidence. The Brazilian economy
has also benefited from increased confidence but, on the other hand, it has
been held back by worries over a rising current account deficit, which is
likely to force the government to restrain growth.
IMPROVING FUNDAMENTALS
<TABLE>
<CAPTION>
Growth Inflation Gov Bud
Bal % GDP
1993 1997f 1993 1997f 1993 1997f
<S> <C> <C> <C> <C> <C> <C>
Total Emerging 6.3 6.2 43.0 11.0 (3.0) (1.6)
Latin America 3.2 4.0 210 13.0 (0.1) (0.9)
Asia 8.7 7.5 9.6 7.8 (2.4) (1.4)
Europe/ME 4.2 3.3 24.0 26.4 (7.1) (4.5)
</TABLE>
Improving fundamentals in many emerging economies have contributed to the
strong performance of their debt markets. Economic conditions forecasted for
1997, in fact, compare very favorably with 1993-the year in which emerging
markets were the darlings of international investment.
Source: World Economic Outlook, October 1996
3
<PAGE>
INVESTMENT OBJECTIVE
The Fund primarily seeks a high level of current income. The Fund's secondary
objectives are capital appreciation and protection of principal through
active management of maturity structure and currency exposure. It invests
primarily in high-quality U.S. and foreign government securities.
GT GLOBAL Government INCOME FUND
PERFORMANCE SUMMARY
JP Morgan Global Government Bond Index GT Global Government Income Fund
3/29/88 10000 9525
10022 9525
9975 9442
9868 9299
9780 9290
9704 9256
9635 9231
9875 9379
10264 9589
10353 9721
10292 9632
10190 9722
10173 9413
10087 9468
10254 9635
10143 9664
10374 9957
10787 10350
10468 10090
10633 10168
10770 10345
10866 10424
10992 10704
10829 10543
10712 10421
10646 10400
10605 10400
10944 10610
11142 10886
11470 11283
11381 11206
11487 11206
11942 11579
12151 11655
12286 11644
12565 11904
12575 11937
12182 11868
12329 11996
12340 12090
12176 11877
12433 11913
12691 12106
13155 12519
13284 12667
13501 12667
14183 13235
13905 13045
13864 13161
13737 13007
13851 13098
14244 13267
14633 13320
14955 13613
15353 13733
9/30/92 15338 13357
14955 13465
14690 13313
14829 13493
15080 13715
15323 14358
15558 14414
15842 14399
15943 14627
15955 15246
15962 15536
16435 16236
16608 16119
16600 16413
16479 16325
16647 16936
16804 17084
16620 15915
16543 15453
16531 15221
16394 14818
16589 14837
16744 14887
16701 14699
16785 14734
17036 14958
16821 14906
16860 14573
17201 14732
17644 15086
18542 15478
18838 15852
19364 16208
19484 16131
19577 16145
19033 15849
19461 16120
19651 16337
19871 16593
20117 16851
19910 16864
19794 16497
19764 16454
19691 16430
19711 16386
19883 16557
20249 16768
20333 16822
20445 17075
20851 17499
21148 17905
21001 17871
20476 17613
20334 17557
20180 17399
4/30/97 20066 17301
The chart above shows the performance of the GT Global Government Income Fund
Class A shares since the Fund's inception, versus the J.P. Morgan Global
Government Bond Index. This represents a cumulative return of 73.01% and an
average annual total return of 6.22%. The chart assumes a hypothetical
$10,000 initial investment in the Fund's Class A shares and reflects all Fund
expenses and the maximum 4.75% sales charge. A $10,000 investment in the
Fund's Class B shares at inception on October 22, 1992, would have been
valued at $12,263. This figure reflects all Fund expenses, the applicable
contingent deferred sales charge (5% in the first year, decreasing to 0%
after six years) and assumes complete redemption at the end of the period. A
$10,000 investment in Advisor Class shares at inception on June 1, 1995,
would have been worth $10,734 on April 30, 1997.
AVERAGE ANNUAL TOTAL RETURNS%(1)
APRIL 30, 1997
<TABLE>
<CAPTION>
Without Sales Charge(2) With Sales Charge
Share Class 1-Year 5-Year Life of Fund 1-Year 5-Year Life of Fund
<S> <C> <C> <C> <C> <C> <C>
Class A(3) 5.30 5.72 6.79 0.30 4.70 6.22
Class B(3) 4.65 N/A 4.93 (0.30) N/A 4.62
Advisor Class(4) 5.68 N/A 3.77 N/A N/A N/A
</TABLE>
HISTORICAL PERFORMANCE%(2)
ANNUAL RETURNS
<TABLE>
1988 1989 1990 1991 1992 1993 1994 1995 1996
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class A 1.12(3) 11.14 8.77 13.67 1.94 25.52 (13.95) 15.63 6.05
Class B N/A N/A N/A N/A (0.203) 24.70 (14.44) 14.56 5.50
</TABLE>
(1) Figures assume reinvestment of all dividends and capital gain
distributions at net asset value.
(2) Performance data do not reflect the maximum 4.75% sales charge and the
contingent deferred sales charge (5% in the first year, decreasing to 0%
after six years) for Class A and Class B shares, respectively, which, if
included, would have reduced the performance quoted.
(3) The Fund began operations on March 29,1988; Class B shares commenced on
October 22,1992.
(4) The Fund began offering Advisor Class shares on June 1,1995.
The above data represent past performance of the Fund's shares, which does
not guarantee future results. The investment return and principal value of an
investment in the Fund will fluctuate, so that an investor's shares, when
redeemed, may be worth more or less than their original cost.
4
<PAGE>
INTERVIEW WITH CHIEF INVESTMENT OFFICER, GLOBAL FIXED INCOME, N.A., HOCK LAU
Q HOW DID THE FUND PERFORM?
A For the six-month period to April 30, 1997, the Fund's total return for
Class A shares was -1.13% (-5.83% including the maximum 4.75% sales charge)
and -1.44 for Class B shares (-6.24% including the maximum 5% contingent
deferred sales charge). The Fund's benchmark, the JP Morgan Global Government
Bond Index,5 returned -3.76% over the same period. Relative to the index,
most of the Fund's outperformance was a result of its holdings in continental
Europe.
Q WHAT DID YOU FIND ATTRACTIVE ABOUT CONTINENTAL EUROPEAN MARKETS?
A Our strategy over the last six months was to overweight European fixed
income markets while being underinvested in both the Japanese and U.S.
markets. The overall allocation generally worked well for the Fund, as
European bond yields fell in response to better-than-expected economic
fundamentals, investors' growing optimism over the on-time start of European
Monetary Union and the countries that will be included in the union.
Our country allocation within Europe also contributed to returns; in the
higher-yielding markets, Spain and Sweden positively impacted performance. In
local currency terms, these markets had returns in excess of 5%, compared to
U.S. and Japanese market returns of 2.1% and 3.8%, respectively. Most of the
disparity in performance was realized in the first three months of this
reporting period.
In fact, beginning in February, most of our performance expectations for
European markets were met, and we began to lower our allocations in favor of
selected English-speaking markets like the UK, Australia and New Zealand. At
current market prices, these markets look attractive relative to their
respective fundamentals. We also minimized the negative impact of a rising
U.S. dollar by hedging a significant portion of our European bond investments
and by avoiding Japanese yen investments.
Q WHAT OTHER FACTORS CONTRIBUTED TO PERFORMANCE?
A A well-diversified, 15% allocation to investment-grade emerging market
fixed income also contributed to portfolio returns. During the period,
investors rerated these markets as their improving fundamentals lowered
associated risk premiums. Brady bond yields fell relative to U.S. Treasury
bond yields, and domestic interest rates fell while currencies remained
relatively stable. The Fund's largest allocation to emerging market fixed
income during the period was a 4% investment in Mexican government T-bills
(Cetes), which were yielding upwards of 24% on an annualized basis.
AUSTRALIA: ATTRACTIVE OPPORTUNITIES DOWN UNDER
INFLATION AND REAL YIELDS
Real Yield Inflation
---------- ---------
3/86 9.8 9.5
12/87 7.5 7.2
12/89 5.6 5.3
12/91 3.4 1.9
12/93 2.1 2.1
12/95 3.2 2.1
3/97 2.1
GDP
1996 ............. 4.0%
Avg. Annual
1980-1995 ........ 3.1%
STRONG GROWTH LEADS TO IMPROVING FINANCES...
BUDGET DEFICIT
1996 ............ -5.0%
1997e ............ -2.7%
1998e ............ 4.6%
AUSTRALIA IS ENJOYING AN ECONOMIC PICKUP, DECLINING INFLATION AND AN
IMPROVING LABOR MARKET. CYCLICALLY, AUSTRALIA HAS BEEN WEAKER THAN THE U.S.,
ALLOWING IT TO CONTINUE TO CUT ITS OFFICIAL CASH RATE WHILE U.S. RATES HAVE
RISEN. AUSTRALIA IS ALSO EXPECTED TO EXPERIENCE CONSIDERABLE IMPROVEMENT IN
ITS BUDGET DEFICIT AND IS EXPECTED TO MOVE INTO A SURPLUS IN 1998.
Source: J.P. Morgan April-June '97; Bloomberg, June '97.
CONTINUED P6
(5) The J.P. Morgan Global Government Bond Index is market value-weighted
average of government bonds from 13 major bond markets. It includes the
effect of reinvested coupons and is measured in U.S. dollars.
Indices are unmanaged, not available for direct investment and do not incur
sales charges and professional management fees.
5
<PAGE>
INTERVIEW WITH THE PORTFOLIO MANAGER CONTINUED
Beginning in January, based on our concern that market prices were reflecting
much of the positive news and vulnerable to a downside surprise, we
tactically decided to lower the emerging market allocation. This was
fortunate because as expectations of a Federal Reserve rate increase rose,
emerging markets sold off sharply.
Q WHAT IS YOUR OUTLOOK GOING FORWARD?
A Our long-term outlook continues to be positive on global growth and
inflation. We believe a cocktail of technology-led productivity growth,
global economic liberalization and prudent fiscal and monetary policies will
limit any potential global inflation. However, we are cautious in the near
term because cyclical risks are pointing to higher yields in the U.S., Europe
and Japan.
We do not, by any measure, expect a repeat of 1994's broad market selloff.
However, we do expect that uncertainty over U.S. and Japanese monetary
policies, and the underlying momentum of the U.S. economy, will cause markets
to be volatile within a broad trading range. Our strategy over the next three
months is not to be aggressive with portfolio interest-rate risk but,
instead, to focus on selective country allocations where fundamentals and
market valuations are attractive. Two such markets are Australia and New
Zealand; inflationary risks there are declining and yields are upwards of 7%.
In the investment-grade emerging market sector, we believe South Africa and
Mexico look fundamentally attractive, and high yields more than compensate
investors for risk. Additionally, the volatility we anticipate should provide
opportunities to identify markets where valuations are not consistent with
fundamentals. The U.S. market might present such an opportunity.
If the uncertainty over momentum of the U.S. economy does not slow
sufficiently and anxiety over the course of interest rates increases, U.S.
30-year bond yields could once again test the old highs of 7.2% to 7.4%.
Given our long-term outlook, we feel these levels represent attractive
valuations and, everything else being equal, we may take the opportunity to
invest.
GT GLOBAL GOVERNMENT INCOME FUND
GEOGRAPHIC ALLOCATION OF NET ASSETS%
APRIL 30,1997
AUSTRALIA 5.0
CANADA 11.6
COLOMBIA 1.5
DENMARK 3.9
FINLAND -
GERMANY 11.2
IRELAND -
ITALY 7.3
MEXICO -
NETHERLANDS 4.9
NEW ZEALAND 8.8
POLAND -
SOUTH AFRICA 3.6
SPAIN 4.1
SWEDEN 2.8
UK 11.3
UNITED STATES 15.9
SHORT TERM & OTHER 8.1
Geographic allocations may change as market conditions change.
6
<PAGE>
INVESTMENT OBJECTIVE AND CURRENT STRATEGY
The Fund primarily seeks high current income and, secondarily, capital
appreciation. It invests primarily in debt securities from emerging markets
around the world, where we perceive value through improving fundamentals.
GT GLOBAL HIGH INCOME FUND
PERFORMANCE SUMMARY
<TABLE>
<S> <C> <C>
JP Morgan Emerging Markets Brady Bond Index GT Global High Income Fund B GT Global High Income Fund
10/22/92 10000 10000 9525
10105 10000 9525
9970 9983 9508
10209 10141 9684
10316 10206 9743
10451 10460 9991
10996 11141 10645
11217 11379 10887
11598 11786 11283
12003 12266 11747
12504 12826 12290
12755 13149 12596
12922 13266 12723
14011 14260 13681
13871 14417 13848
14718 15276 14678
14758 15495 14895
13530 14153 13615
11982 12044 11578
11988 11866 11413
12815 12714 12236
11783 12173 11722
12073 12382 11930
12936 13112 12640
13063 13439 12952
12693 13263 12799
12822 13308 12840
1/31/95 11968 12280 11854
11554 11704 11315
10952 11328 10948
10643 10966 10604
11785 11864 11489
12824 12768 12370
13073 12975 12577
13082 12898 12509
13391 13221 12828
13852 13602 13205
13710 13537 13159
14190 13905 13512
15265 14646 14248
16609 15912 15474
15442 14999 14594
15838 15144 14755
16635 15678 15283
16842 16105 15708
17308 16415 16019
17440 16739 16342
18006 17349 16946
19131 18487 18066
19180 18702 18297
20254 19677 19260
20480 19899 19487
21220 20521 20094
21601 20937 20512
20758 19981 19586
4/30/97 21462 20365 20170
</TABLE>
The chart above shows the performance of the GT Global High Income Fund Class
A and Class B shares since the Fund's inception, versus the J.P Morgan EMBI
(Brady) Index. The chart assumes a hypothetical $10,000 initial investment in
the Fund's Class A shares and reflects all Fund expenses and the maximum
4.75% sales charge. For Class B shares, results reflect all Fund expenses and
the applicable contingent deferred sales charge (5% in the first year,
decreasing to 0% after six years) and assumes complete redemption at the end
of the period. A $10,000 investment in Advisor Class shares at inception on
June 1,1995, would have been worth $16,388 on April 30, 1997.
AVERAGE ANNUAL TOTAL RETURNS%(1)
APRIL 30, 1997
<TABLE>
<CAPTION>
Without Sales Charge(2) With Sales Charge
Share Class 1-Year Life of Fund 1-Year Life of Fund
<S> <C> <C> <C> <C>
Class A(3) 31.98 18.05 25.71 16.79
Class B(3) 31.17 17.29 26.17 17.04
Advisor Class(4) 32.29 29.43 N/A N/A
</TABLE>
HISTORICAL PERFORMANCE(2)
ANNUAL RETURNS%
<TABLE>
1992(3) 1993 1994 1995 1996
<S> <C> <C> <C> <C> <C>
Class A 1.67 51.57 (19.24) 20.19 36.77
Class B 1.41 50.60 (19.61) 19.27 35.86
</TABLE>
(1) Figures assume reinvestment of all dividends and capital gain
distributions at net asset value.
(2) Performance data do not reflect the maximum 4.75% sales charge and the
contingent deferred sales charge (5% in the first year, decreasing to 0%
after six years) for Class A and Class B shares, respectively, which, if
included, would have reduced the performance quoted.
(3) The Fund began operations on October 22, 1992.
(4) The Fund began offering Advisor Class shares on June 1,1995. Advisor Class
shares are not sold directly to the general public and are only available
through certain employee benefit plans, financial institutions and other
entities that have entered into specific agreements with GT Global. Please
see the "Alternative Purchase Plan" section in the Fund's prospectus.
The above data represent past performance of the Fund's shares, which does
not guarantee future results. The investment return and principal value of an
investment in the Fund will fluctuate, so that an investor's shares, when
redeemed, may be worth more or less than their original cost.
7
<PAGE>
INTERVIEW WITH HEAD OF GLOBAL EMERGING MARKET DEBT, MICHAEL MABBUTT
Q HOW DID THE fUND PERFORM OVER THE LAST SIX MONTHS?
A After several years of impressive returns, emerging market debt suffered
weakness over the first quarter of the year. Against this background, the
Fund's total return for the six months ended April 30, 1997, was 10.23% for
Class A shares (5.0% including the maximum 4.75% sales charge) and 9.96% for
Class B shares (4.96% including the maximum 5% contingent deferred sales
charge). Total return over the same investment period was 11.90% for the J.P.
Morgan EMBI (Brady) Index.(5)
While performance of this asset class over the short term has been
disappointing relative to the notable returns we saw in 1996, we continue to
believe in the long-term opportunities these markets have to offer as their
fundamental economic conditions strengthen. In Latin America, the Fund
benefited from a continued commitment by many countries to implement and
adhere to serious monetary and fiscal policies following the Mexican peso
crisis of December 1994. Most importantly, these economies have shown they
are not nearly as vulnerable now to the same influences that precipitated the
crisis. Many are no longer in danger of default, and Argentina and Brazil, in
fact, received upgrades in the beginning of April in their sovereign ratings
from Standard & Poors.
Meanwhile, in eastern Europe domestic reform continues and economic
stabilization is underway. Many countries, including Russia, are expected to
enjoy positive economic growth this year. Thus, despite the short-term
contraction in emerging debt markets over the first quarter of the year, we
continue to believe that, fundamentally, many of these economies are still
sound.
Q HOW DOES THE FUND DIFFER FROM THE INDEX?
A The Fund is much more diversified than the index, which has about 80% of
its assets concentrated in Latin America. At present we don't feel that such
a high allocation is appropriate for a global emerging market debt fund. More
importantly, we have sought to lower the Fund's volatility and exposure to
risk through greater diversification. As additional diversification, we have
been increasing the Fund's allocation to corporates, currently about 15%,
whereas the index is purely a sovereign index and holds no corporates.
Q WHAT CONTRIBUTED TO THE DOWNTURN IN EMERGING MARKET DEBT?
A Weakness in emerging fixed income over the first quarter of the year has
largely been a function of the U.S. Treasury market, as emerging market
economies remain very dependent on capital inflows from the Organization for
Economic Cooperation and Development (OECD). The selloff in the first quarter
primarily occurred because of expectations that the Fed funds rate would
rise. This began affecting markets at the end of February when Treasuries
started rising in yield, reaching nearly 7% by the time the Fed tightened
rates. In such an environment, people tend to become more risk averse and
switch into better quality instruments and cash. And because some of these
countries are dependent on oil exports, the recent fall in oil prices has
reduced the value of exports, which, on a fundamental basis, is not good for
their economies.
Q WERE THERE ANY EXCEPTIONS TO THE CORRECTION? WHAT MARKETS DID WELL IN THIS
ENVIRONMENT?
A Several markets continued to do well in spite of the hike in rates. In
Bulgaria, for example, spreads narrowed dramatically, returning over 20% (in
US$) for the first quarter, and the Fund benefited.
The three core Latin markets--Mexico, Argentina and Brazil--also managed to
stay in positive territory. Their economic growth prospects remain quite
good, and we expect Argentina, in particular, to benefit from a pickup in
consumer confidence, while inflation should remain low.
Brazil has also been successful in taming inflation, from about 5,000%
year-on-year in June of 1994 to less than 10% currently, primarily through
strict currency controls. One worrying side effect is a rising current
account deficit, which is likely to force the government to restrain growth.
President Cardoso's success, however, in achieving his reelection reform
goals, has paved the way for further achievements in fiscal reform, and
positive developments are taking place on the privatization front.
Mexico, like Argentina, is expected to enjoy another year of rapid growth
following 1995's recession. Real GDP is forecasted at 3.7% for the year, and
the current account deficit should be more moderate than that of Argentina
and Brazil. The country, however, is not entirely free from political risks,
with mid-term elections to be held in July.
(5) The J.P. Morgan EMBI (Brady) Index is a market value-weighted average
of Brady bonds from nine emerging bond markets. It includes the effect
of reinvested coupons and is measured in U.S. dollars.
Indices are unmanaged, not available for direct investment and do not incur
sales charges and professional management fees.
8
<PAGE>
Q HOW DID VENEZUELA AND ECUADOR, LAST YEAR'S RECOVERY STORIES, FARE?
A While Venezuelan fixed income has performed relatively well over the
period, its performance this year to the end of April suffered as the country
was destabilized by a disenchanted electorate and demands by the IMF. High
inflation (103% in 1996) and rising unemployment have hindered the government
in carrying out its reform agenda. Meanwhile, Ecuador's fixed income market
was negatively affected this year as a result of political struggles: their
president was impeached and an interim government was established. The main
focus of the new government is to reduce the fiscal deficit and continue with
privatization. Stronger oil prices would also help in restraining the current
account deficit. Despite Ecuador's disappointing performance, however, we
feel a return to stability would signal prospects for outperformance.
Q HOW DO YOU ATTEMPT TO CONTROL RISK IN THE PORTFOLIO?
A While our fundamental top-down process remains intact, we are currently
implementing strategies that place more emphasis on global liquidity and
capital flows.
We use a number of measures to gauge market risk. Interest rate duration, for
example, is a technical measurement that essentially reflects our view on
U.S. Treasuries. Currently, the average interest rate duration of the Fund's
portfolio is approximately 3% (below index). Spread duration, on the other
hand, reflects our view on countries' economic fundamentals. At the end of
April, average spread duration of the Fund's portfolio was roughly 5%
(neutral to index).
Unlike core bond portfolios, a portfolio of emerging market debt has the
advantage of at times being able to isolate risk in one area or the other.
The fact that the Fund is below the index in terms of interest duration
merely says we think U.S. rates might rise a little further in the short run.
However, in terms of the Fund's risk relative to country economic
fundamentals, in other words, the spread over U.S. Treasuries, we're
reasonably satisfied with those measures of value and therefore maintain a
neutral position to the index.
In terms of a general approach, we're trying to protect the value of the Fund
by underweighting duration on an interest rate basis. We are fairly
comfortable with Treasury rates on a 12- to 24-month basis, which is very
supportive for emerging markets, but in the short term we may face another
tightening. In the future, when we become more confident that Treasuries are
stabilizing, we will likely increase interest rate duration to seek to add
value.
Q WHAT IS YOUR OUTLOOK FOR SOME OF THE EASTERN EUROPEAN MARKETS OVER THE
NEXT SIX MONTHS?
A Bulgaria, where we were overweighted relative to the index at the end of
the period (approximately 8% vs. 2%), is currently one of our favorite
markets. Its fixed income market has done well this year. And, although we
only invested after the previous government agreed to step aside, we think it
could end the year as one of the best-performing markets. We are enthusiastic
about the political change and believe the new reform-minded government will
accelerate economic progress. Moreover, the introduction of a currency board
should boost consumer confidence. Support from multilateral organizations
also appears forthcoming, which could help Bulgaria overcome their debt
servicing problems, implement the currency board and improve infrastructure.
In Russia, while its bond market has suffered this year from Yeltsin's
absence and a lack of direction in economic policy, we are reasonably
optimistic about the potential going forward. Spreads are currently very
attractive, Yeltsin has made a vigorous comeback, and the addition of several
reform-minded ministers to the cabinet demonstrates his continued commitment
to fiscal reform. Perhaps the single most important feature is that this year
Russia is expected to enjoy positive growth--for the first time since the
collapse of communism. This is very important for debt markets because it
strengthens creditworthiness. Furthermore, we expect the IMF to reinstate the
US$10.1 billion Extended Fund Facility in coming months, which would provide
another positive boost.
GEOGRAPHIC ALLOCATION
Africa 5.2%
Asia-Pacific 8.9%
U.S. & Other 12.0%
Eastern Europe 27.7%
Latin America 46.2%
Allocations may change as conditions change.
9
<PAGE>
INVESTMENT OBJECTIVE AND CURRENT STRATEGY
The Fund primarily seeks high current income and, secondarily, capital
appreciation. It invests mainly in debt securities of issuers in the U.S.,
developed foreign countries and emerging markets. The Fund selects debt
securities from those issued by governments, their agencies and
instrumentalities, central banks, commercial banks and other corporate
entities.
GT GLOBAL STRATEGIC INCOME FUND
PERFORMANCE SUMMARY
JP Morgan Global Government Bond Index GT Global Strategic Income Fund
3/29/88 10000 9525
10021 9525
9975 9542
9868 9525
9780 9425
9704 9346
9635 9279
9875 9414
10264 9705
10353 9713
10292 9636
10190 9592
10173 9416
10087 9461
10254 9630
10143 9755
10374 10043
10787 10389
10468 10134
10633 10116
10770 10366
10866 10440
10992 10616
10829 10247
10712 10172
10646 10200
10605 10103
10944 10190
11142 10443
11470 10846
11381 10629
11487 10677
11942 11229
12151 11429
12286 11506
12565 11772
12575 11721
12182 11429
12329 11597
12340 11545
12176 11229
12433 11446
12691 11683
13155 12239
13284 12095
13501 12239
14183 13322
13905 13027
13864 12856
13737 12494
13851 12401
14244 12864
14633 13110
14955 13334
9/30/92 15353 13686
15338 13572
14955 13440
14690 13237
14829 13490
15080 13666
15323 14210
15558 14735
15842 15096
15943 15435
15955 16127
15962 16694
16435 17293
16608 17427
16600 18410
16479 18357
16647 19419
16804 19589
16620 17588
16543 15893
16531 15603
16394 16129
16589 15880
16744 16034
16701 16280
16785 16483
17036 16489
16821 16292
16860 15370
17201 15017
17644 14986
18542 15020
18838 15743
19364 16424
19484 16424
19577 16423
19033 16439
19461 16830
19651 16993
19871 17408
20117 17991
19910 18743
19794 18036
19764 18187
19691 18579
19711 18784
19883 19078
20249 19408
20333 19827
20445 20548
20851 20901
21148 21648
21001 21775
20476 21972
20334 22116
20180 21460
4/30/97 20066 21717
The chart above shows the performance of the GT Global Strategic Income Fund
Class A shares since the Fund's inception, versus the J.P. Morgan Global
Government Bond Index. This represents a cumulative return of 117.17% and an
average annual total return of 8.91% for the Fund. The chart assumes a
hypothetical $10,000 initial investment in the Fund's Class A shares and
reflects all Fund expenses and the maximum 4.75% sales charge. A $10,000
investment in the Fund's Class B shares at inception on October 22, 1992
would have been valued at $15,370. This figure reflects all Fund expenses,
the applicable contingent deferred sales charge (5% in the first year,
decreasing to 0% after six years) and assumes complete redemption at the end
of the period. A $10,000 investment in Advisor Class shares at inception on
June 1, 1996, would have been worth $13,332 on April 30, 1997.
AVERAGE ANNUAL TOTAL RETURNS%(1)
APRIL 30, 1997
<TABLE>
<CAPTION>
Without Sales Charge(2) With Sales Charge
Share Class 1-Year 5-Year Life of Fund 1-Year 5-Year Life of Fund
<S> <C> <C> <C> <C> <C> <C>
Class A(3) 16.89 11.86 9.49 11.34 10.77 8.91
Class B(3) 16.31 N/A 10.29 11.31 N/A 9.98
Advisor Class(4) 17.38 N/A 16.20 N/A N/A N/A
</TABLE>
HISTORICAL PERFORMANCE%(2)
ANNUAL RETURNS
<TABLE>
1988 1989 1990 1991 1992 1993 1994 1995 1996
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class A 1.16(3) 10.17 8.39 15.78 1.27 43.95 (20.85) 17.06 21.03
Class B N/A N/A N/A N/A (0.693) 43.10 (21.29) 16.28 20.31
</TABLE>
(1) Figures assume reinvestment of all dividends and capital gain
distributions at net asset value.
(2) Performance data do not reflect the maximum 4.75% sales charge and the
contingent deferred sales charge (5% in the first year, decreasing to
0% after six years) for Class A and Class B shares, respectively,
which, if included, would have reduced the performance quoted.
(3) The Fund began operations on March 29, 1988; Class B shares commenced
on October 22, 1992.
(4) Advisor Class shares are not sold directly to the general public and
are only available through certain employee benefit plans, financial
institutions and other entities that have entered into specific
agreements with GT Global. Please see the "Alternative Purchase Plan"
section in the Fund's prospectus.
The above data represent past performance of the Fund's shares, which does
not guarantee future results. The investment return and principal value of an
investment in the Fund will fluctuate, so that an investor's shares, when
redeemed, may be worth more or less than their original cost.
10
<PAGE>
INTERVIEW WITH PORTFOLIO MANAGERS
HOCK LAU AND MICHAEL MABBUTT
Q HOW DID THE FUND PERFORM?
A For the six-month period ended April 30, 1997, total return for Class A
shares was 3.91% (-1.03% including the maximum 4.75% sales charge) and 3.65%
for Class B shares (-1.35 including the maximum 5% contingent deferred sales
charge). Total return over the same investment period was -3.76% for the J.P.
Morgan Global Government Bond Index,(5) and 11.90% for the J.P. Morgan EMBI
(Brady) Index.(6)
These index returns highlight the considerable divergence between performance
of core and emerging markets over the period. Our significant weighting in
emerging market debt accounts for a good deal of the Fund's positive
performance. While Brazil and Bulgaria stand out as two of the overall
top-performing markets during the period, Russia and Mexico had the largest
positive impact on Fund performance relative to the index, which does not
have an allocation to Russia and is underweighed in Mexico. On the core side,
the two largest positive contributors to Fund performance relative to the
J.P. Morgan Global Government Bond Index were France and the Netherlands.
Both markets performed poorly, and the Fund minimized their impact by
underweighting allocations to those markets. The Fund had no exposure to the
Netherlands and was underweighted in France.
Q COULD YOU ADDRESS PERFORMANCE AND EXPECTATIONS IN THE EMERGING DEBT
MARKETS OF BRAZIL, BULGARIA, RUSSIA AND MEXICO?
A Brazil has been successful in taming inflation, from about 5,000%
year-on-year in June of 1994 to less than 10% currently, primarily through
strict currency controls. One worrying side effect is a rising current
account deficit, which is likely to force the government to restrain growth.
President Cardoso's success, however, in achieving his reelection reform
goals has paved the way for further achievements in fiscal reform, and
positive developments are taking place on the privatization front.
In Bulgaria, fundamentals are improving after a particularly painful 1996.
Its fixed income market has done well this year as spreads narrowed
dramatically, returning over 20% (in US$) for the first quarter. We are
enthusiastic about political changes there and believe the new reform-minded
government will accelerate economic progress. Moreover, the introduction of a
currency board should boost consumer confidence. Support from multilateral
organizations also appears forthcoming, which could help Bulgaria overcome
its debt servicing problems, implement the currency board and improve
infrastructure.
While Russia's bond market has suffered this year (relative to last year's
impressive gains) from Yeltsin's absence and a lack of direction in economic
policy, we are reasonably optimistic about potential going forward. Spreads
are currently very attractive, Yeltsin has made a vigorous comeback, and the
addition of several reform-minded ministers to the cabinet demonstrates his
continued commitment to fiscal reform. Perhaps the single most important
feature is that this year Russia is expected to enjoy positive growth-for the
first time since the collapse of communism. This is very important for debt
markets because it strengthens creditworthiness. Furthermore, we expect the
IMF to reinstate the US$10.1 billion Extended Fund Facility in coming months,
which would provide another positive boost.
Mexico's recovery has been well managed following 1995's recession and, as a
result, it is enjoying a pickup in economic growth. Inflation has fallen
swiftly as monetary management has been cautious. Moreover, government
efforts to reduce fiscal spending have been successful in preventing the
development of a sizeable fiscal deficit. The country, however, is not
entirely free from political risks, with mid-term elections to be held in
July.
Q WHAT WAS YOUR STRATEGY OVER THE PERIOD ON THE CORE MARKET SIDE?
A In general, our strategy was to overweight European fixed income markets
while being underinvested in both the Japanese and U.S. markets. This
allocation worked well for the Fund, as European bond yields fell in response
to better-than-expected economic fundamentals, investors' growing optimism
over the on-time start of European Monetary Union and the countries that will
be included in the union.
(5) The J.P. Morgan Global Government Bond Index is a market value-weighted
average of government bonds from 13 major bond markets. It includes the
effect of reinvested coupons and is measured in U.S. dollars.
(6) The J.P. Morgan EMBI (Brady) Index is a market value-weighted average
of Brady bonds from nine emerging bond markets. It includes the effect
of reinvested coupons and is measured in U.S. dollars.
The indices are unmanaged, not available for direct investment and do not
incur sales charges and professional management fees.
11
<PAGE>
INTERVIEW WITH THE PORTFOLIO MANAGERS CONTINUED
The portfolio was overweighted in the higher-yielding markets of Spain, Italy
and Sweden. In local currency terms, these markets had returns in excess of
5%, compared to U.S. and Japanese market returns of 2.1% and 3.8%,
respectively. Most of the disparity in performance was realized in the first
three months of this reporting period.
In fact, beginning in February, most of our performance expectations for
European markets were met, and we began to lower our allocations in favor of
selected English- speaking markets like the UK, Australia and New Zealand. At
current market prices, these markets look attractive relative to their
respective fundamentals. We also minimized the negative impact of a rising
U.S. dollar by hedging a significant portion of our European bond investments
and by avoiding Japanese yen investments.
Q WHAT ACCOUNTS FOR THE FUND'S SIGNIFICANT ALLOCATION TO GERMANY?
A Germany's real GDP in 1996 was a disappointing 1.5%, and after five years
of miserable jobs performance, unemployment has soared to a post-war high of
9.8%. Meanwhile, inflation remains on a downward trend and is likely to
settle at 1%-1.5% during the second half of 1997. The government also
continues on a road of fiscal retrenchment in an effort to meet 1998 European
Monetary Union deficit goals. Against this background, we feel the Bundesbank
is not likely to raise interest rates any time soon.
In addition, we feel it is always a good idea to include a market such as
Germany to additionally diversify portfolio risk. The German market does not
always correlate with emerging markets, and, in some cases, has historically
been inversely correlated.
Q WHAT IS YOUR OVERALL OUTLOOK GOING FORWARD?
A Our long-term outlook continues to be positive on global growth and
inflation. We believe a cocktail of technology-led productivity growth,
global economic liberalization and prudent fiscal and monetary policies will
limit any potential global inflation. However, we are cautious in the near
term because cyclical risks are pointing to higher yields in the U.S., Europe
and Japan.
We expect the international interest rate environment to remain positive for
emerging market debt, and while we don't expect the same stellar returns of
last year, we believe returns will nonetheless be reasonably good.
GEOGRAPHIC ALLOCATION
Africa 3.0%
Asia-Pacific 6.3%
Eastern Europe 14.4%
U.S., Canada & Other 16.7%
Latin America 28.4%
Europe 31.2%
Allocations may change as market conditions change.
<PAGE>
GT GLOBAL
INCOME FUNDS
FINANCIAL
STATEMENTS
<PAGE>
GT GLOBAL HIGH INCOME FUND
GT GLOBAL STRATEGIC INCOME FUND
REPORT OF
INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Board of Directors of G.T. Investment Funds, Inc.
and the Shareholders of GT Global High Income Fund and
GT Global Strategic Income Fund:
We have audited the accompanying statements of assets and liabilities of GT
Global High Income Fund - Consolidated and GT Global Strategic Income Fund,
including the portfolios of investments, as of April 30, 1997, the related
statements of operations for the six months then ended, the statements of
changes in net assets for the six months then ended and for the year ended
October 31, 1996, and the financial highlights for each of the periods indicated
herein. These financial statements and the financial highlights are the
responsibility of the Funds' management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of April
30, 1997 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and the financial highlights referred
to above present fairly, in all material respects, the financial positions of GT
Global High Income Fund - Consolidated and GT Global Strategic Income Fund as of
April 30, 1997, the results of their operations for the six months then ended,
the changes in their net assets for the six months ended and for the year ended
October 31, 1996, and the financial highlights for each of the periods indicated
herein, in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
JUNE 12, 1997
F1
<PAGE>
GT GLOBAL GOVERNMENT INCOME FUND
PORTFOLIO OF INVESTMENTS
April 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- ---------------------------------------------------------- -------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Government & Government Agency Obligations (87.2%)
Australia (5.0%)
Commonwealth of Australia, 9.5% due 8/15/03 .......... AUD 9,100,000 $ 7,778,347 2.6
New South Wales, 7% due 04/01/2004 ................... AUD 9,600,000 7,159,959 2.4
Canada (11.6%)
Canadian Government, 8.75% due 12/1/05 ............... CAD 26,600,000 21,739,744 7.2
Ontario Province, 6.25% due 1/13/04 .................. DEM 22,500,000 13,500,338 4.4
Colombia (1.5%)
Republic of Colombia, 7.25% due 2/23/04 .............. USD 4,875,000 4,631,250 1.5
Denmark (3.9%)
Kingdom of Denmark:
7% due 12/15/04 .................................... DKK 44,000,000 6,979,559 2.3
8% due 5/15/03 ..................................... DKK 28,000,000 4,717,726 1.6
Germany (11.2%)
Deutschland Republic, 6% due 1/5/06{./} {z} .......... DEM 57,900,000 34,091,092 11.2
Italy (7.3%)
Italian Buoni Poliennali del Tesoro (BTPS), 8.50% due
8/1/04 .............................................. ITL 36,010,000,000 22,065,559 7.3
Netherlands (4.9%)
Netherlands Government, 5.75% due 2/15/07 ............ NLG 29,100,000 14,995,301 4.9
New Zealand (5.0%)
New Zealand Government, 8% due 4/15/04 ............... NZD 22,000,000 15,315,244 5.0
South Africa (3.6%)
Republic of South Africa, 9.625% due 12/15/99 ........ USD 10,480,000 11,036,750 3.6
Spain (4.1%)
Spain Government, 10.5% due 10/30/03 ................. ESP 1,500,000,000 12,462,707 4.1
Sweden (2.8%)
Swedish Government, 13% due 6/15/01 .................. SEK 53,500,000 8,520,802 2.8
United Kingdom (11.3%)
United Kingdom Treasury:
7.5% due 12/7/06 ................................... GBP 8,500,000 13,670,680 4.5
8% due 12/7/00 ..................................... GBP 7,500,000 12,480,010 4.1
7% due 6/7/02 ...................................... GBP 5,000,000 8,054,229 2.7
United States (15.0%)
United States Treasury Note:
6.25% due 10/31/01{./} ............................. USD 17,350,000 17,139,225 5.6
7.875% due 11/15/04{./} ............................ USD 13,200,000 14,091,000 4.6
United States Treasury Bond, 6.50% due 10/15/06{z} ... USD 14,800,000 14,554,296 4.8
------------
Total Government & Government Agency Obligations (cost
$275,997,960) ........................................... 264,983,818
------------
Corporate Bonds (3.8%)
New Zealand (3.8%)
Transpower Finance Ltd., 8% due 3/15/02 (cost
$11,321,899) ........................................ NZD 16,500,000 11,379,146 3.8
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F2
<PAGE>
GT GLOBAL GOVERNMENT INCOME FUND
PORTFOLIO OF INVESTMENTS (cont'd)
April 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- ---------------------------------------------------------- -------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Supranational Bonds (3.3%)
International Bank Reconstruction & Development,
7.125% due 04/12/05 (cost $10,552,054) .............. DEM 15,710,000 $ 9,910,641 3.3
------------
Asset Backed (0.9%)
United States (0.9%)
Salomon Brothers Mortgage Securities CMO, 6.0867% due
4/25/27 (cost $2,594,384) ........................... USD 2,600,000 2,600,000 0.9
------------ -----
TOTAL FIXED INCOME INVESTMENTS (cost $300,466,297) ....... 288,873,605 95.2
------------ -----
<CAPTION>
PRINCIPAL VALUE % OF NET
SHORT-TERM INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- ---------------------------------------------------------- -------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Government & Government Agency Obligations (4.9%)
Philippines (4.9%)
Philippine Treasury Bill, 10.40% due 7/9/97 (cost
$14,705,847) ........................................ PHP 399,024,710 14,847,338 4.9
------------
Commercial Paper - Discounted (2.9%)
Indonesia (2.9%)
PT Bank Tabungan Negara: ............................. IDR -- -- 2.8
Effective yield 12.90%, due 9/12/97 ................ -- 12,000,000,000 4,714,029 --
Effective yield 12.71%, due 11/21/97 ............... -- 10,000,000,000 3,840,231 --
PT Bank Dagang Negara, effective yield 12.90%, due
9/12/97 ............................................. IDR 750,000,000 294,627 0.1
------------
Total Commercial Paper - Discounted (cost $8,969,826) .... 8,848,887
------------ -----
TOTAL SHORT-TERM INVESTMENTS (cost $23,675,673) .......... 23,696,225 7.8
------------ -----
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENTS (NOTE 1) ASSETS
- ---------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated April 30, 1997, with Bank of America NT&SA, due
May 1, 1997, for an effective yield of 5.30%,
collateralized by $9,990,000 U.S. Treasury Notes,
6.625% due 6/30/01 (market value of collateral is
$10,221,222, including accrued interest). ............ 10,001,472 3.3
Dated April 30, 1997, with State Street Bank & Trust
Co., due May 1, 1997, for an effective yield of 5.27%,
collateralized by $875,000 U.S. Treasury Bonds, 7.25%
due 5/15/16 (market value of collateral is $916,707,
including accrued interest). ......................... 898,131 0.3
------------ -----
TOTAL REPURCHASE AGREEMENTS (cost $10,899,603) ........... 10,899,603 3.6
------------ -----
TOTAL INVESTMENTS (cost $335,041,573) * ................. 323,469,433 106.6
Other Assets and Liabilities ............................. (19,925,529) (6.6)
------------ -----
NET ASSETS ............................................... $303,543,904 100.0
------------ -----
------------ -----
</TABLE>
- --------------
{./} All or part of the Fund's holdings in this security is segregated
as collateral for when-issued securities or forward currency
contracts. See Note 1 to the Financial Statements.
{z} All or part of the Fund's holdings in this security is segregated
as collateral for written futures. See Note 1 to the Financial
Statements.
* For Federal income tax purposes, cost is $335,281,467 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 548,775
Unrealized depreciation: (12,360,809)
-------------
Net unrealized depreciation: $ (11,812,034)
-------------
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F3
<PAGE>
GT GLOBAL GOVERNMENT INCOME FUND
PORTFOLIO OF INVESTMENTS (cont'd)
April 30, 1997 (Unaudited)
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
APRIL 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
UNREALIZED
MARKET VALUE CONTRACT DELIVERY APPRECIATION
CONTRACTS TO BUY: (U.S. DOLLARS) PRICE DATE (DEPRECIATION)
- ---------------------------------------- -------------- -------- -------- --------------
<S> <C> <C> <C> <C>
Australian Dollars...................... 26,675,282 1.28193 06/03/97 $ (22,785)
British Pounds.......................... 3,153,243 0.61614 06/10/97 (11,607)
Canadian Dollars........................ 7,245,795 1.35658 05/29/97 (199,398)
Canadian Dollars........................ 6,026,205 1.35625 05/29/97 (167,343)
Canadian Dollars........................ 7,640,368 1.38746 05/29/97 (35,529)
Deutsche Marks.......................... 3,367,836 1.68832 05/14/97 (85,139)
Deutsche Marks.......................... 9,687,539 1.66964 06/25/97 (314,617)
Deutsche Marks.......................... 13,835,198 1.70907 06/25/97 (119,760)
Japanese Yen............................ 9,546,509 120.379 07/03/97 (422,007)
Japanese Yen............................ 9,546,509 120.9958 07/03/97 (371,191)
New Zealand Dollars..................... 26,634,995 1.43868 05/02/97 (83,619)
Swiss Francs............................ 8,608,347 1.45019 05/27/97 (109,099)
-------------- --------------
Total Contracts to Buy (Payable amount
$133,909,920)........................ 131,967,826 (1,942,094)
-------------- --------------
THE VALUE OF CONTRACTS TO BUY AS
PERCENTAGE OF NET ASSETS IS 43.48%.
<CAPTION>
UNREALIZED
MARKET VALUE CONTRACT DELIVERY APPRECIATION
CONTRACTS TO SELL: (U.S. DOLLARS) PRICE DATE (DEPRECIATION)
- ---------------------------------------- -------------- -------- -------- --------------
<S> <C> <C> <C> <C>
British Pounds.......................... 6,710,747 0.627 06/10/97 (91,912)
British Pounds.......................... 10,647,342 0.61692 07/31/97 50,928
Canadian Dollars........................ 3,228,324 1.3831 05/29/97 25,237
Canadian Dollars........................ 3,730,508 1.37804 05/29/97 42,967
Canadian Dollars........................ 6,456,649 1.3825 05/29/97 53,297
Canadian Dollars........................ 6,133,816 1.3721 05/29/97 97,508
Canadian Dollars........................ 14,132,886 1.35668 05/29/97 387,909
Danish Kroner........................... 7,454,791 6.5715 07/17/97 (13,568)
Deutsche Marks.......................... 3,367,836 1.6716 05/14/97 119,677
Deutsche Marks.......................... 16,381,803 1.72489 06/25/97 (9,744)
Deutsche Marks.......................... 2,552,406 1.711 06/25/97 19,190
Deutsche Marks.......................... 14,197,756 1.71996 06/25/97 32,226
Deutsche Marks.......................... 8,492,549 1.6799 06/25/97 222,255
Deutsche Marks.......................... 8,179,300 1.67628 06/25/97 232,162
Indonesian Rupiahs...................... 8,758,288 2,449.75 06/05/97 (22,703)
Italian Liras........................... 5,674,619 1,704.40 07/21/97 42,936
Japanese Yen............................ 9,944,280 124.175 07/03/97 122,158
New Zealand Dollars..................... 26,622,711 1.43989 06/03/97 73,869
Spanish Pesetas......................... 12,943,422 145.025 07/15/97 90,193
Swiss Francs............................ 8,608,347 1.45765 05/27/97 64,454
-------------- --------------
Total Contracts to Sell (Receivable
amount $185,757,419)................. 184,218,380 1,539,039
-------------- --------------
THE VALUE OF CONTRACTS TO SELL AS
PERCENTAGE OF NET ASSETS IS 60.69%.
Total Open Forward Foreign Currency
Contracts, Net....................... $ (403,055)
--------------
--------------
</TABLE>
- ----------------
See Note 1 to the financial statements.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
WRITTEN FUTURES CONTRACTS OUTSTANDING
APRIL 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
EXPIRATION NO. OF MARKET
DESCRIPTION DATE CONTRACTS CURRENCY VALUE
- ---------------------------------------- ---------- --------- -------- -----------
<S> <C> <C> <C> <C>
Canadian 10-Year Bond Future (face
$15,950,754)........................... 06/17/97 196 CAD $16,138,445
Italian 10-Year Bond Future (face
$9,856,872)............................ 06/04/97 65 ITL $ 9,813,648
</TABLE>
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
F4
<PAGE>
GLOBAL HIGH INCOME FUND -- CONSOLIDATED
PORTFOLIO OF INVESTMENTS
April 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- ---------------------------------------------------------- -------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Government & Government Agency Obligations (55.0%)
Argentina (15.0%)
Republic of Argentina:
Discount Bond, 6.375% due 3/31/23+ ................. USD 41,535,000 $ 34,370,207 8.1
BOCON Pro 1, 3.2376% due 4/1/07+ ................... ARS 19,889,500 20,617,529 4.9
BOCON Pre 1, 3.2376% due 4/1/01[.] + ............... ARS 6,459,500 8,436,182 2.0
Brazil (7.1%)
Republic of Brazil:
Debt Conversion Bond Series L, 6.9375% due
4/15/12+ .......................................... USD 25,943,000 20,721,971 4.9
Debt Conversion Bond Registered, 6.9375% due
4/15/12+ .......................................... USD 11,626,000 9,286,268 2.2
Bulgaria (8.1%)
Republic of Bulgaria:
Interest Arrear Bond, 6.5625% due 7/28/11 -
Euro+ ............................................. USD 30,147,000 18,879,559 4.5
Front Loaded Interest Reduction Bond Series A, 2.25%
due 7/28/12++ ..................................... USD 32,006,000 15,322,873 3.6
Costa Rica (1.6%)
Banco Central de Costa Rica:
Interest Bond Series A, 6.3125% due 5/21/05
(effective maturity date 2/21/03)+ ................ USD 5,147,632 5,006,072 1.2
Principal Bond Series A, 6.25% due 5/21/10 ......... USD 1,900,000 1,596,000 0.4
Ecuador (1.8%)
Republic of Ecuador:
Discount Bond, 6.4375% due 2/28/25 - EURO+ ......... USD 6,060,000 4,060,200 1.0
11.25% due 4/25/02 - 144A{.} ....................... USD 3,372,000 3,456,300 0.8
Mexico (3.9%)
United Mexican States:
Par Bond Series A, 6.25% due 12/31/19+/+ ........... USD 17,167,000 12,478,263 2.9
Discount Bond Series C, 6.35156% due 12/31/19+
+/+ ............................................... USD 4,956,000 4,392,255 1.0
Nigeria (2.8%)
Central Bank of Nigeria, Par Bond, 6.25% due
11/15/20+/+ ......................................... USD 18,750,000 12,000,000 2.8
Panama (2.7%)
Panama, Interest Reduction Bond, 3.5% due 7/17/14 -
144A++ {.} .......................................... USD 15,692,000 11,602,273 2.7
Peru (1.5%)
Republic of Peru:
Past Due Interest, 4% due 3/7/17 - 144A++ {.} ...... USD 5,557,000 3,355,039 0.8
Front Loaded Interest Reduction Bond, 3.25% due
3/7/17 - 144A++ {.} ............................... USD 5,600,000 3,041,500 0.7
Poland (4.6%)
Republic of Poland:
12% due 6/12/01 .................................... PLZ 42,250,000 10,826,395 2.6
Past Due Interest, 4% due 10/31/14 - EURO{./} ++ ... USD 10,434,000 8,464,583 2.0
Uruguay (1.6%)
Banco Central del Uruguay:
New Money Bond, 6.625% due 2/18/06+ ................ USD 3,750,000 3,581,250 0.8
Par Bond Series A, 6.75% due 2/19/21+/+ ............ USD 2,290,000 1,998,025 0.5
Par Bond Series B, 6.75% due 2/19/21+/+ ............ USD 1,500,000 1,308,750 0.3
</TABLE>
The accompanying notes are an integral part of the financial statements.
F5
<PAGE>
GLOBAL HIGH INCOME FUND -- CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
April 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- ---------------------------------------------------------- -------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Government & Government Agency Obligations (Continued)
Venezuela (4.3%)
Republic of Venezuela:
Par Bond Series A, 6.75% due 3/31/20+/+ ............ USD 19,000,000 $ 13,786,875 3.3
Debt Conversion Bond, 6.5% due 12/18/07+ ........... USD 4,750,000 4,194,844 1.0
------------
Total Government & Government Agency Obligations (cost
$223,998,123) ........................................... 232,783,213
------------
Corporate Bonds (14.3%)
Argentina (1.7%)
Supermercados Norte, 10.875% due 2/9/04 - 144A{.} .... USD 2,655,000 2,660,841 0.7
Central Termica Guemes S.A., 12% due 11/26/01 -
144A{.} ............................................. USD 2,370,000 2,466,459 0.6
Acindar Industrial Argentina, 11.25% due 2/15/04 ..... USD 1,497,000 1,523,198 0.4
Brazil (1.5%)
RBS Participacoes S.A., 11% due 4/1/07 - 144A{.} ..... USD 2,273,000 2,295,730 0.5
Tevecap S.A., 12.625% due 11/26/04 - 144A{.} ......... USD 2,000,000 2,040,000 0.5
TV Filme, Inc., 12.875% due 12/15/04 - 144A{.} ....... USD 1,996,000 2,035,920 0.5
China (1.3%)
AES China Generating Co., Ltd., 10.125% due
12/15/06 ............................................ USD 3,290,000 3,462,725 0.8
Panda Global Energy Co., 12.5% due 4/15/04 -
144A{.} ............................................. USD 2,111,000 2,013,366 0.5
Indonesia (4.5%)
Polysindo International Finance, 9% due 4/22/99 ...... IDR 27,500,000,000 8,213,692 1.9
FSW International, 12.5% due 11/1/06 - 144A{.} ....... USD 3,207,000 3,158,895 0.7
PT Tjiwi Kimia, 13.25% due 8/1/01 .................... USD 2,500,000 2,787,500 0.7
Rapp International Finance, 13.25% due 12/15/05 -
Euro ................................................ USD 2,430,000 2,460,375 0.6
Ongko International Finance Co., 10.5% due 3/29/04 -
144A{.} ............................................. USD 2,378,000 2,403,266 0.6
Jamaica (1.0%)
Mechala Group Jamaica Ltd., 12.75% due 12/30/99 -
Series B ............................................ USD 4,134,000 4,289,025 1.0
Mexico (2.3%)
Cemex, S.A. de C.V. "B", 12.75% due 7/15/06 -
144A{.} ............................................. USD 2,420,000 2,704,350 0.6
TV Azteca, S.A. de C.V., 10.5% due 2/15/07 -
144A{.} ............................................. USD 2,350,000 2,317,688 0.5
Copamex Industrias S.A., 11.375% due 4/30/04 -
144A{.} ............................................. USD 1,903,000 1,957,711 0.5
Grupo Elektra, S.A. de C.V., 12.75% due 5/15/01 -
144A{.} ............................................. USD 1,500,000 1,633,125 0.4
Grupo Mexico de Desarrollo, 8.25% due 2/17/01 -
Euro ................................................ USD 1,910,000 1,334,613 0.3
Philippines (1.1%)
CE Casecan Water & Energy:
Series B, 11.95% due 11/15/10 - Reg. S{c} .......... USD 3,213,000 3,570,446 0.8
11.45% due 11/15/05 - Reg. S{c} .................... USD 1,030,000 1,113,688 0.3
Russia (0.9%)
Lukinter Finance, 3.5% due 5/6/02 - 144A{.} .......... USD 3,704,000 3,861,420 0.9
------------
Total Corporate Bonds (cost $59,467,855) ................. 60,304,033
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F6
<PAGE>
GLOBAL HIGH INCOME FUND -- CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
April 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- ---------------------------------------------------------- -------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Sovereign Debt (12.5%)
Morocco (2.4%)
Kingdom of Morocco, Tranche A Loan Agreement, 6.8125%
due 1/1/09+ ......................................... USD 11,732,000 $ 10,324,160 2.4
Russia (10.1%)
Bank for Foreign Economic Affairs (Vnesheconombank)
Loan Agreement:
Assignment ** {./} -/- ............................. USD 46,757,000 37,929,501 9.0
Participation ** -/- ............................... DEM 9,819,000 4,750,672 1.1
------------
Total Sovereign Debt (cost $32,981,886) .................. 53,004,333
------------
Supranational Bonds (1.1%)
International Finance Corp., 10.25% due 4/10/02 (cost
$4,751,045) ........................................... PHP 125,000,000 4,743,833 1.1
------------ -----
TOTAL FIXED INCOME INVESTMENTS (cost $321,198,909) ....... 350,835,412 82.9
------------ -----
<CAPTION>
UNDERLYING VALUE % OF NET
OPTIONS CURRENCY AMOUNT (NOTE 1) ASSETS
- ---------------------------------------------------------- -------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Republic of Brazil Debt Conversion Bond 4/15/12, Call
Option, strike 80.222, expires 6/12/97 ................ USD 114,475,000 989,178 0.2
GOVERNMENT & GOVERNMENT AGENCY OBLIGATIONS
Republic of Bulgaria Floating Interest Rate Bond "A"
7/28/12, Call Option, strike 45.9375, expires
7/17/97 ............................................... USD 30,693,000 1,104,948 0.3
GOVERNMENT & GOVERNMENT AGENCY OBLIGATIONS
Russian Ministry of Finance Bond No. 3 5/14/99, Call
Option, strike 86.625, expires 5/7/97 ................. USD 40,770,000 12,231 --
GOVERNMENT & GOVERNMENT AGENCY OBLIGATIONS
------------ -----
TOTAL OPTIONS (cost $3,943,512) .......................... 2,106,357 0.5
------------ -----
<CAPTION>
PRINCIPAL VALUE % OF NET
SHORT-TERM INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- ---------------------------------------------------------- -------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Structured Notes (3.7%)
Russia (3.7%)
Russian Federation GKO (Treasury Bills) Linked Note
with cancellable currency forwards attached:
Due 4/15/98 ........................................ USD 11,717,400 15,803,539 3.7
------------
(Notes issued by Credit Suisse First Boston (Cayman)
Ltd. The note is linked to the local price in
Russian rubles of 117,174 Titles of Russian
treasury bills maturing 4/8/98. The note includes
options to sell the Russian ruble proceeds at
maturity for U.S. dollars.) (cost $15,438,552)
Government & Government Agency Obligations (0.9%)
Indonesia (0.9%)
Dharmala Intiutama International Promissary Note,
effective yield 16.28% due 10/27/97 (cost
$3,923,980) ......................................... IDR 10,000,000,000 3,809,378 0.9
------------ -----
TOTAL SHORT-TERM INVESTMENTS (cost $19,362,532) .......... 19,612,917 4.6
------------ -----
</TABLE>
The accompanying notes are an integral part of the financial statements.
F7
<PAGE>
GLOBAL HIGH INCOME FUND -- CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
April 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- ---------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated April 30, 1997, with State Street Bank & Trust
Co., due May 1, 1997, for an effective yield of 5.27%
collateralized by $12,115,000 U.S. Treasury Bonds,
7.25% due 5/15/16 (market value of collateral is
$12,692,463, including accrued interest).(cost
$12,438,821) ......................................... $ 12,438,821 2.9
------------ -----
TOTAL INVESTMENTS (cost $356,943,774) * ................. 384,993,507 90.9
Other Assets and Liabilities ............................. 38,712,733 9.1
------------ -----
NET ASSETS ............................................... $423,706,240 100.0
------------ -----
------------ -----
</TABLE>
- --------------
+ The coupon rate shown on floating rate note represents the rate at
period end.
{./} All or part of the Fund's holdings in this security is segregated
as collateral for when-issued securities or forward currency
contracts. See Note 1 to the Financial Statements.
-/- Non-income producing security.
** Underlying loan agreement currently in default.
{.} Security exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers.
{c} Security issued under Regulation S. Rule 144A and additional
restrictions may apply in the resale of such securities.
[.] Bond pays stated or additional interest with "payment-in-kind"
(PIK) bonds.
++ The coupon rate shown on step-up coupon bond 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.
* For Federal income tax purposes, cost is $358,525,644 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 33,282,273
Unrealized depreciation: (6,814,410)
-------------
Net unrealized appreciation: $ 26,467,863
-------------
-------------
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
APRIL 30, 1997
<TABLE>
<CAPTION>
UNREALIZED
MARKET VALUE CONTRACT DELIVERY APPRECIATION
CONTRACTS TO SELL: (U.S. DOLLARS) PRICE DATE (DEPRECIATION)
- ---------------------------------------- -------------- ----------- -------- --------------
<S> <C> <C> <C> <C>
Deutsche Marks.......................... 3,948,582 1.66715 05/13/97 $151,229
Indonesian Rupiah....................... 11,868,708 2,449.75000 06/05/97 (30,765)
-------------- --------------
Total Contracts to Sell (Receivable
amount $15,937,754).................. 15,817,290 120,464
-------------- --------------
THE VALUE OF CONTRACTS TO SELL AS
PERCENTAGE OF NET ASSETS IS 3.73%.
Total Open Forward Foreign Currency
Contracts............................ $120,464
--------------
--------------
</TABLE>
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
F8
<PAGE>
GT GLOBAL STRATEGIC INCOME FUND
PORTFOLIO OF INVESTMENTS
April 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- ---------------------------------------------------------- -------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Government & Government Agency Obligations (80.4%)
Argentina (8.3%)
Republic of Argentina:
Discount Bond, 6.375% due 3/31/23+ ................. USD 31,992,000 $ 26,472,427 5.9
BOCON Pro 1, 3.2376% due 4/1/07[.] + ............... ARS 5,122,000 5,309,484 1.2
BOCON Pre 1, 3.2376% due 4/1/01[.] + ............... ARS 4,267,900 5,232,969 1.2
Australia (2.5%)
Commonwealth of Australia, 9.5% due 8/15/03 .......... AUD 13,500,000 11,539,306 2.5
Brazil (3.9%)
Federal Republic of Brazil:
Debt Conversion Bond Series L, 6.9375% due
4/15/12+ .......................................... USD 20,578,000 16,436,678 3.6
Debt Conversion Bond Registered, 6.9375% due
4/15/12+ .......................................... USD 1,924,000 1,536,795 0.3
Bulgaria (3.0%)
Republic of Bulgaria:
Interest Arrears Bond, 6.5625% due 7/28/11 -
Euro+ ............................................. USD 16,364,000 10,247,955 2.3
Front Loaded Interest Reduction Bond Series A, 2.25%
due 7/28/12++ ..................................... USD 6,959,000 3,331,621 0.7
Canada (1.9%)
Canadian Government, 8.75% due 12/1/05 ............... CAD 10,500,000 8,581,478 1.9
Colombia (0.5%)
Republic of Colombia, 8.7% due 2/15/16 ............... USD 2,538,000 2,480,895 0.5
Costa Rica (0.9%)
Banco Central de Costa Rica:
Interest Bond Series A, 6.3125% due 5/21/05
(effective maturity date 2/21/03)+ ................ USD 2,312,072 2,248,490 0.5
Principal Bond Series A, 6.25% due 5/21/10 ......... USD 1,900,000 1,596,000 0.4
Denmark (1.6%)
Kingdom of Denmark, 7% due 12/15/04 .................. DKK 46,000,000 7,296,812 1.6
Ecuador (1.0%)
Republic of Ecuador:
Discount Bond, 6.4375% due 2/28/25 - Euro+ ......... USD 3,599,000 2,411,330 0.5
11.25% due 4/25/02 - 144A{.} ....................... USD 2,022,000 2,072,550 0.5
France (1.7%)
France O.A.T., 7.25% due 4/25/06 ..................... FRF 40,000,000 7,657,329 1.7
Germany (12.2%)
Deutschland Republic:
8.25% due 9/20/01 .................................. DEM 38,000,000 25,036,973 5.5
6% due 1/5/06{z} ................................... DEM 35,500,000 20,902,137 4.6
Treuhandanstalt, 7.125% due 1/29/03 .................. DEM 15,000,000 9,529,463 2.1
Italy (5.4%)
Italian Buoni Poliennali del Tesoro (BTPS):
10.5% due 11/1/00 .................................. ITL 19,200,000,000 12,397,221 2.7
9.5% due 2/1/99 .................................... ITL 8,000,000,000 4,874,540 1.1
Republic of Italy Series Y, .5883% due 7/26/99+ ...... JPY 928,000,000 7,351,603 1.6
Mexico (5.6%)
United Mexican States:
Discount Bond Series C, 6.35156% due 12/31/19+
+/+ ............................................... USD 15,950,000 14,135,688 3.1
Global Bond, 11.5% due 5/15/26 ..................... USD 4,526,000 4,803,218 1.1
11.375% due 9/15/16 - 144A{.} ...................... USD 3,000,000 3,165,000 0.7
7.625% due 8/6/01 - 144A+ {.} ...................... USD 2,953,000 2,991,389 0.7
</TABLE>
The accompanying notes are an integral part of the financial statements.
F9
<PAGE>
GT GLOBAL STRATEGIC INCOME FUND
PORTFOLIO OF INVESTMENTS (cont'd)
April 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- ---------------------------------------------------------- -------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Government & Government Agency Obligations (Continued)
Nigeria (1.6%)
Central Bank of Nigeria, Par Bond, 6.25% due
11/15/20+/+ ......................................... USD 11,000,000 $ 7,040,000 1.6
Panama (2.7%)
Republic of Panama:
Interest Reduction Bond, 3.5% due 7/17/14 - 144A++
{.} ............................................... USD 12,542,000 9,273,241 2.0
7.875% due 2/13/02 - 144A{.} ....................... USD 3,360,000 3,276,000 0.7
Poland (2.7%)
Republic of Poland:
Past Due Interest Bond , 4% due 10/31/14 -
EURO++ ............................................ USD 9,200,000 7,463,500 1.6
12% due 6/12/01 .................................... PLZ 19,272,000 4,938,374 1.1
Spain (1.8%)
Spain Government, 10.5% due 10/30/03 ................. ESP 1,000,000,000 8,308,471 1.8
Sweden (1.3%)
Swedish Government, 13% due 6/15/01 .................. SEK 36,000,000 5,733,624 1.3
United Kingdom (7.2%)
United Kingdom Treasury:
7% due 6/7/02 ...................................... GBP 11,900,000 19,169,063 4.2
8% due 12/7/00 ..................................... GBP 8,160,000 13,578,251 3.0
United States (11.6%)
United States Treasury:
6.875% due 3/31/00{./} ............................. USD 43,000,000 43,496,349 9.6
6.875% due 8/15/25 ................................. USD 9,000,000 8,829,668 2.0
Uruguay (0.3%)
Banco Central del Uruguay, Par Bond Series A, 6.75%
due 2/19/21+/+ ...................................... USD 1,370,000 1,195,325 0.3
Venezuela (2.7%)
Republic of Venezuela:
Par Bond Series A, 6.75% due 3/31/20+/+ ............ USD 12,000,000 8,707,500 1.9
Debt Conversion Bond, 6.5% due 12/18/07+ ........... USD 4,000,000 3,532,500 0.8
------------
Total Government & Government Agency Obligations (cost
$368,892,972) ........................................... 364,181,217
------------
Sovereign Debt (7.6%)
Morocco (1.4%)
Kingdom of Morocco, Tranche A Loan Agreement, 6.8125%
due 1/1/09+ ......................................... USD 7,027,000 6,183,760 1.4
Russia (6.2%)
Bank for Foreign Economic Affairs (Vnesheconombank)
Loan Agreement:
Assignment ** {./} -/- ............................. USD 31,585,000 25,623,331 5.7
Participation ** -/- ............................... DEM 4,566,000 2,209,142 0.5
------------
Total Sovereign Debt (cost $21,866,604) .................. 34,016,233
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F10
<PAGE>
GT GLOBAL STRATEGIC INCOME FUND
PORTFOLIO OF INVESTMENTS (cont'd)
April 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- ---------------------------------------------------------- -------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Corporate Bonds (6.2%)
Argentina (0.5%)
Central Termica Guemes S.A., 12% due 11/26/01 -
144A{.} ............................................. USD 1,279,000 $ 1,331,055 0.3
Acindar Industrial Argentina, 11.25% due 2/15/04 ..... USD 816,000 830,280 0.2
Brazil (0.7%)
RBS Participacoes S.A., 11% due 4/1/07 - 144A{.} ..... USD 1,278,000 1,290,780 0.3
TV Filme, Inc., 12.875% due 12/15/04 - 144A{.} ....... USD 1,102,000 1,124,040 0.2
Tevecap S.A., 12.625% due 11/26/04 - 144A{.} ......... USD 1,025,000 1,045,500 0.2
China (0.7%)
AES China Generating Co., Ltd., 10.125% due
12/15/06 ............................................ USD 1,818,000 1,913,445 0.4
Panda Global Energy Co., 12.5% due 4/15/04 -
144A{.} ............................................. USD 1,244,000 1,186,465 0.3
Indonesia (0.8%)
FSW International, 12.5% due 11/1/06 - 144A{.} ....... USD 1,727,000 1,701,095 0.4
Ongko International Finance Co., 10.5% due 3/29/04 -
144A{.} ............................................. USD 1,328,000 1,342,110 0.3
Rapp International Finance, 13.25% due 12/15/05 -
Euro ................................................ USD 664,000 672,300 0.1
Jamaica (0.2%)
Mechala Group Jamaica Ltd., 12.75% due 12/30/99 -
Series B ............................................ USD 719,000 745,963 0.2
Mexico (1.0%)
TV Azteca, S.A. de C.V., 10.5% due 2/15/07 -
144A{.} ............................................. USD 1,300,000 1,282,125 0.3
Copamex Industrias S.A., 11.375% due 4/30/04 -
144A{.} ............................................. USD 1,134,000 1,166,603 0.3
Grupo Elektra, S.A. de C.V., 12.75% due 5/15/01 ...... USD 1,000,000 1,088,750 0.2
Grupo Mexico de Desarrollo, 8.25% due 2/17/01 ........ USD 1,105,000 772,119 0.2
Philippines (0.6%)
CE Casecnan Water & Energy:
Series B, 11.95% due 11/15/10 - Reg S{c} ........... USD 1,803,000 2,003,584 0.4
11.45% due 11/15/05 - Reg S{c} ..................... USD 670,000 724,438 0.2
Russia (0.5%)
Lukinter Finance, 3.5% due 5/6/02 - 144A{.} .......... USD 2,205,000 2,298,713 0.5
United States (1.2%)
Chase Manhattan Corp., 6.25% due 1/15/06 ............. USD 2,835,000 2,637,962 0.6
General Motors Acceptance Corp., 6.625% due
10/15/05 ............................................ USD 2,700,000 2,582,653 0.6
------------
Total Corporate Bonds (cost $27,400,371) ................. 27,739,980
------------
Supranational Bonds (1.7%)
International Bank Reconstruction and Development,
10.25% due 4/11/02 - 144A ............................. PHP 130,000,000 4,933,586 1.1
International Finance Corp., 10.25% due 4/10/02 ........ PHP 70,000,000 2,656,546 0.6
------------
Total Supranational Bonds (cost $7,605,528) .............. 7,590,132
------------ -----
TOTAL FIXED INCOME INVESTMENTS (cost $425,765,475) ....... 433,527,562 95.9
------------ -----
</TABLE>
The accompanying notes are an integral part of the financial statements.
F11
<PAGE>
GT GLOBAL STRATEGIC INCOME FUND
PORTFOLIO OF INVESTMENTS (cont'd)
April 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
UNDERLYING VALUE % OF NET
OPTIONS CURRENCY AMOUNT (NOTE 1) ASSETS
- ---------------------------------------------------------- -------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Republic of Brazil Debt Conversion Bond 4/15/12, Call
Option, strike 80.222, expires 6/12/97 ................ USD 63,300,000 $ 546,975 0.1
GOVERNMENT & GOVERNMENT AGENCY OBLIGATIONS
Republic of Bulgaria Floating Interest Rate Bond "A"
7/28/12, Call Option, strike 45.9375, expires
7/17/97 ............................................... USD 18,406,000 662,616 0.2
GOVERNMENT & GOVERNMENT AGENCY OBLIGATIONS
Russian Ministry of Finance Bond No. 3 5/14/99, Call
Option, strike 86.625, expires 5/7/97 ................. USD 22,000,000 6,600 --
GOVERNMENT & GOVERNMENT AGENCY OBLIGATIONS
------------ -----
TOTAL OPTIONS (cost $2,219,920) .......................... 1,216,191 0.3
------------ -----
<CAPTION>
PRINCIPAL VALUE % OF NET
SHORT-TERM INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- ---------------------------------------------------------- -------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Structured Notes (1.8%)
Russia (1.8%)
Russian Federation GKO (Treasury Bills) Linked Notes
with cancellable
currency forwards attached:
Due 4/15/98 ........................................ USD 6,019,900 8,119,184 1.8
------------ -----
(Notes issued by Credit Suisse First Boston (Cayman)
Ltd. These notes are linked to the local price in
Russian rubles of 60,199 Titles of Russian treasury
bills maturing 4/8/98. The note includes options to
sell the Russian ruble proceeds at maturity for
U.S. dollars.)(cost $7,931,669)
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- ---------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated April 30, 1997, with State Street Bank & Trust
Co., due May 1, 1997, for an effective yield of 5.27%,
collateralized by $590,000 U.S. Treasury Bonds, 7.25%
due 5/15/16 (market value of collateral is $618,122,
including accrued interest).(cost $601,088) .......... 601,088 0.1
------------ -----
TOTAL INVESTMENTS (cost $436,518,152) * ................. 443,464,025 98.1
Other Assets and Liabilities ............................. 8,656,822 1.9
------------ -----
NET ASSETS ............................................... $452,120,847 100.0
------------ -----
------------ -----
</TABLE>
- --------------
+ The coupon rate shown on floating rate note represents the rate at
period end.
{./} All or part of the Fund's holdings in this security is segregated
as collateral for when-issued securities or forward currency
contracts. See Note 1 to the Financial Statements.
-/- Non-income producing security.
** Underlying loan agreement currently in default.
{.} Security exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers.
{c} Security issued under Regulation S. Rule 144A and additional
restrictions may apply in the resale of such securities.
[.] Bond pays stated or additional interest with "payment-in-kind"
(PIK) bonds.
++ The coupon rate shown on step-up coupon bond represents the rate at
period end.
{z} All or part of the Fund's holdings in this security is segregated
as collateral for written futures. See Note 1 to the Financial
Statements.
+/+ 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 $437,587,488 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 20,732,878
Unrealized depreciation: (14,856,341)
-------------
Net unrealized appreciation: $ 5,876,537
-------------
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F12
<PAGE>
GT GLOBAL STRATEGIC INCOME FUND
PORTFOLIO OF INVESTMENTS (cont'd)
April 30, 1997
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
APRIL 30, 1997
<TABLE>
<CAPTION>
MARKET VALUE UNREALIZED
(U.S. CONTRACT DELIVERY APPRECIATION
CONTRACTS TO BUY: DOLLARS) PRICE DATE (DEPRECIATION)
- ---------------------------------------- ------------ ----------- -------- --------------
<S> <C> <C> <C> <C>
Australian Dollars...................... 7,640,140 1.27930 05/12/97 $ (20,324)
Australian Dollars...................... 3,118,425 1.30422 05/12/97 51,465
British Pounds.......................... 6,613,725 0.62700 06/10/97 90,584
Canadian Dollars........................ 3,866,815 1.35625 05/29/97 (107,379)
Canadian Dollars........................ 2,080,476 1.35658 05/29/97 (57,253)
Canadian Dollars........................ 860,886 1.35625 05/29/97 (23,907)
Canadian Dollars........................ 4,704,590 1.38712 06/02/97 (21,029)
Deutsche Marks.......................... 5,800,922 1.66964 06/25/97 (188,393)
Deutsche Marks.......................... 10,557,677 1.70907 06/25/97 (91,389)
------------ --------------
Total Contracts to Buy (Payable amount
$45,611,281)......................... 45,243,656 (367,625)
------------ --------------
THE VALUE OF CONTRACTS TO BUY AS PERCENTAGE OF NET ASSETS IS 10.01%.
<CAPTION>
CONTRACTS TO SELL:
- ----------------------------------------
<S> <C> <C> <C> <C>
Australian Dollars...................... 11,772,053 1.32100 05/12/97 (341,352)
British Pounds.......................... 10,284,422 0.62125 06/10/97 (46,921)
British Pounds.......................... 9,114,770 0.61692 07/31/97 43,598
Canadian Dollars........................ 175,764 1.38310 05/29/97 1,374
Canadian Dollars........................ 2,765,598 1.37804 05/29/97 31,853
Canadian Dollars........................ 3,866,815 1.35668 05/29/97 106,134
Canadian Dollars........................ 2,120,834 1.38273 06/02/97 16,250
Canadian Dollars........................ 4,521,574 1.38214 06/02/97 36,575
Deutsche Marks.......................... 9,271,423 1.70765 06/11/97 98,179
Deutsche Marks.......................... 11,480,024 1.72489 06/25/97 (6,829)
Deutsche Marks.......................... 15,825,915 1.72025 08/05/97 (14,260)
Italian Liras........................... 18,197,214 1704.40000 07/21/97 137,684
Spanish Pesetas......................... 8,628,720 145.02500 07/15/97 60,127
------------ --------------
Total Contracts to Sell (Receivable
amount $108,147,538)................. 108,025,126 122,412
------------ --------------
THE VALUE OF CONTRACTS TO SELL AS PERCENTAGE OF NET ASSETS IS 23.89%.
Total Open Forward Foreign Currency
Contracts, Net....................... $(245,213)
--------------
--------------
</TABLE>
- --------------
See Note 1 to the financial statements.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
WRITTEN FUTURES CONTRACTS OUTSTANDING
APRIL 30, 1997
<TABLE>
<CAPTION>
EXPIRATION NO. OF MARKET
DESCRIPTION DATE CONTRACTS CURRENCY VALUE
- ---------------------------------------- ---------- --------- -------- ----------
<S> <C> <C> <C> <C>
Canadian 10-Year Bond Future (face
$4,502,734)............................ 06/17/97 55 CAD $4,532,106
</TABLE>
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
F13
<PAGE>
GT GLOBAL INCOME FUNDS
STATEMENTS OF ASSETS
AND LIABILITIES
April 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GT GLOBAL
-----------------------------------------
HIGH
GOVERNMENT INCOME FUND- STRATEGIC
INCOME FUND CONSOLIDATED INCOME
(UNAUDITED) (NOTE 1) FUND
------------- ------------ ------------
<S> <C> <C> <C>
Assets:
Investments in securities, at value (cost $335,041,573;
$356,943,774; and $436,518,152, respectively) (Note 1)............. $ 323,469,433 $384,993,507 $443,464,025
U.S. currency....................................................... 935 692 423
Foreign Currencies (cost $0, $5,055 and $22,143).................... -- 7,843 15,987
Interest receivable................................................. 6,921,964 7,380,033 10,680,530
Receivable for forward foreign currency contracts -- closed (Note
1)................................................................. -- -- 609,200
Receivable for Fund shares sold..................................... 1,229,405 29,718,796 498,356
Receivable for open forward foreign currency contracts, net (Note
1)................................................................. -- 120,464 --
Receivable for securities sold...................................... 1,612,843 45,772,511 22,948,570
Receivable for variation margin..................................... 365,250 -- 44,000
Unamortized organizational costs.................................... -- 18,114 --
Cash held as collateral for securities loaned (Note 1).............. 53,315,063 -- 31,692,850
------------- ------------ ------------
Total assets...................................................... 386,914,893 468,011,960 509,953,941
------------- ------------ ------------
Liabilities:
Payable for custodian fees (Note 1)................................. 6,812 22,753 36,402
Payable for Directors' and Trustees' fees and expenses (Note 2)..... 5,357 9,194 3,069
Payable for forward foreign currency contracts -- closed (Note 1)... 936,808 -- --
Payable for fund accounting fees (Note 2)........................... 5,482 7,137 7,815
Payable for Fund shares repurchased (Note 2)........................ 1,275,648 16,371,067 1,920,626
Payable for investment management and administration fees (Note
2)................................................................. 188,108 414,603 270,302
Payable for loan outstanding (Note 1)............................... -- -- 8,000,000
Payable for open forward foreign currency contracts, net (Note 1)... 403,055 -- 245,213
Payable for printing and postage expenses........................... 86,447 85,813 63,484
Payable for professional fees....................................... 45,996 62,307 42,311
Payable for registration and filing fees............................ 14,649 4,780 15,821
Payable for securities purchased.................................... 26,634,995 26,989,737 15,153,278
Payable for service and distribution expenses (Note 2).............. 163,681 241,491 296,865
Payable for transfer agent fees (Note 2)............................ 158,072 73,523 61,029
Payable for variation margin........................................ 117,495 -- 16,539
Other accrued expenses.............................................. 13,321 23,215 7,490
Collateral for securities loaned (Note 1)........................... 53,315,063 -- 31,692,850
------------- ------------ ------------
Total liabilities................................................. 83,370,989 44,305,620 57,833,094
Minority interest (Notes 1 & 2)..................................... -- 100 --
------------- ------------ ------------
Net assets............................................................ $ 303,543,904 $423,706,240 $452,120,847
------------- ------------ ------------
------------- ------------ ------------
Class A:
Net asset value and redemption price per share ($175,950,786 DIVIDED
BY 20,970,870; $153,460,610 DIVIDED BY 9,873,278; and $146,964,268
DIVIDED BY 12,450,853 shares outstanding, respectively)............ $ 8.39 $ 15.54 $ 11.80
------------- ------------ ------------
------------- ------------ ------------
Maximum offering price per share (100/95.25 of $8.39; 100/95.25 of
$15.54; and 100/95.25 of $11.80, respectively) *................... $ 8.81 $ 16.31 $ 12.39
------------- ------------ ------------
------------- ------------ ------------
Class B:+
Net asset value and redemption price per share $127,475,633 DIVIDED
BY 15,198,325; $253,260,463 DIVIDED BY 16,307,458; and $304,649,669
DIVIDED BY 25,783,431 shares outstanding, respectively)............ $ 8.39 $ 15.53 $ 11.82
------------- ------------ ------------
------------- ------------ ------------
Advisor Class:
Net asset value and redemption price per share, and redemption price
per share $117,485 DIVIDED BY 14,017; $16,985,167 DIVIDED BY
1,094,910; and $506,910 DIVIDED BY 42,891 shares outstanding,
respectively)...................................................... $ 8.38 $ 15.51 $ 11.82
------------- ------------ ------------
------------- ------------ ------------
Net assets consist of:
Paid in capital (Note 4)............................................ $ 462,174,231 $356,282,851 $528,173,539
Undistributed (distributions in excess of) net investment income.... (821,466) 581,155 (1,459,223)
Accumulated net realized gain (loss) on investments................. (144,627,921) 38,733,564 (81,623,623)
Net unrealized appreciation (depreciation) on translation of assets
and liabilities.................................................... (1,464,333) 58,937 113,653
Net unrealized appreciation (depreciation) of investments........... (11,716,607) 28,049,733 6,916,501
------------- ------------ ------------
Total -- representing net assets applicable to capital shares
outstanding.......................................................... $ 303,543,904 $423,706,240 $452,120,847
------------- ------------ ------------
------------- ------------ ------------
<FN>
- ----------------
* On sales of $50,000 or more, the offering price is reduced.
+ Redemption price per share is equal to the net asset value per share less
any applicable contingent deferred sales charge.
</TABLE>
The accompanying notes are an integral part of the financial statements.
F14
<PAGE>
GT GLOBAL INCOME FUNDS
STATEMENTS OF OPERATIONS
Six months ended April 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GT GLOBAL
-------------------------------------
HIGH
GOVERNMENT INCOME STRATEGIC
INCOME FUND FUND- INCOME
(UNAUDITED) CONSOLIDATED FUND
----------- ----------- -----------
<S> <C> <C> <C>
Investment income: (Note 1)
Interest income................................................. $11,954,617 $21,725,880 $19,230,691
Other income.................................................... 51,190 -- 65,807
----------- ----------- -----------
Total investment income....................................... 12,005,807 21,725,880 19,296,498
----------- ----------- -----------
Expenses:
Investment management and administration fees (Note 2).......... 1,310,589 2,075,683 1,788,489
Amortization of organization costs (Note 1)..................... -- 17,257 --
Audit fees...................................................... 31,675 40,182 29,386
Custodian Fees (Note 1)......................................... 108,511 94,000 144,323
Directors' and Trustees' fees and expenses (Note 2)............. 7,240 9,593 6,786
Fund accounting fees (Note 2)................................... 45,193 56,673 61,715
Legal fees...................................................... 7,783 10,317 2,911
Printing and postage expenses................................... 64,979 40,648 62,945
Registration and filing fees (Note 1)........................... 26,245 30,980 19,702
Service and distribution expenses: (Note 2)
Class A....................................................... 374,005 310,543 294,706
Class B....................................................... 738,658 1,296,780 1,623,939
Transfer agent fees (Note 2).................................... 460,645 360,890 425,940
Other expenses (Note 1)......................................... 39,418 112,147 122,022
----------- ----------- -----------
Total expenses before reductions.............................. 3,214,941 4,455,693 4,582,864
----------- ----------- -----------
Expense reductions (Note 1)................................... (192,330) -- (79,477)
----------- ----------- -----------
Total net expenses.............................................. 3,022,611 4,455,693 4,503,387
----------- ----------- -----------
Net investment income............................................. 8,983,196 17,270,187 14,793,111
----------- ----------- -----------
Net realized and unrealized gain (loss) on investments: (Note 1)
Net realized gain on investments................................ 2,046,548 39,324,838 24,069,456
Net realized gain on foreign currency transactions.............. 8,387,440 671,467 5,168,455
----------- ----------- -----------
Net realized gain during the period........................... 10,433,988 39,996,305 29,237,911
----------- ----------- -----------
Net change in unrealized appreciation (depreciation) on
translation of assets and liabilities in foreign currencies.... 179,558 (121,380) 995,697
Net change in unrealized depreciation of investments............ (23,220,682) (12,783,791) (25,288,668)
----------- ----------- -----------
Net unrealized depreciation during the period................. (23,041,124) (12,905,171) (24,292,971)
----------- ----------- -----------
Net realized and unrealized gain (loss) on investments and foreign
currencies....................................................... (12,607,136) 27,091,134 4,944,940
----------- ----------- -----------
Net increase (decrease) in net assets resulting from operations... $(3,623,940) $44,361,321 $19,738,051
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F15
<PAGE>
GT GLOBAL INCOME FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GT GLOBAL
-------------------------------------------------------------------
GOVERNMENT INCOME FUND
-------------------------------- HIGH INCOME FUND-CONSOLIDATED
SIX MONTHS --------------------------------
ENDED SIX MONTHS
APRIL 30, 1997 YEAR ENDED ENDED YEAR ENDED
(UNAUDITED) OCTOBER 31, 1996 APRIL 30, 1997 OCTOBER 31, 1996
-------------- ---------------- -------------- ----------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income............. $ 8,983,196 $ 31,802,934 $ 17,270,187 $ 37,117,017
Net realized gain (loss) on
investments and foreign currency
transactions..................... 10,433,988 (1,896,895) 39,996,305 62,517,472
Net change in unrealized
appreciation (depreciation) on
translation of assets and
liabilities in foreign
currencies....................... 179,558 2,319,205 (121,380) 174,082
Net change in unrealized
appreciation (depreciation) of
investments...................... (23,220,682) (1,121,083) (12,783,791) 31,730,913
-------------- ---------------- -------------- ----------------
Net increase (decrease) in net
assets resulting from
operations..................... (3,623,940) 31,104,161 44,361,321 131,539,484
-------------- ---------------- -------------- ----------------
Class A:
Distributions to shareholders: (Note
1)
From net investment income........ (5,526,002) (15,504,590) (6,771,411) (13,418,057)
From net realized gain on
investments...................... -- (8,183,323) (2,548,751) (1,230,117)
In excess of net investment
income........................... (729,803) -- -- --
Class B:
Distributions to shareholders: (Note
1)
From net investment income........ (3,454,573) (9,165,193) (9,244,748) (18,753,394)
From net realized gain on
investments...................... -- (5,303,358) (3,624,283) (1,719,241)
In excess of net investment
income........................... (456,235) -- -- --
Advisor Class:
Distributions to shareholders: (Note
1)
From net investment income........ (2,621) (7,915) (672,873) (505,715)
From net realized gain on
investments...................... -- (2,893) (243,515) (46,362)
In excess of net investment
income........................... (346) -- -- --
-------------- ---------------- -------------- ----------------
Total distributions............. (10,169,580) (38,167,272) (23,105,581) (35,672,886)
-------------- ---------------- -------------- ----------------
Capital share transactions: (Note 4)
Increase from capital shares sold
and reinvested................... 300,378,032 386,482,407 345,851,435 583,133,415
Decrease from capital shares
repurchased...................... (390,649,126) (592,826,606) (388,019,420) (592,743,855)
-------------- ---------------- -------------- ----------------
Net increase (decrease) from
capital share transactions..... (90,271,094) (206,344,199) (42,167,985) (9,610,440)
-------------- ---------------- -------------- ----------------
Total increase (decrease) in net
assets............................. (104,064,614) (213,407,310) (20,912,245) 86,256,158
Net assets:
Beginning of period............... 407,608,518 621,015,828 444,618,485 358,362,327
-------------- ---------------- -------------- ----------------
End of period..................... $ 303,543,904* $ 407,608,518* $ 423,706,240* $ 444,618,485*
-------------- ---------------- -------------- ----------------
-------------- ---------------- -------------- ----------------
* Includes undistributed
(distributions in excess of)
accumulated net investment
income........................... $ (821,466) $ 364,918 $ 581,155 $ --
-------------- ---------------- -------------- ----------------
-------------- ---------------- -------------- ----------------
<CAPTION>
STRATEGIC INCOME FUND
--------------------------------
SIX MONTHS
ENDED YEAR ENDED
APRIL 30, 1997 OCTOBER 31, 1996
-------------- ----------------
<S> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income............. $ 14,793,111 $ 40,286,756
Net realized gain (loss) on
investments and foreign currency
transactions..................... 29,237,911 36,675,981
Net change in unrealized
appreciation (depreciation) on
translation of assets and
liabilities in foreign
currencies....................... 995,697 1,913,734
Net change in unrealized
appreciation (depreciation) of
investments...................... (25,288,668) 27,794,834
-------------- ----------------
Net increase (decrease) in net
assets resulting from
operations..................... 19,738,051 106,671,305
-------------- ----------------
Class A:
Distributions to shareholders: (Note
1)
From net investment income........ (5,368,404) (12,520,881)
From net realized gain on
investments...................... -- --
In excess of net investment
income........................... (529,550) (1,097,884)
Class B:
Distributions to shareholders: (Note
1)
From net investment income........ (9,406,738) (22,200,673)
From net realized gain on
investments...................... -- --
In excess of net investment
income........................... (927,900) (1,946,649)
Advisor Class:
Distributions to shareholders: (Note
1)
From net investment income........ (17,969) (46,547)
From net realized gain on
investments...................... -- --
In excess of net investment
income........................... (1,773) (4,081)
-------------- ----------------
Total distributions............. (16,252,334) (37,816,715)
-------------- ----------------
Capital share transactions: (Note 4)
Increase from capital shares sold
and reinvested................... 163,903,808 335,665,174
Decrease from capital shares
repurchased...................... (234,051,924) (432,196,117)
-------------- ----------------
Net increase (decrease) from
capital share transactions..... (70,148,116) (96,530,943)
-------------- ----------------
Total increase (decrease) in net
assets............................. (66,662,399) (27,676,353)
Net assets:
Beginning of period............... 518,783,246 546,459,599
-------------- ----------------
End of period..................... $ 452,120,847* $ 518,783,246*
-------------- ----------------
-------------- ----------------
* Includes undistributed
(distributions in excess of)
accumulated net investment
income........................... $ (1,459,223) $ --
-------------- ----------------
-------------- ----------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F16
<PAGE>
GT GLOBAL GOVERNMENT INCOME FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS A+
-------------------------------------------------------------------------
SIX MONTHS
ENDED
APRIL 30, YEAR ENDED OCTOBER 31,
1997 ----------------------------------------------------------
(UNAUDITED) (D) 1996 (D) 1995 (D) 1994 (D) 1993 (D) 1992
------------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 8.74 $ 8.81 $ 8.63 $ 11.07 $ 9.83 $ 10.29
------------- ---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income................. 0.23 0.57 0.62 0.65 0.74 0.92
Net realized and unrealized gain
(loss) on investments................ (0.32) 0.03 0.15 (1.52) 1.34 (0.31)
------------- ---------- ---------- ---------- ---------- ----------
Net increase (decrease) from
investment operations.............. (0.09) 0.60 0.77 (0.87) 2.08 0.61
------------- ---------- ---------- ---------- ---------- ----------
Distributions to shareholders:
From net investment income............ (0.23) (0.57) (0.59) (0.65) (0.74) (0.83)
From net realized gain on
investments.......................... -- (0.10) -- (0.27) -- (0.13)
In excess of net investment income.... (0.03) -- -- -- -- --
In excess of net realized gain on
investments.......................... -- -- -- (0.55) -- --
Return of capital..................... -- -- -- (0.10) -- --
From sources other than net investment
income............................... -- -- -- -- (0.10) (0.11)
------------- ---------- ---------- ---------- ---------- ----------
Total distributions................. (0.26) (0.67) (0.59) (1.57) (0.84) (1.07)
------------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period.......... $ 8.39 $ 8.74 $ 8.81 $ 8.63 $ 11.07 $ 9.83
------------- ---------- ---------- ---------- ---------- ----------
------------- ---------- ---------- ---------- ---------- ----------
Total investment return (c)............. (1.13)%(a) 7.11% 9.22% (8.87)% 21.9% 6.3%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 175,951 $ 240,945 $ 385,404 $ 502,094 $ 708,301 $ 623,387
Ratio of net investment income to
average net assets..................... 5.23%(b) 6.52% 6.98% 6.87% 7.1% 9.0%
Ratio of expenses to average net assets:
With expense reductions (Note 1)...... 1.41%(b) 1.34% 1.35% 1.33% 1.4% 1.6%
Without expense reductions............ 1.51%(b) 1.39% 1.38% --%* --%* --%*
Portfolio turnover rate++++............. 225%(b) 268% 385% 625% 495% 351%
</TABLE>
- ----------------
(a) Not annualized.
(b) Annualized.
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon weighted
average shares outstanding during the period.
(e) Ratios are not meaningful due to short period of operation.
+ All capital shares issued and oustanding as of October 21, 1992 were
reclassified as Class A shares.
++ Commencing October 22, 1992, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares.
* Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
F17
<PAGE>
GT GLOBAL GOVERNMENT INCOME FUND
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS B++
-------------------------------------------------------------------------------
SIX MONTHS
ENDED
APRIL 30, YEAR ENDED OCTOBER 31, OCTOBER 22, 1992
1997 ---------------------------------------------- TO
(UNAUDITED) (D) 1996 (D) 1995 (D) 1994 (D) 1993 (D) OCTOBER 31, 1992
------------- ---------- ---------- ---------- ---------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 8.74 $ 8.80 $ 8.64 $ 11.07 $ 9.83 $ 9.87
------------- ---------- ---------- ---------- ---------- --------
Income from investment operations:
Net investment income................. 0.20 0.51 0.55 0.59 0.67 0.02
Net realized and unrealized gain
(loss) on investments................ (0.32) 0.04 0.14 (1.52) 1.34 (0.06)
------------- ---------- ---------- ---------- ---------- --------
Net increase (decrease) from
investment operations.............. (0.12) 0.55 0.69 (0.93) 2.01 (0.04)
------------- ---------- ---------- ---------- ---------- --------
Distributions to shareholders:
From net investment income............ (0.20) (0.51) (0.53) (0.59) (0.67) --
From net realized gain on
investments.......................... -- (0.10) -- (0.27) -- --
In excess of net investment income.... (0.03) -- -- -- -- --
In excess of net realized gain on
investments.......................... -- -- -- (0.54) -- --
Return of capital..................... -- -- -- (0.10) -- --
From sources other than net investment
income............................... -- -- -- -- (0.10) --
------------- ---------- ---------- ---------- ---------- --------
Total distributions................. (0.23) (0.61) (0.53) (1.50) (0.77) --
------------- ---------- ---------- ---------- ---------- --------
Net asset value, end of period.......... $ 8.39 $ 8.74 $ 8.80 $ 8.64 $ 11.07 $ 9.83
------------- ---------- ---------- ---------- ---------- --------
------------- ---------- ---------- ---------- ---------- --------
Total investment return (c)............. (1.44)%(a) 6.54% 8.22% (9.39)% 21.1% (0.4)% (a)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 127,476 $ 166,577 $ 235,481 $ 262,405 $ 182,972 $ 2,624
Ratio of net investment income to
average net assets..................... 4.58%(b) 5.87% 6.33% 6.22% 6.5% N/A(e)
Ratio of expenses to average net assets:
With expense reductions (Note 1)...... 2.06%(b) 1.99% 2.00% 1.98% 2.0% N/A(e)
Without expense reductions............ 2.16%(b) 2.04% 2.03% --%* --%* -- % *
Portfolio turnover rate++++............. 225%(b) 268% 385% 625% 495% 351 %
</TABLE>
- ----------------
(a) Not annualized.
(b) Annualized.
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon weighted
average shares outstanding during the period.
(e) Ratios are not meaningful due to short period of operation.
+ All capital shares issued and oustanding as of October 21, 1992 were
reclassified as Class A shares.
++ Commencing October 22, 1992, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares.
* Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
F18
<PAGE>
GT GLOBAL GOVERNMENT INCOME FUND
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
ADVISOR CLASS+++
----------------------------------------
SIX MONTHS
ENDED JUNE 1, 1995
APRIL 30, YEAR ENDED TO
1997 OCTOBER 31, OCTOBER 31,
(UNAUDITED) (D) 1996 (D) 1995 (D)
------------- ----------- ------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 8.73 $ 8.80 $ 8.98
------------- ----------- ------------
Income from investment operations:
Net investment income................. 0.24 0.60 0.26
Net realized and unrealized gain
(loss) on investments................ (0.32) 0.03 (0.19)
------------- ----------- ------------
Net increase (decrease) from
investment operations.............. (0.08) 0.63 0.07
------------- ----------- ------------
Distributions to shareholders:
From net investment income............ (0.24) (0.60) (0.25)
From net realized gain on
investments.......................... -- (0.10) --
In excess of net investment income.... (0.03) -- --
In excess of net realized gain on
investments.......................... -- -- --
Return of capital..................... -- -- --
From sources other than net investment
income............................... -- -- --
------------- ----------- ------------
Total distributions................. (0.27) (0.70) (0.25)
------------- ----------- ------------
Net asset value, end of period.......... $ 8.38 $ 8.73 $ 8.80
------------- ----------- ------------
------------- ----------- ------------
Total investment return (c)............. (0.96)%(a) 7.49% 0.83 %(a)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 117 $ 86 $ 131
Ratio of net investment income to
average net assets..................... 5.58%(b) 6.87% 7.33 %(b)
Ratio of expenses to average net assets:
With expense reductions (Note 1)...... 1.06%(b) 0.99% 1.00 %(b)
Without expense reductions............ 1.16%(b) 1.04% 1.03 %(b)
Portfolio turnover rate++++............. 225%(b) 268% 385 %
</TABLE>
- ----------------
(a) Not annualized.
(b) Annualized.
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon weighted
average shares outstanding during the period.
(e) Ratios are not meaningful due to short period of operation.
+ All capital shares issued and oustanding as of October 21, 1992 were
reclassified as Class A shares.
++ Commencing October 22, 1992, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares.
* Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
F19
<PAGE>
GT GLOBAL HIGH INCOME FUND -- CONSOLIDATED
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS A
----------------------------------------------------------------------------
OCTOBER 22,
1992
(COMMENCEMENT
SIX MONTHS OF OPERATIONS)
ENDED YEAR ENDED OCTOBER 31, TO
APRIL 30, ---------------------------------------------- OCTOBER 31,
1997 1996 (D) 1995 1994 (D) 1993 (D) 1992
------------ ---------- ---------- ---------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 14.85 $ 11.70 $ 12.56 $ 14.92 $ 11.43 $ 11.43
------------ ---------- ---------- ---------- ---------- --------------
Income from investment operations:
Net investment income................. 0.62 1.27 1.35 0.94 0.78 --
Net realized and unrealized gain
(loss) on investments................ 0.88 3.09 (1.09) (1.87) 3.92 --
------------ ---------- ---------- ---------- ---------- --------------
Net increase (decrease) from
investment operations.............. 1.50 4.36 0.26 (0.93) 4.70 --
------------ ---------- ---------- ---------- ---------- --------------
Distributions to shareholders:
From net investment income............ (0.60) (1.11) (1.03) (0.94) (0.78) --
From net realized gain on
investments.......................... (0.21) (0.10) (0.03) (0.27) -- --
In excess of net realized gain on
investments.......................... -- -- -- (0.22) -- --
Return of capital..................... -- -- (0.06) -- -- --
From sources other than net investment
income............................... -- -- -- -- (0.43) --
------------ ---------- ---------- ---------- ---------- --------------
Total distributions................. (0.81) (1.21) (1.12) (1.43) (1.21) --
------------ ---------- ---------- ---------- ---------- --------------
Net asset value, end of period.......... $ 15.54 $ 14.85 $ 11.70 $ 12.56 $ 14.92 $ 11.43
------------ ---------- ---------- ---------- ---------- --------------
------------ ---------- ---------- ---------- ---------- --------------
Total investment return (c)............. 10.23 %(a) 39.05% 2.81% (6.45)% 43.6% -- %(a)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 153,461 $ 178,318 $ 142,002 $ 167,974 $ 143,171 $ 207
Ratio of net investment income to
average net assets..................... 7.98 %(b) 9.52% 11.85% 7.00% 6.40% N/A(e)
Ratio of operating expenses to average
net assets............................. 1.61 %(b) 1.69% 1.75% 1.57% 2.20% N/A(e)
Ratio of interest expense to average net
assets................................. N/A 0.04% N/A 0.22% N/A N/A
Portfolio turnover rate++............... 164 %(b) 290% 213% 178% 195% N/A
</TABLE>
- ----------------
(a) Not annualized
(b) Annualized
(c) Total investment return does not include sales charges.
(d) These selected per share operating data were calculated based upon
weighted average shares outstanding during the year.
(e) Ratios are not meaningful due to short period of operation.
+ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++ Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing among the classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
F20
<PAGE>
GT GLOBAL HIGH INCOME FUND -- CONSOLIDATED
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS B
----------------------------------------------------------------------------
OCTOBER 22,
1992
(COMMENCEMENT
SIX MONTHS OF OPERATIONS)
ENDED YEAR ENDED OCTOBER 31, TO
APRIL 30, ---------------------------------------------- OCTOBER 31,
1997 1996 (D) 1995 1994 (D) 1993 (D) 1992
------------ ---------- ---------- ---------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 14.83 $ 11.69 $ 12.56 $ 14.90 $ 11.43 $ 11.43
------------ ---------- ---------- ---------- ---------- --------------
Income from investment operations:
Net investment income................. 0.58 1.17 1.27 0.86 0.70 --
Net realized and unrealized gain
(loss) on investments................ 0.88 3.09 (1.09) (1.85) 3.90 --
------------ ---------- ---------- ---------- ---------- --------------
Net increase (decrease) from
investment operations.............. 1.46 4.26 0.18 (0.99) 4.60 --
------------ ---------- ---------- ---------- ---------- --------------
Distributions to shareholders:
From net investment income............ (0.55) (1.03) (0.96) (0.86) (0.70) --
From net realized gain on
investments.......................... (0.21) (0.09) (0.03) (0.27) -- --
In excess of net realized gain on
investments.......................... -- -- -- (0.22) -- --
Return of capital..................... -- -- (0.06) -- -- --
From sources other than net investment
income............................... -- -- -- -- (0.43) --
------------ ---------- ---------- ---------- ---------- --------------
Total distributions................. (0.76) (1.12) (1.05) (1.35) (1.13) --
------------ ---------- ---------- ---------- ---------- --------------
Net asset value, end of period.......... $ 15.53 $ 14.83 $ 11.69 $ 12.56 $ 14.90 $ 11.43
------------ ---------- ---------- ---------- ---------- --------------
------------ ---------- ---------- ---------- ---------- --------------
Total investment return (c)............. 9.96 %(a) 38.16% 2.07% (6.99)% 42.6% -- %(a)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 253,260 $ 251,002 $ 214,897 $ 232,423 $ 127,035 $ 53
Ratio of net investment income to
average net assets..................... 7.33 %(b) 8.87% 11.20% 6.35% 5.8% N/A(e)
Ratio of operating expenses to average
net assets............................. 2.26 %(b) 2.34% 2.40% 2.22% 2.8% N/A(e)
Ratio of interest expense to average net
assets................................. N/A 0.04% N/A 0.22% N/A N/A
Portfolio turnover rate++............... 164 %(b) 290% 213% 178% 195% N/A
</TABLE>
- ----------------
(a) Not annualized
(b) Annualized
(c) Total investment return does not include sales charges.
(d) These selected per share operating data were calculated based upon
weighted average shares outstanding during the year.
(e) Ratios are not meaningful due to short period of operation.
+ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++ Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing among the classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
F21
<PAGE>
GT GLOBAL HIGH INCOME FUND -- CONSOLIDATED
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
ADVISOR CLASS+
----------------------------------------
SIX MONTHS JUNE 1, 1995
ENDED YEAR ENDED TO
APRIL 30, OCTOBER 31, OCTOBER 31,
1997 1996 (D) 1995
------------- ----------- ------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 14.83 $ 11.71 $ 11.44
------------- ----------- ------------
Income from investment operations:
Net investment income................. 0.64 1.34 0.57
Net realized and unrealized gain
(loss) on investments................ 0.88 3.05 0.17
------------- ----------- ------------
Net increase (decrease) from
investment operations.............. 1.52 4.39 0.74
------------- ----------- ------------
Distributions to shareholders:
From net investment income............ (0.63) (1.16) (0.44)
From net realized gain on
investments.......................... (0.21) (0.11) --
In excess of net realized gain on
investments.......................... -- -- --
Return of capital..................... -- -- (0.03)
From sources other than net investment
income............................... -- -- --
------------- ----------- ------------
Total distributions................. (0.84) (1.27) (0.47)
------------- ----------- ------------
Net asset value, end of period.......... $ 15.51 $ 14.83 $ 11.71
------------- ----------- ------------
------------- ----------- ------------
Total investment return (c)............. 10.36%(a) 39.38% 6.54 %(a)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 16,985 $ 15,298 $ 1,463
Ratio of net investment income to
average net assets..................... 8.33%(b) 9.87% 12.20 %(b)
Ratio of operating expenses to average
net assets............................. 1.26%(b) 1.34% 1.40 %(b)
Ratio of interest expense to average net
assets................................. N/A 0.04% N/A
Portfolio turnover rate++............... 164%(b) 290% 213 %
</TABLE>
- ----------------
(a) Not annualized
(b) Annualized
(c) Total investment return does not include sales charges.
(d) These selected per share operating data were calculated based upon
weighted average shares outstanding during the year.
(e) Ratios are not meaningful due to short period of operation.
+ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++ Portfolio turnover is calculated on the basis of the fund as a whole
without distinguishing among the classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
F22
<PAGE>
GT GLOBAL STRATEGIC INCOME FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS A+
------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED OCTOBER 31,
APRIL 30, ----------------------------------------------------------
1997 1996 (D) 1995 (D) 1994 1993 (D) 1992
------------ ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 11.76 $ 10.32 $ 10.88 $ 13.61 $ 11.25 $ 10.91
------------ ---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income................. 0.38 0.89 0.97 0.79 0.96 0.86
Net realized and unrealized gain
(loss) on investments................ 0.08 1.44 (0.69) (2.14) 2.85 0.31
------------ ---------- ---------- ---------- ---------- ----------
Net increase (decrease) from
investment operations.............. 0.46 2.33 0.28 (1.35) 3.81 1.17
------------ ---------- ---------- ---------- ---------- ----------
Distributions to shareholders:
From net investment income............ (0.38) (0.82) (0.80) (0.79) (0.96) (0.83)
From net realized gain on
investments.......................... -- -- -- (0.38) (0.37) --
In excess of net investment income.... (0.04) (0.07) -- -- -- --
Return of capital..................... -- -- (0.04) (0.21) -- --
From sources other than net investment
income............................... -- -- -- -- (0.12) --
------------ ---------- ---------- ---------- ---------- ----------
Total distributions................. (0.42) (0.89) (0.84) (1.38) (1.45) (0.83)
------------ ---------- ---------- ---------- ---------- ----------
Net asset value, end of period.......... $ 11.80 $ 11.76 $ 10.32 $ 10.88 $ 13.61 $ 11.25
------------ ---------- ---------- ---------- ---------- ----------
------------ ---------- ---------- ---------- ---------- ----------
Total investment return (c)............. 3.91 %(a) 23.00% 3.06% (10.44)% 37.0% 11.1%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 146,964 $ 185,126 $ 188,165 $ 275,241 $ 287,870 $ 83,849
Ratio of net investment income to
average net assets..................... 6.44 %(b) 8.09% 9.64% 6.74% 7.2% 7.6%
Ratio of expenses to average net assets:
With expense reductions (Note 1)...... 1.40 %(b) 1.38% 1.42% 1.40% 1.7% 1.8%
Without expense reductions............ 1.43 %(b) 1.40% 1.45% --%* --%* --%*
Ratio of interest expenses to average
net assets............................. N/A N/A N/A 0.10% N/A N/A
Portfolio turnover rate++++............. 128 %(b) 177% 238% 583% 310% 418%
</TABLE>
- ----------------
(a) Not Annualized
(b) Annualized
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon weighted
average shares outstanding during the period.
(e) Ratios are not meaningful due to the short period of operation of
Class B shares.
+ All capital shares issued and outstanding as of October 21, 1992, were
reclassified as Class A shares.
++ Commencing October 22, 1992, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
* Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
F23
<PAGE>
GT GLOBAL STRATEGIC INCOME FUND
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS B++
-----------------------------------------------------------------------------
OCTOBER 22,
SIX MONTHS 1992
ENDED YEAR ENDED OCTOBER 31, TO
APRIL 30, ---------------------------------------------- OCTOBER 31,
1997 1996 (D) 1995 (D) 1994 1993 (D) 1992
------------ ---------- ---------- ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 11.77 $ 10.33 $ 10.88 $ 13.60 $ 11.24 $ 11.36
------------ ---------- ---------- ---------- ---------- ---------------
Income from investment operations:
Net investment income................. 0.34 0.82 0.91 0.73 0.89 0.01
Net realized and unrealized gain
(loss) on investments................ 0.09 1.44 (0.69) (2.14) 2.85 (0.13)
------------ ---------- ---------- ---------- ---------- ---------------
Net increase (decrease) from
investment operations.............. 0.43 2.26 0.22 (1.41) 3.74 (0.12)
------------ ---------- ---------- ---------- ---------- ---------------
Distributions to shareholders:
From net investment income............ (0.34) (0.75) (0.73) (0.72) (0.89) --
From net realized gain on
investments.......................... -- -- -- (0.38) (0.37) --
In excess of net investment income.... (0.04) (0.07) -- -- -- --
Return of capital..................... -- -- (0.04) (0.21) -- --
From sources other than net investment
income............................... -- -- -- -- (0.12) --
------------ ---------- ---------- ---------- ---------- ---------------
Total distributions................. (0.38) (0.82) (0.77) (1.31) (1.38) --
------------ ---------- ---------- ---------- ---------- ---------------
Net asset value, end of period.......... $ 11.82 $ 11.77 $ 10.33 $ 10.88 $ 13.60 $ 11.24
------------ ---------- ---------- ---------- ---------- ---------------
------------ ---------- ---------- ---------- ---------- ---------------
Total investment return (c)............. 3.65 %(a) 22.15% 2.48% (11.02)% 36.2% (1.1)% (a)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 304,650 $ 333,178 $ 357,852 $ 458,550 $ 310,431 $ 533
Ratio of net investment income to
average net assets..................... 5.79 %(b) 7.44% 8.99% 6.09% 6.5% N/A(e)
Ratio of expenses to average net assets:
With expense reductions (Note 1)...... 2.05 %(b) 2.03% 2.07% 2.05% 2.4% N/A(e)
Without expense reductions............ 2.08 %(b) 2.05% 2.10% --%* --%* --% *
Ratio of interest expenses to average
net assets............................. N/A N/A N/A 0.10% N/A N/A
Portfolio turnover rate++++............. 128 %(b) 177% 238% 583% 310% 418%
</TABLE>
- ----------------
(a) Not Annualized
(b) Annualized
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon weighted
average shares outstanding during the period.
(e) Ratios are not meaningful due to the short period of operation of
Class B shares.
+ All capital shares issued and outstanding as of October 21, 1992, were
reclassified as Class A shares.
++ Commencing October 22, 1992, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
* Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
F24
<PAGE>
GT GLOBAL STRATEGIC INCOME FUND
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
ADVISOR CLASS+++
----------------------------------------
SIX MONTHS JUNE 1, 1995
ENDED YEAR ENDED TO
APRIL 30, OCTOBER 31, OCTOBER 31,
1997 1996 (D) 1995 (D)
------------- ----------- ------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 11.77 $ 10.33 $ 10.32
------------- ----------- ------------
Income from investment operations:
Net investment income................. 0.40 0.93 0.41
Net realized and unrealized gain
(loss) on investments................ 0.09 1.44 (0.04)
------------- ----------- ------------
Net increase (decrease) from
investment operations.............. 0.49 2.37 0.37
------------- ----------- ------------
Distributions to shareholders:
From net investment income............ (0.40) (0.86) (0.34)
From net realized gain on
investments.......................... -- -- --
In excess of net investment income.... (0.04) (0.07) --
Return of capital..................... -- -- (0.02)
From sources other than net investment
income............................... -- -- --
------------- ----------- ------------
Total distributions................. (0.44) (0.93) (0.36)
------------- ----------- ------------
Net asset value, end of period.......... $ 11.82 $ 11.77 $ 10.33
------------- ----------- ------------
------------- ----------- ------------
Total investment return (c)............. 4.17%(a) 23.39% 3.72 %(a)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 507 $ 479 $ 443
Ratio of net investment income to
average net assets..................... 6.79%(b) 8.44% 9.99 %(b)
Ratio of expenses to average net assets:
With expense reductions (Note 1)...... 1.05%(b) 1.03% 1.07 %(b)
Without expense reductions............ 1.08%(b) 1.05% 1.10 %(b)
Ratio of interest expenses to average
net assets............................. N/A N/A N/A
Portfolio turnover rate++++............. 128%(b) 177% 238 %
</TABLE>
- ----------------
(a) Not Annualized
(b) Annualized
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon weighted
average shares outstanding during the period.
(e) Ratios are not meaningful due to the short period of operation of
Class B shares.
+ All capital shares issued and outstanding as of October 21, 1992, were
reclassified as Class A shares.
++ Commencing October 22, 1992, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
* Calculation of "Ratio of expenses to average net assets" was made
without considering the effect of expense reductions, if any.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
F25
<PAGE>
GT GLOBAL INCOME FUNDS
NOTES TO
FINANCIAL STATEMENTS
April 30, 1997
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
GT Global Government Income Fund, GT Global High Income Fund, GT Global
Strategic Income Fund ("Funds") are a separate series of G.T. Investment Funds,
Inc. ("Company"). Collectively, these Funds are known as the "GT Global Income
Funds". The Company is organized as a Maryland corporation and is registered
under the Investment Company Act of 1940, as amended ("1940 Act"), as an
open-end management investment company. The Company has twelve series of shares
in operation, each series corresponding to a distinct portfolio of investments.
The GT Global High Income Fund invests substantially all of its investable
assets in Global High Income Portfolio ("Portfolio"). The Portfolio is organized
as a New York Trust and is registered under the 1940 Act as an open-end
management investment company.
The Portfolio has investment objectives, policies and limitations substantially
identical to those of the GT Global High Income Fund. Therefore, the financial
statements of the Fund and its respective Portfolio have been presented on a
consolidated basis, and represent all activities of both the Fund and Portfolio.
Through April 30, 1997, all of the shares of beneficial interest of the
Portfolio were owned by either the Fund or Chancellor LGT Asset Management, Inc.
(the "Manager"), which has a nominal ($100) investment in the Portfolio.
The Funds offer Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges except that Class A and Class B
each has exclusive voting rights with respect to its distribution plan.
Investment income, realized and unrealized capital gains and losses, and the
common expenses of each Fund are allocated on a pro rata basis to each class
based on the relative net assets of each class to the total net assets of the
Fund. Each class of shares differs in its respective service and distribution
expenses, and may differ in its transfer agent, registration, and certain other
class-specific fees and expenses.
The following is a summary of significant accounting policies consistently
followed by the Funds and Portfolio in the preparation of the financial
statements. The policies are in conformity with generally accepted accounting
principles, and the financial statements may include certain estimates made by
management.
(A) PORTFOLIO VALUATION
The Funds calculate the net asset value of and complete orders to purchase,
exchange, or repurchase Fund shares on each business day, with the exception of
those days on which the New York Stock Exchange is closed.
Equity securities are valued at the last sale price on the exchange on which
such securities are traded, or on the principal over-the-counter market 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 the Manager to be the
primary market.
Fixed income investments are valued at the mean of representative quoted bid and
ask prices for such investments or, if such prices are not available, at prices
for investments of comparative maturity, quality, and type; however, when the
Manager deems it appropriate, prices obtained for the day of valuation from a
bond pricing service will be used. Short-term investments are valued at
amortized cost adjusted for foreign exchange translation and market fluctuation,
if any.
Investments for which market quotations are not readily available (including
restricted securities which are subject to limitations on their sale) are valued
at fair value as determined in good faith by or under the direction of the
Company's Board of Directors or the Portfolio's Board of Trustees.
Portfolio securities which are primarily traded on foreign exchanges are
generally valued at the preceding closing values of such securities on their
respective exchanges, and those values are then translated into U.S. dollars at
the current exchange rates, except that when an occurrence subsequent to the
time a value was so established is likely to have materially changed such value,
then the fair value of those securities will be determined by consideration of
other factors by or under the direction of the Company's Board of Directors or
the Portfolio's Board of Trustees.
(B) FOREIGN CURRENCY TRANSLATION
The accounting records of each Fund and Portfolio are maintained in U.S.
dollars. The market values of foreign securities, currency holdings, and other
assets and liabilities are recorded in the books and records of the Funds or
Portfolio (the phrase "Funds or Portfolio" hereinafter refers to the GT Global
Government Income Fund, the GT Global Strategic Income Fund, and the Global High
Income Portfolio) 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.
A Fund or Portfolio does not isolate that portion of the results of operations
resulting from changes in foreign exchange rates on investments from
fluctuations arising from changes in market prices of securities held. Such
fluctuations are included with the net realized and unrealized gain or loss from
investments.
Reported net realized foreign exchange gains or losses arise from sales and
maturities of short-term securities, forward foreign currency contracts, sales
of foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the difference between the
amounts of dividends, interest, and foreign withholding taxes recorded on a
Fund's or Portfolio's books and the U.S. dollar equivalent of the amounts
F26
<PAGE>
GT GLOBAL INCOME FUNDS
actually received or paid. Net unrealized foreign exchange gains or losses arise
from changes in the value of assets and liabilities other than investments in
securities at period end, resulting from changes in exchange rates.
(C) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by a Fund or Portfolio, it is
the Fund's or Portfolio'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 or Portfolio 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 a Fund or Portfolio as an unrealized gain or loss.
When the Forward Contract is closed, the Fund or Portfolio 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. Forward Contracts involve market risk
in excess of the amount shown in the Fund's or Portfolio's "Statement of Assets
and Liabilities". A Fund or Portfolio could be exposed to risk if a counterparty
is unable to meet the terms of the contract or if the value of the currency
changes unfavorably. A Fund or Portfolio 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 a Fund or Portfolio writes a call or put option, an amount equal to the
premium received is included in the Fund's or Portfolio'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 or Portfolio 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 or Portfolio can write options only on a covered basis,
which, for a call, requires that the Fund or Portfolio hold the underlying
security and, for a put, requires the Fund or Portfolio 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 or Portfolio may use options to manage its
exposure to the stock market and to fluctuations in currency values or interest
rates.
The premium paid by the Fund or Portfolio for the purchase of a call or put
option is included in the Fund's or Portfolio'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 or Portfolio has
purchased expires on the stipulated expiration date, the Fund or Portfolio
realizes a loss in the amount of the cost of the option. If the Fund or
Portfolio enters into a closing sale transaction, the Fund or Portfolio 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 or Portfolio
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 or Portfolio
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 or Portfolio 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 or Portfolio 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 or Portfolio 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 a
Fund or Portfolio 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 or Portfolio
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 or Portfolio as unrealized gains
or losses. When the contract is closed, the Fund or Portfolio 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 or Portfolio is that the change in value of the underlying
securities may not correlate to the change in value of the contracts. A Fund or
Portfolio may use futures contracts to manage its exposure to the stock market
and to fluctuations in currency values or interest rates.
(G) SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on a first-in,
first-out-basis, unless otherwise specified. Dividends are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Where a high
level of uncertainty exists
F27
<PAGE>
GT GLOBAL INCOME FUNDS
as to its collection, income is recorded net of all withholding tax with any
rebate recorded when received. A Fund or Portfolio may trade securities on other
than normal settlement terms. This may increase the risk if the other party to
the transaction fails to deliver and causes the Fund or Portfolio to
subsequently invest at less advantageous prices.
(H) PORTFOLIO SECURITIES LOANED
At April 30, 1997, stocks with an aggregate value listed below were on loan to
brokers. The loans were secured by cash collateral received by the Funds:
<TABLE>
<CAPTION>
PERIOD ENDED APRIL 30, 1997
-------------------------------------------------
AGGREGATE VALUE CASH
GT GLOBAL ON LOAN COLLATERAL FEES RECEIVED
- ---------------------------------------- --------------- -------------- --------------
<S> <C> <C> <C>
Government Income Fund.................. $ 48,062,720 $ 53,315,063 $192,330
Strategic Income Fund................... 28,203,307 31,692,850 79,477
</TABLE>
For international securities, cash collateral is received by a Fund or Portfolio
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 a Fund or Portfolio against loaned securities in the
amount at least equal to 102% of the market value of the loaned securities at
the inception of each loan. This collateral must be maintained at not less than
100% of the market value of the loaned securities during the period of the loan.
Fees received from securities loaned were used to reduce the Funds' or
Portfolio's custodian and other administrative expenses.
(I) TAXES
It is the intended policy of the Funds 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 Funds to make
distributions sufficient to avoid imposition of any excise tax under Section
4982 of the Code. Therefore, no provision has been made for Federal taxes on
income, capital gains, or unrealized appreciation of securities held, and excise
tax on income and capital gains. The GT Global Government Income Fund has a
capital loss carryforward of $156,095,393 of which $140,349,807 expires in 2002,
and $15,745,586 expires in 2003. The GT Global Strategic Income Fund has a
capital loss carryforward of $110,439,537 of which $33,635,683 expires in 2002,
and $76,803,854 expires in 2003.
(J) DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders are recorded by each 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 Funds or Portfolio and timing
differences.
(K) DEFERRED ORGANIZATIONAL EXPENSES
Expenses incurred by the GT Global High Income Fund and the Portfolio in
connection with their organization, their initial registration with the
Securities and Exchange Commission and with various states and the initial
public offering of its shares aggregated $149,100 and $25,000, respectively.
These expenses are being amortized on a straightline basis over a five-year
period.
(L) FOREIGN SECURITIES
There are certain additional considerations and risks associated with investing
in foreign securities and currency transactions that are not inherent in
investments of domestic origin. The Fund's or Portfolio's investment in emerging
market countries may involve greater risks than investments in more developed
markets and the price 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
A Fund or Portfolio 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
A Fund or Portfolio 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. At the end of the period,
restricted securities (excluding 144A issues) are shown at the end of the Fund's
or Portfolio's Portfolio of Investments.
(O) LINE OF CREDIT
Each of the Funds, 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. Each of
these three funds is limited to borrowing up to 33 1/3% of the value of each
Fund's total assets. On April 30, 1997, the GT Global Strategic Income Fund had
$8,000,000 in loans outstanding. In addition to the above line of credit, the
Global High Income Portfolio has an additional line of credit with the Bank of
Boston that allows the Portfolio to borrow a maximum amount of $25,000,000.
F28
<PAGE>
GT GLOBAL INCOME FUNDS
For the six months ended April 30, 1997, the average outstanding daily balance
of bank loans (based on the number of days the loans were outstanding) for the
GT Global Government Income Fund, GT Global High Income Fund and GT Global
Strategic Income Fund was $6,142,857, $13,259,259, $12,974,359, respectively.
The average interest rate for the GT Global Government Income Fund, GT Global
High Income Fund and GT Global Strategic Income Fund was 6.30%, 6.52% and 6.36%,
respectively. Interest incurred for the period ended April 30, 1997 for the GT
Global Government Income Fund, Global High Income Portfolio and GT Global
Strategic Income Fund was $20,956, $103,113 and $105,467, respectively. Interest
incurred is included in "Other Expenses" on the Statement of Operations.
(P) SECURITIES PURCHASED ON A WHEN-ISSUED OR FORWARD COMMITMENT BASIS
A Fund or Portfolio 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 or Portfolio 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 or Portfolio has set aside sufficient cash or liquid
securities as collateral for these purchase commitments.
2. RELATED PARTIES
Chancellor LGT Asset Management, Inc. is the Funds' and Portfolio's investment
manager and administrator. The GT Global Government Income Fund and GT Global
Strategic Income Fund each pays the Manager investment management and
administration fees at the annualized rate of 0.725% on the first $500 million
of the average daily net assets of the Fund; 0.70% on the next $1 billion;
0.675% on the next $1 billion; and 0.65% on amounts thereafter. The GT Global
High Income Fund pays administration fees to the Manager at the annualized rate
of 0.25% of its average daily net assets. These fees are computed daily and paid
monthly.
The Global High Income Portfolio pays investment management and administration
fees to the Manager at the annualized rate of 0.475% on the first $500 million
of average daily net assets of the Portfolio; 0.45% on the next $1 billion;
0.425% on the next $1 billion; and 0.40% on amounts thereafter, plus 2% of the
Portfolio's total investment income calculated in accordance with generally
accepted accounting principles, adjusted daily for currency revaluations, on a
mark to market basis, of the Portfolio's assets; provided, however, that during
any fiscal year this amount shall not exceed 2% of the Portfolio's total
investment income calculated in accordance with generally accepted accounting
principles. These fees are computed daily and paid monthly.
GT Global, Inc. ("GT Global"), an affiliate of the Manager, serves as the Funds'
distributor. The Funds offer Class A, Class B, and Advisor Class shares for
purchase.
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with the schedule included in the Funds' current
prospectus. GT Global collects the sales charges imposed on sales of Class A
shares, and reallows a portion of such charges to dealers through which the
sales are made. For the period ended April 30, 1997, GT Global retained the
following sales charges: $6,902 for the GT Global Government Income Fund,
$35,281 for the GT Global High Income Fund, and $14,740 for the GT Global
Strategic Income Fund. Purchases of Class A shares exceeding $500,000 may be
subject to a contingent deferred sales charge ("CDSC") upon redemption, in
accordance with the Funds' current prospectus. GT Global collected CDSCs for the
six months ended April 30, 1997, as follows: $5,273 for the GT Global Government
Income Fund, $2,272 for the GT Global High Income Fund, and $0 for the GT Global
Strategic Income Fund. GT Global also makes ongoing shareholder servicing and
trail commission payments to dealers whose clients hold Class A shares.
Class B shares are not subject to initial sales charges. When Class B shares are
sold, GT Global from its own resources pays commissions to dealers through which
the sales are made. Certain redemptions of Class B shares made within six years
of purchase are subject to CDSCs, in accordance with the Funds' current
prospectus. For the six months ended April 30, 1997, GT Global collected CDSCs
in the amount of: $615,898 for the GT Global Government Income Fund, $962,410
for the GT Global High Income Fund, and $969,970 for the GT Global Strategic
Income Fund. In addition, GT Global makes ongoing shareholder servicing and
trail commission payments to dealers whose clients hold Class B shares.
Pursuant to Rule 12b-1 under the 1940 Act, the Company's Board of Directors has
adopted separate distribution plans with respect to the Funds' Class A shares
("Class A Plan") and Class B shares ("Class B Plan"), pursuant to which a Fund
reimburses GT Global for a portion of its shareholder servicing and
distributions expenses. Under the Class A Plan, a Fund may pay GT Global a
service fee at the annualized rate of up to 0.25% of the average daily net
assets of the Fund's Class A shares for GT Global's expenditures incurred in
servicing and maintaining shareholder accounts, and may pay GT Global a
distribution fee at the annualized rate of up to 0.35% of the average daily net
assets of the Fund's Class A shares, less any amounts paid by the Fund as the
aforementioned service fee, for GT Global's expenditures incurred in providing
services as distributor. All expenses for which GT Global is reimbursed under
the Class A Plan will have been incurred within one year of such reimbursement.
Pursuant to the Fund's Class B Plan, a Fund may pay GT Global a service fee at
the annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class B shares for GT Global's expenditures incurred in servicing and
maintaining shareholder accounts, and may pay GT Global a distribution fee at
the annualized rate of up to 0.75% of the average daily net assets of the Fund's
Class B shares for GT Global's expenditures incurred in providing services as
distributor. Expenses incurred under the Class B Plan in excess of 1.00%
F29
<PAGE>
GT GLOBAL INCOME FUNDS
annually may be carried forward for reimbursement in subsequent years as long as
that Plan continues in effect.
The Manager and GT Global voluntarily have undertaken to limit GT Global
Government Income Fund's and GT Global Strategic Income Fund's expenses
(exclusive of brokerage commissions, taxes, interest, and extraordinary expense)
to the maximum annual rate of 1.85%, 2.50%, and 1.50% of the average daily net
assets of the Fund's Class A, Class B, and Advisor Class shares, respectively.
Similarly, they voluntarily have undertaken to limit GT Global High Income
Fund's expenses to the maximum annual rate of 2.20%, 2.85%, and 1.85% of the
average daily net assets of the Fund's Class A, Class B, and Advisor Class
shares, respectively. If necessary, this limitation will be effected by waivers
by the Manager of investment management and administration fees, waivers by GT
Global of payments under the Class A Plan and/or Class B Plan and/or
reimbursements by the Manager or GT Global of portions of the Fund's other
operating expenses.
GT Global Investor Services, Inc. ("GT Services"), an affiliate of the Manager
and GT Global, is the transfer agent of the Funds. For performing shareholder
servicing, reporting, and general transfer agent services, GT Services receives
an annual maintenance fee of $17.50 per account, a new account fee of $4.00 per
account, a per transaction fee of $1.75 for all transactions other than
exchanges and a per exchange fee of $2.25. GT Services also is reimbursed by the
Funds for its out-of-pocket expenses for such items as postage, forms, telephone
charges, stationery and office supplies.
The Manager is the pricing and accounting agent for the Funds and Portfolio. The
monthly fee for these services to the Manager is a percentage, not to exceed
0.03% annually, of a Fund's or Portfolio'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 each Fund's average daily
net assets.
The Company pays each of its Directors who is not an employee, officer or
director of the Manager, or any other affiliated company $5,000 per year plus
$300 for each meeting of the board or any committee thereof attended by the
Director. Each Portfolio pays each of its Trustees who is not an employee,
officer, or director of the Manager, GT Global or GT Services $500 per year plus
$150 for each meeting of the board or any committee thereof attended by the
Trustee.
3. PURCHASES AND SALES OF SECURITIES
The following summarizes purchases and sales of investment securities, other
than short-term investments, by each Fund or Portfolio for the year ended April
30, 1997:
PURCHASES AND SALES OF SECURITIES
<TABLE>
<CAPTION>
PURCHASES
--------------------------------
U.S. GOVERNMENT OTHER ISSUES
--------------- --------------
<S> <C> <C>
GT Global Government Income Fund................................................ $ 14,950,377 $ 337,435,674
Global High Income Portfolio.................................................... -- 336,584,523
GT Global Strategic Income Fund................................................. -- 296,157,993
</TABLE>
<TABLE>
<CAPTION>
SALES
--------------------------------
U.S. GOVERNMENT OTHER ISSUES
--------------- --------------
<S> <C> <C>
GT Global Government Income Fund................................................ $ 27,411,191 $ 376,337,397
Global High Income Portfolio.................................................... 11,689,150 402,315,028
GT Global Strategic Income Fund................................................. 2,108,125 345,270,190
</TABLE>
4. CAPITAL SHARES
At April 30, 1997, there were 6,000,000,000 shares of the Company's common stock
authorized, at $0.0001 par value. Of this amount, 400,000,000 were classified as
shares of the GT Global Telecommunications Fund; 400,000,000 were classified as
shares of GT Global Government Income Fund; 200,000,000 were classified as
shares of GT Global Health Care Fund; 200,000,000 were classified as shares of
GT Global Strategic Income Fund; 200,000,000 were classified as shares of GT
Global Currency Fund (inactive); 200,000,000 were classified as shares of GT
Global Growth & Income Fund; 200,000,000 were classified as shares of GT Global
Small Companies Fund (inactive); 200,000,000 were classified as shares of GT
Global Latin America Growth Fund; 200,000,000 were classified as shares of GT
Global Emerging Markets Fund; 200,000,000 were classified as shares of GT Global
High Income Fund; 200,000,000 were classified as shares of GT Global Financial
Services Fund; 200,000,000 were classified as shares of GT Global Natural
Resources Fund; 200,000,000 were classified as shares of GT Global
Infrastructure Fund; 200,000,000 were classified as shares of GT Global Consumer
Products and Services Fund. The shares of each of the foregoing series of the
Company were divided equally into two classes, designated Class A and Class B
common stock. With respect to the issuance of Advisor Class shares, 100,000,000
shares were classified as shares of each of the fourteen series of the Company
and designated as Advisor Class common stock. 1,400,000,000 shares remain
unclassified. Transactions in capital shares of the Fund were as follows:
F30
<PAGE>
GT GLOBAL INCOME FUNDS
CAPITAL SHARE TRANSACTIONS
GT GLOBAL GOVERNMENT INCOME FUND
<TABLE>
<CAPTION>
SIX MONTHS ENDED
APRIL 30, 1997 YEAR ENDED
(UNAUDITED) OCTOBER 31, 1996
-------------------------- --------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold............................. 22,134,266 $ 192,081,057 19,126,586 $ 164,293,090
Shares issued in connection with
reinvestment of distributions......... 403,972 3,492,355 1,643,833 14,228,931
----------- ------------- ----------- -------------
22,538,238 195,573,412 20,770,419 178,522,021
Share repurchased....................... (29,127,040) (252,483,693) (36,969,597) (318,856,283)
----------- ------------- ----------- -------------
Net decrease............................ (6,588,802) $ (56,910,281) (16,199,178) $(140,334,262)
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
<CAPTION>
SIX MONTHS ENDED
APRIL 30, 1997 YEAR ENDED
(UNAUDITED) OCTOBER 31, 1996
-------------------------- --------------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold............................. 11,853,341 $ 102,688,847 23,047,364 $ 198,774,141
Shares issued in connection with
reinvestment of distributions......... 240,043 2,075,824 956,866 8,282,950
----------- ------------- ----------- -------------
12,093,384 104,764,671 24,004,230 207,057,091
Share repurchased....................... (15,954,400) (138,160,548) (31,688,935) (273,022,079)
----------- ------------- ----------- -------------
Net decrease............................ (3,861,016) $ (33,395,877) (7,684,705) $ (65,964,988)
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
<CAPTION>
SIX MONTHS ENDED
APRIL 30, 1997 YEAR ENDED
(UNAUDITED) OCTOBER 31, 1996
-------------------------- --------------------------
ADVISOR CLASS SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold............................. 4,358 $ 37,112 105,543 $ 891,754
Shares issued in connection with
reinvestment of distributions......... 330 2,837 1,345 11,541
----------- ------------- ----------- -------------
4,688 39,949 106,888 903,295
Share repurchased....................... (568) (4,885) (111,905) (948,244)
----------- ------------- ----------- -------------
Net increase (decrease)................. 4,120 $ 35,064 (5,017) $ (44,949)
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
</TABLE>
F31
<PAGE>
GT GLOBAL INCOME FUNDS
GT GLOBAL HIGH INCOME FUND
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1997 OCTOBER 31, 1996
-------------------------- --------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold............................. 11,343,404 $ 175,928,253 25,694,335 $ 346,426,450
Shares issued in connection with
reinvestment of distributions......... 361,479 5,594,577 607,445 8,023,249
----------- ------------- ----------- -------------
11,704,883 181,522,830 26,301,780 354,449,699
Share repurchased....................... (13,843,259) (214,795,634) (26,422,858) (355,715,247)
----------- ------------- ----------- -------------
Net decrease............................ (2,138,376) $ (33,272,804) (121,078) $ (1,265,548)
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1997 OCTOBER 31, 1996
-------------------------- --------------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold............................. 8,176,139 $ 127,128,397 14,568,804 $ 194,636,619
Shares issued in connection with
reinvestment of distributions......... 449,008 6,943,020 765,798 10,086,445
----------- ------------- ----------- -------------
8,625,147 134,071,417 15,334,602 204,723,064
Share repurchased....................... (9,237,820) (144,065,918) (16,793,522) (225,719,415)
----------- ------------- ----------- -------------
Net decrease............................ (612,673) $ (9,994,501) (1,458,920) $ (20,996,351)
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1997 OCTOBER 31, 1996
-------------------------- --------------------------
ADVISOR CLASS SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold............................. 1,900,128 $ 29,475,454 1,706,101 $ 23,413,749
Shares issued in connection with
reinvestment of distributions......... 50,506 781,734 40,101 546,903
----------- ------------- ----------- -------------
1,950,634 30,257,188 1,746,202 23,960,652
Share repurchased....................... (1,887,253) (29,157,868) (839,670) (11,309,193)
----------- ------------- ----------- -------------
Net increase............................ 63,381 $ 1,099,320 906,532 $ 12,651,459
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
</TABLE>
F32
<PAGE>
GT GLOBAL INCOME FUNDS
GT GLOBAL STRATEGIC INCOME FUND
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1997 OCTOBER 31, 1996
-------------------------- --------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold............................. 8,412,669 $ 101,155,066 15,025,486 $ 168,473,834
Shares issued in connection with
reinvestment of distributions......... 336,031 4,032,272 829,046 9,085,802
----------- ------------- ----------- -------------
8,748,700 105,187,338 15,854,532 177,559,636
Shares repurchased...................... (12,046,045) (144,885,251) (18,331,797) (204,237,090)
----------- ------------- ----------- -------------
Net decrease............................ (3,297,345) $ (39,697,913) (2,477,265) $ (26,677,454)
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1997 OCTOBER 31, 1996
-------------------------- --------------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold............................. 4,378,899 $ 52,858,608 12,778,909 $ 141,835,937
Shares issued in connection with
reinvestment of distributions......... 471,415 5,664,030 1,206,362 13,216,165
----------- ------------- ----------- -------------
4,850,314 58,522,638 13,985,271 155,052,102
Shares repurchased...................... (7,381,260) (88,998,437) (20,318,197) (224,904,917)
----------- ------------- ----------- -------------
Net decrease............................ (2,530,946) $ (30,475,799) (6,332,926) $ (69,852,815)
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1997 OCTOBER 31, 1996
-------------------------- --------------------------
ADVISOR CLASS SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold............................. 14,435 $ 174,289 278,551 $ 3,010,280
Shares issued in connection with
reinvestment of distributions......... 1,628 19,543 3,931 43,156
----------- ------------- ----------- -------------
16,063 193,832 282,482 3,053,436
Shares repurchased...................... (13,897) (168,236) (284,638) (3,054,110)
----------- ------------- ----------- -------------
Net increase (decrease)................. 2,166 $ 25,596 (2,156) $ (674)
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
</TABLE>
5. WRITTEN OPTIONS:
The Global Government Income Fund's written options contract activity for the
six months ended April 30, 1997 was as follows:
COVERED CALL OPTIONS
<TABLE>
<CAPTION>
UNDERLYING NOMINAL
AMOUNT IN USD PREMIUMS
------------------ ---------
<S> <C> <C>
Options outstanding at October 31,
1996.................................. 0 $ 0
Options written......................... 127,650,000 711,622
Options cancelled in closing purchase
transactions.......................... 0 0
Options expired prior to exercise....... (127,650,000) (711,622)
Options exercised....................... 0 0
------------------ ---------
Options outstanding at April 30, 1997... 0 $ 0
------------------ ---------
------------------ ---------
</TABLE>
F33
<PAGE>
GT GLOBAL INCOME FUNDS
NOTES
- --------------------------------------------------------------------------------
<PAGE>
GT GLOBAL INCOME FUNDS
GT GLOBAL FUNDS
GT GLOBAL OFFERS A BROAD RANGE OF FUNDS TO COMPLEMENT MANY INVESTORS'
PORTFOLIOS. FOR MORE INFORMATION AND A PROSPECTUS ON ANY OF THE GT GLOBAL
FUNDS, PLEASE CONTACT YOUR INVESTMENT ADVISOR OR CALL GT GLOBAL DIRECTLY AT
1-800-824-1580. THE PROSPECTUS CONTAINS MORE COMPLETE INFORMATION, INCLUDING
CHARGES, EXPENSES AND THE RISKS OF GLOBAL AND EMERGING MARKET INVESTING.
INVESTORS SHOULD READ THE PROSPECTUS CAREFULLY BEFORE INVESTING.
GROWTH FUNDS
GLOBALLY DIVERSIFIED FUNDS
GT GLOBAL WORLDWIDE GROWTH FUND
Invests around the world, including the U.S.
GT GLOBAL INTERNATIONAL GROWTH FUND
Provides portfolio diversity by investing outside the U.S.
GT GLOBAL EMERGING MARKETS FUND
Gives access to the growth potential of developing economies
GLOBAL THEME FUNDS
GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
Focuses on worldwide opportunities from the demand for consumer products and
services
GT GLOBAL HEALTH CARE FUND
Invests in growing health care industries worldwide
GT GLOBAL FINANCIAL SERVICES FUND
Focuses on the worldwide opportunities from the demand for financial services
and products
GT GLOBAL INFRASTRUCTURE FUND
Seeks companies that build, improve or maintain infrastructure
GT GLOBAL NATURAL RESOURCES FUND
Concentrates on companies that own, explore or develop natural resources
GT GLOBAL TELECOMMUNICATIONS FUND
Invests in companies worldwide that develop, manufacture or sell
telecommunications services or equipment
REGIONALLY DIVERSIFIED FUNDS
GT GLOBAL NEW PACIFIC GROWTH FUND
Offers access to the emerging and established markets of the Pacific Rim,
excluding Japan
GT GLOBAL EUROPE GROWTH FUND
Focuses on investment opportunities in the new, unified Europe
GT GLOBAL LATIN AMERICA GROWTH FUND
Invests in the emerging markets of Latin America
SINGLE COUNTRY FUNDS
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
Invests in equity securities of small U.S. companies
GT GLOBAL AMERICA MID CAP GROWTH FUND
Concentrates on medium-sized companies in the U.S.
GT GLOBAL AMERICA VALUE FUND
Concentrates on equity securities of large cap U.S. companies believed to be
undervalued
GT GLOBAL JAPAN GROWTH FUND
Provides U.S. investors with direct access to the Japanese market
GROWTH AND INCOME FUND
GT GLOBAL GROWTH & INCOME FUND
Invests in blue-chip stocks and government securities
INCOME FUNDS
GT GLOBAL GOVERNMENT INCOME FUND
Earns monthly income from global government securities
GT GLOBAL STRATEGIC INCOME FUND
Allocates its assets among debt securities from the U.S., developed foreign
countries and emerging markets
GT GLOBAL HIGH INCOME FUND
Invests in debt securities in emerging markets
GT GLOBAL FLOATING RATE FUND
Invests primarily in senior secured floating rate loans that have the potential
to achieve a high level of current income
MONEY MARKET FUND
GT GLOBAL DOLLAR FUND
Invests in high-quality, U.S. dollar-denominated money market securities
worldwide for stability and preservation of capital
THIS REPORT MUST BE ACCOMPANIED OR PRECEDED BY A CURRENT PROSPECTUS.
<PAGE>
[LOGO]
GT Global, Inc.
Fifty California Street
27th Floor
San Francisco, CA
94111-4624
DATED MATERIAL
PLEASE EXPEDITE
INCSAR706350JR.325
June, 1997
