<PAGE>
[GRAPHIC]
GT GLOBAL
OVER 25 YEARS
OF INVESTING
WORLDWIDE
GT GLOBAL
THEME FUNDS
ANNUAL REPORT
OCTOBER 31, 1997
[LOGO] GT GTLOBAL
A MEMBER OF LIECHTENSTEIN GLOBAL TRUST
<PAGE>
[GRAPHIC]
GT GLOBAL THEME FUNDS
TABLE OF CONTENTS
Message from the Chairman . . . . . . . . . . . . . . . . . . . . . . . . . 1
Introduction to Theme Funds . . . . . . . . . . . . . . . . . . . . . . . . 2
GT Global
Consumer Products
and Services Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
GT Global
Financial Services Fund . . . . . . . . . . . . . . . . . . . . . . . . . . 8
GT Global
Health Care Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
GT Global
Infrastructure Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
GT Global
Natural Resources Fund . . . . . . . . . . . . . . . . . . . . . . . . . . 20
GT Global
Telecommunications Fund . . . . . . . . . . . . . . . . . . . . . . . . . 24
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 October 31,
1997, unless otherwise noted. Views, portfolio holdings and allocations may have
changed subsequent to these dates.
<PAGE>
MESSAGE FROM THE CHAIRMAN
Dear Shareholder,
Fiscal 1997 has been a challenging and exciting year. The volatility of the
market--and the resulting record highs and lows--has made investing a sometimes
awe-inspiring endeavor for investors and investment professionals alike.
Across the GT Global family, our Funds have remained true to their investment
goals and objectives regardless of world events. Whether it be the recent
turmoil in the Asian markets, the privatization and reform underway across
eastern Europe, deregulation occurring in Latin America or the ups and downs of
the U.S. market, our Funds have maintained their focus. In fact, we believe
these changes are yielding new investment opportunities in both established
economies and dynamic new markets around the world. Looking forward to 1998, our
commitment is to continue to monitor world markets and seek additional ways to
capitalize on events as they unfold for the benefit of our shareholders.
In an effort to provide our customers easier access to information about the GT
Global Funds, we launched our website, www.gtglobal.com, during the latter part
of this year. We hope to continually enhance the information it contains, from
our worldwide economic outlook, to fund price and performance reporting, to the
Millennium Minute message of the day. Used in conjunction with annual and
semiannual reports and your quarterly statement on our Funds, we hope it helps
you monitor your investments and achieve your financial goals.
Be assured that we will continue to strive to offer you the quality investment
products you need to build a well-diversified portfolio. As always, we
appreciate your continued confidence in our Funds. Should you or your adviser
have any questions regarding GT Global Funds, please call us at 800-824-1580.
One of our representatives will be happy to assist you.
Sincerely,
/s/ William J. Guilfoyle
William J. Guilfoyle
CHAIRMAN OF THE BOARD AND PRESIDENT
GT GLOBAL MUTUAL FUNDS
1
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GT GLOBAL THEME FUNDS
GT Global Theme Funds provide investors with access to a new dimension of global
investing. Each Fund is structured to include multiple industries that, in
combination, represent important global investment themes. From health care to
natural resources to telecommunications, these themes are central to our modern
lives and form the gears that drive global growth.
[PHOTO]
As the world economy becomes ever more global, we believe it is increasingly
appropriate for investors to expand their options by investing in specific
industries as well as regions. With GT Global Theme Funds, you and your
financial adviser can evaluate how one or more of these six globally diversified
Funds may help you realize your investment goals.
The Funds are based on themes we believe will continue to gain importance in the
years to come.
GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
Seeking to benefit from the changing needs of the new global consumer, the
Fund's portfolio invests in companies that manufacture, market, retail or
distribute consumer products and services.
GT GLOBAL FINANCIAL SERVICES FUND
Focusing globally on issuers in the financial services industries, such as
banks, brokerage and investment advisory firms and insurance companies, this
Fund concentrates on the worldwide growth potential of capital markets.
GT GLOBAL HEALTH CARE FUND
Searching out promising issuers in global health care industries, including
pharmaceutical, biotechnology, health care services, and medical technology and
supply companies around the world, this Fund emphasizes the increased health
care needs of the world's aging population and the growing demand for health
care in emerging markets.
GT GLOBAL INFRASTRUCTURE FUND
Seeking to capitalize on the growing need for energy, transportation and
communications in emerging markets, and the need to upgrade existing
infrastructure in developed markets, the Fund's portfolio invests in companies
that build, upgrade and repair basic infrastructure.
GT GLOBAL NATURAL RESOURCES FUND
Targeting companies that own, explore or develop natural resources, including
precious and base metals, fossil fuels, forest and agricultural products, the GT
Global Natural Resources Fund seeks to benefit from a rise in global industrial
production and related business and inflationary cycles.
GT GLOBAL TELECOMMUNICATIONS FUND
Concentrating on companies engaged in the development, manufacture or sale of
telecommunications services or equipment, the Fund seeks to participate in the
growth of worldwide demand for information and the means by which it travels.
2
<PAGE>
THE TEAM APPROACH TO INVESTING
Teamwork among talented investment professionals is at the center of our
investment discipline. Our Theme Fund managers, with an average of ten years of
industry experience, are supported by a group of seasoned investment analysts.
We believe working together as a team creates a combination of strengths and
facilitates the investment process. Within this framework, individual team
members concentrate on their defined industries and regions, ensuring a deeper
and broader group understanding of companies, markets and world events. The
continual exchange of knowledge and ideas promotes style integrity and reflects
our belief that the key to achieving consistent results is following a
disciplined investment process.
ABOUT THE PORTFOLIO MANAGERS
DEREK WEBB, CFA - Head of the Theme Funds and Portfolio Manager of the GT Global
Consumer Products Fund and the GT Global Natural Resources Fund. Prior to
joining Chancellor LGT Asset Management, Mr. Webb spent seven years in the
financial services industry. He received an M.B.A. from the Wharton Business
School.
MICHAEL MAHONEY - Portfolio Manager of the GT Global Telecommunications Fund
since 1993; Investment Analyst from 1991 to 1993. Previously, Mr. Mahoney was a
Management Consultant at Bain & Co. and received an M.B.A. from Stanford
Graduate School of Business.
[PHOTO]
FPO
GT GLOBAL THEME FUNDS' PORTFOLIO
MANAGERS: (LEFT TO RIGHT) BRIAN
NELSON, MIKE YELLEN, MICHAEL
MAHONEY, DEREK WEBB AND JAMES
ELLMAN.
A. JAMES ELLMAN - Portfolio Manager of the GT Global Financial Services Fund
since 1995; Investment Analyst from 1994 to 1995. Formerly, Mr. Ellman was an
international bank examiner for the Federal Reserve. He received an M.B.A. from
Harvard Graduate School of Business.
MIKE YELLEN - Portfolio Manager of the GT Global Health Care Fund since 1996;
Investment Analyst 1994 to 1996. Before joining Chancellor LGT Asset Management,
Mr. Yellen was a Senior Securities Analyst of the Franklin Global Health Care
Fund for Franklin Resources. He is a graduate of Stanford University.
BRIAN NELSON, CFA(1) - Portfolio Manager of the GT Global Infrastructure Fund
since 1997; Investment Analyst from 1995 to 1997. Previously, Mr. Nelson was an
Equity Research Analyst and eventually Co-Portfolio Manager of the Franklin
Global Utilities Fund at Franklin Templeton. He earned a B.A. from the
University of California at Santa Barbara.
(1) Mr. Nelson was an employee of Chancellor Capitol Management until October
31, 1996, when LGT Asset Management merged with Chancellor. The resulting
entity was renamed Chancellor LGT Asset Management and is the investment
manager to GT Global Funds.
3
<PAGE>
[PHOTO]
INVESTMENT OBJECTIVE
AND CURRENT STRATEGY
The Fund seeks long-term capital growth by investing worldwide, primarily in
equity securities of companies that manufacture, market, retail or distribute
consumer products and services. The Fund looks for companies well positioned to
benefit from demographic and economic trends, and that have strong earnings
growth and fundamentals.
GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
PERFORMANCE SUMMARY
[GRAPH]
CLASS A SHARES
GT GLOBAL CONSUMER PRODUCTS
AND SERVICES FUND MSCI WORLD INDEX
12/30/94 9525 10000
9467 9852
9533 9997
9858 10481
9708 10849
9867 10943
10508 10942
11400 11492
11542 11238
12083 11567
12158 11387
12475 11785
12894 12132
13101 12353
13575 12431
14472 12640
15352 12939
5/31/96 16654 12953
16456 13021
15912 12563
17318 12710
18776 13210
18094 13304
18060 14052
17832 13830
17660 13999
17201 14162
16299 13884
16020 14341
17056 15228
17976 15990
19139 16729
18976 15613
20455 16463
10/31/97 20004 15599
[GRAPH]
CLASS B SHARES
12/30/94 10000 10000
9939 9852
10009 9997
10341 10481
10175 10849
10350 10943
11015 10942
11942 11492
12082 11238
12633 11567
12712 11387
13036 11785
13467 12132
13675 12353
14164 12431
15097 12640
16012 12939
5/31/96 17361 12953
17153 13021
16582 12563
18040 12710
19544 13210
18828 13304
18783 14052
18534 13830
18354 13999
17861 14162
16924 13884
16630 14341
17691 15228
18638 15990
19840 16729
19660 15613
21185 16463
10/31/97 20402 15599
The charts above show performance of the GT Global Consumer Products and
Services Fund Class A and Class B shares since inception, versus the MSCI World
Index. The top chart assumes a hypothetical $10,000 initial investment in 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),
assuming a 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 $20,547
on October 31, 1997.
AVERAGE ANNUAL TOTAL RETURNS %(1)
OCTOBER 31, 1997
SHARE CLASS WITHOUT SALES CHARGE(2) WITH SALES CHARGE
1-YEAR LIFE OF FUND 1-YEAR LIFE OF FUND
Class A(3) 10.55 29.91 5.30 27.70
Class B(3) 9.95 29.25 4.95 28.59
Advisor Class(4) 11.15 34.67 N/A N/A
(1) Figures assume reinvestment of all dividends and capital gains distributions
at net asset value.
(2) Performance data do not reflect the maximum 4.75% sales charge or the
contingent deferred sales charge for Class A and Class B shares,
respectively, which, if included, would have reduced quoted performance.
(3) The Fund began operations on December 30, 1994.
(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 Fund 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.
From time to time, the Fund's investment advisor may waive some fees and/or
reimburse some expenses, without which performance would be lower. Waivers and
reimbursements are subject to change.
4
<PAGE>
GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
INTERVIEW WITH PORTFOLIO MANAGER
DEREK WEBB
Q HOW HAS THE FUND PERFORMED OVER THE PAST YEAR?
A The Fund enjoyed a considerable turnaround in performance over the past six
months, ending the one-year period to October 31, 1997, with a total return of
10.55% for Class A shares (5.30% including the maximum 4.75% sales charge), and
9.95% for Class B shares (4.95% including the maximum 5% contingent deferred
sales charge). The Morgan Stanley Capital International (MSCI) World Index,(5)
which, unlike the Fund, is heavily concentrated in larger cap stocks, returned
17.25% over the same period. The index is also designed to represent the
performance of all markets, and does not mirror the Fund's concentration in the
consumer products and services industries.
The Fund's overweighted position in non-index stocks performed exceptionally
well over the second half of the reporting period. This is in contrast to the
first quarter of the year, when the Fund was significantly affected by the
general downturn in small cap stocks.
Q WHAT DO YOU FIND ATTRACTIVE ABOUT NON-INDEX STOCKS?
A We like the stocks of these types of companies primarily because they tend to
have better price-to-growth rates (PEG) than index stocks, meaning their price-
to-earnings ratios (P/Es) are lower relative to their earnings growth. This
occurs because earnings growth of non-index stocks tends to be higher due to
their relatively smaller size. P/Es are also lower because these stocks are not
included in standard indices, which generally drives stock prices up. We find
index stocks extremely overpriced as a result of strong demand relative to non-
index stocks.
Q WHAT OTHER CRITERIA ARE IMPORTANT IN YOUR STOCK SELECTION?
A We look for companies with potential for positive quarterly earnings
surprises and positive earnings revisions by Wall Street analysts. Additionally,
we invest in companies we believe display strong fundamentals, such as high
return on equity, low debt and highly predictable earnings and cash flow. We
also focus on companies we think offer superior products or services, with the
ability to consistently grow sales.
Q COULD YOU PROVIDE EXAMPLES OF FUND HOLDINGS THAT HAVE DONE WELL OVER THE
PERIOD?
A Rental car companies, in general, have enjoyed strong returns. Once a dumping
ground for car companies, many rental car firms have now been spun off by their
automotive owners. As a result, these businesses are being run as businesses and
not as parking lots for obsolete models. In concert with this change, earnings
of certain companies have been rising dramatically as managements have been
increasing prices and reducing costs. The Fund currently holds Avis and Budget.
[GRAPH]
BUDGET - A RENTAL CAR SUCCESS STORY
8/22/94 9.5
9.63
9.88
9.5
11.5
11.25
11.25
11.31
11.25
11
11.5
11.25
11.25
11
10.38
9.63
9.25
9.5
9.38
9.5
9.38
9.5
9
9
9.25
9.75
9.25
9.5
9.25
9.5
8
8.75
8.5
8.25
8.75
8.5
8
7.75
7.5
5/22/95 7.75
7.5
7.25
7.75
7.5
7.5
7.75
7.75
6.88
6.63
7
7.13
7.38
8
8.75
9.5
11.38
10.5
10.25
10.25
10
10.75
10.5
10
10
10.25
10.13
9.75
9.63
9.25
9
8.88
8.5
8.75
8.88
9
8.75
9
9.5
9.5
9.5
10
9.75
3/18/96 9.88
10
9.5
10.25
11.25
11.63
11.25
10.75
13.75
14.63
15.38
16.38
16.25
16.75
16
13.63
14.25
17.5
17.5
19.5
18.25
18
18
18.5
18.5
18.31
17.25
18.75
19
19.25
19.25
18.5
18.75
19.25
18
16.5
16
16.5
12/9/96 16.25
16.75
16.13
16.13
17.75
23.5
27.38
26.31
26.75
28
27
28.56
26.88
26.75
26.63
20.63
21
22.88
19.88
21.5
22.13
25
25.88
26
26.88
27.5
27
27.75
33
34.5
32.44
33.38
34.69
33.19
29.38
29.69
29.44
28.56
29.38
29.06
29.38
34.38
33.75
36
36.31
34.69
33.13
35.19
35.25
36.13
34.5
36.06
34.75
12/15/97 33.44
BUDGET HAD ITS FIRST IPO IN 1989 AFTER BEING TAKEN PRIVATE IN 1986. SINCE THEN,
ITS SHARE PRICE IS UP NEARLY 3.5 TIMES TO THE END OF OCTOBER. IN 1996, FORD
ACQUIRED BUDGET, AND SUBSEQUENTLY SOLD IT OFF EARLIER THIS YEAR.
Source: Datastream, December 1997.
Another stock that has performed well is Tabacalera in Spain. Whereas in the
U.S., tobacco companies have had a difficult time; the Spanish government is
actually decreasing tobacco taxes. They are privatizing Tabacalera and trying to
make the tobacco industry as attractive as possible. Consumption of tobacco is
quite high in Spain, and companies are not currently faced with legal
liabilities, as we have seen here in the U.S.
Other strong contributors to Fund performance include Safeway and CVS,(6) both
well-run businesses;
CONTINUED P6
(5) The MSCI World Index is a market value-weighted average of the performance
of 1,568 securities listed on major world stock exchanges - the U.S.,
Europe, Canada, Australia, New Zealand and the Far East. It includes the
effect of reinvested dividends and is measured in U.S. dollars.
(6) Safeway was sold off prior to October 31, 1997.
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
Jones Apparel, makers of Ralph Lauren clothing; and Tuesday Morning, a teen
market retailer. Also, Yogen Fruz, the main Canadian yogurt company with only
one serious competitor worldwide, enjoyed solid gains as a result of their
consolidation activities.
Q WHAT DO YOU SEE AHEAD FOR THE CONSUMER PRODUCTS INDUSTRY?
A We believe consumer products and services companies will generally remain
attractive investments. Often they have distinguished franchises or name-brand
products that tend to compete more on perceived value than strictly on price. We
also find them good investments because many tend to have low fixed assets and
high, unrestricted cash flows. High cash generation allows them to reinvest in
core businesses, make acquisitions, repurchase stock or debt, and/or increase
dividends.
The Consumer Products and Services Fund is rare because it is totally company
specific. Consumer products and services companies are vastly different from one
another, and we can almost always find interesting companies to invest in. Also,
these companies are not generally affected by macroeconomic cycles. Whether
people eat yogurt or drink gourmet coffee, for example, has little to do with
what's going on in the Asian financial community.
GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
ALLOCATION OF NET ASSETS %
1997 1996
OCTOBER 31 OCTOBER 31
SERVICES 56.3 51.0
CONSUMER NON-DURABLES 14.8 35.9
FINANCE 6.5 3.1
TECHNOLOGY 2.6 1.1
CAPITAL GOODS 1.3 N/A
MULTI-INDUSTRY / MISC. N/A 3.2
SHORT-TERM & OTHER 18.5 5.7
6
<PAGE>
GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
GEOGRAPHIC ALLOCATION OF NET ASSETS
[CHART]
EUROPE 6.2%
NORTH AMERICA & OTHER 93.8%
Allocations may change based on current market conditions. A complete listing
may be found in the Financial Statements section of this report.
GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
KEY PORTFOLIO HOLDINGS(7)
MORNINGSTAR GROUP, INC. A national manufacturer of refrigerated specialty food
products. Brand names include International Delight, Second Nature and Lactaid.
CVS CORP. Through its wholly owned subsidiaries, CVS Pharmacy and Revco, CVS
Corp. operates 3,866 drugstores in 24 states and the District of Columbia.
TABACALERA S.A. Manufactures and sells tobacco and stamps worldwide.
AIRBORNE FREIGHT CORP. An air express company and air freight forwarder that
expedites shipments to destinations throughout the world.
BANKAMERICA CORP. Provides diverse financial products and services to
individuals, businesses, government agencies and financial institutions in 36
countries. In the U.S., the company's banking subsidiaries operate over 2,000
offices throughout the western United States.
BRYLANE, INC. Retails apparel through specialty catalogs.
NEW YORK TIMES CO. Publishes magazines and newspapers, including the New York
Times and the Boston Globe. The company also licenses electronic databases and
operates broadcasting/information services.
JONES APPAREL GROUP, INC. Designs, markets and contracts for the manufacture of
better-priced women's suits and sportswear.
INTERSTATE BAKERIES CORP. The corporation and its subsidiaries produce and
distribute baked goods. The company bakes a variety of breads, buns and rolls
under the names Weber's and Butternut, among others. Interstate sells its breads
in the southern, southwestern and western U.S. They also bake and sell cakes and
breakfast products under the Dolly Madison Bakery name.
PACIFIC SUNWEAR OF CALIFORNIA Pacific Sunwear operates a nationwide, mall-based
specialty retail chain of stores in 33 states. The company specializes in casual
apparel, footwear and related accessories, catering to teenagers and young
adults.
% of
Country Net Assets
U.S. 4.0
U.S. 3.7
Spain 3.3
U.S. 3.1
U.S. 3.1
U.S. 3.1
U.S. 3.0
U.S. 2.8
U.S. 2.8
U.S. 2.5
Source: Bloomberg, November 1997.
(7) There is no assurance the Fund will continue to hold these or any other
securities mentioned in this report.
7
<PAGE>
[PHOTO]
INVESTMENT OBJECTIVE AND CURRENT STRATEGY
The Fund seeks long-term growth of capital primarily by investing in the equity
securities of financial services companies, including those engaged in banking,
insurance, investment management, brokerage and diversified financial
activities. Emphasis is placed on companies we believe have the potential to
experience rising profitability.
GT GLOBAL FINANCIAL SERVICES FUND
PERFORMANCE SUMMARY
[GRAPH]
CLASS A SHARES GT Global Financial
Services Fund MSCI World Index MSCI Banking Index
5/31/94 9525 10000 10000
9525 9974 10012
9508 10165 10010
9950 10473 10042
9683 10200 9707
9683 10492 9971
9283 10039 9542
9075 10138 9631
8825 9987 9507
8650 10135 9550
8408 10626 9943
8583 10998 10534
9242 11094 10648
9400 11093 10141
9850 11650 10915
9942 11393 10355
10117 11727 10736
9933 11544 10355
10458 11947 11041
12/31/95 10805 12299 11566
11007 12524 11437
10990 12602 11374
11158 12814 11648
11411 13118 11818
11537 13131 11641
11386 13200 11602
10998 12736 11369
11369 12885 11513
11781 13392 12033
11941 13488 12173
12681 14246 12753
12448 14020 12096
13025 14192 11820
13521 14357 12379
13016 14076 11881
13422 14538 12177
14071 15438 13088
15062 16211 14083
16117 16960 14886
15297 15828 13946
16523 16690 14935
10/31/97 15513 15814 13497
CLASS B SHARES
5/31/94 10000 10000 10000
10000 9974 10012
9974 10165 10010
10437 10473 10042
10149 10200 9707
10149 10492 9971
9720 10039 9542
9493 10138 9631
9230 9987 9507
9046 10135 9550
8793 10626 9943
8968 10998 10534
9650 11094 10648
9816 11093 10141
10280 11650 10915
10367 11393 10355
10551 11727 10736
10350 11544 10355
10892 11947 11041
12/31/95 11255 12299 11566
11458 12524 11437
11431 12602 11374
11607 12814 11648
11863 13118 11818
12004 13131 11641
11837 13200 11602
11431 12736 11369
11810 12885 11513
12233 13392 12033
12401 13488 12173
13159 14246 12753
12905 14020 12096
13500 14192 11820
14010 14357 12379
13481 14076 11881
13887 14538 12177
14558 15438 13088
15579 16211 14083
16665 16960 14886
15805 15828 13946
17071 16690 14935
10/31/97 15713 15814 13497
The charts above show performance of the GT Global Financial Services Fund Class
A and Class B shares since inception, versus the MSCI World Index and the MSCI
Banking Index. The top chart assumes a hypothetical $10,000 initial investment
in 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), assuming a 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 $16,998 on October 31, 1997.
AVERAGE ANNUAL TOTAL RETURNS %(1)
OCTOBER 31, 1997
SHARE CLASS WITHOUT SALES CHARGE(2) WITH SALES CHARGE
1-YEAR LIFE OF FUND 1-YEAR LIFE OF FUND
Class A(3) 29.91 15.33 23.74 13.70
Class B(3) 29.13 14.76 24.13 14.13
Advisor Class(4) 30.52 24.52 N/A N/A
(1) Figures assume reinvestment of all dividends and capital gains distributions
at net asset value.
(2) Performance data do not reflect the maximum 4.75% sales charge or the
contingent deferred sales charge for Class A and Class B shares,
respectively, which if included, would have reduced quoted performance.
(3) The Fund began operations on May 31, 1994.
(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 Fund 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.
From time to time, the Fund's investment advisor may waive some fees and/or
reimburse some expenses, without which performance would be lower. Waivers and
reimbursements are subject to change.
8
<PAGE>
GT GLOBAL FINANCIAL SERVICES FUND
INTERVIEW WITH PORTFOLIO MANAGER
JAMES ELLMAN
Q HOW DID THE FUND PERFORM?
A We are very pleased with the Fund's performance. Total return for the 12-
month period to October 31, 1997, was 29.91% for Class A shares (23.74%
including the maximum 4.75% sales charge) and 29.13% for Class B shares (24.13%
including the maximum contingent deferred sales charge). In comparison, the
Fund's benchmark, the Morgan Stanley Capital International (MSCI) Banking
Index,5 returned 10.88% for the same period, while the broader MSCI World Index6
returned 17.25%.
Q HOW WAS THE FUND ABLE TO OUTPERFORM THE MSCI BANKING INDEX?
A We outperformed the index primarily as a result of country allocations and
careful stock selection. Over the period, the Fund benefited from overweighted
positions in several markets including the U.S., Canada, the Scandinavian
countries and Australia. Strong gains in banking and insurance stocks in these
markets were fueled by favorable inflationary environments and rallies in their
bond markets. In general, as bond markets rally and interest rates go down,
financial services stocks go up.
We were also very much underweighted in Japan and the rest of Asia. This allowed
the Fund to avoid the bulk of the contagion from the Asian currency crisis
raging across the region in recent months. In terms of stock selection, we
concentrated on market-leading retail bank and insurance companies in several
developed markets, which performed well overall. At the same time, we owned very
little in the sub-prime mortgage, auto and credit areas, which struggled in the
face of difficult credit quality environments.
Several individual holdings of the Fund performed particularly well.
BankAmerica, the Fund's largest position for much of the last year, enjoyed an
exceptional run-up in its share price. The market rewarded the bank's management
strategy of taking decisive action to sell off poorly performing assets.
Opportunity was also found in smaller companies, an example being Hamilton
Bancorp, a trade finance bank in Florida that achieved strong gains from solid
earnings and its ability to increase market share.
Among smaller markets, strong economic growth generally led to rising financial
services stocks. Israel's economy performed well, which boosted returns from the
Fund's holding of Bank Hapoalim where a controlling interest in the company was
recently sold by the government to a group of U.S. investors. Similarly, Allied
Irish Bank of Ireland performed well under favorable local market conditions.
The Irish economy has benefited from an influx of investment by U.S. technology
companies setting up European bases in Ireland. The bank is also expanding and
recently acquired banks in Poland and the U.S.
Q WHAT IS DRIVING OUTPERFORMANCE OF FINANCIAL SERVICES COMPANIES?
A Strong share prices for financial services companies have been precipitated
in part by aggressive capital management, which in this period of strong
profitability takes the form of dividend increases, share repurchases and
securitization of low margin assets. Likewise, consolidation in this industry is
another trend underpinning impressive stock price performance. Consolidation has
been driven by shareholder-oriented management teams and the increasing use of
technology by larger financial services companies leveraging their networks in
order to compete more effectively against smaller players.
Consolidation comprises a number of positive aspects, including cost savings and
revenue synergies. Given the thousands of U.S. banks and insurance companies
with overlapping branch networks or operations, we feel considerable room exists
for cost savings to be realized as the industry is gradually rationalized.
Consolidation also means fewer and more rational competitors, which is usually
beneficial for industry profits and share prices.
CONTINUED P10
(5) The MSCI Banking Index is a market value-weighted average of the performance
of 108 securities listed on major world stock exchanges - the U.S., Europe,
Canada, Australia, New Zealand and the Far East. It includes the effect of
reinvested dividends and is measured in U.S. dollars.
(6) The MSCI World Index is a market value-weighted average of the performance
of 1,568 securities listed on major world stock exchanges - the U.S.,
Europe, Canada, Australia, New Zealand and the Far East. It includes the
effect of reinvested dividends 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.
9
<PAGE>
INTERVIEW WITH THE PORTFOLIO MANAGER CONTINUED
We have seen an amazing number of extremely large mergers and acquisitions
transacted this year in the U.S. financial services sector. The size factor has
come into play partly because many of the banks, insurance and securities firms
being acquired of late have also grown themselves through acquisitions over the
last few years. We expect to see this trend continue in 1998.
Q COULD YOU EXPLAIN HOW TECHNOLOGY IS BEING LEVERAGED IN FINANCIAL SERVICES?
A Banks are finding that expanding technology in their back offices increases
economies of scale, making it more economically rational to have larger
operations. On the front office side, investments in national ATM networks,
phone banks and Internet operations allow a rising number of services to be
delivered to customers 24 hours a day, at a significantly lower cost than
through the traditional branch network. As technology investments rise, larger
companies finance costs through their greater revenue base, an advantage smaller
competitors do not have.
Q DO YOU ANTICIPATE INCREASING THE FUND'S ASIA POSITION IN 1998?
A We expect there may be two big calls to make in Asian financial stock
selection during 1998. The first question is what to do with stocks of the two
large UK-based banks with substantial Asian operations. The Fund owns shares in
one of these; HSBC (Hong Kong Shanghai Bank)--the MSCI Banking Index held about
5% in HSBC at October 31, 1997, while the Fund owned 1.69%. Although share
prices of both companies have suffered during the recent Asian meltdown, we feel
they stand to gain market share as scores of local banks continue to encounter
problems and may be forced to shut down. These banks can also generate revenue
from foreign exchange volatility, so that even in these uncertain times,
earnings may actually be relatively well supported. We will be watching
developments closely.
The second call is on Japan. Although the Fund has done relatively well by
significantly underweighting Japan over the last three years, Japanese financial
companies may at last be starting to look more attractive. With Japanese bank
shares down almost 70% from their peak earlier in the 1990s, we feel potential
value might materialize soon. Japanese banks are also finally beginning to take
some decisive measures to engineer recovery. They are cleaning up their balance
sheets and selling off assets, and several of the weaker players are being
closed down. However, while some of the steps necessary to stimulate growth are
being taken, we are content to wait and see for the time being.
Q WHAT ARE YOUR EXPECTATIONS FOR 1998?
A Banking and insurance stocks are currently in a wonderful sweet spot. Asset
quality is fairly sound, and expectations are for continued deflation and
relative stability in interest rates around the world. In the U.S., we believe
consumers are likely to reap benefits from the southeast Asian currency
implosion through cheaper goods. Additionally, because of lower inflationary
expectations, we think the Fed is less likely to raise interest rates, which is
positive for banks and insurance companies as they tend to trade in line with
bond markets.
If interest rates are not volatile, banks can concentrate on running their
businesses better and building national branch or product distribution systems.
They also have fewer worries about huge charge-offs from their loan books and
real estate becoming a bad asset class. In this type of environment, there is
great potential for continued stable increases in earnings. Stable earnings, in
turn, are generally rewarded by the stock market, which pays higher multiples
for these companies-a very nice trend, indeed.
GT GLOBAL FINANCIAL SERVICES FUND
ALLOCATION OF NET ASSETS %
1997 1996
OCTOBER 31 OCTOBER 31
BANKS - REGIONAL 50.6 37.7
BANKS - MONEY CENTER 18.4 17.2
INSURANCE - MULTI-LINE 10.9 2.2
CONSUMER FINANCE 5.8 9.6
OTHER FINANCIAL 4.1 6.3
SECURITIES BROKER 2.8 7.0
INVESTMENT MANAGEMENT 2.4 5.8
REAL ESTATE N/A 2.4
SHORT-TERM & OTHER 5.0 11.8
10
<PAGE>
GT GLOBAL FINANCIAL SERVICES FUND
GEOGRAPHIC ALLOCATION OF NET ASSETS
[CHART]
LATIN AMERICA 2.50%
AFRICA & MIDDLE EAST 6.30%
ASIA-PACIFIC 10.20%
EUROPE 30.10%
U.S., CANADA & OTHER 50.90%
Allocations may change based on current market conditions. A complete listing
may be found in the Financial Statements section of this report.
GT GLOBAL FINANCIAL SERVICES FUND
KEY PORTFOLIO HOLDINGS(7)
BANKAMERICA CORP. Provides diverse financial products and services to
individuals, businesses, government agencies and financial institutions in 36
countries. In the U.S., the company's banking subsidiaries operate over 2,000
offices throughout the western United States.
CONSECO, INC. A financial services company that, through its subsidiaries,
provides supplemental health insurance, retirement annuities and universal life
insurance.
CITICORP The parent of Citibank, Citicorp offers a broad range of financial
services, with over 3,200 locations in 98 countries and territories.
Chase Manhattan Corp. A bank holding company that provides domestic and
international financial services such as corporate finance, wholesale banking
and investment services. Chase emphasizes originations, underwriting, risk
management products and private banking.
SPARBANKEN SVERIGE AB Sparbanken is the central banking institution for the
Swedish savings bank system. The bank's 607 branches are organized into 130
local savings bank units that provide banking services, including savings,
loans, credit and debit services.
CITY NATIONAL CORP. A holding company for City National Bank, the company
operates approximately 33 branches throughout southern California.
MERITA LTD. A financial services group providing commercial banking services,
equity investment, insurance, real estate brokerage, corporate restructuring and
other financial services. Merita operates in Finland and in 14 countries abroad.
LLOYDS TSB GROUP PLC Through its subsidiaries and associated companies, the
firm provides retail banking services through over 2,000 branches in the UK, as
well as international banking, corporate banking and other services from 500
offices in 40 countries.
FREMONT GENERAL CORP. Provides insurance and financial services, including
commercial and residential real estate, and commercial and premium financing.
ROYAL BANK OF CANADA Provides financial products and services to nearly 1,600
branches and 10 million consumer and business customers in 35 countries.
% of
Country Net Assets
U.S. 3.8
U.S. 2.8
U.S. 2.3
U.S. 2.1
Sweden 1.9
U.S. 1.9
Finland 1.8
UK 1.8
U.S. 1.7
Canada 1.7
Source: Bloomberg, November 1997.
(7) There is no assurance the Fund will continue to hold these or any other
securities mentioned in this report.
11
<PAGE>
[PHOTO]
INVESTMENT OBJECTIVE
AND CURRENT STRATEGY
The Fund seeks long-term capital appreciation by investing primarily in equity
securities of health care companies, including those specializing in
pharmaceuticals, biotechnology, medical devices and supplies, and health care
services. The Fund's strategy is to invest in the securities of a variety of
health care companies worldwide that we believe will benefit from economic,
political and regulatory developments.
GT GLOBAL HEALTH CARE FUND
PERFORMANCE SUMMARY
[GRAPH]
CLASS A SHARES
GT GLOBAL HEALTH MSCI HEALTH & PERSONAL
CARE FUND CARE INDEX MSCI WORLD INDEX
8/7/89 9525 10000 10000
9608 9856 10034
9650 10136 10347
9858 9800 10050
10200 10193 10365
10368 10522 10564
9900 10032 10219
9908 9604 9696
10184 9025 9513
10184 8897 9668
11286 9835 10734
11587 9767 11097
11612 9858 11452
10844 8937 10502
10409 7996 9870
10718 8744 10758
11445 8602 11139
11729 8784 11243
12509 9107 11550
13546 9951 12607
14326 9660 12807
14034 9737 12852
14737 9959 13214
14051 9346 12603
15045 9789 13522
15422 9759 13790
15576 10017 13950
16527 10181 14712
15902 9739 14453
18518 10450 16468
18276 10258 15572
17517 10083 15263
16344 9610 14554
15317 9745 14471
15679 10135 15087
15066 9797 14553
15679 9824 15213
15291 10065 15276
14946 9974 14813
15058 9706 14685
16007 9881 14847
16016 9963 14649
15446 9998 13688
13444 10237 13239
13634 10832 13387
13720 11336 13991
14540 11599 14405
6/30/93 14583 11504 13779
14195 11743 13123
14298 12283 13819
14868 12058 13950
15412 12392 14359
15567 11693 14161
16433 12267 14628
17550 13078 15124
16849 12911 14542
15749 12357 13906
15714 12741 14245
15654 12776 14437
14814 12743 14446
15437 12987 14429
17030 13381 15598
17022 13031 15579
16970 13404 16022
16554 12825 16077
16481 12952 16425
17012 12760 16837
17338 12949 17335
17897 13575 18319
17450 14051 18973
17385 14174 19209
17664 14172 19974
18773 14884 20632
19127 14555 20275
20049 14982 21750
20329 14749 22406
21409 15264 23270
22573 15713 24437
23729 16000 25028
24429 16100 25041
24906 16371 25446
25097 16759 25234
25521 16777 25687
24323 16865 26469
22106 16272 25841
23920 16462 26595
25691 17109 28206
25034 17232 28849
25193 18201 30693
27954 17912 30040
28895 18131 32204
29091 18343 32677
25645 17983 31951
24256 18574 34156
28539 19724 35821
28861 20711 39168
29343 21668 40091
29722 20221 36403
32881 21323 39036
10/31/97 32134 20204 39134
CLASS B SHARES
4/1/93 10000 10000 10000
10199 10377 10573
10802 10618 10886
10827 10531 10413
10532 10750 9917
10603 11244 10443
11020 11038 10542
11418 11344 10851
11520 10704 10702
12160 11230 11054
12983 11972 11430
12456 11819 10990
11640 11312 10509
11608 11663 10765
11563 11695 10910
10939 11665 10917
11389 11889 10904
12559 12249 11787
12552 11929 11773
12507 12271 12108
12199 11741 12150
12138 11857 12412
12525 11681 12724
12760 11853 13100
13169 12427 13843
12830 12863 14338
12781 12975 14516
6/30/95 12982 12974 15094
13785 13625 15592
14041 13324 15322
14712 13715 16436
14906 13502 16932
15694 13973 17585
16537 14384 18467
17381 14647 18913
17887 14739 18923
18234 14987 19230
18368 15342 19070
18668 15358 19412
17784 15438 20002
16158 14895 19528
17476 15069 20098
18763 15662 21316
18273 15774 21802
18384 16661 23195
20390 16397 22702
21067 16598 24337
21204 16791 24694
18687 16462 24145
17668 17003 25811
20776 18056 27070
21007 18959 29599
21341 19835 30297
21615 18511 27510
23892 19520 29500
10/31/97 23144 18495 29574
The charts above show the performance of the GT Global Health Care Fund Class A
and Class B shares since inception, versus the MSCI World Index and the MSCI
Health and Personal Care Index. The top chart assumes a hypothetical $10,000
initial investment in 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), assuming a 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 $18,705 on October 31, 1997.
AVERAGE ANNUAL TOTAL RETURNS %(1)
OCTOBER 31, 1997
Share Class Without Sales Charge(2) With Sales Charge
1-Year 5-Year Life of Fund 1-Year 5-Year Life of Fund
Class A(3) 28.36 16.37 15.92 22.27 15.24 15.23
Class B(3) 27.75 N/A 20.32 22.75 N/A 20.09
Advisor Class(4) 29.00 N/A 29.54 N/A N/A N/A
HISTORICAL PERFORMANCE %(2)
Annual Total Returns (Per Calendar Year)
1989 1990 1991 1992 1993 1994 1995 1996
Class A 8.85(3) 13.14 57.88 -13.51 2.61 0.29 36.96 23.84
Class B N/A N/A N/A N/A 21.60(3) -0.19 36.24 23.30
(1) Figures assume reinvestment of all dividends and capital gains distributions
at net asset value.
(2) Performance data do not reflect the maximum 4.75% sales charge or the
contingent deferred sales charge for Class A and Class B shares,
respectively, which, if included, would have reduced performance quoted.
(3) The Fund began operations on August 7, 1989; Class B shares commenced on
April 1, 1993.
(4) The Fund began offering Advisor Class shares on June 1, 1995. Advisor Class
shares are not sold directly to the general public and are only available
through certain employee benefit plans, financial institutions and other
entities that have entered into specific agreements with GT Global. Please
see the "Alternative Purchase Plan" section in the Fund's prospectus.
The above data represent past performance of the Fund's shares, which does not
guarantee future results. The investment return and principal value of an
investment in the Fund will fluctuate, so that an investor's shares, when
redeemed, may be worth more or less than their original cost.
12
<PAGE>
GT GLOBAL HEALTH CARE FUND
INTERVIEW WITH PORTFOLIO MANAGER
MIKE YELLEN
Q HOW HAS THE FUND PERFORMED?
A The Fund enjoyed a dramatic reversal in performance over the second half of
the period. While we reported a total return of -3.11% for Class A shares
(-7.71% including the maximum 4.75% sales charge) for the six-month period to
the end of April. Over the second six months the Fund's Class A shares
returned 32.48%, bringing the total return over the 12 months to October 31,
1997, to 28.36% (22.27% including the maximum 4.75% sales charge), and 27.75%
for Class B shares (22.75% including the maximum 5% contingent deferred sales
charge). For the same time frame, the Morgan Stanley Capital International
(MSCI) World Index(5) and the MSCI Health and Personal Care Index(6) returned
17.25% and 35.65%, respectively. Relative to our peer group, the GT Global
Health Care Fund (Class A shares) placed 5th out of 14 among health care
funds over the one-year period to October 31, 1997, as ranked by Micropal.(7)
Because the MSCI Health and Personal Care Index is market-cap weighted, it is
heavily concentrated in large cap stocks and consists primarily of
pharmaceutical companies and some large consumer product companies. Its
composition is very different from that of the Fund over the period, which was
concentrated in small and mid cap stocks. The relative outperformance of the
index is mainly a result of the phenomenal rally in larger cap pharmaceuticals
during the year.
Q WHY DID PERFORMANCE IMPROVE SO MUCH IN THE SECOND HALF OF THE PERIOD?
A In the first half of the year, the Fund's underperformance was primarily a
result of its underweighting in large cap health care companies. During that
time, significant divergence existed between the performance of large, blue-chip
stocks and the small to mid cap universe. Large cap stocks performed well
because of the premium investors placed on liquidity and Safety of earnings.
Meanwhile, many small cap stock prices fell anywhere from 30%-75%. Often this
was without any fundamental change in outlook for their businesses, but simply
because market sentiment toward these types of stocks had soured.
This phenomenon reversed to some extent in August and September. While large cap
stocks continued to do well, small and mid cap companies rallied, and the Fund's
performance strengthened accordingly.
Q WHY DO YOU LIKE SMALLER CAP STOCKS?
A For some time we have believed that large cap health care issues are far
less attractively valued than their small cap counterparts. In fact, we took the
opportunity to increase our exposure to small cap stocks during their selloff,
believing many investment opportunities were created in select, smaller cap
companies.
We continue to feel that most of these companies could see (and, in many cases,
have already seen) their stock prices rebound considerably as they continue to
generate revenue and profit growth. In emerging biotechnology and medical
technology, prices of many stocks bounced back as companies continued to
demonstrate progress toward bringing their products to market, and investors
began to appreciate their potential value.
Q COULD YOU EXPLAIN WHY THE FUND HOLDS VIRTUALLY NOTHING OUTSIDE THE U.S.?
A In general, we see few opportunities more attractive than what we're
currently finding here in the U.S. Outside the U.S., opportunities are limited
to large drug companies which, similar to their U.S. counterparts, have
performed well for several years and are highly valued. These companies are
actually more expensive than U.S. companies that, in many cases, have even
stronger growth prospects. Therefore, companies with the strongest growth
prospects and
CONTINUED P14
(5) The MSCI World Index is a market value-weighted average of the performance
of 1,568 securities listed on major world stock exchanges- the U.S., Europe,
Canada, Australia, New Zealand and the Far East. It includes the effect of
reinvested dividends and is measured in U.S. dollars.
(6) The MSCI Health and Personal Care Index is a market value-weighted average
of the performance of 54 securities listed on major world stock exchanges.
Index returns are given without dividends before December 1993 and with
dividends after December 1994.
(7) Based on total returns, the Fund's Class A shares ranked 10 out of 13 funds
for the five-year period ended October 31, 1997. Micropal rankings do not
include sales charges. Different classes of shares are offered and their
performance will vary. Past performance is no guarantee of future results.
Micropal is a nationally recognized mutual fund research organization.
Indices are unmanaged, not available for direct investment and do not incur
sales charges and professional management fees.
13
<PAGE>
INTERVIEW WITH THE PORTFOLIO MANAGER CONTINUED
best values, in our opinion, are still found primarily in the U.S.
Furthermore, the U.S. marketplace, which has a larger market capitalization than
all of Europe combined, remains the most important market for drug companies. In
terms of fundamentals, the U.S. market has been very strong for some time, with
relatively little pressure on pricing and impressive unit consumption growth.
Foreign market fundamentals, on the other hand, have not been as sound,
primarily because governments have more control over pricing. Consequently,
European market growth for pharmaceuticals has been in the low single digits,
and even worse in Japan where price cuts have been instituted every year.
Q GIVEN THAT U.S. VALUES HAVE RISEN CONSIDERABLY OVER THE LAST SEVERAL YEARS,
DOES THE INDUSTRY HAVE FURTHER TO GO?
A We continue to find the industry as a whole very attractive, primarily
because fundamentals remain solid. In U.S. pharmaceuticals, for example, the
lack of any real pricing pressure coming from managed care has been a big
positive. Similarly, threats of political reform, a major concern several years
ago, have mostly gone by the wayside. In addition, we've seen a strong product
cycle with many high-profile drugs coming to market. The concerns people had
about the industry several years ago, which caused valuations to decline, have
never materialized. Instead, many new products have created stronger-than-
expected revenues and profits growth, and prices have risen.
As we mentioned earlier, a sharp distinction has existed between the performance
of index stocks (large cap pharmaceuticals), which have done so well, and small
cap stocks. Thus, with respect to small cap stocks, in particular, we are still
finding many good, solidly positioned companies in the U.S. We believe U.S.
fundamentals are intact, and earnings growth prospects in many cases are higher
than their large cap counterparts.
Q PLEASE DESCRIBE YOUR INVESTMENT STRATEGY.
A Nothing has changed in the overall strategy or investment process of the
Fund. Our approach includes extensive fundamental analysis, a determined focus
on value and a very disciplined buy and sell process. Extensive fundamental
analysis remains the key to providing strong Fund performance.
Chancellor LGT Asset Management is one of the largest institutional health care
investors in the U.S., with approximately $1 billion in dedicated health care
funds under management as of October 31, 1997. This position provides us not
only with excellent support from top analysts and brokerage firms on Wall Street
and around the world, but also with direct access to the management teams of
companies we invest in. We believe these essential resources add significant
value for our shareholders.
Regarding overall portfolio structure, the Fund continues to be diversified
across all sectors of the industry. However, we still maintain a general bias
toward product companies-drug, biotech and medical device-as opposed to more
commodity-oriented or medical services companies, which have few proprietary
characteristics. Generally, the more proprietary the product, the more
positively disposed we are toward a company. We believe these types of companies
offer the most attractive long-term returns to shareholders based on, among
other factors, high barriers to entry and high profitability.
Q WHAT FACTORS UNDERPIN YOUR OPTIMISM FOR THIS INDUSTRY OVER THE LONGER TERM?
A Again, while share prices of medical product companies can be quite
volatile, fundamentals for many of these companies continue to be quite strong.
Aging demographics in developed countries, combined with rising living standards
in emerging economies, suggest increased demand for health care products over
coming years.
Meanwhile, we expect advances in medical science will continue to create
entirely new markets as treatments are discovered for inadequately treated
diseases. People will continue to demand products and services that provide the
best clinical results. Despite attempts at cost containment from governments and
insurers, we believe such products should continue to result in excellent profit
margins for the industry.
Finally, we foresee an increased focus on cost containment acting as an
incentive to a number of mergers and acquisitions among health care companies.
These activities have already proven beneficial to shareholders, a trend we
fully expect to continue.
14
<PAGE>
GT GLOBAL HEALTH CARE FUND
[CHART]
GEOGRAPHIC ALLOCATION OF NET ASSETS
Asia-Pacific/Europe 2.80%
North America & Other 97.20%
GT GLOBAL HEALTH CARE FUND
ALLOCATION OF NET ASSETS %
1997 1996
OCTOBER 31 OCTOBER 31
MEDICAL TECHNOLOGY
& SUPPLIES 37.8 22.3
BIOTECHNOLOGY 26.6 30.7
PHARMACEUTICALS 17.7 25.4
HEALTH CARE SERVICES 5.2 8.2
SHORT-TERM & OTHER 12.7 13.4
Allocations may change based on current market conditions. A complete listing
may be found in the Financial Statements section of this report.
GT GLOBAL HEALTH CARE FUND
KEY PORTFOLIO HOLDINGS(8)
PROTEIN DESIGN LABS, INC. Protein Design is a late-stage biotechnology company,
best known for its Zenapax drug, developed for patients undergoing organ
transplants.
ATL ULTRASOUND, INC. A leading maker of ultrasound machines.
AMGEN, INC. One of the largest and most profitable biotechnology companies,
Amgen's growth has been driven by its two flagship products: Epogen, which
stimulates production of red blood cells (used by kidney dialysis patients); and
Neupogen, a white blood cell stimulant (used for chemotherapy patients).
VISX, INC. Develops and manufactures excimer laser systems designed to
recontour the front surface of the cornea of the human eye to reduce or
eliminate dependence on corrective lenses. These systems are designed to treat
refractive disorders such as myopia, astigmatism and hyperopia with a procedure
known as photorefractive keratectomy.
THERATECH, INC. TheraTech develops advanced, controlled-release drug delivery
products. The company is most widely recognized as producer of the testosterone
patch and currently has over 20 products in development that span a wide variety
of delivery technologies and therapeutic areas.
GUILFORD PHARMACEUTICALS, INC. Guilford researches, develops and commercializes
drugs for the treatment of cancer and other diseases. The company also
manufactures therapeutic and diagnostic products for neurological disease and
conditions.
VENCOR, INC. Provides long-term hospital care to chronically ill patients
primarily dependent on technology for continued life support. Vencor owns and
operates a national network of hospitals, nursing centers and contract service
providers in 46 states.
CELL THERAPEUTICS, INC. Discovers, develops and commercializes small-molecule
drugs that modulate the production of cell membrane lipids called phosphatidic
acids for the treatment of cancer and immune and inflammatory diseases.
ENDOSONICS CORP. The company develops, manufactures and markets intravascular,
ultrasound imaging systems and catheters to assist in the diagnosis and
treatment of cardiovascular and peripheral vascular disease.
PHYSIO-CONTROL INTERNATIONAL CORP. Manufactures, markets and services a line of
non-invasive emergency cardiac defibrillator and vital-sign assessment devices,
disposable electrodes and data management software.
% of
Country Net Assets
U.S. 8.1
U.S 5.2
U.S. 4.2
U.S. 4.2
U.S. 3.6
U.S. 3.5
U.S. 3.5
U.S. 2.9
U.S. 2.8
U.S. 2.7
Source: Bloomberg, November, 1997.
(8) There is no assurance the Fund will continue to hold these or any other
securities mentioned in this report.
15
<PAGE>
[PHOTO]
INVESTMENT OBJECTIVE
AND CURRENT STRATEGY
The Fund seeks long-term growth of capital primarily by investing in equity
securities of companies in established and emerging economies throughout the
world that design, develop or provide products and services necessary for
creating and maintaining a country's infrastructure.
GT GLOBAL INFRASTRUCTURE FUND
PERFORMANCE SUMMARY
[BELOW IS EDGAR REPRESENTATION OF PLOT POINTS USED IN TYPESET GRAPH]
CLASS A SHARES GT GLOBAL
INFRASTRUCTURE FUND MSCI WORLD INDEX
5/31/94 9525 10000
9567 9974
9992 10165
10400 10473
10325 10200
10392 10492
10042 10039
9817 10138
9567 9987
9308 10135
9133 10626
9625 10998
10000 11094
10292 11093
10750 11650
10583 11393
10600 11727
10092 11544
10267 11947
10417 12299
1/31/96 10725 12524
10833 12602
10942 12814
11742 13118
12033 13131
12183 13200
11650 12736
11917 12885
12167 13392
12008 13488
12475 14246
12767 14020
13248 14192
13064 14357
12854 14076
12732 14538
13335 15438
13790 16211
14639 16960
13729 15828
14438 16690
10/31/97 13134 15814
CLASS B SHARES
5/31/94 9525 10000
9567 9974
9992 10165
10400 10473
10325 10200
10392 10492
10042 10039
9817 10138
9567 9987
9308 10135
9133 10626
9625 10998
10000 11094
10292 11093
10750 11650
10583 11393
10600 11727
10092 11544
10267 11947
10417 12299
1/31/96 10725 12524
10833 12602
10942 12814
11742 13118
12033 13131
12183 13200
11650 12736
11917 12885
12167 13392
12008 13488
12475 14246
12767 14020
13248 14192
13064 14357
12854 14076
12732 14538
13335 15438
13790 16211
14639 16960
13729 15828
14438 16690
10/31/97 13259 15814
The charts above show performance of the GT Global Infrastructure Fund Class A
and Class B shares since inception, versus the MSCI World Index. The top chart
assumes a hypothetical $10,000 initial investment in 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), assuming a
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 $13,322 on
October 31, 1997.
AVERAGE ANNUAL TOTAL RETURNS %(1)
October 31, 1997
Share Class Without Sales Charge(2) With Sales Charge
1-YEAR LIFE OF FUND 1-YEAR LIFE OF FUND
Class A(3) 9.38 9.85 4.18 8.30
Class B(3) 8.83 9.31 3.83 8.60
Advisor Class(4) 10.10 12.59 N/A N/A
(1) Figures assume reinvestment of all dividends and capital gains distributions
at net asset value.
(2) Performance data do not reflect the maximum 4.75% sales charge or the
contingent deferred sales charge for Class A and Class B shares,
respectively, which, if included, would have reduced quoted performance.
(3) The Fund began operations on May 31, 1994.
(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.
From time to time, the Fund's Investment advisor may waive some fees and/or
reimburse some expenses, without which performance would be lower. Waiver and
reimbursements are subject to change.
16
<PAGE>
GT GLOBAL INFRASTRUCTURE FUND
INTERVIEW WITH THE PORTFOLIO MANAGER
BRIAN NELSON
Q HOW DID THE FUND PERFORM?
A For the 12 months ended October 31, 1997, the Fund's total return was 9.38%
for Class A shares (4.18% including the maximum 4.75% sales charge) and 8.83%
for Class B shares (3.83% including the maximum 5% contingent deferred sales
charge). Over the same investment period, the Morgan Stanley Capital
International (MSCI) World Index5 returned a total of 17.25%. The index is
designed to represent the performance of all markets, however, and does not
reflect the Fund's concentration in infrastructure industries.
Q WHAT FACTORS CONTRIBUTED TO THE FUND'S PERFORMANCE OVER THE PAST YEAR?
A In North America, continued high GDP growth, combined with a favorable
inflationary environment, provided a supportive economic setting for strong
gains in equity markets. Holdings in companies such as Canadian National
Railway, Giant Cement and Caterpillar in the U.S. performed well against this
backdrop. Similarly, improving economic recovery in Europe fueled strong gains
in many of those markets, with Spanish and Italian utilities among the best
performers.
Meanwhile, although exceptionally volatile, Latin America contributed positively
to Fund performance. Specifically, utilities in Brazil were excellent performers
during the first part of the year, with Cemig and Light ON Participation leading
the way. Most gains in Latin American securities, however, were surrendered
during the latter part of the year as the Asian currency crisis had
repercussions throughout all emerging markets. Many were driven down
significantly over the final three months of the fiscal year.
Within the Asian region, the price of the Fund's investments in Thailand,
Malaysia, Indonesia and Korea dropped severely and led to the Fund's correction
during the latter half of the year.
Q WHAT TRENDS ARE DRIVING INFRASTRUCTURE DEVELOPMENT?
A We believe governments around the world have realized that to compete
effectively in the global marketplace, their country's infrastructure needs to
be built out. Utilities, telecommunications, bridges, roads and buildings are
crucial building blocks for economic success.
Reassuringly, even throughout the Asian turmoil, many governments emphatically
recommitted to spending on internal infrastructure projects. The Chinese
government, for example, recently reiterated its commitment to building the
largest and most expensive dam in the world. Accordingly, even though short-
term growth rates are expected to slow, most notably in Asia, we continue to
believe long-term growth rates in this sector have the potential to be very
favorable.
Two related trends we are investing in are privatization and deregulation.
Privatization refers to transferring state assets to private companies to raise
capital for the country as well as increase efficiencies within that industry.
Many of these previously state-owned enterprises are often inefficiently run so
that when new operators take over, tremendous cost cutting often results, and
earnings-per-share acceleration can transpire very quickly.
Deregulation refers to an industry's transition from a highly regulated
environment to a competitive one.
CONTINUED P18
THE POWER OF PRIVATIZATION AND DEREGULATION
UK GENERATOR COMPANIES EUROPEAN ELECTRIC CO'S
1991 8.8
1992 11.3
1993 14.8
1994 16
1995 19
1996 22 9.6
GWH/EMPLOYEE
SINCE THE UK DEREGULATED ITS GENERATOR INDUSTRY FIVE YEARS AGO, EFFICIENCY HAS
INCREASED 150%. WE BELIEVE EARNINGS OF EUROPEAN ELECTRIC COMPANIES MAY WELL
ACCELERATE IN A SIMILAR MANNER.
Source: Morgan Stanley Research and Company Data.
(5) The MSCI World Index is a market value-weighted average of the performance
of 1,568 securities listed on the major world stock exchanges - the U.S.,
Europe, Canada, Australia, New Zealand and the Far East. It includes the effect
of reinvested dividends and is measured in U.S. dollars.
The index is unmanaged, not available for direct investment and does not include
the effects of sales charges and professional management fees.
17
<PAGE>
INTERVIEW WITH THE PORTFOLIO MANAGER CONTINUED
Usually as a consequence of facing new competition, after privatization the
incumbent operator is allowed to keep earnings instead of returning excess
profits to ratepayers. The combination of privatization and deregulation can be
very favorable for shareholders. Currently, we are seeing these trends most
clearly in Latin America and parts of Europe.
Q COULD YOU DESCRIBE YOUR INVESTMENT PROCESS?
A Our investment process begins with a rigorous bottom-up analysis of
companies within our universe (utilizing internally developed quantitative
modeling techniques). Our fundamental analysis focuses on companies we believe
are best positioned to capitalize on trends we have identified as the most
powerful and compelling. Further, our long-term perspective emphasizes growth
potential and consistent, predictable cash flows.
Q WHAT WAS YOUR INVESTMENT STRATEGY OVER THE PAST YEAR?
A While there have been no changes to our investment process, placing less
emphasis on emerging markets was an investment theme over the year. At the
beginning of the year, many emerging market infrastructure opportunities
appeared very attractive and constituted a relatively high weighting within the
Fund. However, because of the currency crisis in Asia, emerging market countries
are expected to slow spending on infrastructure-related projects over the short
term. Consequently, we have shifted the Fund's focus to developed markets for
the time being, specifically, Europe and North America.
Q WHAT IS YOUR OUTLOOK FOR 1998?
A For the forseeable future, we expect to continue emphasizing developed
markets as the primary area for new investments. We find Europe, in particular,
an attractive market because of what appears to be the early stages of
privatization, deregulation and restructuring of the utility industry throughout
the continent. We also believe that with little to no exposure to Asia, stable
consistent cash flows, relatively high dividend yields and attractive
valuations, the European utility industry is poised to perform well in an often
uncertain global securities market.
Although we expect to concentrate more on developed markets going forward,
several emerging market investments now appear very attractive relative to their
historical valuations. In Latin America, we believe utility industry
fundamentals remain intact and are very positive long term. Brazil, in
particular, has not wavered on its commitment to the privatization and
deregulation process. In fact, the Brazilian government recently stated it may
even accelerate its privatization program for state-owned utilities. In our
view, privatizing such previously state-owned assets could offer significant
investment opportunities if new owners begin to increase the efficiency of these
enterprises and companies begin to demonstrate acceleration in their underlying
growth rates.
Although volatility is likely to continue to characterize many Latin American
stock markets, we believe long-term opportunities in the region justify
investment in what we see as some of the best-positioned companies during this
uncertain period. We will look to expand our Latin American weighting once we
feel greater stability has returned to the markets.
On the other hand, we expect a prolonged period of uncertainty and
volatility-and therefore underperformance-for most emerging Asian markets.
Although we are seeing some apparently undervalued stocks, we do not expect to
materially increase the Fund's exposure to Asia until we are convinced the
investment environment has improved significantly, along with signs that
infrastructure-related spending is reaccelerating. Hong Kong/China has remained
one of the healthiest economies during the regional turmoil and could, in our
opinion, present some good investment opportunities as the market is sold off
with the rest of Asia.
GT GLOBAL INFRASTRUCTURE FUND
ALLOCATION OF NET ASSETS %
1997 1996
OCTOBER 31 OCTOBER 31
ENERGY 31.2 30.8
SERVICES 23.1 27.2
MATERIALS/BASIC INDUSTRY 20.8 17.2
CAPITAL GOODS 9.3 12.9
TECHNOLOGY 7.8 2.7
MULTI INDUSTRY/MISC. 4.7 1.6
SHORT-TERM & OTHER 3.1 7.6
18
<PAGE>
GT GLOBAL INFRASTRUCTURE FUND
GEOGRAPHIC ALLOCATION OF NET ASSETS
[CHART]
ASIA/PACIFIC 6.20%
MIDDLE EAST/AFRICA 9.30%
LATIN AMERICA 16.30%
EUROPE 26.00%
U.S. & CANADA 42.20%
Allocations may change based on current market conditions. A complete listing
may be found in the Financial Statements section of this report.
GT GLOBAL INFRASTRUCTURE FUND
KEY PORTFOLIO HOLDINGS(6)
GIANT CEMENT HOLDING, INC. The holding company manufactures portland and
masonry cement for the residential, commercial and infrastructure construction
markets. The company owns and operates two limestone quarries and manufacturing
facilities through its wholly owned subsidiaries, Giant Cement and Keystone
Cement.
DONCASTERS PLC Manufactures highly engineered components used primarily in the
aerospace and industrial gas and steam turbine industries.
CANADIAN NATIONAL RAILWAY CO. (CNR) CNR operates one of Canada's principal
railroads. The company, which serves all of Canada, also has rail connections to
strategic points in North America. CNR also holds real estate, develops oil and
gas holdings in western Canada, and markets consulting and technology transfers
worldwide.
HUB POWER CO. The company is involved in design, construction and finance, and
owns and operates an oil-fired power station in Pakistan.
MANNESMANN AG Manufactures plant and machinery equipment, automotive control
components and seamless and welded steel pipe. The company also provides
telecommunication services, produces tubes and pipes, and engages in trading and
other activities.
LA CEMENTOS NACIONAL, C.A. Ecuador's largest cement manufacturer, with a
greater than 60% market share. As a subsidiary of Holderbank, the Swiss cement
giant, the company boasts one of the best management teams in the region and
holds a virtual monopoly in much of its territory.
ENRON GLOBAL POWER & PIPELINES L.L.C. Owns and manages the non-United States
power plant and natural gas pipeline operations of Enron Corporation. The
company's interests consist of two power plants in the Philippines, a power
plant in Guatemala and a natural gas pipeline system in Argentina.
NORTHWEST PIPE CO. Northwest manufactures and markets welded steel pipe. The
company makes large-diameter, high-pressure steel pipe products for water
transmission, and other products. Northwest markets its products primarily in
the United States and Canada.
CATERPILLAR, INC. Caterpillar designs, manufactures and markets earthmoving,
construction and materials handling machinery. Products are sold through a
worldwide network of independent dealers.
ENDESA Endesa produces and distributes electricity.
% of
Country Net Assets
U.S. 4.4
UK 3.8
Canada 3.3
Pakistan 3.3
Germany 3.2
Ecuador 3.2
U.S. 3.2
U.S. 3.2
U.S. 3.1
Spain 3.0
Source: Bloomberg, November 1997.
(6) There is no assurance the Fund will continue to hold these or any other
securities mentioned in this report.
19
<PAGE>
[PHOTO]
INVESTMENT OBJECTIVE AND CURRENT STRATEGY
The Fund seeks long-term growth of capital by investing primarily in equity
securities of companies worldwide that own, develop or explore natural
resources, or that supply goods and services to such companies. Natural
resources companies include those that own, explore or develop ferrous and non-
ferrous metals, strategic metals and precious metals, chemicals, forestry
products, foodstuffs, refined products such as steel, and other basic
commodities. The Fund seeks to invest in companies we believe have potential
earnings growth that outpaces expectations, such as those growing their reserves
quickly by making new discoveries or increasing production.
GT GLOBAL NATURAL RESOURCES FUND
PERFORMANCE SUMMARY
[GRAPH]
CLASS A SHARES GT GLOBAL NATURAL
RESOURCES FUND MSCI WORLD INDEX
5/31/94 9525 10000
9358 9974
9658 10165
10142 10473
10475 10200
10342 10492
9783 10039
9691 10138
9098 9987
8989 10135
9023 10626
9441 10998
9566 11094
9624 11093
10142 11650
10009 11393
9917 11727
9558 11544
9950 11947
10375 12299
1/31/96 10878 12524
11658 12602
12212 12814
13235 13118
13721 13131
13034 13200
12581 12736
13587 12885
14376 13392
14627 13488
15181 14246
15271 14020
15376 14192
13577 14357
12874 14076
12370 14538
13525 15438
13630 16211
15124 16960
16105 15828
17973 16690
10/31/97 17938 15814
CLASS B SHARES
5/31/94 10000 10000
9825 9974
10131 10165
10630 10473
10971 10200
10831 10492
10245 10039
10143 10138
9512 9987
9407 10135
9433 10626
9862 10998
9994 11094
10047 11093
10581 11650
10441 11393
10345 11727
9959 11544
10371 11947
10799 12299
1/31/96 11325 12524
12132 12602
12694 12814
13755 13118
14264 13131
13536 13200
13071 12736
14106 12885
14922 13392
14876 13488
15426 14246
15510 14020
15608 14192
13782 14357
13060 14076
12544 14538
13711 15438
13809 16211
15314 16960
16303 15828
18183 16690
10/31/97 18214 15814
The charts above show the performance of the GT Global Natural Resources Fund
Class A and Class B shares, since the Fund's inception, versus the MSCI World
Index. The chart assumes a hypothetical $10,000 initial investment in 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),
assuming a 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 $18,981
on October 31, 1997.
AVERAGE ANNUAL TOTAL RETURNS %(1)
October 31, 1997
Share Class Without Sales Charge(2) With Sales Charge
1-Year Life of Fund 1-Year Life of Fund
Class A(3) 22.64 20.34 16.81 18.64
Class B(3) 21.99 19.74 16.99 19.17
Advisor Class(4) 23.23 30.33 N/A N/A
(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 or the
contingent deferred sale charge for Class A and Class B shares,
respectively, which, if included, would have reduced performance quoted.
(3) The Fund began operations on May 31, 1994.
(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.
From time to time, the Fund's investment advisor may waive some fees and/or
reimburse some expenses, without which performance would be lower. Waivers and
reimbursements are subject to change.
20
<PAGE>
GT GLOBAL NATURAL RESOURCES FUND
INTERVIEW WITH PORTFOLIO MANAGER
DEREK WEBB
Q HOW DID THE FUND PERFORM?
A We were particularly pleased with performance of the GT Global Natural
Resources Fund over the second half of the reporting period, thanks to the
turnaround in oil service stocks, which had a difficult time at the start of the
year. For the 12 months ending October 31, 1997, total return was 22.64% for
Class A shares (16.81% including the maximum 4.75% sales charge); total return
for Class B shares was 21.99% (16.99% including the maximum 5% contingent
deferred sales charge). During the same period, the Morgan Stanley Capital
International (MSCI) World Index5 returned 17.25%. Because the index is designed
to represent the performance of all markets, it does not mirror the Fund's
concentration in the natural resources industries.
Q SPECIFICALLY, WHAT HOLDINGS PERFORMED WELL?
A Cooper Cameron, EVI, Global Industries, Key Energy Group and Patterson
Energy were significant contributors. These companies performed exceptionally
well on the back of the rally in oil service stocks.
Q WHAT ACCOUNTS FOR YOUR BULLISHNESS IN OIL SERVICE STOCKS?
A The Fund's largest allocation continues to be in oil service
companies-defined as offshore oil drilling rigs, onshore drilling rigs, drilling
pipe, compressors, valves and a variety of other products and services. We hold
these types of companies because their fundamentals have actually continued to
improve. We also feel their earnings and cash flow continue to grow better than
any other sectors within the natural resources industries, based on increased
demand for equipment and decreases in supply.
The industry has been going through a substantial recovery after being in a
recession for 15 years. In 1981, expectations were that oil prices would reach
$100/barrel. At these attractive prices, companies invested significantly in new
equipment with intentions of exploring for oil. Instead, oil prices declined
dramatically as consumers learned to conserve and purchased more fuel-efficient
cars. Over the last few years, however, oil consumption has again risen
considerably and, as a result, we have witnessed a substantial increase in
demand for exploration equipment.
Increased demand has maximized capacity utilization of equipment and, with
prices rising 10% to 20% over the last year, the industry has one of the highest
degrees of pricing leverage worldwide. Yet, despite
Continued p22
GROWING RELIANCE ON NATURAL RESOURCES
[GRAPH]
COAL OIL
1971 1510 2327
1992 2301 3109
2000 2612 3549
2010 3280 4395
Millions of Tons Produced
As industrial production increases worldwide, use of natural resources such as
oil and coal are expected to increase substantially.
Source: International Energy Agency; World Energy Outlook 1996.
(5) The MSCI World Index is a market value-weighted average of the performance
of 1,568 securities listed on major world stock exchanges- the U.S.,
Europe, Canada, Australia, New Zealand and the Far East. It includes the
effect of reinvested dividends 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.
21
<PAGE>
GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
Please note:
In this annual report, page 22 features a chart on worldwide oil capacity and
rig utilization. Rig usage is indicated by a green line, and oil capacity by a
purple line. These colors, however, inadvertently were exchanged. Instead, oil
capacity should be represented by the green line and rig utilization by the
purple line. Please make note of this change as you read this report.
GT Global
WORLDWIDE OIL CAPACITY AND RIG UTILIZATION
PERCENT OF UTILIZATION
<TABLE>
<CAPTION>
Oil Rig
<S> <C> <C>
1964 0.96
0.97
0.96
0.97
1968 0.95
0.95
0.94
0.94
1972 0.94
0.94
0.93
0.86
1976 0.89
0.89
0.9
0.96
1980 0.92
0.87
0.86 0.82
0.79 0.8
1984 0.81 0.87
0.8 0.8
0.83 0.58
0.83 0.69
1988 0.87 0.69
0.9 0.8
0.93 0.83
0.79
1992 0.99 0.8
0.96 0.84
0.95 0.82
0.95 0.85
1996 0.96 0.91
0.97 0.94
1998 0.98 0.98
</TABLE>
Estimates through 1998
<PAGE>
INTERVIEW WITH THE PORTFOLIO MANAGER CONTINUED
WORLDWIDE OIL CAPACITY AND RIG UTILIZATION
PERCENT OF UTILIZATION
[BELOW IS EDGAR REPRESENTATION OF PLOT POINTS USED IN TYPESET GRAPH]
RIG OIL
1964 0.96 0.97
0.96 0.97
1968 0.95 0.95
0.94 0.94
1972 0.94 0.94
0.93 0.86
1976 0.89 0.89
0.9 0.96
1980 0.92 1
0.87 0.86
0.82 0.79
0.8
1984 0.87 0.81
0.8 0.8
0.58 0.83
0.69 0.83
1988 0.69 0.87
0.8 0.9
0.83 0.93
0.79 1
1992 0.8 0.99
0.84 0.96
0.82 0.95
0.85 0.95
1996 0.91 0.96
0.94 0.97
1998 0.98 0.98
Estimates through 1998
INCREASED DEMAND HAS MAXIMIZED CAPACITY UTILIZATION OF EQUIPMENT AND, WITH
PRICES RISING 10% TO 20% A YEAR, THE INDUSTRY HAS ONE OF THE HIGHEST DEGREES OF
PRICING LEVERAGE WORLDWIDE.
SOURCE: OIL AND GAS JOURNAL DATABASE, JANUARY 1996.
stretched equipment levels, companies are still well below reinvestment levels.
Even though rates have risen, it is still not economically feasible to build new
equipment. In our opinion, it will be a multi-year cycle but, as we've seen, the
stock prices of these companies can be very volatile. The volatility, however,
has very little to do with the actual fundamentals of these companies but,
rather, is driven primarily by Wall Street, which trades this industry off
natural gas prices.
Q WHAT DO YOU LIKE ABOUT ENERGY AND PRODUCTION COMPANIES?
A The emphasis in this area is on individual holdings. We purchase a company
when something very specific is going on such as a new discovery, cost cutting
or mispricing. Comstock Resources, a natural gas producer, is an example of the
type of company we look for. It's growing very quickly and is accomplished at
finding and acquiring natural gas.
Q COULD YOU DESCRIBE YOUR INVESTMENT STRATEGY?
A Our investment criteria for any company is very disciplined. We look for
companies growing their reserves and/or earnings quickly-faster than
expectations-and where analysts are constantly raising their forecasts for
earnings and/or reserves. Companies must also display strong fundamentals, such
as a high return on equity, low debt, and high relative strength. In addition,
we look for companies undergoing substantial restructuring and/or cost cutting.
We also adhere to a disciplined sell process. When a company comes into conflict
with one of our investment criteria, we will generally reduce our holdings.
Q WHAT IS YOUR OUTLOOK OUTSIDE THE OIL SECTOR?
A Most commodity prices are presently at depressed levels and likely to
remain so for the time being. Currently, we hold no gold, commodity chemicals or
base metals, and very little in forest products and special situations.
GT GLOBAL NATURAL RESOURCES FUND
ALLOCATION OF NET ASSETS %
1997 1996
October 31 October 31
Energy Equipment & Services 53.2 26.8
Metals - Steel 13.5 4.7
Construction 10.8 N/A
Oil 10.0 25.8
Chemicals 2.5 4.7
Paper/Packaging 2.4 N/A
Gas Production & Distribution 2.4 11.8
Industrial Components 2.2 N/A
Consumer Services 2.0 N/A
Gold N/A 12.4
Metals - Non-Ferrous N/A 2.5
Energy Sources N/A 1.9
Misc. Materials & Commodities N/A 1.6
Transportation - Shipping N/A 1.1
Miscellaneous N/A 1.1
Short-Term & Other 1.0 5.6
22
<PAGE>
GT GLOBAL NATURAL RESOURCES FUND
GEOGRAPHIC ALLOCATION OF NET ASSETS
Estimates through 1998
[CHART]
Asia/Pacific 1.80%
Europe 6.10%
Canada 16.00%
U.S. & Other 76.10%
Allocations may change based on current market conditions. A complete listing
may be found in the Financial Statements section of this report.
GT GLOBAL NATURAL RESOURCES FUND
KEY PORTFOLIO HOLDINGS(6)
NATIONAL-OILWELL, INC. The company designs, manufactures and sells machinery
and equipment, and distributes maintenance, repair and operating products used
in oil and gas drilling and production. National-Oilwell distributes its
products worldwide.
SCHLUMBERGER LTD. Offers drilling, oil well logging and
measurement-while-drilling services to the petroleum industry. It also
manufactures computer-aided design systems, electricity and gas meters, power
transmission equipment and electronic payment systems for sale worldwide.
CLIFFS DRILLING CO. An international offshore contract drilling company, Cliffs
provides daywork and turnkey drilling services, mobile offshore production units
and well engineering and management services.
EVI, INC. Manufactures engineered oilfield products, specifically, drilling
tools, premium tubulars and production equipment. EVI operates internationally.
VARCO iNTERNATIONAL, iNC. A manufacturer of products used in the oil and gas
well-drilling industry worldwide, the company also develops new technology and
equipment to enhance the safety and productivity of the drilling process.
COOPER CAMERON CORP. Cooper Cameron manufactures, markets and services
production equipment for the oil and gas industry, including pressure control
equipment. The company sells its products to oil and gas producers as well as to
transmitter companies and non-utility power generators.
GLOBAL INDUSTRIES LTD. Provides construction services, including pipeline
construction, platform installation and removal and diving services. The company
has a fleet of 35 manned vessels that service offshore oil and gas companies off
the U.S. side of the Gulf of Mexico and in select international areas.
PRECISION DRILLING CORP. The company provides contract well drilling and other
services to oil and gas industrial customers located in Alberta.
NABORS INDUSTRIES, INC. With operations in Alaska, Canada, the Middle and Far
East, the Gulf of Mexico, Central and South America and parts of Eastern Europe,
Nabors provides contract drilling of oil and gas wells on land and offshore
platforms.
PATTERSON ENERGY, INC. Provides domestic land-drilling services to major and
independent oil and natural gas companies. The company also develops, explores
for, and acquires and produces oil and natural gas.
% of
Country Net Assets
U.S. 3.2
U.S. 3.1
U.S. 3.1
U.S. 3.0
U.S. 3.0
U.S. 3.0
U.S. 2.9
Canada 2.9
U.S. 2.9
U.S. 2.8
Source: Bloomberg, November 1997.
(6) There can be no assurance the Fund will continue to hold these or any other
securities mentioned in this report.
23
<PAGE>
[PICTURE]
INVESTMENT OBJECTIVE
AND CURRENT STRATEGY
The Fund seeks long-term growth of capital by investing primarily in equity
securities of companies throughout the world engaged in the development,
manufacture or sale of telecommunications services or equipment. The Fund's
strategy is to invest in companies that, in our opinion, are fast growing and
innovative, including equipment providers, wireless services and emerging market
telecommunications companies.
GT GLOBAL TELECOMMUNICATIONS FUND
PERFORMANCE SUMMARY
- -GT Global Telecommunications Fund -MSCI Telecommunications
- -MSCI World Index -Salomon Global Telecom
CLASS A SHARES
GT World Telecom Salomon
1/27/92 9525 10000 10000 10000
9467 10054 9906 9867
9617 9882 9771 10137
9533 9418 9529 9870
9608 9551 10159 10296
9767 9933 10240 10530
9342 9602 10174 9879
9467 9628 10519 10346
9300 9864 10506 10407
9050 9775 10316 10070
9300 9512 10082 10006
9733 9684 10440 10331
9987 9764 10865 10715
10266 9799 10936 10715
10527 10033 11412 11038
10696 10616 11775 12082
10865 11110 11559 12100
11355 11368 12037 12549
11827 11275 12305 12584
12258 11509 12425 12904
13364 12038 13153 13806
13583 11818 12945 13581
14284 12145 13511 14252
13549 11460 12800 13436
14746 12023 13032 14315
15399 12818 13624 15453
14944 12654 12736 14620
14025 12111 12353 13826
14257 12487 12774 13962
14179 12521 12865 13898
13819 12489 12823 13770
14480 12728 13225 14330
15253 13114 13661 15094
14892 12772 13288 14658
10/31/94 15287 13137 13601 14840
14617 12570 12693 13874
14097 12694 12682 13618
13400 12506 12991 13376
13129 12690 13007 12909
13074 13305 13287 13509
13572 13771 13484 13863
13789 13891 13716 13890
14594 13890 13970 14126
15653 14588 14330 14681
15997 14265 14685 14901
16024 14684 15591 15306
14848 14455 15439 14817
15291 14960 15571 15051
15307 15400 16091 15386
16011 15681 16405 15717
16173 15780 16304 15593
16202 16045 16098 15565
17601 16425 16651 16183
18115 16442 16513 16141
17449 16528 16508 16259
15173 15947 15437 15447
16268 16134 15550 15759
16497 16768 15770 15958
15887 16888 16121 16137
16411 17838 17036 16990
16108 17555 17460 17544
17031 17770 17672 18032
15953 17977 17901 18255
15538 17625 17379 18139
15601 18204 17610 18494
17041 19331 18729 20033
18285 20298 19558 20942
20348 21236 19948 21309
19011 19818 18733 19796
20877 20898 20038 21124
10/31/97 18700 19801 19782 20142
CLASS B SHARES
- -GT Global Telecommunications Fund -MSCI Telecommunications
- -MSCI World Index -Salomon Global Telecom
4/1/93 10000 10000 10000 10000
10150 10377 9801 9839
10599 10618 10207 10204
11041 10531 10434 10232
11435 10750 10536 10492
12461 11244 11153 11226
12658 11038 10976 11043
13304 11344 11457 11588
12618 10704 10854 10925
13720 11230 11050 11640
14322 11972 11552 12565
13897 11819 10799 11888
13038 11312 10475 11243
13247 11663 10831 11353
13167 11695 10909 11301
12830 11665 10873 11197
13432 11889 11214 11652
14154 12249 11583 12273
13801 11929 11267 11919
14170 12271 11533 12066
13544 11741 10763 11281
13049 11857 10754 11073
12406 11681 11016 10876
12144 11853 11029 10497
12093 12427 11267 10985
12550 12863 11434 11273
5/31/95 12744 12975 11631 11294
13489 12974 11846 11486
14453 13625 12151 11937
14766 13324 12452 12116
14782 13715 13220 12446
13692 13502 13091 12048
14097 13973 13203 12238
14104 14384 13644 12511
14745 14647 13911 12780
14887 14739 13825 12679
14905 14987 13650 12656
16187 15342 14119 13159
16650 15358 14002 13124
16036 15438 13997 13220
13934 14895 13089 12561
14940 15069 13185 12814
15136 15662 13372 12976
14575 15774 13669 13121
15056 16661 14446 13815
14764 16397 14805 14266
15609 16598 14984 14662
14608 16791 15179 14844
14220 16462 14736 14749
14278 17003 14932 15038
15589 18056 15881 16289
16716 18959 16584 17029
18601 19835 16915 17327
17367 18511 15884 16097
19067 19520 16991 17177
10/31/97 16876 18495 16774 16378
The charts above show the performance of the GT Global Telecommunications Fund
Class A and Class B shares since inception, versus its various indices. The
chart assumes a hypothetical $10,000 initial investment in 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), assuming
a 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 $13,730 on
October 31, 1997.
AVERAGE ANNUAL TOTAL RETURNS %(1)
OCTOBER 31, 1997
<TABLE>
<CAPTION>
SHARE CLASS WITHOUT SALES CHARGE(2) WITH SALES CHARGE
1-YEAR 5-YEAR LIFE OF FUND 1-YEAR 5-YEAR LIFE OF FUND
<S> <C> <C> <C> <C> <C> <C>
Class A(3) 17.70 14.99 12.43 12.11 13.88 11.48
Class B(3) 17.15 N/A 12.38 12.15 N/A 12.09
Advisor Class(4) 18.33 N/A 14.00 N/A N/A N/A
<CAPTION>
HISTORICAL PERFORMANCE(2)
ANNUAL TOTAL RETURNS % (PER CALENDAR YEAR)
1992 1993 1994 1995 1996
<S> <C> <C> <C> <C> <C>
Class A 4.85(3) 47.65 -4.40 8.58 5.24
Class B N/A 37.20(3) -4.89 8.08 4.68
</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 for Class A and Class B shares,
respectively, which, if included, would have reduced performance quoted.
(3) The Fund began operations on January 27, 1992; Class B shares commenced on
April 1, 1993.
(4) The Fund began offering Advisor Class shares on June 1, 1995. Advisor Class
shares are not sold directly to the general public and are only available
through certain employee benefit plans, financial institutions and other
entities that have entered into specific agreements with GT Global. Please
see the "Alternative Purchase Plan" section in the Fund's prospectus.
The above data represent past performance of the Fund's shares, which does not
guarantee future results. The investment return and principal value of an
investment in the Fund will fluctuate, so that an investor's shares, when
redeemed, may be worth more or less than their original cost.
24
<PAGE>
GT GLOBAL TELECOMMUNICATIONS FUND
INTERVIEW WITH PORTFOLIO MANAGER
MICHAEL MAHONEY
Q HOW DID THE FUND PERFORM?
A The period was marked by the long-awaited beginning of open competition
following passage of the U.S. Telecommunications Deregulation Act of 1996. As a
result, industry-wide consolidation and increased equipment spending buoyed Fund
returns. For the 12 months ended October 31, 1997, the Fund's total returns were
17.70% for Class A shares (12.11% including the maximum 4.75% sales charge) and
17.15% for Class B shares (12.15% including the maximum 5% contingent deferred
sales charge).
Total return over the same investment period was 22.71% for the MSCI
Telecommunications Index(5) and 17.25% for the MSCI World Index.(6) The more
comprehensive Salomon Brothers Global Telecommunications Index,(7) which has a
component of emerging market stocks, returned 24.82% over the period.
Q WHAT FACTORS CONTRIBUTED TO FUND PERFORMANCE OVER THE YEAR?
A In the U.S., equipment stocks, several service stocks, such as Nextel in
the wireless area, and a number of competitive local exchange carriers (CLECs),
which had impressive runs in August thanks to merger and acquisition activity,
contributed significantly to Fund returns. Meanwhile, the telecommunications
sector in southern Europe enjoyed solid gains, particularly Telecom Italia.
Additionally, emerging markets performed very well over the first two quarters
of the year, though some of that was reversed in the third quarter.
Q TO WHAT EXTENT WAS THE FUND IMPACTED BY VOLATILITY IN EMERGING MARKETS?
A Because of our relative underweighting in Asian markets all year, we
managed to avoid most of the major problems caused by the fourth-quarter
slowdown in the region. The Fund's two most significant emerging market holdings
are in Russia and Brazil-two markets we feel have been inappropriately and
temporarily tarred with the same brush. Telebras in Brazil, for example, has
seen its share price fall approximately 50% from its high on July 9, 1997.
However, it is still up about 25% for the year to December 10, and contributed
significantly to performance over the period.
Looking ahead, while some concerns remain that Brazil will devalue its currency,
we believe it's unlikely to happen in the near future. Over the longer term, we
also continue to be positive on Russian telecommunications stocks. Valuations of
many of these companies are very low relative to other emerging market telcos,
at roughly $400 to $500 per line, compared with anywhere between $2,000 and
$4,000 a line for most other emerging markets telcos.
Q WHAT ENCOURAGING TRENDS DO YOU SEE DRIVING THE INDUSTRY?
A Although the telecommunications industry has weathered some difficult times
over the last few years, we see signs of improvement across the industry. We
continue to find fundamentals compelling, along with new industry trends we
think bode well for the future. Over the past several months, consolidation has
been a major feature, and we expect recent merger activity here and overseas
(WorldCom-MCI, for example) to aid competition and boost valuations overall.
While plenty of things could still delay full competition, increased equipment
spending is also good news, not just for equipment stocks but for the industry
as a whole. Many analysts regard equipment spending as an important indicator of
industry tone and direction.
Since this time last year, overall equipment spending is up nearly 20%, a trend
we expect to see continue into 1998. Now that deregulation has taken place,
Continued p26
(5) The MSCI Telecommunications Index is a market value-weighted average of the
performance of 30 securities listed on 10 major stock exchanges. It
includes the effect of reinvested dividends and is measured in U.S.
dollars.
(6) The MSCI World Index is a market value-weighted average of the performance
of 1,568 securities listed on major world stock exchanges-the U.S., Europe,
Canada, Australia, New Zealand and the Far East. It includes the effect of
reinvested dividends and is measured in U.S. dollars.
(7) The Salomon Brothers Global Telecommunications Index is a market
value-weighted average of the performance of 80 securities. It consists of
telecommunications companies with total adjusted market capitalizations of
US$100 million or more, including those in emerging markets. It includes
the effect of reinvested dividends and is measured in U.S. dollars.
Indices are unmanaged, not available for direct investment and do not incur the
effects of sales charges and professional management fees.
25
<PAGE>
INTERVIEW WITH THE PORTFOLIO MANAGER CONTINUED
WORLDWIDE WIRELESS USAGE
Mexico 1.1
China 2.5
Thailand 3.5
Germany 6.2
Switzerland 8.2
Singapore 10.1
Italy 11.3
UK 11.8
New Zealand 15
U.S. 16.6
Hong Kong 20.8
Japan 21
Sweden 26.5
Norway 27.2
Finland 31.1
Penetration Rates
Some forecasters expect more than 2.5 billion wireless handsets to be used
worldwide by 2015. As a point of interest, just recently, the U.S.
cellular-phone industry got its 50 millionth customer, after only 13 years.
Today, over 30,000 people within the U.S. sign up for cellular services every
day.
Source: Morgan Stanley Dean Witter Research, March 1997.
U.S. companies are more willing to increase capital expenditures. We estimate
that the CLECs will increase expenditures by about 55% in 1998, with
long-distance carriers increasing somewhere between 20%-25%. Meanwhile, we
forecast that regional bell operating companies (RBOCs) will expand capital
spending by approximately 9%.
Q ARE THESE TRENDS ALSO TAKING HOLD IN EUROPE?
A Interestingly enough, the same dynamics are just beginning to surface in
continental Europe, which will open to competition on January 1, 1998. Many
European countries are deregulated to a certain degree, especially in data
transmission; wireless communications is somewhat deregulated, but the basic
voice market is only starting to see serious competition.
While the deregulation process is often slow, we feel it may not take as long in
Europe as it did in the U.S. because governing bodies, such as the European
Commission, have the ability to speed up the process. The European equivalent of
RBOCs, the incumbent monopolies that, unlike in the U.S., offer long-distance,
international and local voice services, have never been exposed to competition
before. As we have often said in the past, the real risks will be to existing
companies as competition heats up--the winners and losers are yet to be
determined.
Overall, we continue to find Europe an attractive and fairly stable market for
investment, with considerably more reasonable valuations than in the U.S.
Currently, we intend to concentrate on areas of Europe with unusually strong
growth prospects, such as wireless equipment makers in Scandinavia and various
wireless services companies.
In the landline sector, we have generally preferred southern Europe, based on
our belief that more opportunities exist for change. Their economies are growing
faster than other European economies, they have a somewhat greater tendency
toward regulatory reform, penetration rates are lower and valuations are
generally cheaper relative to expected growth.
Q WHAT IS YOUR OUTLOOK FOR SPECIFIC TELECOMMUNICATIONS SECTORS?
A REGIONAL BELL OPERATING COMPANIES (RBOCs)
Our current outlook for RBOCs is positive over the short term. Second-line
growth in the U.S. has been stronger than expected, and RBOC's overseas
investing, for the most part, has been successful, leading to positive earnings.
Additionally, RBOC stocks, which are generally viewed as bond proxies, have
generally done well in the current market environment as a play on interest
rates. Industry consolidation has also enabled RBOCs to benefit from cost
savings associated with restructuring.
Over the longer term, however, we are less optimistic about the RBOCs. They will
gradually face increased competition in local business markets which were their
highest profit margin customers. Moreover, we believe bottom-line profits stand
to suffer as a result of FCC-mandated changes that will substantially cut access
charges for long-distance calls. We own only
Continued p27
26
<PAGE>
INTERVIEW WITH THE PORTFOLIO MANAGER CONTINUED
GTE,(8) a company we feel is uniquely well positioned to benefit from change in
the industry.
WIRELESS SERVICES
Wireless services is a very important area for the Fund. We look for companies
with a focus to their strategy, especially those whose strategy concentrates on
the business customer. One of the Fund's largest holdings, Nextel, serves as a
good example of this type of company.
WIRELESS EQUIPMENT
We believe wireless equipment, which has been very successful for the Fund, will
continue to be among the most promising industries as a result of the new,
competitive marketplace. While all new competitors in wireless markets have to
purchase equipment, other, more established players must continue to build out
and upgrade their existing networks in order to compete. In the meantime, strong
demand across most emerging markets continues to fuel growth-China, for example,
is Nokia's largest market for handsets. On the downside, there are few companies
to invest in and, as a result, the Fund's ability to diversify within the sector
is limited.
LANDLINE EQUIPMENT
This sector encompasses many areas of technological innovation we find very
attractive. We also do not envision that these companies will be greatly
impacted by the crisis in Asia. In general, we like companies able to enhance a
network's capabilities without having to dig up miles and miles of lines. As of
October 31, the Fund's holdings include ECI Telecom, which produces equipment
that multiplies the carrying capacity of transatlantic cables, and Uniphase,
which makes lasers for the photonics used in constructing wave division
multiplexing equipment (a device that increases the bandwidth of fiber optic
cable).
LONG DISTANCE
We continue to feel somewhat cautious about this area, primarily because of
increased competition. While many companies stand to benefit from lower access
charges and lower revenues shared with overseas carriers, long-distance service
is the most deregulated area of the telecommunications marketplace and will
likely continue to face increasing competition. Because of its focus on business
customers, WorldCom is one of the few companies we find attractive in this
sector.
COMPETITIVE LOCAL EXCHANGE CARRIERS (CLECs)
The Fund has emphasized this area for some time, as consolidation has been a key
driver of returns for many such companies. Brooks Fiber(9) was an important
holding in the Fund during the review period. Their basic business is building
out fiber networks to service business customers. Fundamentally, we believe this
is a very good business with an extremely well-focused selling process and high
volumes.
After several trying years, we feel the telecommunications industry is back on
track, and are optimistic about its future. Deregulation and privatization of
government-owned telephone companies are speeding the breakdown of national
monopolies, and telecommunications companies must expand their markets.
Corporate customers are going global and want seamless, barrier-free and
inexpensive service on a worldwide basis.
We have consistently maintained our belief in the telecommunications industry's
bright prospects, and are enthusiastic about opportunities that currently exist
in the market.
GT GLOBAL TELECOMMUNICATIONS FUND
ALLOCATION OF NET ASSETS%
1997 1996
OCTOBER 31 OCTOBER 31
TELECOM EQUIPMENT 28.0 25.4
TELEPHONE NETWORKS 22.4 15.6
WIRELESS COMMUNICATIONS 17.3 20.7
TELEPHONE - LONG DISTANCE 5.7 0.9
TELEPHONE - REGIONAL/LOCAL 5.6 5.9
MULTI-INDUSTRY/MISC. 4.7 1.8
AEROSPACE/DEFENSE 2.6 2.1
TELECOM TECHNOLOGY 2.5 3.3
CABLE TELEVISION 1.6 4.4
BROADCASTING & PUBLISHING 1.4 5.0
SEMICONDUCTORS 0.8 1.6
NETWORKING 0.2 5.5
CONSUMER ELECTRONICS N/A 1.4
SHORT-TERM & OTHER 7.2 6.4
(8) GTE shares were purchased November 10, 1997. As of December 16, the Fund
held 2.5% of total net assets in GTE.
(9) Brooks Fiber has agreed to be acquired by WorldCom.
27
<PAGE>
GT GLOBAL TELECOMMUNICATIONS FUND
GEOGRAPHIC ALLOCATION OF NET ASSETS
Japan 1.80%
Asia-Pacific ex-Japan 2.20%
Middle East 5.20%
Latin America 8.60%
Europe 32.60%
North America & Other 49.60%
Allocations may change based on current market conditions. A complete listing
may be found in the Financial Statements section of this report.
GT GLOBAL TELECOMMUNICATIONS FUND
KEY PORTFOLIO HOLDINGS(10)
NOKIA AB The world's second-largest, but fastest-growing, supplier of cellular
equipment, Nokia manufactures and develops telecommunications systems and
equipment.
ECI TELECOMMUNICATIONS LTD. The worldwide leader in digital circuit
multiplication equipment (DCME) products that, when attached to various telecom
transmission cables, increase carrying capacity. ECI is also a leader in the
development of products for the SDH fiber optic environment.
NEXTEL COMMUNICATIONS, INC. The company provides such fully integrated wireless
communications services as digital voice communications with push-to-talk
instant conferencing, messaging and future data transmission capabilities in a
single handset.
NEWBRIDGE NETWORKS CORP. Manufactures time division multiplexer (TDM) products
for telecom networks and packet switching products, particularly frame relay
asynchronous transfer mode (ATM), which boosts the efficiency and capacity of
existing networks. The company controls half the world market for this
technology.
TELECOM ITALIA S.P.A. Telecom Italia is the financial parent company for
various companies operating in the field of telecommunications, manufacturing,
electronics and network construction. The company's subsidiaries are also active
in publishing, telematics information and services, and auxiliary services.
TELEBRAS Offers domestic and international telephone and data transmission
services throughout Brazil.
MANNESMANN AG A diversified industrial conglomerate involved in
telecommunications, machinery, plant construction, automotive technology, the
production of tubes and pipes, Mannesmann is the majority owner of Germany's
second-largest cellular company. The company also has investments in Italian
cellular and Spanish and French paging companies.
WORLDCOM, INC. A global business telecommunications company, WorldCom provides
facilities-based and fully integrated local, long-distance, international and
Internet services. WorldCom has operations in more than 50 countries.
L.M. ERICSSON One of the world's premier telecommunications equipment
companies. Erricson's revenues derive primarily from its fast-growing radio
communications division, with the remainder coming from its public
telecommunications and defense-related businesses. The company enjoys product
sales in over 100 countries.
SPT TELECOM The monopoly utility in the Czech Republic, SPT is managed by a
joint venture between the state telephone companies of Switzerland and the
Netherlands.
% of
Country Net Assets
Finland 5.4
Israel 4.2
U.S. 4.2
Canada 4.1
Italy 3.8
Brazil 3.7
Germany 3.5
U.S. 3.2
Sweden 3.1
Czech Rep 2.6
Source: Bloomberg, November 1997.
(10) There is no assurance the Fund will continue to hold these or any other
securities mentioned in this report.
28
<PAGE>
GT GLOBAL
THEME FUNDS
FINANCIAL
STATEMENTS
<PAGE>
GT GLOBAL THEME FUNDS
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
ANNUAL REPORT
To the Shareholders and Board of Directors of
G.T. Investment Funds, Inc.:
We have audited the accompanying statements of assets and liabilities of GT
Global Consumer Products & Services Fund - Consolidated, GT Global Financial
Services Fund - Consolidated, GT Global Health Care Fund, GT Global
Infrastructure Fund - Consolidated, GT Global Natural Resources Fund -
Consolidated, and GT Global Telecommunications Fund, six series of G.T.
Investment Funds, Inc., including the portfolios of investments, as of October
31, 1997, the related statements of operations for the year then ended, and the
related statements of changes in net assets and financial highlights for each of
the periods indicated therein. These financial statements and 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
October 31, 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
the aforementioned series of G.T. Investments Funds, Inc. as of October 31,
1997, the results of their operations, changes in their net assets and their
financial highlights for each of the periods indicated therein, in conformity
with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
DECEMBER 15, 1997
F1
<PAGE>
GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (56.3%)
CVS Corp. ................................................. US 97,900 $ 6,002,494 3.7
RETAILERS-OTHER
Airborne Freight Corp. .................................... US 80,600 5,108,025 3.1
TRANSPORTATION - AIRLINES
Brylane, Inc.-/- .......................................... US 115,000 4,995,313 3.1
RETAILERS-APPAREL
New York Times Co. "A" .................................... US 90,000 4,927,500 3.0
BROADCASTING & PUBLISHING
Jones Apparel Group, Inc.-/- .............................. US 89,200 4,538,050 2.8
RETAILERS-APPAREL
Pacific Sunwear of California-/- .......................... US 150,000 4,143,750 2.5
RETAILERS-APPAREL
Loblaw Cos., Ltd. ......................................... CAN 251,800 3,663,000 2.2
RETAILERS-FOOD
Nordstrom, Inc. ........................................... US 56,000 3,430,000 2.1
RETAILERS-APPAREL
Yogen Fruz World-Wide, Inc.-/- ............................ CAN 583,900 3,314,789 2.0
RETAILERS-FOOD
Central Newspapers, Inc. "A" .............................. US 50,000 3,284,375 2.0
BROADCASTING & PUBLISHING
Cinar Films, Inc. "B"{\/} ................................. CAN 76,000 2,954,500 1.8
LEISURE & TOURISM
Chapters, Inc.: ........................................... CAN -- -- 1.8
RETAILERS-OTHER
Common-/- ............................................... -- 83,500 1,747,978 --
Special Warrants(::) -/- ................................ -- 66,200 1,204,960 --
Sears Canada, Inc. ........................................ CAN 170,500 2,825,131 1.7
RETAILERS-OTHER
Gap, Inc. ................................................. US 50,000 2,659,375 1.6
RETAILERS-APPAREL
Outdoor Systems, Inc.-/- .................................. US 84,000 2,583,000 1.6
BUSINESS & PUBLIC SERVICES
Universal Outdoor Holdings, Inc.-/- ....................... US 60,000 2,535,000 1.6
BUSINESS & PUBLIC SERVICES
Avis Rent A Car, Inc. ..................................... US 90,000 2,469,375 1.5
TRANSPORTATION - ROAD & RAIL
Consolidated Stores Corp.-/- .............................. US 61,300 2,444,338 1.5
RETAILERS-OTHER
Family Dollar Stores, Inc. ................................ US 103,000 2,420,500 1.5
RETAILERS-APPAREL
Bed Bath & Beyond-/- ...................................... US 76,000 2,413,000 1.5
RETAILERS-OTHER
Stage Stores, Inc.-/- ..................................... US 65,000 2,372,500 1.5
RETAILERS-APPAREL
Transat A.T., Inc.-/- ..................................... CAN 270,200 2,320,054 1.4
TRANSPORTATION - AIRLINES
Dress Barn, Inc.-/- ....................................... US 90,700 2,301,513 1.4
RETAILERS-APPAREL
Abercrombie & Fitch Co.-/- ................................ US 80,000 2,080,000 1.3
RETAILERS-APPAREL
</TABLE>
The accompanying notes are an integral part of the financial statements.
F2
<PAGE>
GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (Continued)
Ames Department Stores, Inc.-/- ........................... US 132,600 $ 2,063,588 1.3
RETAILERS-OTHER
Valassis Communications, Inc.-/- .......................... US 60,000 1,770,000 1.1
BROADCASTING & PUBLISHING
Air Canada ................................................ CAN 150,000 1,495,529 0.9
TRANSPORTATION - AIRLINES
The Bombay Co., Inc. ...................................... US 244,100 1,479,856 0.9
RETAILERS-OTHER
Budget Group, Inc. "A"-/- ................................. US 41,800 1,463,000 0.9
TRANSPORTATION - ROAD & RAIL
Tuesday Morning Corp.-/- .................................. US 50,050 1,213,713 0.7
RETAILERS-APPAREL
Ryanair Holdings PLC - ADR-/- {\/} ........................ IRE 42,500 1,062,500 0.7
TRANSPORTATION - AIRLINES
Star Choice Communications, Inc.-/- ....................... CAN 293,500 916,406 0.6
BROADCASTING & PUBLISHING
Hospitality Worldwide Services-/- ......................... US 66,000 767,250 0.5
LEISURE & TOURISM
Dayton Hudson Corp. ....................................... US 10,000 628,125 0.4
RETAILERS-APPAREL
N2K, Inc.-/- .............................................. US 8,300 218,394 0.1
LEISURE & TOURISM
Hudson's Bay Co. .......................................... CAN 300 6,866 --
RETAILERS-APPAREL
------------
91,823,747
------------
Consumer Non-Durables (14.8%)
Morningstar Group, Inc.-/- ................................ US 151,200 6,463,796 4.0
FOOD
Tabacalera S.A. "A" ....................................... SPN 74,000 5,332,967 3.3
TOBACCO
Interstate Bakeries Corp. ................................. US 70,600 4,509,575 2.8
FOOD
Foodmaker, Inc.-/- ........................................ US 208,400 3,425,575 2.1
FOOD
General Cigar Holdings, Inc.-/- ........................... US 62,800 1,817,275 1.1
TOBACCO
Saputo Group, Inc.-/- ..................................... CAN 114,400 1,753,506 1.1
FOOD
American Italian Pasta Co. "A"-/- ......................... US 30,000 630,000 0.4
FOOD
------------
23,932,694
------------
Finance (6.5%)
BankAmerica Corp. ......................................... US 71,000 5,076,500 3.1
BANKS-MONEY CENTER
Merita Ltd. "A" ........................................... FIN 738,300 3,608,281 2.2
BANKS-MONEY CENTER
</TABLE>
The accompanying notes are an integral part of the financial statements.
F3
<PAGE>
GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (Continued)
O&Y Properties Corp. Special Warrants(::) -/- {::} ........ CAN 342,400 $ 1,943,798 1.2
REAL ESTATE
------------
10,628,579
------------
Technology (2.6%)
CHS Electronics, Inc.-/- .................................. US 164,500 4,019,969 2.5
COMPUTERS & PERIPHERALS
Concord Communications, Inc.-/- ........................... US 7,100 126,025 0.1
SOFTWARE
------------
4,145,994
------------
Capital Goods (1.3%)
HON INDUSTRIES, Inc. ...................................... US 40,000 2,065,000 1.3
OFFICE EQUIPMENT
------------ -----
TOTAL EQUITY INVESTMENTS (cost $124,047,571) ................ 132,596,014 81.5
------------ -----
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated October 31, 1997, with State Street Bank & Trust Co.,
due November 3, 1997, for an effective yield of 5.57%,
collateralized by $4,435,000 U.S. Treasury Bond, 8.875%
due 8/15/17 (market value of collateral is $5,818,438,
including accrued interest).
(cost $5,697,881) ....................................... 5,697,881 3.5
------------ -----
TOTAL INVESTMENTS (cost $129,745,452) * .................... 138,293,895 85.0
Other Assets and Liabilities ................................ 24,368,418 15.0
------------ -----
NET ASSETS .................................................. $162,662,313 100.0
------------ -----
------------ -----
</TABLE>
- --------------
-/- Non-income producing security.
(::) Valued in good faith at fair value using procedures approved by the
Board of Directors (see Note 1 of Notes to Financial Statements).
{\/} U.S. currency denominated.
{::} Security was an affiliate at October 31, 1997 (see Note 6 of Notes
to Financial Statements).
* For Federal income tax purposes, cost is $129,972,640 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 11,067,741
Unrealized depreciation: (2,746,486)
-------------
Net unrealized appreciation: $ 8,321,255
-------------
-------------
</TABLE>
Abbreviation:
ADR--American Depository Receipt
The accompanying notes are an integral part of the financial statements.
F4
<PAGE>
GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1997
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at October 31, 1997, was concentrated in the
following countries:
<TABLE>
<CAPTION>
PERCENTAGE OF NET ASSETS
{D}
---------------------------
SHORT-TERM
COUNTRY (COUNTRY CODE/CURRENCY CODE) EQUITY & OTHER TOTAL
- -------------------------------------- ------ ---------- -----
<S> <C> <C> <C>
Canada (CAN/CAD) ..................... 14.7 14.7
Finland (FIN/FIM) .................... 2.2 2.2
Ireland (IRE/IEP) .................... 0.7 0.7
Spain (SPN/ESP) ...................... 3.3 3.3
United States (US/USD) ............... 60.6 18.5 79.1
------ ----- -----
Total ............................... 81.5 18.5 100.0
------ ----- -----
------ ----- -----
</TABLE>
- --------------
{d} Percentages indicated are based on net assets of $162,662,313.
The accompanying notes are an integral part of the financial statements.
F5
<PAGE>
GT GLOBAL FINANCIAL SERVICES FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Banks - Regional (50.6%)
Sparbanken Sverige AB "A" .................................. SWDN 68,000 $ 1,543,927 1.9
City National Corp. ........................................ US 50,550 1,525,978 1.9
Lloyds TSB Group PLC ....................................... UK 113,600 1,419,524 1.8
Royal Bank of Canada ....................................... CAN 26,000 1,390,221 1.7
NationsBank Corp. .......................................... US 20,000 1,197,500 1.5
Mellon Bank Corp. .......................................... US 21,800 1,124,063 1.4
Bank of Montreal ........................................... CAN 25,800 1,114,058 1.4
Demirbank T.A.S. ........................................... TRKY 37,896,000 1,084,691 1.3
National Bank of Canada .................................... CAN 75,600 1,080,996 1.3
Hamilton Bancorp, Inc.-/- .................................. US 35,000 1,067,500 1.3
Crestar Financial Corp. .................................... US 20,800 984,100 1.2
GreenPoint Financial Corp. ................................. US 15,100 972,063 1.2
Norbanken AB ............................................... SWDN 30,400 954,136 1.2
Christiania Bank Og Kreditkasse ............................ NOR 232,900 933,534 1.2
Bayerische Vereinsbank ..................................... GER 16,070 931,864 1.2
Bank Leumi Le - Israel ..................................... ISRL 605,700 930,012 1.1
Jyske Bank ................................................. DEN 9,000 927,029 1.1
Bank Hapoalim Ltd. ......................................... ISRL 383,000 906,460 1.1
Bank of Ireland ............................................ IRE 70,800 895,906 1.1
First Union Corp. (N.C.) ................................... US 18,200 892,938 1.1
H. F. Ahmanson & Co. ....................................... US 15,000 885,000 1.1
Halifax PLC-/- ............................................. UK 76,800 869,507 1.1
Nedcor Ltd. ................................................ SAFR 41,123 863,498 1.1
Zagrebacka Banka - 144A GDR{.} {\/} ........................ CRT 27,000 860,625 1.1
Sovereign Bancorp, Inc. .................................... US 48,200 855,550 1.1
First American Corp. ....................................... US 18,000 855,000 1.1
Allied Irish Bank PLC{V} ................................... IRE 97,644 826,256 1.0
ABSA Group Ltd. ............................................ SAFR 138,867 822,809 1.0
Anglo-Irish Bank Corp., PLC: ............................... IRE -- -- 1.0
Common{V} ................................................ -- 315,036 515,196 --
Common ................................................... -- 180,000 297,565 --
Compagnie Financiere de Paribas S.A. ....................... FR 11,100 806,457 1.0
First National Bank Holdings Ltd. .......................... SAFR 105,800 799,549 1.0
Yapi ve Kredi Bankasi A.S. ................................. TRKY 26,000,000 793,807 1.0
Commercial International Bank - GDR{\/} .................... EGPT 36,265 788,764 1.0
National Australia Bank Ltd. ............................... AUSL 56,500 772,531 1.0
Ergo Bank S.A. ............................................. GREC 12,960 772,510 1.0
Westpac Banking Corp., Ltd. ................................ AUSL 132,000 768,337 0.9
Australia & New Zealand Banking Group Ltd. ................. AUSL 110,000 767,100 0.9
Banco Totta & Acores S.A. "B" .............................. PORT 39,300 760,068 0.9
Wielkopolski Bank Kredytowy S.A. ........................... POL 138,000 753,448 0.9
Cullen/Frost Bankers, Inc. ................................. US 14,500 732,250 0.9
Akbank T.A.S. .............................................. TRKY 9,821,967 669,363 0.8
Banco Commercial S.A. - 144A GDR{.} {\/} ................... URGY 22,000 638,000 0.8
BG Bank AS ................................................. DEN 9,500 610,308 0.8
Banco Bradesco S.A. Preferred .............................. BRZL 79,500,000 591,346 0.7
</TABLE>
The accompanying notes are an integral part of the financial statements.
F6
<PAGE>
GT GLOBAL FINANCIAL SERVICES FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Banks - Regional (Continued)
Security Bank Corp.-/- ..................................... PHIL 688,900 $ 363,095 0.4
-----------
40,914,439
-----------
Banks - Money Center (18.4%)
BankAmerica Corp. .......................................... US 43,400 3,103,091 3.8
Citicorp ................................................... US 15,050 1,882,191 2.3
Chase Manhattan Corp. ...................................... US 14,750 1,701,781 2.1
Merita Ltd. "A" ............................................ FIN 297,000 1,451,523 1.8
HSBC Holdings PLC .......................................... HK 55,800 1,263,260 1.6
Barclays PLC ............................................... UK 39,375 986,026 1.2
Schweizerischer Bankverein (Swiss Bank Corp.)-/- ........... SWTZ 3,330 895,532 1.1
Unidanmark AS "A" .......................................... DEN 13,200 891,009 1.1
ABN AMRO Holdings N.V. ..................................... NETH 42,864 863,463 1.1
Bank of Tokyo - Mitsubishi ................................. JPN 41,750 544,867 0.7
Sumitomo Bank .............................................. JPN 37,000 393,682 0.5
Industrial Bank of Japan ................................... JPN 26,000 257,190 0.3
Fuji Bank Ltd. ............................................. JPN 29,000 250,707 0.3
Sanwa Bank ................................................. JPN 24,000 241,397 0.3
Dai-Ichi Kangyo Bank Ltd. .................................. JPN 15,000 127,182 0.2
-----------
14,852,901
-----------
Insurance - Multi-Line (10.9%)
Conseco, Inc. .............................................. US 51,600 2,251,050 2.8
Fremont General Corp. ...................................... US 30,000 1,398,750 1.7
Allstate Corp. ............................................. US 15,000 1,244,063 1.5
SunAmerica, Inc. ........................................... US 29,800 1,070,938 1.3
Axa Group .................................................. FR 14,770 1,011,872 1.2
Royal & Sun Alliance Insurance Group PLC ................... UK 98,700 946,110 1.2
American International Group, Inc. ......................... US 9,200 938,975 1.2
-----------
8,861,758
-----------
Consumer Finance (5.8%)
The Money Store, Inc. ...................................... US 39,500 1,120,813 1.4
Green Tree Financial Corp. ................................. US 24,600 1,036,275 1.3
Doral Financial Corp. ...................................... US 45,200 1,000,050 1.2
Aeon Credit Service ........................................ HK 2,964,000 747,710 0.9
Acom Co., Ltd. ............................................. JPN 9,000 493,766 0.6
Bankard, Inc.-/- ........................................... PHIL 5,307,000 362,872 0.4
-----------
4,761,486
-----------
Other Financial (4.1%)
Newcourt Credit Group, Inc. ................................ CAN 25,200 871,771 1.1
Banco LatinoAmericano de Exportaciones S.A. (Bladex)
"E"{\/} ................................................... PAN 20,000 795,000 1.0
Investors Financial Services Corp. ......................... US 16,500 726,000 0.9
MoneyGram Payment Systems, Inc.-/- ......................... US 42,000 580,125 0.7
</TABLE>
The accompanying notes are an integral part of the financial statements.
F7
<PAGE>
GT GLOBAL FINANCIAL SERVICES FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Other Financial (Continued)
Shohkoh Fund ............................................... JPN 1,200 $ 349,127 0.4
-----------
3,322,023
-----------
Securities Broker (2.8%)
Hambrecht & Quist Group-/- ................................. US 30,000 945,000 1.2
Morgan Stanley, Dean Witter, Discover and Co. .............. US 13,200 652,575 0.8
Peregrine Investment Holdings Ltd. ......................... HK 532,000 523,053 0.6
Nomura Securities Co., Ltd. ................................ JPN 10,000 116,376 0.1
Daiwa Securities Co., Ltd. ................................. JPN 14,000 84,722 0.1
-----------
2,321,726
-----------
Investment Management (2.4%)
Alliance Capital Management L.P. ........................... US 32,400 1,111,725 1.4
Franklin Resources, Inc. ................................... US 8,750 786,406 1.0
-----------
1,898,131
----------- -----
TOTAL EQUITY INVESTMENTS (cost $69,090,966) .................. 76,932,464 95.0
----------- -----
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- -------------------------------------------------------------- ----------- -------------
<S> <C> <C> <C> <C>
Dated October 31, 1997, with State Street Bank & Trust Co.,
due November 3, 1997, for an effective yield of 5.57%,
collateralized by $2,110,000 U.S. Treasury Bond, 8.875% due
8/15/17 (market value of collateral is $2,768,185,
including accrued interest). (cost $2,708,419) ........... 2,708,419 3.4
----------- -----
TOTAL INVESTMENTS (cost $71,799,385) * ...................... 79,640,883 98.4
Other Assets and Liabilities ................................. 1,320,751 1.6
----------- -----
NET ASSETS ................................................... $80,961,634 100.0
----------- -----
----------- -----
</TABLE>
- --------------
-/- Non-income producing security.
{\/} U.S. currency denominated.
{.} Security exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers.
{V} Security is denominated in GBP.
* For Federal income tax purposes, cost is $72,281,726 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 10,637,773
Unrealized depreciation: (3,278,616)
-------------
Net unrealized appreciation: $ 7,359,157
-------------
-------------
</TABLE>
Abbreviation:
GDR--Global Depository Receipt
The accompanying notes are an integral part of the financial statements.
F8
<PAGE>
GT GLOBAL FINANCIAL SERVICES FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1997
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at October 31, 1997, was concentrated in the
following countries:
<TABLE>
<CAPTION>
PERCENTAGE OF NET ASSETS {D}
-----------------------------------
SHORT-TERM
COUNTRY (COUNTRY CODE/CURRENCY CODE) EQUITY & OTHER TOTAL
- -------------------------------------- ------ ------------- ----------
<S> <C> <C> <C>
Australia (AUSL/AUD) ................. 2.8 2.8
Brazil (BRZL/BRL) .................... 0.7 0.7
Canada (CAN/CAD) ..................... 5.5 5.5
Croatia (CRT/HRK) .................... 1.1 1.1
Denmark (DEN/DKK) .................... 3.0 3.0
Egypt (EGPT/EGP) ..................... 1.0 1.0
Finland (FIN/FIM) .................... 1.8 1.8
France (FR/FRF) ...................... 2.2 2.2
Germany (GER/DEM) .................... 1.2 1.2
Greece (GREC/GRD) .................... 1.0 1.0
Hong Kong (HK/HKD) ................... 3.1 3.1
Ireland (IRE/IEP) .................... 3.1 3.1
Israel (ISRL/ILS) .................... 2.2 2.2
Japan (JPN/JPY) ...................... 3.5 3.5
Netherlands (NETH/NLG) ............... 1.1 1.1
Norway (NOR/NOK) ..................... 1.2 1.2
Panama (PAN/PND) ..................... 1.0 1.0
Philippines (PHIL/PHP) ............... 0.8 0.8
Poland (POL/PLZ) ..................... 0.9 0.9
Portugal (PORT/PTE) .................. 0.9 0.9
South Africa (SAFR/ZAR) .............. 3.1 3.1
Sweden (SWDN/SEK) .................... 3.1 3.1
Switzerland (SWTZ/CHF) ............... 1.1 1.1
Turkey (TRKY/TRL) .................... 3.1 3.1
United Kingdom (UK/GBP) .............. 5.3 5.3
United States (US/USD) ............... 40.4 5.0 45.4
Uruguay (URGY/UYP) ................... 0.8 0.8
------ --- ----------
Total ............................... 95.0 5.0 100.0
------ --- ----------
------ --- ----------
</TABLE>
- --------------
{d} Percentages indicated are based on net assets of $80,961,634.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACT OUTSTANDING
OCTOBER 31, 1997
<TABLE>
<CAPTION>
MARKET VALUE CONTRACT DELIVERY UNREALIZED
CONTRACT TO SELL: (U.S. DOLLARS) PRICE DATE APPRECIATION
- ---------------------------------------- -------------- ----------- -------- --------------
<S> <C> <C> <C> <C>
Japanese Yen............................ 1,182,045 114.50000 11/12/97 $ 59,877
-------------- --------------
Total Contracts to Sell (Receivable
amount $1,241,922)................... 1,182,045 59,877
-------------- --------------
THE VALUE OF CONTRACTS TO SELL AS A
PERCENTAGE OF NET ASSETS IS 1.46%.
Total Open Forward Foreign Currency
Contracts............................ $ 59,877
--------------
--------------
</TABLE>
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
F9
<PAGE>
GT GLOBAL HEALTH CARE FUND
PORTFOLIO OF INVESTMENTS
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Medical Technology & Supplies (37.8%)
ATL Ultrasound, Inc.{::} -/- .............................. US 755,500 $ 32,486,500 5.2
Visx, Inc.{::} -/- ........................................ US 1,147,700 26,253,638 4.2
Endosonics Corp.{::} -/- .................................. US 1,546,000 17,779,000 2.8
Physio-Control International Corp.{::} -/- ................ US 1,050,500 16,742,344 2.7
Sunrise Medical, Inc.{::} -/- ............................. US 1,011,700 15,618,119 2.5
Waters Corp.-/- ........................................... US 345,000 15,158,438 2.4
Dexter Corp. .............................................. US 339,000 13,305,750 2.1
TECNOL Medical Products, Inc.-/- .......................... US 572,900 12,317,350 2.0
Circon Corp.{::} -/- ...................................... US 686,486 10,812,155 1.7
Cardiac Pathways Corp.{::} -/- ............................ US 1,002,400 9,522,800 1.5
Lifecore Biomedical, Inc.-/- .............................. US 361,900 7,509,425 1.2
AVECOR Cardiovascular, Inc.{::} -/- ....................... US 658,700 6,751,675 1.1
Mentor Corp. .............................................. US 175,800 6,405,713 1.0
CONMED Corp.-/- ........................................... US 308,400 6,322,200 1.0
Angeion Corp.-/- .......................................... US 1,325,000 5,217,188 0.8
Kensey Nash Corp.-/- ...................................... US 322,600 4,919,650 0.8
Photoelectron Corp.-/- .................................... US 338,300 3,721,300 0.6
Cardiovascular Dynamics, Inc.{::} -/- ..................... US 515,675 3,480,806 0.6
Innerdyne, Inc.-/- ........................................ US 824,600 2,886,100 0.5
CardioGenesis Corp.-/- .................................... US 307,000 2,763,000 0.4
Laser Industries Ltd.-/- .................................. US 130,500 2,593,688 0.4
INAMED Corp.{::} -/- ...................................... US 628,900 2,515,600 0.4
Heartstream, Inc.-/- ...................................... US 206,800 2,145,550 0.3
Laserscope-/- ............................................. US 330,800 1,943,450 0.3
ThermoTrex Corp.-/- ....................................... US 73,000 1,679,000 0.3
Micro Therapeutics, Inc.-/- ............................... US 290,000 1,558,750 0.2
Abaxis, Inc.-/- ........................................... US 462,400 1,445,000 0.2
Lumisys, Inc.-/- .......................................... US 211,400 1,294,825 0.2
Interpore International-/- ................................ US 92,900 870,938 0.1
Sulzer Medica AG - Registered-/- .......................... SWTZ 3,130 849,571 0.1
ESC Medical Systems Ltd.-/- {\/} .......................... ISRL 19,200 753,600 0.1
Thoratec Laboratories Corp.-/- ............................ US 60,000 412,500 0.1
ATS Medical, Inc.-/- ...................................... US 31,250 195,313 --
Conceptus, Inc.-/- ........................................ US 18,000 130,500 --
------------
238,361,436
------------
Biotechnology (26.6%)
Protein Design Labs, Inc.{::} -/- ......................... US 1,017,600 50,752,795 8.1
Amgen, Inc.-/- ............................................ US 539,000 26,545,750 4.2
Guilford Pharmaceuticals, Inc.-/- ......................... US 896,600 21,854,625 3.5
Cell Therapeutics, Inc.{::} -/- ........................... US 1,141,000 18,256,000 2.9
Regeneron Pharmaceuticals, Inc.{::} -/- ................... US 1,414,900 14,768,019 2.4
Human Genome Sciences, Inc.-/- ............................ US 260,900 10,696,900 1.7
Genelabs Technologies, Inc.-/- ............................ US 1,642,800 6,365,850 1.0
Interferon Sciences, Inc.-/- .............................. US 552,500 5,110,625 0.8
NABI, Inc.-/- ............................................. US 592,500 2,814,375 0.5
</TABLE>
The accompanying notes are an integral part of the financial statements.
F10
<PAGE>
GT GLOBAL HEALTH CARE FUND
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Biotechnology (Continued)
PathoGenesis Corp.-/- ..................................... US 61,400 $ 2,210,400 0.4
Agouron Pharmaceuticals, Inc.-/- .......................... US 46,400 2,117,000 0.3
CytoTherapeutics, Inc.-/- ................................. US 396,900 2,083,725 0.3
Pharmacyclics, Inc.-/- .................................... US 75,000 1,912,500 0.3
Coulter Pharmaceutical, Inc.-/- ........................... US 73,700 1,059,438 0.2
Enzon, Inc. Preferred-/- (.) .............................. US 16,000 222,460 --
Targeted Genetics Corp.-/- ................................ US 40,000 160,000 --
------------
166,930,462
------------
Pharmaceuticals (17.7%)
TheraTech, Inc.{::} -/- ................................... US 2,150,000 22,575,000 3.6
American Home Products Corp. .............................. US 145,600 10,792,600 1.7
Perrigo Co.-/- ............................................ US 648,600 9,972,225 1.6
Spiros Development Corp.(::) (.) -/- ...................... US 100,000 9,161,246 1.5
Rhone-Poulenc "A" ......................................... FR 190,736 8,319,910 1.3
Depotech Corp.-/- ......................................... US 549,300 7,621,538 1.2
Magainin Pharmaceuticals, Inc.-/- ......................... US 895,100 7,608,350 1.2
Bergen Brunswig Corp. "A" ................................. US 150,000 6,009,375 1.0
Catalytica, Inc.-/- ....................................... US 437,866 5,473,325 0.9
SEQUUS Pharmaceuticals, Inc.-/- ........................... US 597,800 5,380,200 0.9
IVAX Corp.-/- ............................................. US 700,000 5,293,750 0.8
Altana AG ................................................. GER 50,000 3,632,937 0.6
Life Medical Sciences, Inc.{::} -/- ....................... US 768,600 3,074,400 0.5
Warner Chilcott Laboratories - ADR{\/} .................... IRE 117,000 1,652,625 0.3
Unimed Pharmaceuticals, Inc.-/- ........................... US 147,200 1,048,800 0.2
Intercardia, Inc.-/- ...................................... US 41,200 999,100 0.2
Alpharma, Inc. "A" ........................................ US 21,700 478,756 0.1
Aradigm Corp.-/- .......................................... US 28,000 322,000 0.1
------------
109,416,137
------------
Health Care Services (5.2%)
Vencor, Inc.-/- ........................................... US 801,400 21,637,800 3.5
Allegiance Corp. .......................................... US 120,000 3,330,000 0.5
Grupo Casa Autrey, S.A. de C.V. - ADR{\/} ................. MEX 135,100 2,313,588 0.4
Parkway Holdings Ltd. ..................................... SING 900,000 2,277,177 0.4
SteriGenics International, Inc.-/- ........................ US 61,900 1,392,750 0.2
Cohr, Inc.-/- ............................................. US 129,100 1,355,550 0.2
------------
32,306,865
------------ -----
TOTAL EQUITY INVESTMENTS (cost $484,175,220) ................ 547,014,900 87.3
------------ -----
</TABLE>
The accompanying notes are an integral part of the financial statements.
F11
<PAGE>
GT GLOBAL HEALTH CARE FUND
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NO. OF VALUE % OF NET
WARRANTS COUNTRY WARRANTS (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Rhone-Poulenc Warrants, expire 11/5/01 .................... FR 190,736 $ 603,731 0.1
PHARMACEUTICALS
ALZA Corp. Warrants, expire 12/31/99 ...................... US 100,000 18,750 --
PHARMACEUTICALS
------------ -----
TOTAL WARRANTS (cost $32,137) ............................... 622,481 0.1
------------ -----
<CAPTION>
NO. OF
RIGHTS RIGHTS
- ------------------------------------------------------------- -----------
<S> <C> <C> <C> <C>
Alpharma, Inc. Rights, expire 11/25/97 (cost $0) .......... US 3,616 20,340 --
------------ -----
PHARMACEUTICALS
<CAPTION>
REPURCHASE AGREEMENT
- -------------------------------------------------------------
<S> <C> <C> <C> <C>
Dated October 31, 1997, with State Street Bank & Trust Co.,
due November 3, 1997, for an effective yield of 5.57%,
collateralized by $56,460,000 U.S. Treasury Bond, 8.875%
due 8/15/17 (market value of collateral is $74,071,916,
including accrued interest).
(cost $72,617,234) ...................................... 72,617,234 11.6
------------ -----
TOTAL INVESTMENTS (cost $556,824,591) * .................... 620,274,955 99.0
Other Assets and Liabilities ................................ 6,067,162 1.0
------------ -----
NET ASSETS .................................................. $626,342,117 100.0
------------ -----
------------ -----
</TABLE>
- --------------
-/- Non-income producing security.
{::} Security was an affiliate at October 31, 1997 (see Note 6 of Notes
to Financial Statements).
{\/} U.S. currency denominated.
(::) Valued in good faith at fair value using procedures approved by the
Board of Directors (see Note 1 of Notes to Financial Statements).
(.) Restricted securities: At October 31, 1997 the Fund owned the
following restricted securities constituting less than 1.5% of net
assets which may not be publicly sold without registration under
the Securities Act of 1933 (Note 1). Additional information on the
securities is as follows:
<TABLE>
<CAPTION>
VALUE
PER
SHARE
(NOTE
DESCRIPTION ACQUISITION DATE SHARES COST 1)
----------------------------------------------- ----------------- ------ ----------- ------
<S> <C> <C> <C> <C>
Enzon, Inc. Preferred.......................... 3/22/90 16,000 $ 400,000 $13.90
Spiros Development Corp........................ 1/3/96 100,000 3,000,000 91.61
</TABLE>
* For Federal income tax purposes, cost is $558,926,202 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 88,802,844
Unrealized depreciation: (27,454,091)
-------------
Net unrealized appreciation: $ 61,348,753
-------------
-------------
</TABLE>
Abbreviation:
ADR--American Depository Receipt
The accompanying notes are an integral part of the financial statements.
F12
<PAGE>
GT GLOBAL HEALTH CARE FUND
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1997
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at October 31, 1997, was concentrated in the
following countries:
<TABLE>
<CAPTION>
PERCENTAGE OF NET ASSETS {D}
-------------------------------------
FIXED INCOME, SHORT-TERM
RIGHTS & &
COUNTRY (COUNTRY CODE/CURRENCY CODE) EQUITY WARRANTS OTHER TOTAL
- -------------------------------------- ------ ------------- ----- -----
<S> <C> <C> <C> <C>
France (FR/FRF) ...................... 1.3 0.1 1.4
Germany (GER/DEM) .................... 0.6 0.6
Ireland (IRE/IEP) .................... 0.3 0.3
Israel (ISRL/ILS) .................... 0.1 0.1
Mexico (MEX/MXN) ..................... 0.4 0.4
Singapore (SING/SGD) ................. 0.4 0.4
Switzerland (SWTZ/CHF) ............... 0.1 0.1
United States (US/USD) ............... 84.1 12.6 96.7
------ --- ----- -----
Total ............................... 87.3 0.1 12.6 100.0
------ --- ----- -----
------ --- ----- -----
</TABLE>
- --------------
{d} Percentages indicated are based on net assets of $626,342,117.
The accompanying notes are an integral part of the financial statements.
F13
<PAGE>
GT GLOBAL INFRASTRUCTURE FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Energy (31.2%)
Hub Power Co.-/- ........................................... PAK 2,400,000 $ 3,206,835 3.3
ELECTRICAL & GAS UTILITIES
Enron Global Power & Pipelines L.L.C. ...................... US 90,000 3,099,375 3.2
ELECTRICAL & GAS UTILITIES
Endesa S.A. - ADR{\/} ...................................... SPN 160,000 2,980,000 3.0
ELECTRICAL & GAS UTILITIES
Shaw Group, Inc.-/- ........................................ US 140,300 2,928,763 3.0
ENERGY EQUIPMENT & SERVICES
IES Industries, Inc. ....................................... US 81,000 2,612,250 2.7
ELECTRICAL & GAS UTILITIES
Light - Participacoes S.A. ................................. BRZL 9,910,000 2,535,033 2.6
ELECTRICAL & GAS UTILITIES
Edison S.p.A. .............................................. ITLY 450,000 2,370,058 2.4
ELECTRICAL & GAS UTILITIES
Light - Servicos de Electricidade S.A. ..................... BRZL 7,000,000 2,324,020 2.4
ELECTRICAL & GAS UTILITIES
EVN Energie-Versorgung Niederoesterreich AG ................ ASTRI 16,800 1,948,628 2.0
ELECTRICAL & GAS UTILITIES
Giant Industries, Inc. ..................................... US 102,600 1,840,388 1.9
OIL
AES Corp.-/- ............................................... US 45,264 1,793,586 1.8
ELECTRICAL & GAS UTILITIES
BSES Ltd. - 144A GDR{.} {\/} ............................... IND 70,000 1,085,000 1.1
ELECTRICAL & GAS UTILITIES
Companhia Energetica de Minas Gerais (CEMIG) - ADR{\/} ..... BRZL 24,900 996,000 1.0
ELECTRICAL & GAS UTILITIES
MetroGas S.A. - ADR{\/} .................................... ARG 111,051 805,120 0.8
ELECTRICAL & GAS UTILITIES
-----------
30,525,056
-----------
Services (23.1%)
Canadian National Railway Co. .............................. CAN 60,900 3,284,415 3.3
TRANSPORTATION - ROAD & RAIL
Aeroporti di Roma SpA-/- ................................... ITLY 286,600 2,606,270 2.7
TRANSPORTATION - AIRLINES
Hellenic Telecommunications Organization S.A. .............. GREC 118,250 2,469,600 2.5
TELEPHONE NETWORKS
Telecom Italia SpA - Di Risp-/- ............................ ITLY 600,000 2,415,946 2.5
TELEPHONE NETWORKS
SPT Telecom-/- ............................................. CZCH 19,000 2,187,547 2.2
TELEPHONE NETWORKS
Tranz Rail Holdings Ltd. - ADR{\/} ......................... NZ 132,000 1,782,000 1.8
TRANSPORTATION - ROAD & RAIL
Portugal Telecom S.A. - ADR{\/} ............................ PORT 43,000 1,773,750 1.8
TELEPHONE NETWORKS
Paging Network, Inc.-/- .................................... US 125,000 1,546,875 1.6
WIRELESS COMMUNICATIONS
Centennial Cellular Corp. "A"-/- ........................... US 50,000 1,000,000 1.0
WIRELESS COMMUNICATIONS
</TABLE>
The accompanying notes are an integral part of the financial statements.
F14
<PAGE>
GT GLOBAL INFRASTRUCTURE FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Services (Continued)
DDI Corp. .................................................. JPN 295 $ 985,786 1.0
WIRELESS COMMUNICATIONS
Telefonica del Peru S.A. - ADR{\/} ......................... PERU 40,900 807,775 0.8
TELEPHONE NETWORKS
Compania Anonima Nacional Telefonos de Venezuela (CANTV) -
ADR{\/} ................................................... VENZ 16,000 700,000 0.7
TELEPHONE NETWORKS
Pakistan Telecommunications Co., Ltd.: ..................... PAK -- -- 0.6
TELEPHONE NETWORKS
GDR{\/} .................................................. -- 4,892 396,252 --
"A" ...................................................... -- 280,000 235,741 --
Philippine Long Distance Telephone Co. - ADR{\/} ........... PHIL 20,000 485,000 0.5
TELEPHONE NETWORKS
China Telecom (Hong Kong) Ltd.-/- .......................... HK 80,000 127,814 0.1
WIRELESS COMMUNICATIONS
-----------
22,804,771
-----------
Materials/Basic Industry (20.8%)
Giant Cement Holding, Inc.-/- .............................. US 179,800 4,360,150 4.4
CEMENT
La Cementos Nacional, C.A. - 144A GDR{.} {\/} .............. ECDR 15,060 3,162,600 3.2
CEMENT
Northwest Pipe Co.-/- ...................................... US 127,500 3,091,875 3.2
METALS - STEEL
IPSCO, Inc. ................................................ CAN 67,600 2,926,199 3.0
METALS - STEEL
Hylsamex, S.A. de C.V. - 144A ADR{.} {\/} .................. MEX 75,000 2,896,875 3.0
METALS - STEEL
NS Group, Inc.-/- .......................................... US 98,100 2,624,175 2.7
METALS - STEEL
Suez Cement Co. - Reg S GDR{c} {\/} ........................ EGPT 60,000 1,245,000 1.3
CEMENT
-----------
20,306,874
-----------
Capital Goods (9.3%)
Doncasters PLC - ADR-/- {\/} ............................... UK 139,600 3,760,474 3.8
AEROSPACE/DEFENSE
Caterpillar, Inc. .......................................... US 60,000 3,075,000 3.1
MACHINERY & ENGINEERING
KCI Konecranes International ............................... FIN 42,660 1,664,636 1.7
MACHINERY & ENGINEERING
United Engineers Ltd. ...................................... MAL 270,000 640,733 0.7
CONSTRUCTION
-----------
9,140,843
-----------
Technology (7.8%)
Tadiran Telecommunications Ltd.{\/} ........................ ISRL 130,000 2,941,250 3.0
TELECOM TECHNOLOGY
Emcore Corp.-/- ............................................ US 123,000 2,367,750 2.4
SEMICONDUCTORS
</TABLE>
The accompanying notes are an integral part of the financial statements.
F15
<PAGE>
GT GLOBAL INFRASTRUCTURE FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Technology (Continued)
Cisco Systems, Inc.-/- ..................................... US 21,000 $ 1,722,656 1.8
NETWORKING
Asia Pacific Wire & Cable Corporation Ltd.-/- {\/} ......... SING 59,400 549,450 0.6
TELECOM TECHNOLOGY
-----------
7,581,106
-----------
Multi-Industry/Miscellaneous (4.7%)
Mannesmann AG .............................................. GER 7,500 3,166,135 3.2
MULTI-INDUSTRY
E.R.G. Ltd. ................................................ AUSL 1,689,040 1,436,723 1.5
MULTI-INDUSTRY
-----------
4,602,858
----------- -----
TOTAL EQUITY INVESTMENTS (cost $76,186,714) .................. 94,961,508 96.9
----------- -----
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- -------------------------------------------------------------- ----------- -------------
<S> <C> <C> <C> <C>
Dated October 31, 1997, with State Street Bank & Trust Co.,
due November 3, 1997, for an effective yield of 5.57%,
collateralized by $1,680,000 U.S. Treasury Bond, 8.875% due
8/15/17 (market value of collateral is $2,204,053,
including accrued interest). (cost $2,156,334) ........... 2,156,334 2.2
----------- -----
TOTAL INVESTMENTS (cost $78,343,048) * ...................... 97,117,842 99.1
Other Assets and Liabilities ................................. 901,217 0.9
----------- -----
NET ASSETS ................................................... $98,019,059 100.0
----------- -----
----------- -----
</TABLE>
- --------------
{\/} U.S. currency denominated.
-/- Non-income producing security.
{.} Security exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers.
{c} Security issued under Regulation S. Rule 144A and additional
restrictions may apply in the resale of such securities.
* For Federal income tax purposes, cost is $78,343,048 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 23,477,043
Unrealized depreciation: (4,702,249)
-------------
Net unrealized appreciation: $ 18,774,794
-------------
-------------
</TABLE>
Abbreviations:
ADR--American Depository Receipt
GDR--Global Depository Receipt
The accompanying notes are an integral part of the financial statements.
F16
<PAGE>
GT GLOBAL INFRASTRUCTURE FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1997
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at October 31, 1997, was concentrated in the
following countries:
<TABLE>
<CAPTION>
PERCENTAGE OF NET ASSETS
{D}
---------------------------
SHORT-TERM
COUNTRY (COUNTRY CODE/CURRENCY CODE) EQUITY & OTHER TOTAL
- -------------------------------------- ------ ---------- -----
<S> <C> <C> <C>
Argentina (ARG/ARS) .................. 0.8 0.8
Australia (AUSL/AUD) ................. 1.5 1.5
Austria (ASTRI/ATS) .................. 2.0 2.0
Brazil (BRZL/BRL) .................... 6.0 6.0
Canada (CAN/CAD) ..................... 6.3 6.3
Czech Republic (CZCH/CSK) ............ 2.2 2.2
Ecuador (ECDR/ECS) ................... 3.2 3.2
Egypt (EGPT/EGP) ..................... 1.3 1.3
Finland (FIN/FIM) .................... 1.7 1.7
Germany (GER/DEM) .................... 3.2 3.2
Greece (GREC/GRD) .................... 2.5 2.5
Hong Kong (HK/HKD) ................... 0.1 0.1
India (IND/INR) ...................... 1.1 1.1
Israel (ISRL/ILS) .................... 3.0 3.0
Italy (ITLY/ITL) ..................... 7.6 7.6
Japan (JPN/JPY) ...................... 1.0 1.0
Malaysia (MAL/MYR) ................... 0.7 0.7
Mexico (MEX/MXN) ..................... 3.0 3.0
New Zealand (NZ/NZD) ................. 1.8 1.8
Pakistan (PAK/PKR) ................... 3.9 3.9
Peru (PERU/PES) ...................... 0.8 0.8
Philippines (PHIL/PHP) ............... 0.5 0.5
Portugal (PORT/PTE) .................. 1.8 1.8
Singapore (SING/SGD) ................. 0.6 0.6
Spain (SPN/ESP) ...................... 3.0 3.0
United Kingdom (UK/GBP) .............. 3.8 3.8
United States & Other (US/USD) ....... 32.8 3.1 35.9
Venezuela (VENZ/VEB) ................. 0.7 0.7
------ --- -----
Total ............................... 96.9 3.1 100.0
------ --- -----
------ --- -----
</TABLE>
- --------------
{d} Percentages indicated are based on net assets of $98,019,059.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
OCTOBER 31, 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.......................... 1,509,823 1.80100 11/28/97 $ (66,180)
Japanese Yen............................ 404,821 114.50000 11/12/97 20,506
Japanese Yen............................ 368,245 120.70000 01/07/98 (4,948)
Japanese Yen............................ 84,327 118.82300 02/04/98 (168)
-------------- --------------
Total Contracts to Sell (Receivable
amount $2,316,426)................... 2,367,216 (50,790)
-------------- --------------
THE VALUE OF CONTRACTS TO SELL AS A
PERCENTAGE OF NET ASSETS IS 2.42%.
Total Open Forward Foreign Currency
Contracts............................ $ (50,790)
--------------
--------------
</TABLE>
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
F17
<PAGE>
GT GLOBAL NATURAL RESOURCES FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Energy Equipment & Services (53.2%)
Schlumberger Ltd. ......................................... US 60,800 $ 5,320,000 3.1
Cliffs Drilling Co.-/- .................................... US 73,100 5,313,456 3.1
EVI, Inc.-/- .............................................. US 81,000 5,199,188 3.0
Varco International, Inc.-/- .............................. US 85,000 5,179,688 3.0
Cooper Cameron Corp.-/- ................................... US 71,500 5,165,875 3.0
Precision Drilling Corp.-/- ............................... CAN 162,300 4,980,581 2.9
Nabors Industries, Inc.-/- ................................ US 120,200 4,943,225 2.9
Patterson Energy, Inc.-/- ................................. US 86,800 4,860,800 2.8
UTI Energy Corp.-/- ....................................... US 107,700 4,806,113 2.8
Key Energy Group, Inc.-/- ................................. US 147,600 4,630,950 2.7
Pool Energy Services Co.-/- ............................... US 133,600 4,534,050 2.6
Diamond Offshore Drilling, Inc. ........................... US 72,000 4,482,000 2.6
Helmerich & Payne, Inc. ................................... US 51,300 4,139,269 2.4
BJ Services Co.-/- ........................................ US 43,600 3,695,100 2.1
Santa Fe International Corp.-/- ........................... US 71,700 3,526,744 2.1
Falcon Drilling Co., Inc.-/- .............................. US 96,900 3,524,738 2.0
Smith International, Inc.-/- .............................. US 41,900 3,194,875 1.9
Bonus Resource Services Corp.-/- .......................... CAN 482,284 2,361,453 1.4
Veritas DGC, Inc.-/- ...................................... US 56,400 2,308,875 1.3
Noble Drilling Corp.-/- ................................... US 64,300 2,286,669 1.3
Fred Olsen Energy ASA-/- .................................. NOR 74,500 2,053,003 1.2
Computalog Ltd.-/- ........................................ CAN 58,800 1,189,185 0.7
Rowan Cos., Inc.-/- ....................................... US 30,000 1,166,250 0.7
Enerflex Systems Ltd. ..................................... CAN 38,000 1,078,626 0.6
Hanover Compressor Co.-/- ................................. US 42,100 910,413 0.5
Dril-Quip, Inc.-/- ........................................ US 22,700 814,363 0.5
------------
91,665,489
------------
Metals - Steel (13.5%)
IPSCO, Inc. ............................................... CAN 111,700 4,835,155 2.8
Tubos de Acero de Mexico S.A. - ADR{\/} -/- ............... MEX 227,800 4,598,713 2.7
Prudential Steel Ltd. ..................................... CAN 102,200 4,278,882 2.5
NS Group, Inc.-/- ......................................... US 130,300 3,485,525 2.0
Oregon Steel Mills, Inc. .................................. US 146,800 3,091,975 1.8
Maverick Tube Corp.-/- .................................... US 81,600 2,876,400 1.7
------------
23,166,650
------------
Construction (10.8%)
National-Oilwell, Inc.-/- ................................. US 71,501 5,474,292 3.2
Global Industries Ltd.-/- ................................. US 248,800 5,007,100 2.9
Cal Dive International, Inc.-/- ........................... US 80,000 2,500,000 1.5
Halter Marine Group, Inc.-/- .............................. US 43,600 2,280,825 1.3
Coflexip - ADR{\/} ........................................ FR 34,300 1,886,500 1.1
Bouygues Offshore S.A. - ADR{\/} .......................... FR 31,900 773,575 0.4
TransCoastal Marine Services, Inc.-/- ..................... US 19,200 477,600 0.3
</TABLE>
The accompanying notes are an integral part of the financial statements.
F18
<PAGE>
GT GLOBAL NATURAL RESOURCES FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Construction (Continued)
UNIFAB International, Inc.-/- ............................. US 4,200 $ 134,400 0.1
------------
18,534,292
------------
Oil (10.0%)
Giant Industries, Inc. .................................... US 201,100 3,607,231 2.1
Orogen Minerals Ltd. - 144A ADR{.} {\/} ................... AUSL 111,200 3,030,200 1.8
Canadian Fracmaster Ltd.-/- ............................... CAN 261,500 2,597,928 1.5
Ranger Oil Ltd. ........................................... CAN 280,900 2,431,862 1.4
Black Sea Energy Ltd.-/- .................................. CAN 1,139,600 2,345,189 1.4
ERG SpA-/- ................................................ ITLY 373,000 1,535,837 0.9
Petroleo Brasileiro S.A. (Petrobras) Preferred ............ BRZL 7,900,000 1,469,067 0.9
------------
17,017,314
------------
Chemicals (2.5%)
Ciba Specialty Chemicals AG-/- ............................ SWTZ 43,360 4,258,571 2.5
------------
Paper/Packaging (2.4%)
Fort James Corp. .......................................... US 66,962 2,657,554 1.5
Jefferson Smurfit Corp.-/- ................................ US 100,400 1,506,000 0.9
------------
4,163,554
------------
Gas Production & Distribution (2.4%)
Comstock Resources, Inc.-/- ............................... US 232,400 3,892,700 2.3
Berkley Petroleum Corp.-/- ................................ CAN 20,400 233,792 0.1
------------
4,126,492
------------
Industrial Components (2.2%)
Encore Wire Corp.-/- ...................................... US 132,950 3,755,838 2.2
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F19
<PAGE>
GT GLOBAL NATURAL RESOURCES FUND - CONSOLIDATED
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Consumer Services (2.0%)
American Disposal Services, Inc.-/- ....................... US 95,500 $ 3,366,375 2.0
------------
Forest Products (0.7%)
The TimberWest Timber Trust Special Warrants(.) (::) ...... CAN 422,700 1,124,840 0.7
------------ -----
TOTAL EQUITY INVESTMENTS (cost $136,805,346) ................ 171,179,415 99.7
------------ -----
TOTAL INVESTMENTS (cost $136,805,346) * .................... 171,179,415 99.7
Other Assets and Liabilities ................................ 494,158 0.3
------------ -----
NET ASSETS .................................................. $171,673,573 100.0
------------ -----
------------ -----
</TABLE>
- --------------
-/- Non-income producing security.
{\/} U.S. currency denominated.
{.} Security exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers.
(::) Valued in good faith at fair value using procedures approved by the
Board of Directors (see Note 1 of Notes to Financial Statements).
(.) Restricted securities: At October 31, 1997 the Fund owned the
following restricted security constituting 0.7% of net assets which
may not be publicly sold without registration under the Securities
Act of 1933 (Note 1). Additional information on the security is as
follows:
<TABLE>
<CAPTION>
VALUE
PER
SHARE
(NOTE
DESCRIPTION ACQUISITION DATE SHARES COST 1)
----------------------------------------------- ----------------- ------ ----------- ------
<S> <C> <C> <C> <C>
The TimberWest Timber Trust Special Warrants... 8/7/97 422,700 $ 1,142,844 $2.66
</TABLE>
* For Federal income tax purposes, cost is $137,392,339 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 37,982,563
Unrealized depreciation: (4,195,487)
-------------
Net unrealized appreciation: $ 33,787,076
-------------
-------------
</TABLE>
Abbreviation:
ADR--American Depository Receipt
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at October 31, 1997, was concentrated in the
following countries:
<TABLE>
<CAPTION>
PERCENTAGE OF NET ASSETS
{D}
---------------------------
SHORT-TERM
COUNTRY (COUNTRY CODE/CURRENCY CODE) EQUITY & OTHER TOTAL
- -------------------------------------- ------ ---------- -----
<S> <C> <C> <C>
Australia (AUSL/AUD) ................. 1.8 1.8
Brazil (BRZL/BRL) .................... 0.9 0.9
Canada (CAN/CAD) ..................... 16.0 16.0
France (FR/FRF) ...................... 1.5 1.5
Italy (ITLY/ITL) ..................... 0.9 0.9
Mexico (MEX/MXN) ..................... 2.7 2.7
Norway (NOR/NOK) ..................... 1.2 1.2
Switzerland (SWTZ/CHF) ............... 2.5 2.5
United States (US/USD) ............... 72.2 0.3 72.5
------ ----- -----
Total ............................... 99.7 0.3 100.0
------ ----- -----
------ ----- -----
</TABLE>
- --------------
{d} Percentages indicated are based on net assets of $171,673,573.
The accompanying notes are an integral part of the financial statements.
F20
<PAGE>
GT GLOBAL TELECOMMUNICATIONS FUND
PORTFOLIO OF INVESTMENTS
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ----------------------------------------------------------- -------- ----------- -------------- -------------
<S> <C> <C> <C> <C>
Telecom Equipment (28.0%)
Nokia AB "A" ............................................ FIN 1,059,160 $ 92,479,819 5.4
ECI Telecommunications Ltd.{\/} ......................... ISRL 2,609,500 72,087,438 4.2
Newbridge Networks Corp.-/- ............................. CAN 1,332,300 71,049,067 4.1
Telefonaktiebolaget LM Ericsson: ........................ SWDN -- -- 3.1
"B" Free-/- ........................................... -- 871,200 38,397,307 --
ADR{\/} ............................................... -- 350,480 15,508,740 --
DSC Communications Corp.-/- ............................. US 1,220,100 29,739,938 1.7
Corning, Inc. ........................................... US 600,000 27,075,000 1.6
P-COM, Inc.-/- .......................................... US 1,200,000 24,150,000 1.4
ANTEC Corp.-/- .......................................... US 1,162,300 18,306,225 1.1
Tekelec-/- .............................................. US 428,900 17,960,188 1.0
Tellabs, Inc.-/- ........................................ US 240,000 12,960,000 0.8
Pairgain Technologies, Inc.-/- .......................... US 428,800 12,113,600 0.7
Tadiran Ltd. - ADR{\/} .................................. ISRL 246,100 9,290,275 0.5
Geotek Communications, Inc.-/- .......................... US 2,471,100 8,957,738 0.5
Champion Technology Holding Ltd. ........................ HK 67,154,902 8,166,314 0.5
Teledata Communications Ltd.-/- {\/} .................... ISRL 198,000 6,138,000 0.4
Allen Telecom, Inc.-/- .................................. US 300,000 5,662,500 0.3
Netas Telekomunik-/- .................................... TRKY 17,820,000 5,343,474 0.3
Ascend Communications, Inc.-/- .......................... US 160,000 4,330,000 0.3
Himachal Futuristic Communications Ltd. - 144A GDR{.} -/-
{\/} (.) (::) .......................................... IND 1,248,000 2,184,000 0.1
Sapura Telecommunications Bhd. .......................... MAL 1,155,000 680,024 --
Kantone Holding Ltd.-/- ................................. HK 6,256,868 639,447 --
--------------
483,219,094
--------------
Telephone Networks (22.4%)
Telecom Italia S.p.A.: .................................. ITLY -- -- 3.8
Di Risp-/- ............................................ -- 13,989,767 56,330,863 --
Common ................................................ -- 1,263,334 7,901,199 --
Telecomunicacoes Brasileiras S.A. (Telebras) -
ADR{\/} ................................................ BRZL 632,500 64,198,750 3.7
WorldCom, Inc. .......................................... US 1,644,290 55,289,251 3.2
SPT Telecom-/- .......................................... CZCH 391,340 45,056,567 2.6
Cable & Wireless Communications - ADR-/- {\/} ........... UK 1,670,250 30,377,672 1.8
Hellenic Telecommunications Organization S.A. ........... GREC 1,286,000 26,857,552 1.6
NTL, Inc.-/- {\/} ....................................... UK 855,833 23,214,470 1.4
Carso Global Telecom "A1" ............................... MEX 7,036,683 23,090,433 1.3
France Telecom S.A.: .................................... FR -- -- 0.9
ADR-/- {\/} ........................................... -- 320,000 12,120,000 --
Common-/- ............................................. -- 85,500 3,237,187 --
Ionica Group PLC-/- ..................................... UK 1,456,400 7,523,838 0.4
Atlantic Tele-Network, Inc.-/- .......................... US 500,100 6,313,763 0.4
Telefonica del Peru S.A. - ADR{\/} ...................... PERU 318,400 6,288,400 0.4
Russian Telecommunications Development Corp.: ........... RUS -- -- 0.3
Non-Voting(.) -/- {\/} (::) ........................... -- 453,000 3,397,500 --
Voting(.) -/- {\/} (::) ............................... -- 331,000 2,482,500 --
Compania Anonima Nacional Telefonos de Venezuela (CANTV)
- ADR{\/} .............................................. VENZ 96,000 4,200,000 0.2
PLD Telekon, Inc.-/- {\/} (.) ........................... RUS 510,000 4,016,250 0.2
</TABLE>
The accompanying notes are an integral part of the financial statements.
F21
<PAGE>
GT GLOBAL TELECOMMUNICATIONS FUND
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ----------------------------------------------------------- -------- ----------- -------------- -------------
<S> <C> <C> <C> <C>
Telephone Networks (Continued)
TelecomAsia Corp. - Foreign-/- .......................... THAI 6,622,652 $ 2,965,367 0.2
--------------
384,861,562
--------------
Wireless Communications (17.3%)
Nextel Communications, Inc. "A"-/- ...................... US 2,745,700 72,074,625 4.2
Millicom International Cellular S.A.{::} -/- {\/} ....... LUX 1,057,000 44,394,000 2.6
DDI Corp. ............................................... JPN 9,320 31,144,140 1.8
Grupo Iusacell S.A. "L" - ADR-/- {\/} ................... MEX 1,672,100 30,097,800 1.8
Paging Network, Inc.-/- ................................. US 2,165,000 26,791,875 1.6
Clearnet Communications, Inc. "A"-/- .................... CAN 1,138,100 17,848,432 1.0
WinStar Communications, Inc.-/- ......................... US 667,700 15,273,638 0.9
Western Wireless Corp. "A"-/- ........................... US 750,300 13,411,613 0.8
Telecom Italia Mobile S.p.A. - Di Risp .................. ITLY 5,425,700 11,086,917 0.6
Advanced Info. Service - Foreign ........................ THAI 1,993,150 10,709,463 0.6
Vimpel-Communications - ADR-/- {\/} ..................... RUS 250,000 8,187,500 0.5
Powertel, Inc.-/- ....................................... US 365,000 6,638,438 0.4
Microcell Telecommunications, Inc. "B"-/- {\/} .......... CAN 596,400 5,330,325 0.3
China Telecom (Hong Kong) Ltd.-/- ....................... HK 1,452,000 2,319,819 0.1
SK Telecom Co., Ltd. - ADR{\/} .......................... KOR 289,900 1,594,450 0.1
--------------
296,903,035
--------------
Telephone - Long Distance (5.7%)
Tel-Save Holdings, Inc.-/- .............................. US 2,000,000 43,000,000 2.5
Call-Net Enterprises, Inc.: ............................. CAN -- -- 2.2
"B"-/- ................................................ -- 1,036,700 20,966,470 --
"A"-/- ................................................ -- 519,400 10,688,760 --
"B" - 144A{.} -/- ..................................... -- 379,400 7,673,077 --
Bell Canada International, Inc.: ........................ CAN -- -- 0.8
Common-/- ............................................. -- 717,300 12,165,392 --
Common-/- {\/} ........................................ -- 132,500 2,235,938 --
RSL Communications Ltd. "A"-/- .......................... US 136,000 3,196,000 0.2
--------------
99,925,637
--------------
Telephone - Regional/Local (5.6%)
ICG Communications, Inc.-/- ............................. US 1,504,600 34,605,800 2.0
Intermedia Communications of Florida, Inc.-/- ........... US 613,900 27,855,713 1.6
Teleport Communications Group, Inc. "A"-/- .............. US 364,000 17,608,500 1.0
ING Barings Russian Regional Telecommunications Basket
Bridge Certificates-/- {\/} {=} ........................ RUS 1,749 14,383,024 0.8
Brooks Fiber Properties, Inc.-/- ........................ US 41,400 2,302,875 0.1
NEXTLINK Communications, Inc. "A"-/- .................... US 78,000 1,764,750 0.1
--------------
98,520,662
--------------
Multi-Industry (4.7%)
Mannesmann AG ........................................... GER 140,900 59,481,125 3.5
Grupo Carso, S.A. de C.V. "A1" .......................... MEX 3,300,000 20,985,629 1.2
--------------
80,466,754
--------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F22
<PAGE>
GT GLOBAL TELECOMMUNICATIONS FUND
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ----------------------------------------------------------- -------- ----------- -------------- -------------
<S> <C> <C> <C> <C>
Aerospace/Defense (2.6%)
Orbital Sciences Corp.{::} -/- .......................... US 1,838,500 $ 44,813,438 2.6
--------------
Telecom Technology (2.5%)
Uniphase Corp.-/- ....................................... US 449,900 30,199,538 1.8
Three-Five Systems, Inc.{::} -/- ........................ US 599,000 12,429,250 0.7
--------------
42,628,788
--------------
Cable Television (1.6%)
Comcast Corp. "A" ....................................... US 604,300 16,618,250 1.0
Comcast UK Cable Partners Ltd. "A"-/- ................... UK 415,000 4,707,656 0.3
United International Holdings, Inc. "A"-/- .............. US 373,000 4,615,875 0.3
--------------
25,941,781
--------------
Broadcasting & Publishing (1.4%)
EchoStar Communications Corp. "A"{::} ................... US 609,200 11,574,800 0.7
Sistem Televisyen Malaysia Bhd. ......................... MAL 7,436,000 7,549,919 0.4
Seat SpA-/- ............................................. ITLY 16,820,000 4,413,481 0.3
--------------
23,538,200
--------------
Semiconductors (0.8%)
DSP Communications, Inc.-/- ............................. US 624,000 11,544,000 0.7
General Semiconductor, Inc.-/- .......................... US 175,000 1,990,625 0.1
--------------
13,534,625
--------------
Retailers - Other (0.3%)
Asia Food & Properties Ltd.-/- {\/} ..................... SING 14,192,000 4,328,560 0.3
Gran Cadena de Almacenes Colombianos S.A. ............... COL 66,560 82,032 --
--------------
4,410,592
--------------
Networking (0.2%)
3Com Corp.-/- ........................................... US 80,100 3,319,144 0.2
-------------- -----
TOTAL EQUITY INVESTMENTS (cost $1,274,850,186) ............ 1,602,083,312 93.1
-------------- -----
<CAPTION>
PRINCIPAL VALUE % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- ----------------------------------------------------------- -------- ----------- -------------- -------------
<S> <C> <C> <C> <C>
Structured Note (2.2%)
Russia (2.2%)
Credit Suisse Financial Products Russian Equity Linked
Note, 3.3% due 4/29/98 (This is an equity linked note.
The value of this note is linked to the underlying
value of Rostelecom.)-/- (.) ......................... USD 38,000,000 37,012,000 2.2
-------------- -----
TOTAL FIXED INCOME INVESTMENTS (cost $38,000,000) ......... 37,012,000 2.2
-------------- -----
</TABLE>
The accompanying notes are an integral part of the financial statements.
F23
<PAGE>
GT GLOBAL TELECOMMUNICATIONS FUND
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NO. OF VALUE % OF NET
WARRANTS COUNTRY WARRANTS (NOTE 1) ASSETS
- ----------------------------------------------------------- -------- ----------- -------------- -------------
<S> <C> <C> <C> <C>
Asia Food & Properties Ltd. Warrants, expire
7/12/02{\/} ............................................ SING 1,064,400 $ 191,592 --
FOOD
American Satellite Network Warrants, expire 1/1/99(::)
(.) .................................................... US 65,825 -- --
WIRELESS COMMUNICATIONS
-------------- -----
TOTAL WARRANTS (cost $484,741) ............................ 191,592 --
-------------- -----
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- ----------------------------------------------------------- -------------- -------------
<S> <C> <C> <C> <C>
Dated October 31, 1997, with State Street Bank & Trust
Co., due November 3, 1997, for an effective yield of
5.57%, collateralized by $35,290,000 U.S. Treasury Bond,
8.875% due 8/15/17 (market value of collateral is
$46,298,227, including accrued interest).
(cost $45,388,021) .................................... 45,388,021 2.6
-------------- -----
TOTAL INVESTMENTS (cost $1,358,722,948) * ................ 1,684,674,925 97.9
Other Assets and Liabilities .............................. 36,444,134 2.1
-------------- -----
NET ASSETS ................................................ $1,721,119,059 100.0
-------------- -----
-------------- -----
</TABLE>
- --------------
-/- Non-income producing security.
{::} Security was an affiliate at October 31, 1997 (see Note 6 of Notes
to Financial Statements).
{\/} U.S. currency denominated.
{.} Security exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers.
{=} Issued by ING Barings, the value of which is linked to the
underlying value of a basket of shares issued by Russian regional
telephone companies.
(.) Restricted securities: At October 31, 1997 the Fund owned the
following restricted securities constituting 2.8% of net assets
which may not be publicly sold without registration under the
Securities Act of 1933 (Note 1). Additional information on the
securities is as follows:
<TABLE>
<CAPTION>
VALUE
PER
SHARE
(NOTE
DESCRIPTION ACQUISITION DATE SHARES COST 1)
----------------------------------------------- ----------------- ------ ----------- ------
<S> <C> <C> <C> <C>
American Satellite Network Warrants, expire
1/1/99........................................ 12/31/93 65,825 $ -- $--
Credit Suisse Financial Products Russian Equity
Linked Note, 3.3% due 4/29/98................. 4/29/97 38,000,000 38,000,000 0.97
Himachal Futuristic Communications Ltd. - 144A
GDR........................................... 8/1/95 1,248,000 9,604,650 1.75
PLD Telekon, Inc............................... 8/30/96 510,000 3,498,750 7.88
Russian Telecommunications Development Corp.:
Non-voting................................... 12/22/93 453,000 4,530,000 7.50
Voting....................................... 12/22/93 331,000 3,310,000 7.50
</TABLE>
(::) Valued in good faith at fair value using procedures approved by the
Board of Directors (See Note 1 of Notes to Financial Statements).
* For Federal income tax purposes, cost is $1,359,258,436 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 519,851,820
Unrealized depreciation: (194,435,331)
-------------
Net unrealized appreciation: $ 325,416,489
-------------
-------------
</TABLE>
Abbreviations:
ADR--American Depository Receipt
GDR--Global Depository Receipt
The accompanying notes are an integral part of the financial statements.
F24
<PAGE>
GT GLOBAL TELECOMMUNICATIONS FUND
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1997
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at October 31, 1997, was concentrated in the
following countries:
<TABLE>
<CAPTION>
PERCENTAGE OF NET ASSETS {D}
-------------------------------------------
FIXED INCOME,
RIGHTS & SHORT-TERM
COUNTRY (COUNTRY CODE/CURRENCY CODE) EQUITY WARRANTS & OTHER TOTAL
- -------------------------------------- ------ ------------- ---------- -----
<S> <C> <C> <C> <C>
Brazil (BRZL/BRL) .................... 3.7 3.7
Canada (CAN/CAD) ..................... 8.4 8.4
Czech Republic (CZCH/CSK) ............ 2.6 2.6
Finland (FIN/FIM) .................... 5.4 5.4
France (FR/FRF) ...................... 0.9 0.9
Germany (GER/DEM) .................... 3.5 3.5
Greece (GREC/GRD) .................... 1.6 1.6
Hong Kong (HK/HKD) ................... 0.6 0.6
India (IND/INR) ...................... 0.1 0.1
Israel (ISRL/ILS) .................... 5.1 5.1
Italy (ITLY/ITL) ..................... 4.7 4.7
Japan (JPN/JPY) ...................... 1.8 1.8
Korea (KOR/KRW) ...................... 0.1 0.1
Luxembourg (LUX/LUF) ................. 2.6 2.6
Malaysia (MAL/MYR) ................... 0.4 0.4
Mexico (MEX/MXN) ..................... 4.3 4.3
Peru (PERU/PES) ...................... 0.4 0.4
Russia (RUS/SUR) ..................... 1.8 2.2 4.0
Singapore (SING/SGD) ................. 0.3 0.3
Sweden (SWDN/SEK) .................... 3.1 3.1
Thailand (THAI/THB) .................. 0.8 0.8
Turkey (TRKY/TRL) .................... 0.3 0.3
United Kingdom (UK/GBP) .............. 3.9 3.9
United States (US/USD) ............... 36.5 4.7 41.2
Venezuela (VENZ/VEB) ................. 0.2 0.2
------ ----- ----- -----
Total ............................... 93.1 2.2 4.7 100.0
------ ----- ----- -----
------ ----- ----- -----
</TABLE>
- --------------
{d} Percentages indicated are based on net assets of $1,721,119,059.
The accompanying notes are an integral part of the financial statements.
F25
<PAGE>
GT GLOBAL TELECOMMUNICATIONS FUND
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1997
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
OCTOBER 31, 1997
<TABLE>
<CAPTION>
UNREALIZED
MARKET VALUE CONTRACT DELIVERY APPRECIATION
CONTRACTS TO BUY: (U.S. DOLLARS) PRICE DATE (DEPRECIATION)
- ---------------------------------------- -------------- ----------- -------- --------------
<S> <C> <C> <C> <C>
Japanese Yen............................ 13,280,549 118.50000 11/12/97 $ (201,730)
Japanese Yen............................ 673,732 118.60000 11/12/97 (9,657)
-------------- --------------
Total Contracts to Buy (Payable amount
$14,165,668)......................... 13,954,281 (211,387)
-------------- --------------
THE VALUE OF CONTRACTS TO BUY AS
PERCENTAGE OF NET ASSETS IS 0.81%.
<CAPTION>
CONTRACTS TO SELL:
- ----------------------------------------
<S> <C> <C> <C> <C>
British Pounds.......................... 41,535,139 0.60190 1/20/98 (1,170,888)
Deutsche Marks.......................... 15,664,388 1.80000 11/21/97 (664,388)
Deutsche Marks.......................... 7,948,226 1.72400 11/21/97 (1,591)
Finnish Markka.......................... 38,825,761 5.28300 1/21/98 (968,483)
Italian Liras........................... 50,091,184 1730.40000 1/21/98 (969,594)
Japanese Yen............................ 23,255,611 113.59900 11/12/97 1,371,807
Japanese Yen............................ 17,298,836 114.50000 11/12/97 876,273
Swedish Kronor.......................... 51,700,408 7.61030 1/21/98 (979,674)
-------------- --------------
Total Contracts to Sell (Receivable
amount $243,813,015)................. 246,319,553 (2,506,538)
-------------- --------------
THE VALUE OF CONTRACTS TO SELL AS
PERCENTAGE OF NET ASSETS IS 14.31%.
Total Open Forward Foreign Currency
Contracts, Net....................... $(2,717,925)
--------------
--------------
</TABLE>
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
F26
<PAGE>
GT GLOBAL THEME FUNDS
STATEMENT OF ASSETS
AND LIABILITIES
October 31, 1997
<TABLE>
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------
<CAPTION>
GT GLOBAL
-----------------------------------------------------------------------------
CONSUMER NATURAL
PRODUCTS AND FINANCIAL INFRASTRUCTURE RESOURCES
SERVICES FUND- SERVICES FUND- HEALTH FUND- FUND-
CONSOLIDATED CONSOLIDATED CARE CONSOLIDATED CONSOLIDATED
(NOTE 1) (NOTE 1) FUND (NOTE 1) (NOTE 1)
-------------- -------------- ------------ -------------- ------------
<S> <C> <C> <C> <C> <C>
Assets:
Investments in securities: (Note 1)
At identified cost............... $124,047,571 $69,090,966 $484,207,357 $76,186,714 $136,805,346
-------------- -------------- ------------ -------------- ------------
-------------- -------------- ------------ -------------- ------------
At value......................... $132,596,014 $76,932,464 $547,657,721 $94,961,508 $171,179,415
Repurchase Agreement, at value
and cost (Note 1)............... 5,697,881 2,708,419 72,617,234 2,156,334 --
U.S. currency...................... 303 -- 390 128 705
Foreign currencies (cost $249,434,
$290,416, $32,405,
$252,788, $2,016,446, and
$938,200, respectively)........... 247,103 290,889 32,773 257,815 2,016,446
Dividends and dividend withholding
tax reclaims receivable........... 29,063 50,112 10,585 25,624 15,438
Interest receivable................ -- -- -- -- --
Receivable for forward foreign
currency contracts -- closed, net
(Note 1).......................... -- -- -- 5,096 --
Receivable for Fund shares sold.... 585,508 1,011,553 13,993,515 141,205 5,010,514
Receivable for open forward foreign
currency contracts (Note 1)....... -- 59,877 -- -- --
Receivable for securities sold..... 25,634,646 1,515,031 6,745,139 1,309,852 6,715,639
Unamortized organizational costs
(Note 1).......................... 22,264 19,944 -- 16,280 16,225
Miscellaneous receivable........... 91,501 4,131 36,371 -- 33,585
-------------- -------------- ------------ -------------- ------------
Total assets..................... 164,904,283 82,592,420 641,093,728 98,873,842 184,987,967
-------------- -------------- ------------ -------------- ------------
Liabilities:
Payable for custodian fees......... 769 10,403 7,317 1,332 8,200
Payable for Directors' and
Trustees' fees and expenses
(Note 2).......................... 4,859 4,446 9,136 7,921 5,237
Payable for forward foreign
currency contracts -- closed, net
(Note 1).......................... -- -- -- -- --
Payable for fund accounting fees
(Note 2).......................... 4,352 1,845 14,194 2,367 3,914
Payable for Fund shares
repurchased....................... 261,522 142,435 882,049 496,631 4,099,045
Payable for investment management
and administration fees (Note
2)................................ 139,166 180,741 536,273 89,949 147,355
Payable for loan outstanding (Note
1)................................ -- -- -- -- 4,670,000
Payable for open forward foreign
currency contracts, net (Note
1)................................ -- -- -- 50,790 --
Payable for printing and postage
expenses.......................... 33,464 23,148 73,457 51,926 45,104
Payable for professional fees...... 23,989 25,345 39,780 30,852 35,756
Payable for registration and filing
fees.............................. 4,130 2,371 15,839 2,078 12,139
Payable for securities purchased... 1,563,285 1,154,504 12,706,263 -- 4,125,569
Payable for service and
distribution expenses (Note 2).... 114,540 57,009 346,611 74,426 113,980
Payable for transfer agent fees
(Note 2).......................... 55,435 20,911 111,824 38,302 39,544
Other accrued expenses............. 36,359 7,528 8,868 8,109 8,451
-------------- -------------- ------------ -------------- ------------
Total liabilities................ 2,241,870 1,630,686 14,751,611 854,683 13,314,294
Minority interest (Notes 1 & 2).... 100 100 -- 100 100
-------------- -------------- ------------ -------------- ------------
Net assets........................... $162,662,313 $80,961,634 $626,342,117 $98,019,059 $171,673,573
-------------- -------------- ------------ -------------- ------------
-------------- -------------- ------------ -------------- ------------
<CAPTION>
TELECOM-
MUNICATIONS
FUND
---------------
<S> <C>
Assets:
Investments in securities: (Note 1)
At identified cost............... $ 1,313,334,927
---------------
---------------
At value......................... $ 1,639,286,904
Repurchase Agreement, at value
and cost (Note 1)............... 45,388,021
U.S. currency...................... 1,822,076
Foreign currencies (cost $249,434,
$290,416, $32,405,
$252,788, $2,016,446, and
$938,200, respectively)........... 944,514
Dividends and dividend withholding
tax reclaims receivable........... 403,424
Interest receivable................ 639,026
Receivable for forward foreign
currency contracts -- closed, net
(Note 1).......................... --
Receivable for Fund shares sold.... 15,407,247
Receivable for open forward foreign
currency contracts (Note 1)....... --
Receivable for securities sold..... 28,894,370
Unamortized organizational costs
(Note 1).......................... --
Miscellaneous receivable........... 76,388
---------------
Total assets..................... 1,732,861,970
---------------
Liabilities:
Payable for custodian fees......... 84,942
Payable for Directors' and
Trustees' fees and expenses
(Note 2).......................... 19,588
Payable for forward foreign
currency contracts -- closed, net
(Note 1).......................... 518,821
Payable for fund accounting fees
(Note 2).......................... 42,359
Payable for Fund shares
repurchased....................... 3,902,530
Payable for investment management
and administration fees (Note
2)................................ 1,545,877
Payable for loan outstanding (Note
1)................................ --
Payable for open forward foreign
currency contracts, net (Note
1)................................ 2,717,925
Payable for printing and postage
expenses.......................... 143,320
Payable for professional fees...... 42,564
Payable for registration and filing
fees.............................. 21,199
Payable for securities purchased... 824,693
Payable for service and
distribution expenses (Note 2).... 1,246,800
Payable for transfer agent fees
(Note 2).......................... 578,391
Other accrued expenses............. 53,902
---------------
Total liabilities................ 11,742,911
Minority interest (Notes 1 & 2).... --
---------------
Net assets........................... $ 1,721,119,059
---------------
---------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F27
<PAGE>
GT GLOBAL THEME FUNDS
STATEMENT OF ASSETS
AND LIABILITIES (cont'd)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GT GLOBAL
-----------------------------------------------------------------------------
CONSUMER NATURAL
PRODUCTS AND FINANCIAL INFRASTRUCTURE RESOURCES
SERVICES FUND- SERVICES FUND- HEALTH FUND- FUND-
CONSOLIDATED CONSOLIDATED CARE CONSOLIDATED CONSOLIDATED
(NOTE 1) (NOTE 1) FUND (NOTE 1) (NOTE 1)
-------------- -------------- ------------ -------------- ------------
<S> <C> <C> <C> <C> <C>
Class A:
Net assets......................... $ 62,637,424 $29,639,233 $472,082,753 $38,281,107 $ 69,975,533
-------------- -------------- ------------ -------------- ------------
-------------- -------------- ------------ -------------- ------------
Shares outstanding................. 2,823,290 1,720,718 16,869,933 2,550,862 3,388,224
Net asset value and redemption
price per share................... $ 22.19 $ 17.22 $ 27.98 $ 15.01 $ 20.65
-------------- -------------- ------------ -------------- ------------
-------------- -------------- ------------ -------------- ------------
Maximum offering price per share
(100/95.25 of Class A net asset
value) *.......................... $ 23.30 $ 18.08 $ 29.38 $ 15.76 $ 21.68
-------------- -------------- ------------ -------------- ------------
-------------- -------------- ------------ -------------- ------------
Class B:+
Net assets......................... $ 93,978,324 $47,584,875 $147,440,444 $57,199,440 $ 86,812,455
-------------- -------------- ------------ -------------- ------------
-------------- -------------- ------------ -------------- ------------
Shares outstanding................. 4,298,574 2,803,980 5,406,267 3,878,968 4,262,012
Net asset value and offering price
per share......................... $ 21.86 $ 16.97 $ 27.27 $ 14.75 $ 20.37
-------------- -------------- ------------ -------------- ------------
-------------- -------------- ------------ -------------- ------------
Advisor Class:
Net assets......................... $ 6,046,565 $ 3,737,526 $ 6,818,920 $ 2,538,512 $ 14,885,585
-------------- -------------- ------------ -------------- ------------
-------------- -------------- ------------ -------------- ------------
Shares outstanding................. 268,724 214,778 240,609 166,702 715,607
Net asset value, offering price per
share, and redemption price per
share............................. $ 22.50 $ 17.40 $ 28.34 $ 15.23 $ 20.80
-------------- -------------- ------------ -------------- ------------
-------------- -------------- ------------ -------------- ------------
Net assets consist of:
Paid in capital (Note 4)........... $139,734,245 $70,584,296 $418,339,020 $78,555,962 $132,802,223
Undistributed net investment
income............................ -- -- -- -- --
Accumulated net realized gain on
investments and foreign currency
transactions...................... 14,374,566 2,469,935 144,809,745 733,004 4,606,185
Net unrealized appreciation
(depreciation) on translation of
assets and liabilities in foreign
currencies........................ 5,059 65,905 (257,012) (44,701) (108,904)
Net unrealized appreciation of
investments....................... 8,548,443 7,841,498 63,450,364 18,774,794 34,374,069
-------------- -------------- ------------ -------------- ------------
Total -- representing net assets
applicable to capital shares
outstanding......................... $162,662,313 $80,961,634 $626,342,117 $98,019,059 $171,673,573
-------------- -------------- ------------ -------------- ------------
-------------- -------------- ------------ -------------- ------------
<CAPTION>
TELECOM-
MUNICATIONS
FUND
---------------
<S> <C>
Class A:
Net assets......................... $ 910,801,431
---------------
---------------
Shares outstanding................. 50,482,268
Net asset value and redemption
price per share................... $ 18.04
---------------
---------------
Maximum offering price per share
(100/95.25 of Class A net asset
value) *.......................... $ 18.94
---------------
---------------
Class B:+
Net assets......................... $ 805,535,052
---------------
---------------
Shares outstanding................. 45,831,329
Net asset value and offering price
per share......................... $ 17.58
---------------
---------------
Advisor Class:
Net assets......................... $ 4,782,576
---------------
---------------
Shares outstanding................. 261,622
Net asset value, offering price per
share, and redemption price per
share............................. $ 18.28
---------------
---------------
Net assets consist of:
Paid in capital (Note 4)........... $ 1,284,396,946
Undistributed net investment
income............................ 5,534
Accumulated net realized gain on
investments and foreign currency
transactions...................... 113,512,388
Net unrealized appreciation
(depreciation) on translation of
assets and liabilities in foreign
currencies........................ (2,747,786)
Net unrealized appreciation of
investments....................... 325,951,977
---------------
Total -- representing net assets
applicable to capital shares
outstanding......................... $ 1,721,119,059
---------------
---------------
<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.
F28
<PAGE>
GT GLOBAL THEME FUNDS
STATEMENT OF OPERATIONS
Year ended October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GT GLOBAL
-----------------------------------------------------------------------------
CONSUMER NATURAL
PRODUCTS AND FINANCIAL HEALTH INFRASTRUCTURE RESOURCES
SERVICES FUND- SERVICES FUND- CARE FUND- FUND-
CONSOLIDATED CONSOLIDATED FUND CONSOLIDATED CONSOLIDATED
-------------- -------------- ------------ -------------- ------------
<S> <C> <C> <C> <C> <C>
Investment income:
Dividend income (net of foreign
withholding tax of $116,237,
$77,681, $47,010, $134,900,
$37,547, and $1,130,922,
respectively)...................... $ 1,313,121 $ 984,532 $ 1,039,797 $1,596,063 $ 449,578
Interest income..................... 547,671 222,469 3,553,024 438,660 389,867
Other income........................ -- -- 10,693 -- --
-------------- -------------- ------------ -------------- ------------
Total investment income........... 1,860,792 1,207,001 4,603,514 2,034,723 839,445
-------------- -------------- ------------ -------------- ------------
Expenses:
Investment management and
administration fees (Note 2)....... 1,624,151 466,730 5,820,067 1,038,752 1,317,793
Amortization of organization costs
(Note 1)........................... 10,300 12,622 -- 10,300 10,300
Custodian fees (Note 1)............. 37,548 43,877 41,984 32,117 46,437
Directors' and Trustees' fees and
expenses (Note 2).................. 10,068 15,695 13,505 16,060 16,464
Fund accounting fees (Note 2)....... 43,330 12,292 153,780 27,303 34,698
Professional fees................... 62,925 77,090 73,277 74,770 86,956
Printing and postage expenses....... 53,290 27,560 239,520 49,065 54,239
Registration and filing fees........ 75,895 50,741 80,092 54,967 80,810
Service and distribution expenses:
(Note 2)
Class A........................... 351,953 97,454 2,327,631 218,486 291,788
Class B........................... 941,035 280,650 1,316,284 621,768 733,200
Transfer agent fees (Note 2)........ 547,348 177,473 1,346,860 364,416 478,946
Other expenses...................... 10,567 7,531 34,305 17,058 81,546
-------------- -------------- ------------ -------------- ------------
Total expenses before
reductions....................... 3,768,410 1,269,715 11,447,305 2,525,062 3,233,177
-------------- -------------- ------------ -------------- ------------
Expense reductions (Notes 1 &
5)............................... (244,767) (31,702) (178,043) (84,870) (138,074)
-------------- -------------- ------------ -------------- ------------
Total net expenses.................. 3,523,643 1,238,013 11,269,262 2,440,192 3,095,103
-------------- -------------- ------------ -------------- ------------
Net investment loss................... (1,662,851) (31,012) (6,665,748) (405,469) (2,255,658)
-------------- -------------- ------------ -------------- ------------
Net realized and unrealized gain on
investments and foreign currencies:
(Note 1)
Net realized gain on investments.... 16,725,116 2,648,364 153,144,761 380,153 7,635,020
Net realized gain (loss) on foreign
currency transactions.............. (557,667) (19,802) 454,546 398,459 (94,442)
-------------- -------------- ------------ -------------- ------------
Net realized gain during the
year............................. 16,167,449 2,628,562 153,599,307 778,612 7,540,578
-------------- -------------- ------------ -------------- ------------
Net change in unrealized
appreciation (depreciation) on
translation of assets and
liabilities in foreign
currencies......................... 5,172 58,275 (569,426) (116,926) (125,779)
Net change in unrealized
appreciation (depreciation) of
investments........................ (714,518) 6,449,986 1,308,779 8,647,635 18,607,939
-------------- -------------- ------------ -------------- ------------
Net unrealized appreciation
(depreciation) during the period
................................. (709,346) 6,508,261 739,353 8,530,709 18,482,160
-------------- -------------- ------------ -------------- ------------
Net realized and unrealized gain on
investments and foreign currencies... 15,458,103 9,136,823 154,338,660 9,309,321 26,022,738
-------------- -------------- ------------ -------------- ------------
Net increase in net assets resulting
from operations...................... $13,795,252 $9,105,811 $147,672,912 $8,903,852 $23,767,080
-------------- -------------- ------------ -------------- ------------
-------------- -------------- ------------ -------------- ------------
<CAPTION>
TELECOM-
MUNICATIONS
FUND
-------------
<S> <C>
Investment income:
Dividend income (net of foreign
withholding tax of $116,237,
$77,681, $47,010, $134,900,
$37,547, and $1,130,922,
respectively)...................... $ 12,312,099
Interest income..................... 2,451,921
Other income........................ 100,726
-------------
Total investment income........... 14,864,746
-------------
Expenses:
Investment management and
administration fees (Note 2)....... 17,999,111
Amortization of organization costs
(Note 1)........................... --
Custodian fees (Note 1)............. 744,400
Directors' and Trustees' fees and
expenses (Note 2).................. 27,375
Fund accounting fees (Note 2)....... 493,322
Professional fees................... 89,205
Printing and postage expenses....... 421,575
Registration and filing fees........ 110,230
Service and distribution expenses:
(Note 2)
Class A........................... 5,105,842
Class B........................... 8,933,516
Transfer agent fees (Note 2)........ 5,229,276
Other expenses...................... 619,413
-------------
Total expenses before
reductions....................... 39,773,265
-------------
Expense reductions (Notes 1 &
5)............................... (1,051,898)
-------------
Total net expenses.................. 38,721,367
-------------
Net investment loss................... (23,856,621)
-------------
Net realized and unrealized gain on
investments and foreign currencies:
(Note 1)
Net realized gain on investments.... 101,709,075
Net realized gain (loss) on foreign
currency transactions.............. 18,717,671
-------------
Net realized gain during the
year............................. 120,426,746
-------------
Net change in unrealized
appreciation (depreciation) on
translation of assets and
liabilities in foreign
currencies......................... (7,132,389)
Net change in unrealized
appreciation (depreciation) of
investments........................ 217,773,979
-------------
Net unrealized appreciation
(depreciation) during the period
................................. 210,641,590
-------------
Net realized and unrealized gain on
investments and foreign currencies... 331,068,336
-------------
Net increase in net assets resulting
from operations...................... $ 307,211,715
-------------
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F29
<PAGE>
GT GLOBAL THEME FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GT GLOBAL
-----------------------------------------------------------------------------
CONSUMER PRODUCTS AND FINANCIAL SERVICES
SERVICES FUND-CONSOLIDATED HEALTH CARE
FUND-CONSOLIDATED ----------------------- FUND
------------------------ YEAR ENDED --------------------------
YEAR ENDED YEAR ENDED YEAR ENDED OCTOBER YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, 31, OCTOBER 31, OCTOBER 31,
1997 1996 1997 1996 1997 1996
----------- ----------- ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net
assets
Operations:
Net investment income
(loss)..................... $(1,662,851) $ (806,945) $ (31,012) $ 18,823 $ (6,665,748) $ (4,508,835)
Net realized gain on
investments and foreign
currency transactions...... 16,167,449 8,472,742 2,628,562 1,764,380 153,599,307 176,889,538
Net change in unrealized
appreciation (depreciation)
on translation of assets
and liabilities in foreign
currencies................. 5,172 (7,034) 58,275 (6,352) (569,426) (547,070)
Net change in unrealized
appreciation (depreciation)
of investments............. (714,518) 8,880,649 6,449,986 615,083 1,308,779 (53,392,951)
----------- ----------- ----------- ---------- ------------ ------------
Net increase in net assets
resulting from
operations............... 13,795,252 16,539,412 9,105,811 2,391,934 147,672,912 118,440,682
----------- ----------- ----------- ---------- ------------ ------------
Class A:
Distributions to shareholders:
(Note 1)
From net investment
income..................... -- -- -- (56,390) -- --
From net realized gain on
investments................ (3,424,902) (217,050) (580,522) (8,739) (34,613,411) (54,405,334)
Class B:
Distributions to shareholders:
(Note 1)
From net investment
income..................... -- -- -- (37,999) -- --
From net realized gain on
investments................ (4,055,905) (180,431) (823,692) (7,991) (8,701,491) (9,956,648)
Advisor Class:
Distributions to shareholders:
(Note 1)
From net investment
income..................... -- -- -- (377) -- --
From net realized gain on
investments................ (308,573) (5,969) (5,018) (43) (57,488) (69,184)
----------- ----------- ----------- ---------- ------------ ------------
Total distributions....... (7,789,380) (403,450) (1,409,232) (111,539) (43,372,390) (64,431,166)
----------- ----------- ----------- ---------- ------------ ------------
Capital share transactions:
(Note 4)
Increase from capital shares
sold and reinvested........ 136,239,369 241,650,741 130,520,030 19,900,814 1,007,452,632 2,138,295,778
Decrease from capital shares
repurchased................ (151,833,735) (92,740,871) (74,514,633) (15,187,336) (1,062,045,275) (2,113,330,083)
----------- ----------- ----------- ---------- ------------ ------------
Net increase (decrease)
from capital share
transactions............. (15,594,366) 148,909,870 56,005,397 4,713,478 (54,592,643) 24,965,695
----------- ----------- ----------- ---------- ------------ ------------
Total increase (decrease) in
net assets................... (9,588,494) 165,045,832 63,701,976 6,993,873 49,707,879 78,975,211
Net assets:
Beginning of year........... 172,250,807 7,204,975 17,259,658 10,265,785 576,634,238 497,659,027
----------- ----------- ----------- ---------- ------------ ------------
End of year *............... $162,662,313 $172,250,807 $80,961,634 $17,259,658 $626,342,117 $576,634,238
----------- ----------- ----------- ---------- ------------ ------------
----------- ----------- ----------- ---------- ------------ ------------
* Includes accumulated net
investment income/(loss)... $ -- $ -- $ -- $ -- $ -- $ --
----------- ----------- ----------- ---------- ------------ ------------
----------- ----------- ----------- ---------- ------------ ------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F30
<PAGE>
GT GLOBAL THEME FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (cont'd)
<TABLE>
<CAPTION>
GT GLOBAL
----------------------------------------------------------------------------
INFRASTRUCTURE
FUND-CONSOLIDATED NATURAL RESOURCES TELECOMMUNICATIONS
---------------------- FUND-CONSOLIDATED FUND
YEAR ENDED YEAR ENDED ------------------------ --------------------------
OCTOBER OCTOBER YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
31, 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1997 1996 1997 1996 1997 1996
---------- ---------- ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net
assets
Operations:
Net investment income
(loss)..................... $ (405,469) $ (421,987) $(2,255,658) $(1,055,526) $(23,856,621) $(26,498,477)
Net realized gain on
investments and foreign
currency transactions...... 778,612 5,308,138 7,540,578 7,316,705 120,426,746 230,489,793
Net change in unrealized
appreciation (depreciation)
on translation of assets
and liabilities in foreign
currencies................. (116,926) (86,155) (125,779) 65,378 (7,132,389) (21,852,465)
Net change in unrealized
appreciation (depreciation)
of investments............. 8,647,635 9,582,726 18,607,939 14,910,009 217,773,979 (5,766,662)
---------- ---------- ----------- ----------- ------------ ------------
Net increase in net assets
resulting from
operations............... 8,903,852 14,382,722 23,767,080 21,236,566 307,211,715 176,372,189
---------- ---------- ----------- ----------- ------------ ------------
Class A:
Distributions to shareholders:
(Note 1)
From net investment
income..................... -- -- -- (46,497) -- --
From net realized gain on
investments................ (1,943,050) -- (1,915,988) (9,643) (95,676,425) (64,901,484)
Class B:
Distributions to shareholders:
(Note 1)
From net investment
income..................... -- -- -- -- -- --
From net realized gain on
investments................ (2,733,339) -- (2,369,395) (10,136) (83,596,023) (54,643,650)
Advisor Class:
Distributions to shareholders:
(Note 1)
From net investment
income..................... -- -- -- (853) -- --
From net realized gain on
investments................ (17,129) -- (134,145) (69) (176,806) (33,321)
---------- ---------- ----------- ----------- ------------ ------------
Total distributions....... (4,693,518) -- (4,419,528) (67,198) (179,449,254) (119,578,455)
---------- ---------- ----------- ----------- ------------ ------------
Capital share transactions:
(Note 4)
Increase from capital shares
sold and reinvested........ 44,324,471 42,853,853 377,334,346 219,606,793 1,783,734,946 3,156,330,159
Decrease from capital shares
repurchased................ (42,934,337) (51,456,466) (336,987,548) (155,468,156) (2,403,405,013) (3,466,020,319)
---------- ---------- ----------- ----------- ------------ ------------
Net increase (decrease)
from capital share
transactions............. 1,390,134 (8,602,613) 40,346,798 64,138,637 (619,670,067) (309,690,160)
---------- ---------- ----------- ----------- ------------ ------------
Total increase (decrease) in
net assets................... 5,600,468 5,780,109 59,694,350 85,308,005 (491,907,606) (252,896,426)
Net assets:
Beginning of year........... 92,418,591 86,638,482 111,979,223 26,671,218 2,213,026,665 2,465,923,091
---------- ---------- ----------- ----------- ------------ ------------
End of year *............... $98,019,059 $92,418,591 $171,673,573 $111,979,223 $1,721,119,059 $2,213,026,665
---------- ---------- ----------- ----------- ------------ ------------
---------- ---------- ----------- ----------- ------------ ------------
* Includes accumulated net
investment income/(loss)... $ -- $ -- $ -- $ -- $ 5,534 $ 5,534
---------- ---------- ----------- ----------- ------------ ------------
---------- ---------- ----------- ----------- ------------ ------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F31
<PAGE>
GT GLOBAL THEME FUNDS
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
<TABLE>
<S> <C> <C> <C>
statements.
<CAPTION>
<S> <C> <C> <C>
<CAPTION>
CONSUMER PRODUCTS AND SERVICES FUND
------------------------------------------
CLASS A
------------------------------------------
DECEMBER 30, 1994
YEAR ENDED OCTOBER 31, (COMMENCEMENT OF
OPERATIONS) TO
---------------------- OCTOBER 31,
1997 (D) 1996 (D) 1995 (D)
---------- ---------- ------------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 20.98 $ 14.59 $ 11.43
---------- ---------- --------
Income from investment operations:
Net investment income (loss).......... (0.15) (0.22) 0.02*
Net realized and unrealized gain on
investments.......................... 2.27 7.13 3.14
---------- ---------- --------
Net increase from investment
operations......................... 2.12 6.91 3.16
---------- ---------- --------
Distributions to shareholders:
From net realized gain on
investments.......................... (0.91) (0.52) --
---------- ---------- --------
Total distributions................. (0.91) (0.52) --
---------- ---------- --------
Net asset value, end of period.......... $ 22.19 $ 20.98 $ 14.59
---------- ---------- --------
---------- ---------- --------
Total investment return (c)............. 10.55% 48.82% 27.65 % (b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 62,637 $ 76,900 $ 4,082
Ratio of net investment income (loss) to
average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1 & 5)....... (0.72)% (1.14)% 0.20 % (a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... (0.87)% (1.24)% (11.11)% (a)
Ratio of expenses to average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1 & 5)....... 1.84% 2.24% 2.32 % (a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... 1.99% 2.34% 13.63 % (a)
Portfolio turnover rate++............... 392% 169% 240 % (a)
Average commission rate per share paid
on portfolio transactions++............ $ 0.0319 $ 0.0545 N/A
</TABLE>
- ----------------
(a) Annualized.
(b) Not annualized.
(c) Total investment return does not include sales charges.
(d) These selected per share operating data were calculated based upon
average shares outstanding during the period.
* Before reimbursement by Chancellor LGT Asset Management, Inc., net
investment income per share would have been reduced by $1.12, $1.04
and $0.61 for Class A, Class B and Advisor Class, respectively.
+ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++ Portfolio turnover and average commission rates are calculated on the
basis of the Portfolio as a whole without distinguishing between the
classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
F32
<PAGE>
GT GLOBAL THEME FUNDS
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>
CONSUMER PRODUCTS AND SERVICES FUND
---------------------------------------------------------------------------------
CLASS B
------------------------------------------ ADVISOR CLASS+
-------------------------------------
DECEMBER 30, 1994
YEAR ENDED OCTOBER 31, (COMMENCEMENT OF YEAR ENDED OCTOBER 31, JUNE 1, 1995
OPERATIONS) TO TO
---------------------- OCTOBER 31, ---------------------- OCTOBER 31,
1997 (D) 1996 (D) 1995 (D) 1997 (D) 1996 (D) 1995 (D)
---------- ---------- ------------------ ---------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 20.79 $ 14.53 $ 11.43 $ 21.15 $ 14.64 $ 11.84
---------- ---------- -------- ---------- ---------- -------------
Income from investment operations:
Net investment income (loss).......... (0.24) (0.31) (0.04) * (0.04) (0.13) 0.04*
Net realized and unrealized gain on
investments.......................... 2.22 7.09 3.14 2.30 7.16 2.76
---------- ---------- -------- ---------- ---------- -------------
Net increase from investment
operations......................... 1.98 6.78 3.10 2.26 7.03 2.80
---------- ---------- -------- ---------- ---------- -------------
Distributions to shareholders:
From net realized gain on
investments.......................... (0.91) (0.52) -- (0.91) (0.52) --
---------- ---------- -------- ---------- ---------- -------------
Total distributions................. (0.91) (0.52) -- (0.91) (0.52) --
---------- ---------- -------- ---------- ---------- -------------
Net asset value, end of period.......... $ 21.86 $ 20.79 $ 14.53 $ 22.50 $ 21.15 $ 14.64
---------- ---------- -------- ---------- ---------- -------------
---------- ---------- -------- ---------- ---------- -------------
Total investment return (c)............. 9.95% 48.11% 27.12 % (b) 11.15% 49.50% 23.65%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 93,978 $ 87,904 $ 2,959 $ 6,047 $ 7,446 $ 164
Ratio of net investment income (loss) to
average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1 & 5)....... (1.22)% (1.64)% (0.30)% (a) (0.22)% (0.64)% 0.70%(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... (1.37)% (1.74)% (11.61)% (a) (0.37)% (0.74)% (10.61)%(a)
Ratio of expenses to average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1 & 5)....... 2.34% 2.74% 2.82 % (a) 1.34% 1.74% 1.82%(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... 2.49% 2.84% 14.13 % (a) 1.49% 1.84% 13.13%(a)
Portfolio turnover rate++............... 392% 169% 240 % (a) 392% 169% 240%(a)
Average commission rate per share paid
on portfolio transactions++............ $ 0.0319 $ 0.0545 N/A $ 0.0319 $ 0.0545 N/A
</TABLE>
- ----------------
(a) Annualized.
(b) Not annualized.
(c) Total investment return does not include sales charges.
(d) These selected per share operating data were calculated based upon
average shares outstanding during the period.
* Before reimbursement by Chancellor LGT Asset Management, Inc., net
investment income per share would have been reduced by $1.12, $1.04
and $0.61 for Class A, Class B and Advisor Class, respectively.
+ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++ Portfolio turnover and average commission rates are calculated on the
basis of the Portfolio as a whole without distinguishing between the
classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
F33
<PAGE>
GT GLOBAL THEME FUNDS
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding,
total investment return, ratios and supplemental data. This information has been
<TABLE>
<S> <C> <C> <C> <C>
derived from information provided in the financial statements.
<CAPTION>
<S> <C> <C> <C> <C>
<CAPTION>
FINANCIAL SERVICES FUND
-------------------------------------------------------
CLASS A
-------------------------------------------------------
MAY 31, 1994
YEAR ENDED OCTOBER 31, (COMMENCEMENT OF
----------------------------------- OPERATIONS) TO
1997 (D) 1996 (D) 1995 (D) OCTOBER 31, 1994
---------- ---------- ----------- ------------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 14.20 $ 11.92 $ 11.62 $ 11.43
---------- ---------- ----------- --------
Income from investment operations:
Net investment income (loss).......... 0.04 0.05* 0.17* * 0.02* * *
Net realized and unrealized gain on
investments.......................... 3.97 2.36 0.13 0.17
---------- ---------- ----------- --------
Net increase from investment
operations......................... 4.01 2.41 0.30 0.19
---------- ---------- ----------- --------
Distributions to shareholders:
From net investment income............ -- (0.12) -- --
From net realized gain on
investments.......................... (0.99) (0.01) -- --
---------- ---------- ----------- --------
Total distributions................. (0.99) (0.13) -- --
---------- ---------- ----------- --------
Net asset value, end of period.......... $ 17.22 $ 14.20 $ 11.92 $ 11.62
---------- ---------- ----------- --------
---------- ---------- ----------- --------
Total investment return (c)............. 29.91% 20.21% 2.58% 1.66 % (b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 29,639 $ 7,302 $ 5,687 $ 3,175
Ratio of net investment income (loss) to
average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1 & 5)....... 0.23% 0.41% 1.46% 0.66 % (a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... 0.16% (0.66)% (5.34)% (7.26)% (a)
Ratio of expenses to average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1 & 5)....... 2.29% 2.32% 2.34% 2.40 % (a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... 2.36% 3.39% 9.14% 10.32 % (a)
Portfolio turnover rate++............... 91% 103% 170% 53 % (a)
Average commission rate per share paid
on portfolio transactions++............ $ 0.0014 $ 0.0080 N/A N/A
</TABLE>
- ----------------
(a) Annualized.
(b) Not annualized.
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon average
shares outstanding during the period.
* Before reimbursement by Chancellor LGT Asset Management, Inc., the net
investment income per share would have been reduced by $0.13 for each
of the three classes.
* * Before reimbursement by Chancellor LGT Asset Management, Inc., the net
investment income per share would have been reduced by $0.59, $0.59
and $0.30 for Class A, Class B and Advisor Class, respectively.
* * * Before reimbursement by Chancellor LGT Asset Management, Inc., the net
investment income per share would have been reduced by $0.23 for Class
A and Class B.
+ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++ Portfolio turnover and average commission rates are calculated on the
basis of the Portfolio as a whole without distinguishing between the
classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
F34
<PAGE>
GT GLOBAL THEME FUNDS
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding,
total investment return, ratios and supplemental data. This information has been
derived from information provided in the financial statements.
<TABLE>
<CAPTION>
FINANCIAL SERVICES FUND
-------------------------------------------------------------------------------
ADVISOR CLASS+
CLASS B ----------------------
-------------------------------------------------------
MAY 31, 1994 YEAR ENDED OCTOBER 31,
YEAR ENDED OCTOBER 31, (COMMENCEMENT OF
----------------------------------- OPERATIONS) TO ----------------------
1997 (D) 1996 (D) 1995 (D) OCTOBER 31, 1994 1997 (D) 1996 (D)
---------- ---------- ----------- ------------------ ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 14.06 $ 11.83 $ 11.60 $ 11.43 $ 14.26 $ 11.95
---------- ---------- ----------- -------- ---------- ----------
Income from investment operations:
Net investment income (loss).......... (0.04) (0.01) * 0.11* * 0.00 * * 0.12 0.12*
Net realized and unrealized gain on
investments.......................... 3.94 2.34 0.12 0.17 4.01 2.36
---------- ---------- ----------- -------- ---------- ----------
Net increase from investment
operations......................... 3.90 2.33 0.23 0.17 4.13 2.48
---------- ---------- ----------- -------- ---------- ----------
Distributions to shareholders:
From net investment income............ -- (0.09) -- -- -- (0.16)
From net realized gain on
investments.......................... (0.99) (0.01) -- -- (0.99) (0.01)
---------- ---------- ----------- -------- ---------- ----------
Total distributions................. (0.99) (0.10) -- -- (0.99) (0.17)
---------- ---------- ----------- -------- ---------- ----------
Net asset value, end of period.......... $ 16.97 $ 14.06 $ 11.83 $ 11.60 $ 17.40 $ 14.26
---------- ---------- ----------- -------- ---------- ----------
---------- ---------- ----------- -------- ---------- ----------
Total investment return (c)............. 29.13% 19.81% 1.98% 1.49 % (b) 30.52% 20.87%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 47,585 $ 9,886 $ 4,548 $ 2,235 $ 3,738 $ 72
Ratio of net investment income (loss) to
average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1 & 5)....... (0.27)% (0.09)% 0.96% 0.16 % (a) 0.73% 0.91%
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... (0.34)% (1.16)% (5.84)% (7.76)% (a) 0.66%(a) (0.16)%
Ratio of expenses to average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1 & 5)....... 2.79% 2.82% 2.84% 2.90 % (a) 1.79% 1.82%
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... 2.86% 3.89% 9.64% 10.82 % (a) 1.86% 2.89%
Portfolio turnover rate++............... 91% 103% 170% 53 % (a) 91% 103%
Average commission rate per share paid
on portfolio transactions++............ $ 0.0014 $ 0.0080 N/A N/A $ 0.0014 $ 0.0080
<CAPTION>
JUNE 1, 1995
TO
OCTOBER 31,
1995 (D)
-------------
<S> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 11.09
-------------
Income from investment operations:
Net investment income (loss).......... 0.09* *
Net realized and unrealized gain on
investments.......................... 0.77
-------------
Net increase from investment
operations......................... 0.86
-------------
Distributions to shareholders:
From net investment income............ --
From net realized gain on
investments.......................... --
-------------
Total distributions................. --
-------------
Net asset value, end of period.......... $ 11.95
-------------
-------------
Total investment return (c)............. 7.75%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 31
Ratio of net investment income (loss) to
average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1 & 5)....... 1.96%(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... (4.84)%(a)
Ratio of expenses to average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1 & 5)....... 1.84%(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... 8.64%(a)
Portfolio turnover rate++............... 170%
Average commission rate per share paid
on portfolio transactions++............ N/A
</TABLE>
- ----------------
(a) Annualized.
(b) Not annualized.
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon average
shares outstanding during the period.
* Before reimbursement by Chancellor LGT Asset Management, Inc., the net
investment income per share would have been reduced by $0.13 for each
of the three classes.
* * Before reimbursement by Chancellor LGT Asset Management, Inc., the net
investment income per share would have been reduced by $0.59, $0.59
and $0.30 for Class A, Class B and Advisor Class, respectively.
* * * Before reimbursement by Chancellor LGT Asset Management, Inc., the net
investment income per share would have been reduced by $0.23 for Class
A and Class B.
+ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++ Portfolio turnover and average commission rates are calculated on the
basis of the Portfolio as a whole without distinguishing between the
classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
F35
<PAGE>
GT GLOBAL THEME FUNDS
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding,
total investment return, ratios and supplemental data. This information has been
<TABLE>
<S> <C> <C> <C> <C> <C>
derived from information provided in the financial statements.
<CAPTION>
<S> <C> <C> <C> <C> <C>
<CAPTION>
HEALTH CARE FUND
----------------------------------------------------------
CLASS A+
----------------------------------------------------------
YEAR ENDED OCTOBER 31,
----------------------------------------------------------
1997 (D) 1996 (D) 1995 1994 (D) 1993 (D)
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 23.60 $ 21.84 $ 19.60 $ 17.86 $ 17.44
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment loss................... (0.25) (0.17) (0.15) (0.22) (0.15)
Net realized and unrealized gain on
investments.......................... 6.48 4.79 3.73 2.02 0.57
---------- ---------- ---------- ---------- ----------
Net increase (decrease) from
investment operations.............. 6.23 4.62 3.58 1.80 0.42
---------- ---------- ---------- ---------- ----------
Distributions to shareholders:
From net realized gain on
investments.......................... (1.85) (2.86) (1.34) -- --
In excess of net realized gain on
investments.......................... -- -- -- (0.06) --
---------- ---------- ---------- ---------- ----------
Total distributions................. (1.85) (2.86) (1.34) (0.06) --
---------- ---------- ---------- ---------- ----------
Net asset value, end of period.......... $ 27.98 $ 23.60 $ 21.84 $ 19.60 $ 17.86
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Total investment return (c)............. 28.36% 23.14% 19.79% 10.11% 2.4%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 472,083 $ 467,861 $ 426,380 $ 438,940 $ 461,113
Ratio of net investment loss to average
net assets:
With expense reductions (Notes 1 &
5)................................... (1.00)% (0.71)% (0.72)% (1.23)% (0.9)%
Without expense reductions............ (1.03)% (0.75)% (0.78)% N/A N/A
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 1.77% 1.80% 1.85% 1.98% 2.0%
Without expense reductions............ 1.80% 1.84% 1.91% N/A N/A
Portfolio turnover rate++++............. 149% 157% 99% 64% 61%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0490 $ 0.0548 N/A N/A N/A
</TABLE>
- ----------------
(a) Annualized.
(b) Not annualized.
(c) Total investment return does not include sales charge.
(d) These selected per share data were calculated based upon average
shares outstanding during the period.
+ All capital shares issued and outstanding as of March 31, 1993 were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover and average commission rates are calculated on the
basis of the Fund as a whole without distinguishing between the
classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
F36
<PAGE>
GT GLOBAL THEME FUNDS
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding,
total investment return, ratios and supplemental data. This information has been
derived from information provided in the financial statements.
<TABLE>
<CAPTION>
HEALTH CARE FUND
-------------------------------------------------------------------------------------
ADVISOR CLASS+++
CLASS B++ ----------------------
-------------------------------------------------------------
APRIL 1, 1993 YEAR ENDED OCTOBER 31,
YEAR ENDED OCTOBER 31, TO
---------------------------------------------- OCTOBER 31, ----------------------
1997 (D) 1996 (D) 1995 1994 (D) 1993 (D) 1997 (D) 1996 (D)
---------- ---------- ---------- ---------- ------------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 23.15 $ 21.56 $ 19.46 $ 17.80 $ 15.59 $ 23.77 $ 21.88
---------- ---------- ---------- ---------- ------------- ---------- ----------
Income from investment operations:
Net investment loss................... (0.37) (0.27) (0.25) (0.32) (0.14) (0.12) (0.05)
Net realized and unrealized gain on
investments.......................... 6.34 4.72 3.69 2.02 2.35 6.54 4.80
---------- ---------- ---------- ---------- ------------- ---------- ----------
Net increase (decrease) from
investment operations.............. 5.97 4.45 3.44 1.70 2.21 6.42 4.75
---------- ---------- ---------- ---------- ------------- ---------- ----------
Distributions to shareholders:
From net realized gain on
investments.......................... (1.85) (2.86) (1.34) -- -- (1.85) (2.86)
In excess of net realized gain on
investments.......................... -- -- -- (0.04) -- -- --
---------- ---------- ---------- ---------- ------------- ---------- ----------
Total distributions................. (1.85) (2.86) (1.34) (0.04) -- (1.85) (2.86)
---------- ---------- ---------- ---------- ------------- ---------- ----------
Net asset value, end of period.......... $ 27.27 $ 23.15 $ 21.56 $ 19.46 $ 17.80 $ 28.34 $ 23.77
---------- ---------- ---------- ---------- ------------- ---------- ----------
---------- ---------- ---------- ---------- ------------- ---------- ----------
Total investment return (c)............. 27.75% 22.59% 19.17% 9.55% 14.2%(b) 29.00% 23.82%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 147,440 $ 107,622 $ 70,740 $ 39,100 $ 8,604 $ 6,819 $ 1,152
Ratio of net investment loss to average
net assets:
With expense reductions (Notes 1 &
5)................................... (1.50)% (1.21)% (1.22)% (1.73)% (1.4)%(a) (0.50)% (0.21)%
Without expense reductions............ (1.53)% (1.25)% (1.28)% N/A N/A (0.53)% (0.25)%
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 2.27% 2.30% 2.35% 2.48% 2.50%(a) 1.27% 1.30%
Without expense reductions............ 2.30% 2.34% 2.41% N/A N/A 1.30% 1.34%
Portfolio turnover rate++++............. 149% 157% 99% 64% 61% 149% 157%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0490 $ 0.0548 N/A N/A N/A $ 0.0490 $ 0.0548
<CAPTION>
JUNE 1, 1995
TO
OCTOBER 31,
1995
-------------
<S> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 18.66
-------------
Income from investment operations:
Net investment loss................... (0.02)
Net realized and unrealized gain on
investments.......................... 3.24
-------------
Net increase (decrease) from
investment operations.............. 3.22
-------------
Distributions to shareholders:
From net realized gain on
investments.......................... --
In excess of net realized gain on
investments.......................... --
-------------
Total distributions................. --
-------------
Net asset value, end of period.......... $ 21.88
-------------
-------------
Total investment return (c)............. 17.10%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 539
Ratio of net investment loss to average
net assets:
With expense reductions (Notes 1 &
5)................................... (0.22)%(a)
Without expense reductions............ (0.28)%(a)
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 1.35%(a)
Without expense reductions............ 1.41%(a)
Portfolio turnover rate++++............. 99%
Average commission rate per share paid
on portfolio transactions++++.......... N/A
</TABLE>
- ----------------
(a) Annualized.
(b) Not annualized.
(c) Total investment return does not include sales charge.
(d) These selected per share data were calculated based upon average
shares outstanding during the period.
+ All capital shares issued and outstanding as of March 31, 1993 were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover and average commission rates are calculated on the
basis of the Fund as a whole without distinguishing between the
classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
F37
<PAGE>
GT GLOBAL THEME FUNDS
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
<TABLE>
<S> <C> <C> <C> <C>
statements.
<CAPTION>
<S> <C> <C> <C> <C>
<CAPTION>
INFRASTRUCTURE FUND
-----------------------------------------------------
CLASS A
-----------------------------------------------------
MAY 31, 1994
YEAR ENDED OCTOBER 31, (COMMENCEMENT OF
---------------------------------- OPERATIONS) TO
1997 (D) 1996 (D) 1995 OCTOBER 31, 1994
---------- ---------- ---------- -----------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 14.42 $ 12.11 $ 12.47 $ 11.43
---------- ---------- ---------- -----------------
Income from investment operations:
Net investment income (loss).......... (0.01) (0.03) (0.03) * 0.01* *
Net realized and unrealized gain
(loss) on investments................ 1.32 2.34 (0.33) 1.03
---------- ---------- ---------- -----------------
Net increase (decrease) from
investment operations.............. 1.31 2.31 (0.36) 1.04
---------- ---------- ---------- -----------------
Distributions to shareholders:
From net realized gain on
investments.......................... (0.72) -- -- --
---------- ---------- ---------- -----------------
Total distributions................. (0.72) -- -- --
---------- ---------- ---------- -----------------
Net asset value, end of period.......... $ 15.01 $ 14.42 $ 12.11 $ 12.47
---------- ---------- ---------- -----------------
---------- ---------- ---------- -----------------
Total investment return (c)............. 9.38% 19.08% (2.89)% 9.10% (b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 38,281 $ 38,397 $ 36,241 $ 23,615
Ratio of net investment income (loss) to
average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1 & 5)....... (0.09)% (0.19)% (0.32)% 0.41% (a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... (0.17)% (0.30)% (0.58)% (0.47)% (a)
Ratio of expenses to average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1 & 5)....... 2.00% 2.14% 2.36% 2.40% (a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... 2.08% 2.25% 2.62% 3.28% (a)
Portfolio turnover rate++............... 41% 41% 45% 18%
Average commission rate per share paid
on portfolio transactions++............ $ 0.0046 $ 0.0109 N/A N/A
</TABLE>
- ----------------
(a) Annualized.
(b) Not Annualized.
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon average
shares outstanding during the period.
* Before reimbursement by Chancellor LGT Asset Management, Inc., the net
investment income per share would have been reduced by $0.03 for Class
A shares, $0.03 for Class B shares, and $0.02 for Advisor Class
shares.
* * Before reimbursement by Chancellor LGT Asset Management, Inc., the net
investment income per share would have been reduced by $0.02 for Class
A and Class B from May 31, 1994 to October 31, 1994.
+ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++ Portfolio turnover and average commission rates are calculated on the
basis of the Portfolio as a whole without distinguishing between the
classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
F38
<PAGE>
GT GLOBAL THEME FUNDS
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>
INFRASTRUCTURE FUND
-----------------------------------------------------------------------------
ADVISOR CLASS+
CLASS B ----------------------
-----------------------------------------------------
MAY 31, 1994 YEAR ENDED OCTOBER 31,
YEAR ENDED OCTOBER 31, (COMMENCEMENT OF
---------------------------------- OPERATIONS) TO ----------------------
1997 (D) 1996 (D) 1995 OCTOBER 31, 1994 1997 (D) 1996 (D)
---------- ---------- ---------- ----------------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 14.24 $ 12.03 $ 12.45 $ 11.43 $ 14.52 $ 12.14
---------- ---------- ---------- ----------------- ---------- ----------
Income from investment operations:
Net investment income (loss).......... (0.09) (0.09) (0.09) * (0.01) * * 0.05 0.04
Net realized and unrealized gain
(loss) on investments................ 1.32 2.30 (0.33) 1.03 1.38 2.34
---------- ---------- ---------- ----------------- ---------- ----------
Net increase (decrease) from
investment operations.............. 1.23 2.21 (0.42) 1.02 1.43 2.38
---------- ---------- ---------- ----------------- ---------- ----------
Distributions to shareholders:
From net realized gain on
investments.......................... (0.72) -- -- -- (0.72) --
---------- ---------- ---------- ----------------- ---------- ----------
Total distributions................. (0.72) -- -- -- (0.72) --
---------- ---------- ---------- ----------------- ---------- ----------
Net asset value, end of period.......... $ 14.75 $ 14.24 $ 12.03 $ 12.45 $ 15.23 $ 14.52
---------- ---------- ---------- ----------------- ---------- ----------
---------- ---------- ---------- ----------------- ---------- ----------
Total investment return (c)............. 8.83% 18.37% (3.37)% 8.92% (b) 10.10% 19.60%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 57,199 $ 53,678 $ 50,181 $ 30,954 $ 2,539 $ 344
Ratio of net investment income (loss) to
average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1 & 5)....... (0.59)% (0.69)% (0.82)% (0.09)% (a) 0.41% 0.31%
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... (0.67)% (0.80)% (1.08)% (0.97)% (a) 0.33% 0.20%
Ratio of expenses to average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1 & 5)....... 2.50% 2.64% 2.86% 2.90% (a) 1.50% 1.64%
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... 2.58% 2.75% 3.12% 3.78% (a) 1.58% 1.75%
Portfolio turnover rate++............... 41% 41% 45% 18% 41% 41%
Average commission rate per share paid
on portfolio transactions++............ $ 0.0046 $ 0.0109 N/A N/A $ 0.0046 $ 0.0109
<CAPTION>
JUNE 1, 1995
TO
OCTOBER 31,
1995
-------------
<S> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 12.00
-------------
Income from investment operations:
Net investment income (loss).......... 0.02*
Net realized and unrealized gain
(loss) on investments................ 0.12
-------------
Net increase (decrease) from
investment operations.............. 0.14
-------------
Distributions to shareholders:
From net realized gain on
investments.......................... --
-------------
Total distributions................. --
-------------
Net asset value, end of period.......... $ 12.14
-------------
-------------
Total investment return (c)............. 1.17%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 216
Ratio of net investment income (loss) to
average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1 & 5)....... 0.18%(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... (0.08)%(a)
Ratio of expenses to average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1 & 5)....... 1.86%(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... 2.12%(a)
Portfolio turnover rate++............... 45%
Average commission rate per share paid
on portfolio transactions++............ N/A
</TABLE>
- ----------------
(a) Annualized.
(b) Not Annualized.
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon average
shares outstanding during the period.
* Before reimbursement by Chancellor LGT Asset Management, Inc., the net
investment income per share would have been reduced by $0.03 for Class
A shares, $0.03 for Class B shares, and $0.02 for Advisor Class
shares.
* * Before reimbursement by Chancellor LGT Asset Management, Inc., the net
investment income per share would have been reduced by $0.02 for Class
A and Class B from May 31, 1994 to October 31, 1994.
+ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++ Portfolio turnover and average commission rates are calculated on the
basis of the Portfolio as a whole without distinguishing between the
classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
F39
<PAGE>
GT GLOBAL THEME FUNDS
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
<TABLE>
<S> <C> <C> <C> <C>
statements.
<CAPTION>
<S> <C> <C> <C> <C>
<CAPTION>
NATURAL RESOURCES FUND
-----------------------------------------------------
CLASS A
-----------------------------------------------------
MAY 31, 1994
YEAR ENDED OCTOBER 31, (COMMENCEMENT OF
---------------------------------- OPERATIONS) TO
1997 (D) 1996 (D) 1995 OCTOBER 31, 1994
---------- ---------- ---------- -----------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 17.43 $ 11.44 $ 12.41 $ 11.43
---------- ---------- ---------- -----------------
Income from investment operations:
Net investment income (loss).......... (0.25) (0.24) 0.04* 0.06* *
Net realized and unrealized gain
(loss) on investments................ 4.08 6.28 (0.98) 0.92
---------- ---------- ---------- -----------------
Net increase (decrease) from
investment operations.............. 3.83 6.04 (0.94) 0.98
---------- ---------- ---------- -----------------
Distributions to shareholders:
From net investment income............ -- (0.04) (0.03) --
From net realized gain on
investments.......................... (0.61) (0.01) -- --
---------- ---------- ---------- -----------------
Total distributions................. (0.61) (0.05) (0.03) --
---------- ---------- ---------- -----------------
Net asset value, end of period.......... $ 20.65 $ 17.43 $ 11.44 $ 12.41
---------- ---------- ---------- -----------------
---------- ---------- ---------- -----------------
Total investment return (c)............. 22.64% 53.04% (7.58)% 8.57% (b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 69,975 $ 48,729 $ 12,598 $ 14,797
Ratio of net investment income (loss) to
average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1 & 5)....... (1.41)% (1.55)% 0.41% 2.63% (a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... (1.51)% (1.65)% (0.69)% 0.65% (a)
Ratio of expenses to average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1 & 5)....... 2.03% 2.20% 2.37% 2.40% (a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... 2.13% 2.30% 3.47% 4.38% (a)
Portfolio turnover rate++............... 321% 94% 87% 137%
Average commission rate per share paid
on portfolio transactions++............ $ 0.0112 $ 0.0243 N/A N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon average
shares outstanding during the period.
* Before reimbursement by Chancellor LGT Asset Management, Inc., the net
investment income (loss) per share would have been reduced (increased)
by $0.14, $0.13, and $0.12 for Class A, Class B, and Advisor Class,
respectively.
* * Before reimbursement by Chancellor LGT Asset Management, Inc., the net
investment income per share would have been reduced by $0.04 for Class
A and Class B.
+ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++ Portfolio turnover and average commission rates are calculated on the
basis of the Portfolio as a whole without distinguishing between the
classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
F40
<PAGE>
GT GLOBAL THEME FUNDS
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>
NATURAL RESOURCES FUND
-----------------------------------------------------------------------------
ADVISOR CLASS+
CLASS B ----------------------
-----------------------------------------------------
MAY 31, 1994 YEAR ENDED OCTOBER 31,
YEAR ENDED OCTOBER 31, (COMMENCEMENT OF
---------------------------------- OPERATIONS) TO ----------------------
1997 (D) 1996 (D) 1995 OCTOBER 31, 1994 1997 (D) 1996 (D)
---------- ---------- ---------- ----------------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 17.29 $ 11.36 $ 12.38 $ 11.43 $ 17.47 $ 11.47
---------- ---------- ---------- ----------------- ---------- ----------
Income from investment operations:
Net investment income (loss).......... (0.33) (0.31) (0.02) * 0.03* * (0.14) (0.17)
Net realized and unrealized gain
(loss) on investments................ 4.02 6.25 (0.98) 0.92 4.08 6.28
---------- ---------- ---------- ----------------- ---------- ----------
Net increase (decrease) from
investment operations.............. 3.69 5.94 (1.00) 0.95 3.94 6.11
---------- ---------- ---------- ----------------- ---------- ----------
Distributions to shareholders:
From net investment income............ -- -- (0.02) -- -- (0.10)
From net realized gain on
investments.......................... (0.61) (0.01) -- -- (0.61) (0.01)
---------- ---------- ---------- ----------------- ---------- ----------
Total distributions................. (0.61) (0.01) (0.02) -- (0.61) (0.11)
---------- ---------- ---------- ----------------- ---------- ----------
Net asset value, end of period.......... $ 20.37 $ 17.29 $ 11.36 $ 12.38 $ 20.80 $ 17.47
---------- ---------- ---------- ----------------- ---------- ----------
---------- ---------- ---------- ----------------- ---------- ----------
Total investment return (c)............. 21.99% 52.39% (8.05)% 8.31% (b) 23.23% 53.76%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 86,812 $ 57,749 $ 13,978 $ 13,404 $ 14,886 $ 5,502
Ratio of net investment income (loss) to
average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1 & 5)....... (1.91)% (2.05)% (0.09)% 2.13% (a) (0.91)% (1.05)%
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... (2.01)% (2.15)% (1.19)% 0.15% (a) (1.01)% (1.15)%
Ratio of expenses to average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1 & 5)....... 2.53% 2.70% 2.87% 2.90% (a) 1.53% 1.70%
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... 2.63% 2.80% 3.97% 4.88% (a) 1.63% 1.80%
Portfolio turnover rate++............... 321% 94% 87% 137% 321% 94%
Average commission rate per share paid
on portfolio transactions++............ $ 0.0112 $ 0.0243 N/A N/A $ 0.0112 $ 0.0243
<CAPTION>
JUNE 1, 1995
TO
OCTOBER 31,
1995
-------------
<S> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 11.45
-------------
Income from investment operations:
Net investment income (loss).......... 0.11*
Net realized and unrealized gain
(loss) on investments................ (0.09)
-------------
Net increase (decrease) from
investment operations.............. 0.02
-------------
Distributions to shareholders:
From net investment income............ --
From net realized gain on
investments.......................... --
-------------
Total distributions................. --
-------------
Net asset value, end of period.......... $ 11.47
-------------
-------------
Total investment return (c)............. 0.17%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 95
Ratio of net investment income (loss) to
average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1 & 5)....... 0.91%(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... (0.19)%(a)
Ratio of expenses to average net assets:
With expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc. (Notes 1 & 5)....... 1.87%(a)
Without expense reductions and
reimbursement by Chancellor LGT Asset
Management, Inc...................... 2.97%(a)
Portfolio turnover rate++............... 87%
Average commission rate per share paid
on portfolio transactions++............ N/A
</TABLE>
- ----------------
(a) Annualized
(b) Not annualized
(c) Total investment return does not include sales charges.
(d) These selected per share data were calculated based upon average
shares outstanding during the period.
* Before reimbursement by Chancellor LGT Asset Management, Inc., the net
investment income (loss) per share would have been reduced (increased)
by $0.14, $0.13, and $0.12 for Class A, Class B, and Advisor Class,
respectively.
* * Before reimbursement by Chancellor LGT Asset Management, Inc., the net
investment income per share would have been reduced by $0.04 for Class
A and Class B.
+ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++ Portfolio turnover and average commission rates are calculated on the
basis of the Portfolio as a whole without distinguishing between the
classes of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
F41
<PAGE>
GT GLOBAL THEME FUNDS
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
<TABLE>
<S> <C> <C> <C> <C> <C>
statements.
<CAPTION>
<S> <C> <C> <C> <C> <C>
<CAPTION>
TELECOMMUNICATIONS FUND
----------------------------------------------------------
CLASS A+
----------------------------------------------------------
YEAR ENDED OCTOBER 31,
----------------------------------------------------------
1997 (D) 1996 (D) 1995 1994 (D) 1993
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 16.69 $ 16.42 $ 17.80 $ 16.92 $ 11.16
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income (loss).......... (0.17) (0.13) (0.09) (0.01) 0.08
Net realized and unrealized gain
(loss) on investments................ 2.93 1.22 (0.43) 1.17 5.83
---------- ---------- ---------- ---------- ----------
Net increase (decrease) from
investment operations.............. 2.76 1.09 (0.52) 1.16 5.91
---------- ---------- ---------- ---------- ----------
Distributions to shareholders:
From net investment income............ -- -- -- (0.01) (0.15)
From net realized gain on
investments.......................... (1.41) (0.82) (0.86) (0.27) --
---------- ---------- ---------- ---------- ----------
Total distributions................. (1.41) (0.82) (0.86) (0.28) (0.15)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period.......... $ 18.04 $ 16.69 $ 16.42 $ 17.80 $ 16.92
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Total investment return (c)............. 17.70% 7.00% (2.88)% 7.02% 53.60%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 910,801 $1,204,428 $1,353,722 $1,644,402 $1,223,340
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Notes 1 &
5)................................... (1.01)% (0.84)% (0.49)% (0.02)% 0.80%
Without expense reductions............ (1.06)% (0.89)% (0.55)% N/A N/A
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 1.79% 1.74% 1.77% 1.80% 2.0%
Without expense reductions............ 1.84% 1.79% 1.83% N/A N/A
Portfolio turnover rate++++............. 35% 37% 62% 57% 41%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0085 $ 0.0165 N/A N/A N/A
</TABLE>
- ----------------
(a) Annualized.
(b) Not Annualized.
(c) Total investment return does not include sales charge.
(d) These selected per share data were calculated based upon the average
shares outstanding during the period.
+ All capital shares issued and outstanding March 31, 1993 were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover and average commission rates are calculated on the
basis of the Fund as whole without distinguishing between the classes
of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
F42
<PAGE>
GT GLOBAL THEME FUNDS
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>
TELECOMMUNICATIONS FUND
-----------------------------------------------------------------------------------
CLASS B++ ADVISOR CLASS+++
----------------------------------------------------------- ----------------------
APRIL 1,
1993 YEAR ENDED OCTOBER 31,
YEAR ENDED OCTOBER 31, TO
---------------------------------------------- OCTOBER 31, ----------------------
1997 (D) 1996 (D) 1995 1994 (D) 1993 1997 (D) 1996 (D)
---------- ---------- ---------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 16.37 $ 16.20 $ 17.66 $ 16.87 $ 12.68 $ 16.81 $ 16.46
---------- ---------- ---------- ---------- ----------- ---------- ----------
Income from investment operations:
Net investment income (loss).......... (0.25) (0.23) (0.17) (0.10) 0.01 (0.09) (0.05)
Net realized and unrealized gain
(loss) on investments................ 2.87 1.22 (0.43) 1.17 4.18 2.97 1.22
---------- ---------- ---------- ---------- ----------- ---------- ----------
Net increase (decrease) from
investment operations.............. 2.62 0.99 (0.60) 1.07 4.19 2.88 1.17
---------- ---------- ---------- ---------- ----------- ---------- ----------
Distributions to shareholders:
From net investment income............ -- -- -- (0.01) -- -- --
From net realized gain on
investments.......................... (1.41) (0.82) (0.86) (0.27) -- (1.41) (0.82)
---------- ---------- ---------- ---------- ----------- ---------- ----------
Total distributions................. (1.41) (0.82) (0.86) (0.28) -- (1.41) (0.82)
---------- ---------- ---------- ---------- ----------- ---------- ----------
Net asset value, end of period.......... $ 17.58 $ 16.37 $ 16.20 $ 17.66 $ 16.87 $ 18.28 $ 16.81
---------- ---------- ---------- ---------- ----------- ---------- ----------
---------- ---------- ---------- ---------- ----------- ---------- ----------
Total investment return (c)............. 17.15% 6.46% (3.37)% 6.50% 33.0%(b) 18.33% 7.49%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 805,535 $1,007,654 $1,111,520 $1,184,081 $ 455,335 $ 4,783 $ 945
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Notes 1 &
5)................................... (1.51)% (1.34)% (0.99)% (0.52)% 0.3%(a) (0.51)% (0.34)%
Without expense reductions............ (1.56)% (1.39)% (1.05)% N/A N/A (0.56)% (0.39)%
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 2.29% 2.24% 2.27% 2.30% 2.5%(a) 1.29% 1.24%
Without expense reductions............ 2.34% 2.29% 2.33% N/A N/A 1.34% 1.29%
Portfolio turnover rate++++............. 35% 37% 62% 57% 41% 35% 37%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0085 $ 0.0165 N/A N/A N/A $ 0.0085 $ 0.0165
<CAPTION>
JUNE 1, 1995
TO
OCTOBER 31,
1995
-------------
<S> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 15.24
-------------
Income from investment operations:
Net investment income (loss).......... --
Net realized and unrealized gain
(loss) on investments................ 1.22
-------------
Net increase (decrease) from
investment operations.............. 1.22
-------------
Distributions to shareholders:
From net investment income............ --
From net realized gain on
investments.......................... --
-------------
Total distributions................. --
-------------
Net asset value, end of period.......... $ 16.46
-------------
-------------
Total investment return (c)............. 7.94%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 681
Ratio of net investment income (loss) to
average net assets:
With expense reductions (Notes 1 &
5)................................... 0.01%(a)
Without expense reductions............ 0.07%(a)
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 1.27%(a)
Without expense reductions............ 1.33%(a)
Portfolio turnover rate++++............. 62%
Average commission rate per share paid
on portfolio transactions++++.......... N/A
</TABLE>
- ----------------
(a) Annualized.
(b) Not Annualized.
(c) Total investment return does not include sales charge.
(d) These selected per share data were calculated based upon the average
shares outstanding during the period.
+ All capital shares issued and outstanding March 31, 1993 were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover and average commission rates are calculated on the
basis of the Fund as whole without distinguishing between the classes
of shares issued.
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
F43
<PAGE>
GT GLOBAL THEME FUNDS
NOTES TO
FINANCIAL STATEMENTS
October 31, 1997
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
GT Global Consumer Products and Services Fund, GT Global Financial Services
Fund, GT Global Health Care Fund, GT Global Infrastructure Fund, GT Global
Natural Resources Fund and GT Global Telecommunications Fund ("Funds") are
separate series of G.T. Investment Funds, Inc. ("Company"). Collectively, these
Funds are known as the "GT Global Theme 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 thirteen series of shares in operation, each series corresponding to
a distinct portfolio of investments.
The GT Global Consumer Products and Services Fund, GT Global Financial Services
Fund, GT Global Infrastructure Fund, and GT Global Natural Resources Fund each
invests substantially all of its investable assets in Global Consumer Products
and Services Portfolio, Global Financial Services Portfolio, Global
Infrastructure Portfolio, and Global Natural Resources Portfolio ("Portfolios"),
respectively. Each Portfolio is organized as a subtrust of a New York common law
trust ("Trust") and is registered under the 1940 Act as an open-end management
investment company.
The Portfolios have investment objectives, policies, and limitations
substantially identical to those of their corresponding Funds. Therefore, the
financial statements of the aforementioned Funds and their respective Portfolios
have been presented on a consolidated basis, and represent all activities of
both the respective Funds and Portfolios. Through October 31, 1997, all of the
shares of beneficial interest of each Portfolio were owned by either its
respective Fund or Chancellor LGT Asset Management, Inc. (the "Manager"), which
has a nominal ($100) investment in each 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 preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of
significant accounting policies in conformity with generally accepted accounting
principles consistently followed by the Funds and Portfolios in the preparation
of the financial statements.
(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 Trusts' 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 Trusts' 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
Portfolios (the phrase "Fund or Portfolio" hereinafter includes the GT Global
Health Care Fund, the GT Global Telecommunications Fund, and the four
Portfolios) 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.
F44
<PAGE>
GT GLOBAL THEME FUNDS
A Fund or Portfolio does not isolate that portion of the results of operations
resulting from changes in foreign exchange rates on investments from the
fluctuations arising from changes in market prices of securities held. Such
fluctuations are included with the net realized and unrealized gain or loss from
investments.
Reported net realized foreign exchange gains or losses arise from sales and
maturities of short-term securities, forward foreign currency contracts, sales
of foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the difference between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Fund's or Portfolio's books and the U.S. dollar equivalent of the amounts
actually received or paid. Net unrealized foreign exchange gains or losses arise
from changes in the value of assets and liabilities other than investments in
securities at year end, resulting from changes in exchange rates.
(C) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by 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 the 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
F45
<PAGE>
GT GLOBAL THEME FUNDS
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 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 October 31, 1997, stocks with an aggregate value listed below were on loan to
brokers. The loans were secured by cash collateral received by the Funds or
Portfolios:
<TABLE>
<CAPTION>
YEAR ENDED
OCTOBER 31, 1997 OCTOBER 31,
-------------------------------- 1997
AGGREGATE VALUE CASH --------------
ON LOAN COLLATERAL FEES RECEIVED
--------------- -------------- --------------
<S> <C> <C> <C>
Global Consumer Products and Services
Portfolio.............................. $ 4,385,800 $ 4,476,600 $121,197
Global Financial Services Portfolio..... 1,715,052 1,813,650 18,080
GT Global Health Care Fund.............. 33,287,031 33,773,900 96,689
Global Infrastructure Portfolio......... 3,149,538 3,301,300 84,150
Global Natural Resources Portfolio...... 12,448,138 12,910,000 66,945
GT Global Telecommunications Fund....... 132,935,037 137,795,261 888,654
</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
Portfolios' custodian and other administrative expenses.
(I) TAXES
It is the intended policy of the Funds and Portfolios 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, unrealized appreciation of securities held, or excise tax
on income and capital gains.
(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 Portfolios and timing
differences.
(K) DEFERRED ORGANIZATIONAL EXPENSES
Expenses incurred by the GT Global Consumer Products and Services Fund, GT
Global Financial Services Fund, GT Global Infrastructure Fund, and GT Global
Natural Resources Fund in connection with their organizations, their initial
registration with the Securities and Exchange Commission and with various states
and the initial public offering of its shares aggregated $51,500, $63,100,
$51,500, and $51,500, 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 investments 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.
In addition, each Fund or Portfolio may focus its investments in certain related
consumer products and services, financial services, health care, infrastructure,
natural resources, or telecommunications industries, subjecting the Fund or
Portfolio to greater risk than a fund that is more diversified.
(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.
F46
<PAGE>
GT GLOBAL THEME FUNDS
(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 ("GT Funds") advised and/or
administered by the Manager, has a line of credit with each of BankBoston and
State Street Bank & Trust Company. The arrangements with the banks allow the GT
Funds to borrow an aggregate maximum amount of $200,000,000. Each Fund is
limited to borrowing up to 33 1/3% of the value of each Fund's total assets. On
October 31, 1997, GT Global Natural Resources Fund had $4,670,000 in loans
outstanding.
For the year ended October 31, 1997, the weighted average outstanding daily
balance of bank loans (based on the number of days the loans were outstanding)
for GT Global Consumer Products Fund, GT Global Health Care Fund, GT Global
Natural Resources Fund and GT Global Telecommunications Fund was $2,217,765,
$4,916,667, $4,008,879 and $26,570,611, respectively, with a weighted average
interest rate of 6.14%, 6.61%, 6.32% and 6.32%, respectively. Interest expense
for the GT Global Consumer Products Fund, GT Global Health Care Fund, GT Global
Natural Resources Fund and GT Global Telecommunications Fund for the year ended
October 31, 1997 was $6,616, $21,656, $64,318 and $527,303, respectively.
Interest expense is included in "Other Expenses" on the Statement of Operations.
2. RELATED PARTIES
Chancellor LGT Asset Management, Inc. is the Funds' and Portfolios' investment
manager and administrator. GT Global Consumer Products and Services Fund, GT
Global Financial Services Fund, GT Global Infrastructure Fund, and GT Global
Natural Resources Fund each pays the Manager administration fees at the
annualized rate of 0.25% of such Fund's average daily net assets. Each of the
Portfolios pays investment management and administration fees to the Manager at
the annualized rate of 0.725% on the first $500 million of average daily net
assets of the Portfolio; 0.70% on the next $500 million; 0.675% on the next $500
million; and 0.65% on amounts thereafter. GT Global Health Care Fund and GT
Global Telecommunications Fund each pays investment management and
administration fees to the Manager at the annualized rate of 0.975% on the first
$500 million of average daily net assets of the Fund; 0.95% on the next $500
million; 0.925% on the next $500 million and 0.90% on amounts thereafter. These
fees are computed daily and paid monthly.
GT Global, Inc. ("GT Global"), an affiliate of the Manager, serves as the 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 year ended October 31, 1997, GT Global retained the
following sales charges: $85,990 for the GT Global Consumer Products and
Services Fund, $22,263 for the GT Global Financial Services Fund, $54,971 for
the GT Global Health Care Fund, $24,983 for the GT Global Infrastructure Fund,
$63,915 for the GT Global Natural Resources Fund, and $131,495 for the GT Global
Telecommunications 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
year ended October 31, 1997, as follows: $5,032 for the GT Global Consumer
Products and Services Fund, $0 for the GT Global Financial Services Fund,
$15,375 for the GT Global Health Care Fund, $115 for the GT Global
Infrastructure Fund, $12,885 for the GT Global Natural Resources Fund, and
$11,930 for the GT Global Telecommunications 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 year ended October 31, 1997, GT Global collected CDSCs in
the amount of: $503,378 for the GT Global Consumer Products and Services Fund,
$81,031 for the GT Global Financial Services Fund, $530,383 for the GT Global
Health Care Fund, $261,504 for the GT Global Infrastructure Fund, $404,993 for
the GT Global Natural Resources Fund, and $7,104,939 for the GT Global
Telecommunications 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 0.50% of the average daily net
assets of the Fund's Class A shares, less any amounts paid by the Fund as the
aforementioned service fee, for GT Global's expenditures incurred in providing
services as distributor. All expenses for which GT Global is reimbursed under
the Class A Plan will have been incurred within one year of such reimbursement.
Pursuant to the 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
F47
<PAGE>
GT GLOBAL THEME FUNDS
of the Fund's Class B shares for GT Global's expenditures incurred in servicing
and maintaining shareholder accounts, and may pay GT Global a distribution fee
at the annualized rate of up to 0.75% of the average daily net assets of the
Fund's Class B shares for GT Global's expenditures incurred in providing
services as distributor. Expenses incurred under the Class B Plan in excess of
1.00% annually may be carried forward for reimbursement in subsequent years as
long as that Plan continues in effect.
The Manager and GT Global voluntarily have undertaken to limit each Fund's
expenses (exclusive of brokerage commissions, taxes, interest, and extraordinary
expense) to the maximum annual rate of 2.40%, 2.90%, and 1.90% of the average
daily net assets of the Fund's Class A, Class B, and Advisor Class shares,
respectively. If necessary, this limitation will be effected by waivers by the
Manager of investment management 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.
Effective November 1, 1997, the Manager and GT Global have undertaken to limit
each Fund's expenses (exclusive of brokerage commissions, taxes, interest, and
extraordinary expenses) to the annual rate of 2.00%, 2.50%, and 1.50% of the
average daily net assets of the Fund's Class A, Class B and Advisor Class
shares, respectively. This undertaking may be changed or eliminated in the
future.
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 Portfolios.
The monthly fee for these services to the Manager is a percentage, not to exceed
0.03% annually, of a Fund 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 Director 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
October 31, 1997:
PURCHASES AND SALES OF SECURITIES
<TABLE>
<CAPTION>
PORTFOLIO PURCHASES
- ---------------------------------------------------------------------------------------------------- -----------------
<S> <C>
Global Consumer Products and Services Portfolio..................................................... $ 612,647,861
Global Financial Services Portfolio................................................................. 92,386,002
GT Global Health Care Fund.......................................................................... 787,196,366
Global Infrastructure Portfolio..................................................................... 39,949,012
Global Natural Resources Portfolio.................................................................. 443,019,604
GT Global Telecommunications Fund................................................................... 645,313,904
<CAPTION>
PORTFOLIO SALES
- ---------------------------------------------------------------------------------------------------- -------------------
<S> <C>
Global Consumer Products and Services Portfolio..................................................... $ 664,389,208
Global Financial Services Portfolio................................................................. 40,245,074
GT Global Health Care Fund.......................................................................... 891,939,099
Global Infrastructure Portfolio..................................................................... 39,409,094
Global Natural Resources Portfolio.................................................................. 403,198,520
GT Global Telecommunications Fund................................................................... 1,492,219,852
</TABLE>
4. CAPITAL SHARES
At October 31, 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 Developing Markets 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 fifteen series of
the Company and designated as Advisor Class common stock. 1,100,000,000 shares
remain unclassified. Transactions in capital shares of the Fund were as follows:
F48
<PAGE>
GT GLOBAL THEME FUNDS
CAPITAL SHARE TRANSACTIONS
GT GLOBAL CONSUMER PRODUCTS & SERVICES FUND
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1997 OCTOBER 31, 1996
-------------------------- --------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold............................. 3,438,964 $ 69,880,587 6,142,401 $ 118,779,939
Shares issued in connection with
reinvestment of distributions......... 143,274 2,884,089 13,656 202,166
----------- ------------- ----------- -------------
3,582,238 72,764,676 6,156,057 118,982,105
Shares repurchased...................... (4,424,828) (88,957,730) (2,769,898) (54,486,898)
----------- ------------- ----------- -------------
Net increase (decrease)................. (842,590) $ (16,193,054) 3,386,159 $ 64,495,207
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
</TABLE>
<TABLE>
<CAPTION>
CLASS B
- ----------------------------------------
<S> <C> <C> <C> <C>
Shares sold............................. 2,703,434 $ 53,329,784 5,689,956 $ 110,105,123
Shares issued in connection with
reinvestment of distributions......... 168,859 3,364,713 10,957 161,052
----------- ------------- ----------- -------------
2,872,293 56,694,497 5,700,913 110,266,175
Shares repurchased...................... (2,802,820) (55,171,454) (1,675,446) (32,960,366)
----------- ------------- ----------- -------------
Net increase............................ 69,473 $ 1,523,043 4,025,467 $ 77,305,809
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
</TABLE>
<TABLE>
<CAPTION>
ADVISOR CLASS
- ----------------------------------------
<S> <C> <C> <C> <C>
Shares sold............................. 287,832 $ 6,471,623 589,226 $ 12,396,492
Shares issued in connection with
reinvestment of distributions......... 15,186 308,573 402 5,969
----------- ------------- ----------- -------------
303,018 6,780,196 589,628 12,402,461
Shares repurchased...................... (386,341) (7,704,551) (248,775) (5,293,607)
----------- ------------- ----------- -------------
Net increase (decrease)................. (83,323) $ (924,355) 340,853 $ 7,108,854
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
</TABLE>
GT GLOBAL FINANCIAL SERVICES FUND
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1997 OCTOBER 31, 1996
-------------------------- --------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold............................. 3,783,353 $ 60,418,186 900,372 $ 11,973,497
Shares issued in connection with
reinvestment of distributions......... 35,121 488,531 3,997 50,562
----------- ------------- ----------- -------------
3,818,474 60,906,717 904,369 12,024,059
Shares repurchased...................... (2,611,893) (41,931,634) (867,261) (11,494,650)
----------- ------------- ----------- -------------
Net increase............................ 1,206,581 $ 18,975,083 37,108 $ 529,409
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
</TABLE>
<TABLE>
<CAPTION>
CLASS B
- ----------------------------------------
<S> <C> <C> <C> <C>
Shares sold............................. 4,102,099 $ 64,968,183 596,980 $ 7,792,181
Shares issued in connection with
reinvestment of distributions......... 44,922 618,563 2,898 36,456
----------- ------------- ----------- -------------
4,147,021 65,586,746 599,878 7,828,637
Shares repurchased...................... (2,045,933) (32,384,709) (281,339) (3,677,982)
----------- ------------- ----------- -------------
Net increase............................ 2,101,088 $ 33,202,037 318,539 $ 4,150,655
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
</TABLE>
<TABLE>
<CAPTION>
ADVISOR CLASS
- ----------------------------------------
<S> <C> <C> <C> <C>
Shares sold............................. 220,956 $ 4,021,549 3,500 $ 47,698
Shares issued in connection with
reinvestment of distributions......... 359 5,018 35 420
----------- ------------- ----------- -------------
221,315 4,026,567 3,535 48,118
Shares repurchased...................... (11,568) (198,290) (1,103) (14,704)
----------- ------------- ----------- -------------
Net increase............................ 209,747 $ 3,828,277 2,432 $ 33,414
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
</TABLE>
F49
<PAGE>
GT GLOBAL THEME FUNDS
GT GLOBAL HEALTH CARE FUND
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1997 OCTOBER 31, 1996
-------------------------- --------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold............................. 31,631,342 $ 772,292,073 84,410,204 $1,903,687,570
Shares issued in connection with
reinvestment of distributions......... 1,208,813 27,043,227 2,009,491 41,475,881
----------- ------------- ----------- -------------
32,840,155 799,335,300 86,419,695 1,945,163,451
Shares repurchased...................... (35,792,763) (876,621,319) (86,124,175) (1,957,478,015)
----------- ------------- ----------- -------------
Net increase (decrease)................. (2,952,608) $ (77,286,019) 295,520 $ (12,314,564)
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
</TABLE>
<TABLE>
<CAPTION>
CLASS B
- ----------------------------------------
<S> <C> <C> <C> <C>
Shares sold............................. 6,206,431 $ 152,327,079 6,741,207 $ 157,453,975
Shares issued in connection with
reinvestment of distributions......... 321,688 7,045,104 411,416 8,363,880
----------- ------------- ----------- -------------
6,528,119 159,372,183 7,152,623 165,817,855
Shares repurchased...................... (5,770,947) (142,017,878) (5,784,194) (129,761,569)
----------- ------------- ----------- -------------
Net increase............................ 757,172 $ 17,354,305 1,368,429 $ 36,056,286
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
</TABLE>
<TABLE>
<CAPTION>
ADVISOR CLASS
- ----------------------------------------
<S> <C> <C> <C> <C>
Shares sold............................. 1,865,809 $ 48,687,774 1,142,479 $ 27,246,793
Shares issued in connection with
reinvestment of distributions......... 2,543 57,375 3,280 67,679
----------- ------------- ----------- -------------
1,868,352 48,745,149 1,145,759 27,314,472
Shares repurchased...................... (1,676,189) (43,406,078) (1,121,971) (26,090,499)
----------- ------------- ----------- -------------
Net increase............................ 192,163 $ 5,339,071 23,788 $ 1,223,973
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
</TABLE>
GT GLOBAL INFRASTRUCTURE FUND
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1997 OCTOBER 31, 1996
-------------------------- --------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ----------- ------------- ----------- -------------
Shares sold............................. 1,282,535 $ 19,272,428 2,175,475 $ 30,275,819
<S> <C> <C> <C> <C>
Shares issued in connection with
reinvestment of distributions......... 123,795 1,776,449 -- --
----------- ------------- ----------- -------------
1,406,330 21,048,877 2,175,475 30,275,819
Shares repurchased...................... (1,518,962) (23,157,570) (2,503,715) (33,964,432)
----------- ------------- ----------- -------------
Net decrease............................ (112,632) $ (2,108,693) (328,240) $ (3,688,613)
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
</TABLE>
<TABLE>
<CAPTION>
CLASS B
- ----------------------------------------
<S> <C> <C> <C> <C>
Shares sold............................. 1,233,796 $ 18,394,879 903,064 $ 12,423,925
Shares issued in connection with
reinvestment of distributions......... 164,966 2,337,575 -- --
----------- ------------- ----------- -------------
1,398,762 20,732,454 903,064 12,423,925
Shares repurchased...................... (1,288,192) (19,574,097) (1,306,101) (17,421,173)
----------- ------------- ----------- -------------
Net increase (decrease)................. 110,570 $ 1,158,357 (403,037) $ (4,997,248)
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
</TABLE>
<TABLE>
<CAPTION>
ADVISOR CLASS
- ----------------------------------------
<S> <C> <C> <C> <C>
Shares sold............................. 154,643 $ 2,526,548 11,122 $ 154,109
Shares issued in connection with
reinvestment of distributions......... 1,147 16,592 -- --
----------- ------------- ----------- -------------
155,790 2,543,140 11,122 154,109
Shares repurchased...................... (12,773) (202,670) (5,256) (70,861)
----------- ------------- ----------- -------------
Net increase............................ 143,017 $ 2,340,470 5,866 $ 83,248
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
</TABLE>
F50
<PAGE>
GT GLOBAL THEME FUNDS
GT GLOBAL NATURAL RESOURCES FUND
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1997 OCTOBER 31, 1996
-------------------------- --------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold............................. 14,008,426 $ 250,536,207 9,220,103 $ 142,385,816
Shares issued in connection with
reinvestment of distributions......... 97,424 1,671,792 3,977 47,892
----------- ------------- ----------- -------------
14,105,850 252,207,999 9,224,080 142,433,708
Shares repurchased...................... (13,512,928) (239,425,288) (7,529,884) (116,812,100)
----------- ------------- ----------- -------------
Net increase............................ 592,922 $ 12,782,711 1,694,196 $ 25,621,608
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
</TABLE>
<TABLE>
<CAPTION>
CLASS B
- ----------------------------------------
<S> <C> <C> <C> <C>
Shares sold............................. 5,227,207 $ 91,103,073 4,288,540 $ 66,460,658
Shares issued in connection with
reinvestment of distributions......... 120,229 2,044,194 709 8,495
----------- ------------- ----------- -------------
5,347,436 93,147,267 4,289,249 66,469,153
Shares repurchased...................... (4,425,914) (75,084,090) (2,178,862) (33,276,553)
----------- ------------- ----------- -------------
Net increase............................ 921,522 $ 18,063,177 2,110,387 $ 33,192,600
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
</TABLE>
<TABLE>
<CAPTION>
ADVISOR CLASS
- ----------------------------------------
<S> <C> <C> <C> <C>
Shares sold............................. 1,573,656 $ 31,848,691 663,037 $ 10,703,010
Shares issued in connection with
reinvestment of distributions......... 7,576 130,389 77 922
----------- ------------- ----------- -------------
1,581,232 31,979,080 663,114 10,703,932
Shares repurchased...................... (1,180,622) (22,478,170) (356,384) (5,379,503)
----------- ------------- ----------- -------------
Net increase............................ 400,610 $ 9,500,910 306,730 $ 5,324,429
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
</TABLE>
GT GLOBAL TELECOMMUNICATIONS FUND
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1997 OCTOBER 31, 1996
----------------------------- -----------------------------
CLASS A SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ------------ --------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold............................. 86,491,272 $ 1,449,735,933 161,134,594 $ 2,777,197,821
Shares issued in connection with
reinvestment of distributions......... 4,872,560 77,134,577 3,376,395 52,886,360
------------ --------------- ------------ ---------------
91,363,832 1,526,870,510 164,510,989 2,830,084,181
Shares repurchased...................... (113,032,156) (1,893,258,359) (174,818,005) (3,017,740,549)
------------ --------------- ------------ ---------------
Net decrease............................ (21,668,324) $ (366,387,849) (10,307,016) $ (187,656,368)
------------ --------------- ------------ ---------------
------------ --------------- ------------ ---------------
</TABLE>
<TABLE>
<CAPTION>
CLASS B
- ----------------------------------------
<S> <C> <C> <C> <C>
Shares sold............................. 9,249,969 $ 152,245,081 15,365,874 $ 260,167,785
Shares issued in connection with
reinvestment of distributions......... 4,413,826 68,371,781 2,882,770 44,452,585
------------ --------------- ------------ ---------------
13,663,795 220,616,862 18,248,644 304,620,370
Shares repurchased...................... (29,383,147) (477,593,385) (25,319,583) (426,829,324)
------------ --------------- ------------ ---------------
Net decrease............................ (15,719,352) $ (256,976,523) (7,070,939) $ (122,208,954)
------------ --------------- ------------ ---------------
------------ --------------- ------------ ---------------
</TABLE>
<TABLE>
<CAPTION>
ADVISOR CLASS
- ----------------------------------------
<S> <C> <C> <C> <C>
Shares sold............................. 2,029,510 $ 36,070,768 1,229,487 $ 21,592,338
Shares issued in connection with
reinvestment of distributions......... 11,071 176,806 2,119 33,270
------------ --------------- ------------ ---------------
2,040,581 36,247,574 1,231,606 21,625,608
Shares repurchased...................... (1,835,151) (32,553,269) (1,216,785) (21,450,446)
------------ --------------- ------------ ---------------
Net increase............................ 205,430 $ 3,694,305 14,821 $ 175,162
------------ --------------- ------------ ---------------
------------ --------------- ------------ ---------------
</TABLE>
5. EXPENSE REDUCTIONS
The Manager has directed certain portfolio trades to brokers who paid a portion
of a Fund's or Portfolio's expenses. For the year ended October 31, 1997, the
Funds' or Portfolios' expenses were reduced by the following amounts under these
arrangements:
<TABLE>
<CAPTION>
EXPENSE
REDUCTION
---------
<S> <C>
Global Consumer Products and Services Portfolio.......................................................................... $ 123,570
Global Financial Services Portfolio...................................................................................... 13,622
GT Global Health Care Fund............................................................................................... 81,354
Global Infrastructure Portfolio.......................................................................................... 720
Global Natural Resources Portfolio....................................................................................... 71,129
GT Global Telecommunications Fund........................................................................................ 163,244
</TABLE>
F51
<PAGE>
GT GLOBAL THEME FUNDS
6. HOLDINGS OF 5% VOTING SECURITIES OF PORTFOLIO COMPANIES
Investments of 5% or more of an issuer's outstanding voting securities by a Fund
or Portfolio are defined in the Investment Company Act of 1940 as an affiliated
company. Investments in affiliated companies by Global Consumer Products
Portfolio, GT Global Health Care Fund, and GT Global Telecommunications Fund at
October 31, 1997 amounted to $1,943,798, $251,388,855, and $113,211,488,
respectively, at value.
Transactions during the period with companies that are or were affiliates are as
follows:
GLOBAL CONSUMER PRODUCTS PORTFOLIO
<TABLE>
<CAPTION>
SALES NET REALIZED DIVIDEND
PURCHASES COST PROCEEDS GAIN (LOSS) INCOME
--------------- --------------- --------------- ------------
<S> <C> <C> <C> <C>
O & Y Properties Inc. Sp Wts...................... $ 1,996,065 $ -- $ -- $ --
</TABLE>
GT GLOBAL HEALTH CARE FUND
<TABLE>
<CAPTION>
PURCHASES SALES NET REALIZED DIVIDEND
COST PROCEEDS GAIN (LOSS) INCOME
--------------- --------------- --------------- ------------
<S> <C> <C> <C> <C>
ATL Ultrasound, Inc............................... $ 22,092,644 $ 7,075,476 $ 1,636,015 $ --
AVECOR Cardiovascular, Inc........................ 1,034,472 -- -- --
Cardiac Pathways Corp............................. 8,400,212 -- -- --
Cardiovascular Dynamics Inc....................... 3,500,454 -- -- --
Catalytica, Inc................................... 10,691,833 16,327,767 8,539,392 --
Cell Therapeutics Inc............................. 12,018,948 -- -- --
Circon Corp....................................... -- 2,739,253 568,655 --
Depotech Corp..................................... 12,202,500 5,683,922 896,972 --
Endosonics Corp................................... 20,775,778 4,411,500 (979,619) --
INAMED Corp....................................... 3,033,798 90,000 (108,753) --
Interferon........................................ 5,870,743 3,085,840 839,277
Kensey Nash Corp.................................. 5,159,335 1,561,197 1,266,168 --
Life Medical Sciences, Inc........................ 2,096,223 442,500 (352,500) --
Micro Therapeutics, Inc........................... 1,800,000 66,248 6,248 --
Photoelectron Corp................................ 2,822,805 -- -- --
Physio-Control International Corp................. 16,172,912 1,542,063 65,018 --
Protein Design Labs, Inc.......................... 12,029,386 22,123,118 40,261 --
Regeneron Pharmaceuticals, Inc.................... 15,114,745 2,161,577 277,371 --
Sunrise Medical, Inc.............................. 3,237,927 -- -- --
TheraTech, Inc.................................... 7,797,057 -- -- --
Visx, Inc......................................... 12,660,684 8,329,268 (295,181) --
</TABLE>
GT GLOBAL TELECOMMUNICATIONS FUND
<TABLE>
<CAPTION>
SALES NET REALIZED DIVIDEND
PURCHASES COST PROCEEDS GAIN (LOSS) INCOME
--------------- --------------- ---------------- ------------
<S> <C> <C> <C> <C>
ANTEC Corp........................................ $ -- $ 8,346,027 $ (10,335,549) $ --
Atlantic Tele-Network, Inc........................ -- 1,368,992 (86,633) --
DSP Communications, Inc........................... 22,490,263 10,010,074 (10,387,819) --
Echostar Communications Corp. "A"................. -- -- -- --
Gandalf Technologies, Inc......................... -- 4,316,779 (27,050,916) --
Grupo Mexicano de Video - 144A ADR................ -- -- -- --
Himachal Futuristic Communications Ltd. - 144A
GDR............................................. -- 1,643,750 (7,656,250) --
Intermedia Communications of Florida, Inc......... 508,750 -- -- --
International Engineering PLC - Foreign........... -- 3,181,312 (15,784,033) 305,427
Millicom International Cellular S.A............... -- -- -- --
Orbital Sciences Corp............................. 430,000 6,351,505 1,003,380 --
PT Kabelindo Murni - Foreign...................... -- 1,394,687 (5,501,277) --
Spectrian Corp.................................... -- 10,450,207 (9,831,404) --
Tekelec........................................... 292,878 43,271,004 31,126,430 --
Tele 2000 S.A..................................... -- 10,524,931 (2,848,177) --
Three-Five Systems, Inc........................... -- 1,862,340 (1,738,353) --
</TABLE>
F52
<PAGE>
GT GLOBAL THEME FUNDS
FEDERAL TAX INFORMATION (UNAUDITED): Listed below is the amount of income
received by the Funds from sources within foreign countries and possessions of
the United States and the amount of taxes paid by the Funds to such countries
for the fiscal year ended October 31, 1997:
<TABLE>
<CAPTION>
FOREIGN FOREIGN
------------------------- -----------------------
FUND SOURCE INCOME PER SHARE TAXES PAID PER SHARE
- ---------------------------------------- ------------- --------- ------------ ---------
<S> <C> <C> <C> <C>
GT Global Consumer Products and Services
Fund.................................. -- -- -- --
GT Global Financial Services Fund....... $699,745 $0.1412 $ 77,681 $0.0157
GT Global Health Care Fund.............. -- -- -- --
GT Global Infrastructure Fund........... -- -- -- --
GT Global Natural Resources Fund........ -- -- -- --
GT Global Telecommunications Fund....... -- -- -- --
</TABLE>
Pursuant to Section 852 of the Internal Revenue Code, the Funds designate the
following amounts as capital gain dividends for the fiscal year ended October
31, 1997:
<TABLE>
<CAPTION>
CAPITAL GAIN
FUND DIVIDEND
- ---------------------------------------- ------------
<S> <C>
GT Global Consumer Products and Services
Fund.................................. $ 330,657
GT Global Financial Services Fund....... 740,650
GT Global Health Care Fund.............. --
GT Global Infrastructure Fund........... 3,083,268
GT Global Natural Resources Fund........ 2,673,826
GT Global Telecommunications Fund....... 166,632,944
</TABLE>
Pursuant to Section 854 of the Internal Revenue Code, the Funds designate the
following percentage amounts of ordinary income dividends paid (including
short-term capital gain distributions, if any) by the Funds as income qualifying
for the dividends received deduction for corporations for the fiscal year ended
October 31, 1997:
<TABLE>
<CAPTION>
FUND
- ----------------------------------------
<S> <C>
GT Global Consumer Products and Services
Fund.................................. 2.57%
GT Global Financial Services Fund....... 13.12%
GT Global Health Care Fund.............. --
GT Global Infrastructure Fund........... --
GT Global Natural Resources Fund........ 2.48%
GT Global Telecommunications Fund....... --
</TABLE>
F53
<PAGE>
GT GLOBAL THEME FUNDS
NOTES
- --------------------------------------------------------------------------------
<PAGE>
GT GLOBAL THEME 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 Mutual Funds,
please contact your investmentcounselor or call GT global directly at
1-800-924-1580. The prospectus contains more complete information including
changes, expenses and risks. Investors should read the prospectus carefully
before investing.
GROWTH FUNDS
GLOBALLY DIVERSIFIED FUNDS
GT GLOBAL NEW DIMENSION FUND
Captures global growth opportunities by investing directly in the six GT Global
Theme Funds
GT GLOBAL WORLDWIDE GROWTH FUND
Invests around the world, including the U.S.
GT GLOBAL INTERNATIONAL GROWTH FUND
Offers portfolio diversity by investing outside the U.S.
GT GLOBAL EMERGING MARKETS FUND
Provides access to the growth potential of developing economies
GT GLOBAL DEVELOPING MARKETS FUND
Invests in debt and equity securities of developing market issuers
GLOBAL THEME FUNDS
GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
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
Invests in companies that build, improve or maintain a country's infrastructure
GT GLOBAL NATURAL RESOURCES FUND
Concentrates on companies that own, explore or develop natural resources
GT GLOBAL TELECOMMUNICATIONS FUND
Invests in companies worldwide that develop, manufacture or sell
telecommunications services or equipment
REGIONALLY DIVERSIFIED FUNDS
GT GLOBAL NEW PACIFIC GROWTH FUND
Offers access to 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 small and medium-sized companies in the U.S.
GT GLOBAL AMERICA VALUE FUND
Looks for equity securities of large cap U.S. companies believed to be
undervalued
GT GLOBAL JAPAN GROWTH FUND
Provides U.S. investors with access to the Japanese market
GROWTH AND INCOME FUND
GT GLOBAL GROWTH & INCOME FUND
Invests in blue-chip stocks and government securities from around the world
INCOME FUNDS
GT GLOBAL GOVERNMENT INCOME FUND
Seeks to earn 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 of 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
A MEMBER OF LIECHTENSTEIN GLOBAL TRUST
GT Global Inc.
Fifty California Street
27th Floor
San Fransisco, CA
94111-4624
DATED MATERIAL
PLEASE EXPEDITE
