<PAGE>
GT GLOBAL
OVER 25 YEARS
OF INVESTING
WORLDWIDE
/ /
GT GLOBAL
EMERGING
MARKETS
FUND
/ /
ANNUAL REPORT
OCTOBER 31, 1997
[LOGO]
<PAGE>
TABLE
OF CONTENTS
<TABLE>
<S> <C>
Message from the
Chairman............. 1
Report from the Fund
Managers and Key
Portfolio Holdings... 2
Report of Independent
Accountants.......... F1
Financial
Statements........... F2
Views of the Fund's management
described in this report are as
of the date written. Portfolio
holdings and allocations are as
of October 31, 1997, unless
otherwise noted. These views,
portfolio holdings and
allocations may have changed
subsequently.
</TABLE>
<PAGE>
GT Global Emerging Markets Fund
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
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
PERFORMANCE SUMMARY
INVESTMENT OBJECTIVE
The GT Global Emerging Markets Fund seeks long-term growth of capital. The
Fund primarily invests in equity securities of companies located in emerging
markets, which generally include every country except the U.S., Canada,
Japan, Australia, New Zealand and most of the countries of western Europe.
[EDGAR REPRESENTATION OF CHART]
<TABLE>
<CAPTION>
GT Global
Emerging Markets MSCI Emerging IFC Investable
Fund Class A Shares Markets Index Composite
<S> <C> <C> <C>
5/18/92 9525 10000 10000
9550 9974 9832
9358 9273 8823
9333 9063 8804
9100 8680 8432
8942 8500 8257
9258 9033 8626
9075 9091 8569
9034 9181 8855
9269 9136 8816
9529 9573 9040
9630 10019 9334
9915 10171 9669
10159 10311 9880
10176 10402 10160
10386 10530 10476
10956 11065 11326
11150 11420 11782
12107 12295 12774
12736 12992 13584
14857 15494 15905
15556 15922 16015
15053 15436 15599
13739 14153 14025
13270 14241 13759
13526 14689 14083
12945 14390 13579
13858 15353 14554
15787 16931 16425
16197 17390 16833
16051 16966 16279
15522 16172 15666
14299 15329 13997
1/31/95 12809 13649 12126
11988 13407 11969
12139 13595 11938
12711 13873 12439
13130 14361 12904
12934 14325 12982
13344 14543 13395
13077 14061 13036
12898 14216 12937
12354 13744 12449
11791 13400 12387
12318 13919 12818
13282 14551 13892
13237 14366 13583
13318 14569 13782
13612 15612 14337
13630 15310 14211
13371 15511 14380
12675 14458 13435
13014 14777 13852
13112 14905 14056
12728 14483 13754
12773 14743 13958
12970 14753 14020
13792 15714 15009
14265 16348 15744
13685 15947 15355
13604 16061 15095
13926 16457 15608
14471 17409 16282
14846 17726 16439
12693 15679 14341
13051 15799 14807
10/31/97 10889 13073 12377
</TABLE>
The chart above shows the performance of the GT Global Emerging Markets Fund
Class A shares since inception, versus the various indices shown above. The
chart assumes a hypothetical $10,000 initial investment in the Fund's Class A
shares and reflects all Fund expenses and the maximum 4.75% sales charge. A
$10,000 investment in the Fund's Class B shares at inception on April 1,
1993, would have been valued at $10,855 on October 31, 1997. This figure
reflects all Fund expenses and the applicable contingent deferred sales
charge (5% in the first year, decreasing to 0% after six years), assuming
complete redemption at the end of the period. A $10,000 investment in Advisor
Class shares at inception on June 1, 1995, would have been worth $8,397 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) (14.45) 3.30 2.48 (18.52) 2.30 1.57
Class B(3) (14.91) N/A 2.21 (19.16) N/A 1.81
Advisor Class(4) (14.05) N/A (6.97) N/A N/A N/A
</TABLE>
HISTORICAL PERFORMANCE%(2)
ANNUAL TOTAL RETURNS (PER CALENDAR YEAR)
<TABLE>
<CAPTION>
1992 1993 1994 1995 1996
<S> <C> <C> <C> <C> <C>
Class A (5.16)(3) 64.46 (3.75) (13.86) 5.30
Class B N/A 53.92(3) (4.28) (14.34) 4.77
</TABLE>
(1) Figures assume reinvestment of all dividends and capital gain
distributions at net asset value.
(2) Performance data do not reflect the maximum 4.75% sales charge or the
contingent deferred sales charge, which, if included, would have reduced
performance quoted.
(3) The Fund began operations on May 18, 1992; Class B shares commenced on
April 1, 1993.
(4) The Fund began offering Advisor Class shares on June 1, 1995. Advisor
Class shares are not sold directly to the general public and are only
available through certain employee benefit plans, financial institutions and
other entities that have entered into specific agreements with GT Global.
Please see the "Alternative Purchase Plan" section in the Fund's
prospectus.
The above data represent past performance of the Fund's shares, which does
not guarantee future results. The investment return and principal value of an
investment in the Fund will fluctuate, so that an investor's shares, when
redeemed, may be worth more or less than their original cost.
2
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
INTERVIEW WITH HEAD OF GLOBAL EMERGING MARKETS EQUITIES
ALLAN CONWAY
Q HOW DID THE FUND PERFORM?
A The one-year period to October 31, 1997, ended on a disappointing note as
emerging markets outside Asia fell in sympathy with events in the region. The
Fund was not able to avoid the resulting volatility in worldwide emerging
stock markets and, against this backdrop, Class A shares returned a total of
- -14.45% (-18.52% including the maximum 4.75% sales charge); total return for
the Fund's Class B shares was -14.91% (-19.16% including the maximum 5%
contingent deferred sales charge). The Morgan Stanley Capital International
(MSCI) Emerging Markets Index returned -9.75%, and the International Finance
Corporation (IFC) Investable Composite Index(5) returned -10.02% over the
same period.
While country selection contributed positively to performance against the IFC
Investable Composite Index, as did strong stock selection in Taiwan and South
Africa, poor stock selection, particularly in Malaysia, Mexico and Turkey,
was primarily responsible for relative underperformance. Additionally, the
Fund was underweighted in Brazil over the first nine months of the period,
when the market was up close to 70%, as measured by the IFC Index. Within
Brazil, the Fund was underweighted in state-owned companies, which performed
exceptionally well.
Most of the Fund's relative underperformance occurred in the first eight
months of the period. Some of the evolutionary changes we discussed in the
semiannual report, such as enhanced risk control guidelines and more
disciplined stock selection, began exerting a positive influence toward the
end of the annual reporting period, following a major restructuring of the
portfolio in June.
Q WHAT TRIGGERED THE GENERAL DOWNTURN IN EMERGING MARKETS?
A The trigger was a devaluation in the Thai currency in early July, which
highlighted the instability of its banking sector and many years of excessive
spending based on cheap dollar financings.
REAL GDP GROWTH
[EDGAR REPRESENTATION OF GRAPH]
<TABLE>
<CAPTION>
89 97f
<S> <C> <C>
Developing Countries 4.64 6.6
Latin America 1.8 5.4
E. Europe/Mid-East 2.8 3.56
Asia 6.1 5.22
</TABLE>
Source: GT Global, Inc., November 1997.
While, initially, tremors were contained to Asia, in early October the
sudden, sharp decline in the Hong Kong market--previously considered
relatively immune to regional malaise--prompted fears of a global meltdown.
Even the U.S. suffered a severe bout of volatility as investors fled to
quality and liquidity.
Meanwhile, confidence in emerging equity markets was battered on a grand
scale. Effects were also evident in emerging bond markets, where spreads to
U.S. Treasuries widened dramatically, raising corporate and government
borrowing rates considerably.
Q WHAT COMPANIES PERFORMED WELL?
A A number of Fund holdings performed exceptionally well over the period.
Strong rallies, especially in Brazil, contributed to impressive returns for
Petrobras and Telebras in Brazil, as well as Alfa Credit Bank(6) in Greece,
LUKoil in Russia and India's ITC.
Brazil's Telebras has done well, even taking into account its share price
plummet in October. From the start of 1997 to October 31, Telebras enjoyed a
return of about 35%. We are generally pleased with Brazil's progress on
regulatory reform and overall
CONTINUED P.4
(5) The MSCI Emerging Markets and IFC Investable Composite Indices are market
value-weighted averages of the performance of securities listed on the
exchanges of 26 and 26 countries, respectively. They include the effect of
reinvested dividends and are measured in U.S. dollars. The Fund has changed
benchmarks to the IFC Investable Composite Index because we feel it presents
a more accurate reflection of investment opportunities available to foreign
investors.
Indices are unmanaged, not available for direct investment and do not incur
sales charges and professional management fees.
3
<PAGE>
INTERVIEW WITH THE PORTFOLIO MANAGER CONTINUED
growth of its telecommunications industry. Cellular growth has been
remarkable, and even landline growth has been quite impressive.
Eletrobras, another privatization play, saw its share price strengthen
further with the introduction of a regulatory regime in the energy sector.
The Fund's other big performer in Brazil, Petrobras, has expanded exploration
activities and experienced impressive growth in its oil reserves.
LUKoil is the largest Russian oil group and the world's third-largest oil
producer. The company has more oil reserves than any other listed oil company
in the world. We believe LUKoil should benefit from higher production based
on a strengthening of the domestic economy, the narrowing between domestic
and world price levels, higher exports, its joint venture with a major
western oil company, the acquisition of new cheap oil reserves and the
consolidation of the Russian oil industry.
Alpha Credit Bank,(6) the largest private bank in Greece, benefited strongly
from falling interest rates as inflation was brought under control. As the
most liquid stock in Greece, Alpha Credit also benefited from a rerating of
the entire market.
ITC, an Indian holding company with operations mainly in tobacco, hotels,
paper, packaging and printing, financial services and real estate,
outperformed the local index by over 50%. Profits exceeded expectations
following rising demand for higher-value products in the tobacco sector. In
addition, foreign investors generally increased holdings in Indian companies
with strong international shareholdings and management. A major UK
conglomerate has the maximum stake allowable for foreigners.
On the other hand, major disappointments were mostly limited to companies in
Malaysia, where financials such as Malayan Banking and Rashid Hussain(6) were
particularly affected by the currency crisis.
Q COULD YOU DESCRIBE EVENTS IN ASIA?
A In Thailand and Malaysia, investors focused on the impact of falling
real-estate prices on the banking/financial services and property development
sectors. In both countries, the threat of bursting price "bubbles" had been
growing over the last three years and the failure of policymakers to take
appropriate action only compounded the problem. Similar issues also featured
in the Philippines, although to a lesser degree.
Elsewhere, in South Korea the key issue was the impact of the won's weakness on
highly indebted companies that have borrowed in foreign currencies. Uncertainty
in relation to the timing and size of an International Monetary Fund (IMF)
rescue package for South Korea was also a primary concern. Even Hong Kong was
unable to escape the carnage as capital outflows caused a rise in interest rates
and a fall in property prices. Meanwhile, analysts continue to revise downwards
their expectations for growth in the economy and corporate earnings.
Q OUTSIDE ASIA, HOW HAVE COUNTRIES BEEN IMPACTED BY THE DOWNTURN?
A The year-to-date performance for the emerging markets universe in U.S. dollar
terms ranged from about 180% for Russia to -70% for Thailand (based on the IFC
Index), reinforcing our focus on top-down asset allocation. During the last
several months of the period, in particular, countries characterized by
significant current account deficits, budget deficits or political problems
generally experienced volatile share prices. Examples include Russia, Brazil and
India.
Meanwhile, potential regional safe havens included Mexico, Hungary, South Africa
and Egypt. While events in Asia soured investor sentiment in Mexico too, it was
the least affected of all Latin American markets. In October 1997, fundamental
economic news regarding GDP and industrial production received a warm welcome
because both exceeded expectations. The economy grew 7.3% in the first nine
months of the year, while industrial production rose 13.1% year-on-year to the
end of September. Led by manufacturing and construction, industrial production
was much higher than the consensus expectation of 8.7%.
In Hungary, the three-year commitment to economic austerity has nurtured a
positive investment climate, with local investment and healthy foreign capital
CONTINUED P.5
(6) The Fund sold off its holdings of the securities of this company prior to
October 31, 1997.
4
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
INTERVIEW WITH THE PORTFOLIO MANAGER CONTINUED
inflows producing another strong year for its stock market overall. We
believe valuations are looking more attractive following October's selloff,
and feel Hungary may stand to benefit as a regional safe haven because of its
solid representation of blue-chip companies.
Q THE FUND IS SIGNIFICANTLY OVERWEIGHTED IN EGYPT RELATIVE TO THE IFCI
INDEX. WHAT DO YOU FIND ATTRACTIVE ABOUT THIS MARKET?
A We have overweighted Egypt for a number of reasons. We believe the
monetary environment is supportive, and the overall macroeconomic outlook
remains very positive. Our expectations are for a continued decline in
inflation with nominal interest rates moving in line. Capital inflows have
also been supportive. We believe the main risk for Egypt is that reform takes
longer to materialize than we anticipate. Following the market's strong
performance over the past year, we will continue to monitor events and adjust
the Fund's position accordingly.
Q WHAT AREAS ARE YOU CURRENTLY CAUTIOUS ABOUT?
A We are not yet convinced that Asian policymakers are willing to endure the
pain required to restructure their financial and corporate sectors, and
expect further currency weakness, slower growth and higher inflation to
emerge in this region. Additionally, continued yen weakness will put pressure
on Asian export competitiveness. We believe the key to asset allocation in
this region is identifying competitive, fundamentally strong and reasonably
valued companies. We remain underweighted in financials generally,
particularly banks, across the region.
In Latin America, concerns center around Brazil and Argentina, where the
effects of higher interest rates on the private sector remain to be seen,
leading us to feel cautious for the present. The Brazilian state sector, on
the other hand, continues to be compelling as the reform process and
privatization are seemingly back on track and showing renewed momentum.
Indeed, the critical component of this equation will be the time it takes for
interest rates to fall to normal levels.
Meanwhile, we believe one result of lower economic activity should be a
reduction in the level of imports and redirection of sales to the export
market, which would give some needed relief to the current account deficit.
Of all regional markets, Argentina stands to bear most of the impact from any
slowdown in Brazil. We believe a major factor for Argentina, like Brazil,
will be the rate at which interest rates return to normal levels.
Q WHAT ARE YOUR EXPECTATIONS FOR EMERGING EQUITY MARKETS IN 1998?
A In general, our medium-term outlook for emerging markets remains
favorable. With the emerging markets universe as a whole having unwound most
of its outperformance, valuation measurements, both on a price-to-book and
price-to-earnings basis, are beginning to look attractive. Many emerging
markets remain below their 1994 highs, and we find them generally undervalued
in relation to the past and to developed markets.
We believe economic reform in many of the countries in eastern Europe and the
Middle East (EMEA) could provide attractive opportunities for investors. In
the portfolio, we continue to emphasize EMEA markets we feel are relatively
well insulated from instability. Meanwhile, potential for a pickup in
activity in Germany and other core European economies augurs well for the
eastern European region. Hungary's current account achieved a healthy surplus
in the third quarter, demonstrating strengthening export growth and resulting
support of the current account balance.
As panic subsides, we expect Latin America to decouple from events in Asia. A
decade of reform has delivered relatively stable growth and tame inflation in
many Latin American countries. True, our expectations are more modest than
several months ago but, despite the recent downturn, we are forecasting the
region as a whole to stage its best economic performance for a generation
this year, with average 1997 growth of around 5.5% and inflation below 13%.
Meanwhile, reform and privatization remain well entrenched in the region. At
the extreme, we think funding flows may take some time to recover, as
perceptions of risk have been altered and confidence remains fragile.
5
<PAGE>
INTERVIEW WITH THE PORTFOLIO MANAGER CONTINUED
ABOUT THE MANAGEMENT TEAM
ALLAN CONWAY - Head of Global Emerging Markets Equity Team. Prior to joining
Chancellor LGT Asset Management in 1997, Mr. Conway spent 23 years in the
financial services industry. Most recently, from 1992-97 he was Director,
International Equities, at Hermes Investment Management. Mr. Conway received
a B.A. from the University of York, England.
CHRISTINE ROWLEY - Global Emerging Markets Portfolio Manager. Prior to
joining Chancellor LGT Asset Management in 1992, Ms. Rowley was an Analyst
with the Bank of England and received an M.Sc. from the London School of
Economics.
HUGH HUNTER - Global Emerging Markets Portfolio Manager. Prior to joining
Chancellor LGT Asset Management in 1997, Mr. Hunter was the Head of
Quantitative Research and Strategy-Global emerging Markets at ING Barings,
Hong Kong. From 1985 to 1987, he was a Senior Business Analyst at Exco
International. Mr. Hunter received his B.A. from Plymouth Polytechnic.
DARREN READ - Global Emerging Markets Portfolio Manager. Prior to joining
Chancellor LGT Asset Management in 1997, Mr. Read was a Senior Investment
Analyst with Hermes Investment Management. From 1991 to 1995, he was a
Chartered Accountant with Arthur Anderson. Mr. Read received his B.A. from
Cambridge.
MARK THOROGOOD - Global Emerging Markets Portfolio Manager. Prior to joining
Chancellor LGT Asset Management in 1997, Mr. Thorogood was a proprietary
Trader at ING Barings, Hong Kong. From 1987 to 1994, he was at Provident
Mutual, first as an Analyst, and then as a Portfolio Manager covering the
Japanese and Asian Equity Markets. Mr. Thorogood received his B.A. from
Nottingham University.
ALLOCATION OF NET ASSETS
[EDGAR REPRESENTATION OF GRAPH]
Capital Goods 2.5%
Technology 3.7%
Other 3.9%
Consumer Non-Durables 9.0%
Finance 15.1%
Materials - Basic Industry 15.5%
Services 15.6%
Multi Industry - Misc. 16.1%
Energy 18.6%
Allocations may change as market conditions change. A complete listing may be
found in the Financial Statements section of this report.
GEOGRAPHIC ALLOCATION OF NET ASSETS%
<TABLE>
<CAPTION>
OCTOBER 31, 1997 OCTOBER 31, 1996
<S> <C> <C>
ARGENTINA 1.8 0.3
BRAZIL 12.3 11.6
CHILE 6.4 0.9
CHINA 0.6 N/A
COLOMBIA N/A 0.8
CZECH REPUBLIC N/A 3.0
EGYPT 9.0 N/A
GHANA N/A 0.5
GREECE N/A 3.2
HONG KONG 3.0 12.4
HUNGARY 1.6 0.2
INDIA 5.4 5.2
INDONESIA 3.8 0.6
IRELAND 0.6 N/A
ISRAEL 1.6 6.0
KAZAKHSTAN 0.2 N/A
KOREA 1.6 5.2
MALAYSIA 2.3 3.2
MEXICO 10.7 8.2
PAKISTAN 1.2 0.6
PANAMA 0.6 3.3
PERU 1.4 N/A
PHILIPPINES 1.3 0.6
POLAND 0.5 1.2
PORTUGAL 1.2 1.8
ROMANIA 0.3 N/A
RUSSIA 4.0 2.4
SOUTH AFRICA 15.4 4.8
SRI LANKA 0.4 N/A
TAIWAN 3.5 N/A
THAILAND 1.8 1.8
TURKEY 2.7 2.1
UNITED KINGDOM 0.9 N/A
UNITED STATES & OTHER (0.3) 16.0
VENEZUELA 2.9 1.6
ZIMBABWE 1.3 2.5
</TABLE>
6
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
<TABLE>
<CAPTION>
% of
GT GLOBAL EMERGING MARKETS FUND Country Net Assets
<S> <C> <C>
KEY PORTFOLIO HOLDINGS(7)
ASUSTEK COMPUTER INC. Manufactures and markets Pentium Pro, Pentium and Taiwan 3.5
486-based mainboards. The company also offers other peripherals such as
audio, video and network cards. Asustek sells its products in Taiwan and
exports to America, Asia and Europe.
TELEBRAS The holding company of Brazil's local and long-distance services, Brazil 3.0
this currently state-controlled company is scheduled for privatization in
1998.
LUKOIL HOLDING Russia's largest private oil and gas company, LUKoil holds Russia 2.4
18% of Russia's oil and gas extracting market and 11% of its refining market.
The company's oil reserves are estimated to be the second largest in the
world.
TELEFONOS DE MEXICO S.A. DE C.V. Provides national and international Mexico 2.2
long-distance and local telephone service to 7,320 communities throughout
Mexico. The company also provides voice, data, image signal and cellular
transmission services.
SASOL LTD. The holding company for a group that produces and markets liquid South Africa 2.0
fuels, pipeline gas, petrochemicals, plastics, fertilizers, waxes and mining
explosives from coal and crude oil.
STATE BANK OF INDIA Provides a wide range of banking and financial services India 1.9
to corporate, institutional, commercial, agricultural, industrial and
individual customers. The bank has operations in 34 countries.
KIMBERLY-CLARK DE MEXICO, S.A. DE C.V. The largest manufacturer of diapers, Mexico 1.8
tissue paper, notebooks and paper in Mexico. The company's conservative
management has concentrated on lowering costs every year to retain its
competitive position in the marketplace.
SOUTH AFRICAN BREWERIES LTD. The holding company for a group of companies South Africa 1.7
with diverse operations in the mass consumer markets of South Africa. The
group primarily manufactures and distributes beer, but has interests in other
beverages, and operates in the retailing, hotel, and consumer goods
manufacturing and supply sectors.
PETROBRAS Produces oil and natural gas liquids through approximately 7,258 Brazil 1.7
producing wells. The company continues to benefit from the rapid growth of
both reserves and production. The passing of Brazil's Hydrocarbon Law during
1997 allows the company to further accelerate this growth through joint
ventures with international corporations.
BARLOW LTD. Holding company for a group that produces and distributes South Africa 1.7
products used in building and construction, mining and other industries, as
well as in motor vehicle retailing. The group's manufacturing operations
serve markets in the UK, continental Europe, the U.S., Australia and the Far
East. About 25% of the company's attributable profit is earned in foreign
currencies.
</TABLE>
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>
GT GLOBAL EMERGING MARKETS FUND
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
ANNUAL REPORT
To the Shareholders of GT Global Emerging Markets Fund and
Board of Directors of G.T. Investment Funds, Inc.:
We have audited the accompanying statement of assets and liabilities of GT
Global Emerging Markets Fund, one of the funds organized as a series of G.T.
Investment Funds, Inc., including the portfolio of investments, as of October
31, 1997, the related statement of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period then
ended, and the financial highlights for each of the five years in the period
then ended. These financial statements and the financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and the financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1997 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and the financial highlights referred
to above present fairly, in all material respects, the financial position of GT
Global Emerging Markets Fund as of October 31, 1997, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each of
the five years in the period then ended, in conformity with generally accepted
accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
DECEMBER 15, 1997
F1
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
PORTFOLIO OF INVESTMENTS
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------ -------- ------------ ------------ -------------
<S> <C> <C> <C> <C>
Energy (18.6%)
LUKoil Holding - ADR{\/} ................................. RUS 68,826 $ 5,764,178 2.4
OIL
Sasol Ltd. ............................................... SAFR 402,507 4,853,515 2.0
ENERGY SOURCES
Petroleo Brasileiro S.A. (Petrobras) Preferred ........... BRZL 22,113,561 4,112,192 1.7
OIL
Companhia Energetica de Minas Gerais (CEMIG) - ADR{\/} ... BRZL 85,389 3,415,560 1.4
ELECTRICAL & GAS UTILITIES
C.A. La Electricidad de Caracas .......................... VENZ 2,529,153 3,324,761 1.4
ELECTRICAL & GAS UTILITIES
Centrais Eletricas Brasileiras S.A.-Eletrobras "B" -
ADR{\/} ................................................. BRZL 133,855 2,944,810 1.2
ELECTRICAL & GAS UTILITIES
Chilgener S.A. - ADR{\/} ................................. CHLE 88,263 2,383,101 1.0
ELECTRICAL & GAS UTILITIES
Enersis S.A. - ADR{\/} ................................... CHLE 64,238 2,119,854 0.9
ELECTRICAL & GAS UTILITIES
Empresa Nacional de Electricidad S.A. - ADR{\/} .......... CHLE 100,922 2,031,055 0.8
ELECTRICAL & GAS UTILITIES
Light - Servicos de Electricidade S.A. ................... BRZL 5,020,561 1,666,841 0.7
ELECTRICAL & GAS UTILITIES
Light - Participacoes S.A. ............................... BRZL 6,360,473 1,627,044 0.7
ELECTRICAL & GAS UTILITIES
YPF S.A. - ADR{\/} ....................................... ARG 49,065 1,570,080 0.7
OIL
The Hub Power Co., Ltd. - GDR-/- {\/} .................... PAK 49,150 1,535,938 0.6
ENERGY SOURCES
Unified Energy Systems - Reg S GDR-/- {c} {\/} ........... RUS 37,000 1,156,246 0.5
ELECTRICAL & GAS UTILITIES
Surgutneftegaz - ADR-/- {\/} ............................. RUS 123,235 1,047,498 0.4
OIL
PTT Exploration and Production Public Co., Ltd. -
Foreign ................................................. THAI 101,800 1,038,259 0.4
OIL
MOL Magyar Olaj-es Gazipari RT - Reg S GDR{c} {\/} ....... HGRY 35,800 774,175 0.3
ENERGY SOURCES
Manila Electric Co. "B" .................................. PHIL 236,700 728,308 0.3
ELECTRICAL & GAS UTILITIES
Mosenergo - 144A ADR{.} {\/} ............................. RUS 15,000 630,000 0.3
ELECTRICAL & GAS UTILITIES
Electricity Generating Public Co., Ltd. - Foreign ........ THAI 329,100 548,500 0.2
ELECTRICAL & GAS UTILITIES
Perez Companc S.A. ....................................... ARG 74,818 468,642 0.2
OIL
Tenaga Nasional Bhd. ..................................... MAL 194,000 419,585 0.2
ELECTRICAL & GAS UTILITIES
Korea Electric Power Corp. - ADR{\/} ..................... KOR 44,271 362,469 0.2
ELECTRICAL & GAS UTILITIES
BSES Ltd. - Reg. S GDR{c} ................................ IND 19,100 296,050 0.1
ELECTRICAL & GAS UTILITIES
Yukong Ltd. .............................................. KOR 7,543 102,145 --
OIL
</TABLE>
The accompanying notes are an integral part of the financial statements.
F2
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------ -------- ------------ ------------ -------------
<S> <C> <C> <C> <C>
Energy (Continued)
Guangdong Electric Power Development Co., Ltd. "B"+X+ .... CHNA 127,800 $ 72,084 --
ENERGY SOURCES
Pakistan State Oil Co., Ltd. ............................. PAK 20 216 --
OIL
------------
44,993,106
------------
Multi-Industry/Miscellaneous (16.1%)
Barlow Ltd. .............................................. SAFR 407,077 4,104,623 1.7
CONGLOMERATE
Anglo American Corporation of South Africa Ltd. .......... SAFR 82,607 3,572,195 1.5
CONGLOMERATE
Delta Corporation Ltd. (subdivision)-/- .................. ZBBW 2,187,074 3,114,504 1.3
MULTI-INDUSTRY
PT Telekomunikasi Indonesia .............................. INDO 3,075,500 2,869,896 1.2
MULTI-INDUSTRY
Grupo Carso, S.A. de C.V. "A1" ........................... MEX 396,200 2,519,547 1.0
MULTI-INDUSTRY
ITC Ltd.: ................................................ IND -- -- 1.0
MULTI-INDUSTRY
Common ................................................. -- 123,928 1,916,184 --
GDR-/- {\/} ............................................ -- 25,987 475,562 --
The Saudi Arabian Investment Fund Ltd.-/- {\/} ........... UK 211,000 2,110,000 0.9
COUNTRY FUNDS
PT Gudang Garam .......................................... INDO 625,500 1,777,187 0.7
MULTI-INDUSTRY
China Resources Enterprise Ltd. .......................... HK 623,000 1,708,616 0.7
CONGLOMERATE
Malaysian Resources Corp., Bhd. .......................... MAL 2,556,000 1,520,240 0.6
CONGLOMERATE
Shanghai Industrial Holdings Ltd. ........................ HK 339,000 1,508,616 0.6
MULTI-INDUSTRY
Central Asia Regional Growth Fund-/- {\/} ................ IRE 156,000 1,485,120 0.6
COUNTRY FUNDS
NASR (El) City Company For Housing & Construction-/- ..... EGPT 18,870 1,304,195 0.5
MISCELLANEOUS
Billiton PLC-/- .......................................... SAFR 395,102 1,158,199 0.5
CONGLOMERATE
Sanluis Corporacion, S.A. de C.V. ........................ MEX 145,432 1,128,622 0.5
CONGLOMERATE
John Keells Holdings Ltd. ................................ SLNKA 183,000 934,142 0.4
MULTI-INDUSTRY
Empresas La Moderna, S.A. de C.V. "A"-/- ................. MEX 186,000 913,293 0.4
MULTI-INDUSTRY
PT Bimantara Citra ....................................... INDO 965,000 887,047 0.4
MULTI-INDUSTRY
Romanian Growth Fund{\/} ................................. ROM 75,800 784,530 0.3
COUNTRY FUNDS
Koc Holding AS ........................................... TRKY 1,827,500 687,480 0.3
CONGLOMERATE
Rembrandt Group Ltd. ..................................... SAFR 77,200 633,971 0.3
CONGLOMERATE
</TABLE>
The accompanying notes are an integral part of the financial statements.
F3
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------ -------- ------------ ------------ -------------
<S> <C> <C> <C> <C>
Multi-Industry/Miscellaneous (Continued)
Koor Industries Ltd. - ADR{\/} ........................... ISRL 22,315 $ 476,983 0.2
CONGLOMERATE
PT Hanjaya Mandala Sampoerna ............................. INDO 262,000 457,953 0.2
MULTI-INDUSTRY
Discount Investment Corp. ................................ ISRL 12,474 339,811 0.1
MULTI-INDUSTRY
Quinenco S.A. - ADR-/- {\/} .............................. CHLE 21,500 314,438 0.1
CONGLOMERATE
KEC International Ltd.-/- ................................ IND 160,500 162,280 0.1
MISCELLANEOUS
------------
38,865,234
------------
Services (15.6%)
Telecomunicacoes Brasileiras S.A. (Telebras): ............ BRZL -- -- 3.0
TELEPHONE NETWORKS
ADR{\/} ................................................ -- 37,332 3,789,198 --
Common ................................................. -- 38,472,813 3,419,767 --
Telefonos de Mexico, S.A. de C.V. "L" - ADR{\/} .......... MEX 122,827 5,312,268 2.2
TELEPHONE NETWORKS
Compania Anonima Nacional Telefonos de Venezuela (CANTV) -
ADR{\/} ................................................. VENZ 85,004 3,718,925 1.5
TELEPHONE NETWORKS
Pick'n Pay Stores Ltd.: .................................. SAFR -- -- 1.4
RETAILERS-OTHER
Common ................................................. -- 1,646,589 2,481,865 --
"N" .................................................... -- 719,798 987,665 --
Cia de Telecomunicaciones de Chile S.A. - ADR{\/} ........ CHLE 84,227 2,337,299 1.0
TELEPHONE NETWORKS
Telefonica del Peru S.A. - ADR{\/} ....................... PERU 100,740 1,989,615 0.8
TELEPHONE NETWORKS
Cifra, S.A. de C.V.: ..................................... MEX -- -- 0.6
RETAILERS-OTHER
"C" .................................................... -- 593,000 1,029,760 --
"A" .................................................... -- 275,000 506,527 --
"B" .................................................... -- 26,656 53,248 --
Companhia de Saneamento Basico do Estado de Sao Paulo -
SABESP-/- ............................................... BRZL 7,509,655 1,362,419 0.6
BUSINESS & PUBLIC SERVICES
Telefonica de Argentina S.A. - ADR{\/} ................... ARG 42,183 1,186,397 0.5
TELEPHONE NETWORKS
Telecomunicacoes de Sao Paulo S.A. (TELESP) Preferred .... BRZL 3,388,663 885,282 0.4
TELEPHONE NETWORKS
TelecomAsia Corp. - Foreign-/- ........................... THAI 1,521,400 681,224 0.3
TELEPHONE NETWORKS
Santa Isabel S.A. - ADR{\/} .............................. CHLE 36,543 676,046 0.3
RETAILERS-FOOD
PT Indosat ............................................... INDO 264,500 598,625 0.3
TELECOM - OTHER
Danubius Hotel and Spa Rt.-/- ............................ HGRY 19,037 595,762 0.2
LEISURE & TOURISM
</TABLE>
The accompanying notes are an integral part of the financial statements.
F4
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------ -------- ------------ ------------ -------------
<S> <C> <C> <C> <C>
Services (Continued)
PT Citra Marga Nusaphala Persada ......................... INDO 2,073,000 $ 591,873 0.2
BUSINESS & PUBLIC SERVICES
Mahanagar Telephone Nigam Ltd. ........................... IND 84,400 588,062 0.2
TELECOM - OTHER
Portugal Telecom S.A. - Registered ....................... PORT 13,630 559,388 0.2
TELEPHONE NETWORKS
Sonae Investimentos-Sociedade Gestora de Participacoes
Sociais S.A. ............................................ PORT 14,423 539,017 0.2
RETAILERS-OTHER
Migros Turk T.A.S. ....................................... TRKY 479,400 503,132 0.2
RETAILERS-FOOD
Investec-Consultoria Internacional S.A.-/- ............... PORT 15,692 490,933 0.2
BROADCASTING & PUBLISHING
Super Sol Ltd. ........................................... ISRL 127,545 367,036 0.2
RETAILERS-FOOD
Advanced Info. Service - Foreign ......................... THAI 68,300 366,985 0.2
WIRELESS COMMUNICATIONS
Indian Hotels Co., Ltd. .................................. IND -- -- 0.1
LEISURE & TOURISM
GDR-/- {\/} ............................................ -- 20,200 348,450 --
Common ................................................. -- 3,000 48,573 --
Konsortium Perkapalan Bhd. ............................... MAL 182,000 341,694 0.1
TRANSPORTATION - SHIPPING
Pakistan Telecommunications Co., Ltd. - GDR-/- {\/} ...... PAK 3,700 299,700 0.1
TELEPHONE NETWORKS
Guangshen Railway Co., Ltd. .............................. HK 924,000 286,882 0.1
TRANSPORTATION - ROAD & RAIL
Vimpel-Communications - ADR-/- {\/} ...................... RUS 8,500 278,375 0.1
WIRELESS COMMUNICATIONS
BEC World Public Co., Ltd. - Foreign ..................... THAI 53,000 276,866 0.1
BROADCASTING & PUBLISHING
Estabelecimentos Jeronimo Martins & Filho, Sociedade
Gestora de Participacoes Sociais S.A. ................... PORT 4,141 270,885 0.1
RETAILERS-OTHER
Himachal Futuristic Communications Ltd. .................. IND 450,000 241,423 0.1
TELECOM - OTHER
PT Matahari Putra Prima .................................. INDO 1,109,000 216,240 0.1
RETAILERS-APPAREL
------------
38,227,406
------------
Materials/Basic Industry (15.5%)
Kimberly-Clark de Mexico, S.A. de C.V. "A" ............... MEX 1,012,344 4,461,588 1.8
PAPER/PACKAGING
SA Iron & Steel Industrial Corp., Ltd. (ISCOR) ........... SAFR 6,948,244 3,611,353 1.5
METALS - STEEL
Suez Cement Co. - Reg S GDR{c} {\/} ...................... EGPT 169,935 3,526,151 1.5
CEMENT
Sappi Ltd. ............................................... SAFR 427,859 2,713,035 1.1
FOREST PRODUCTS
Helwan Portland Cement Co.-/- ............................ EGPT 104,210 2,199,138 0.9
CEMENT
</TABLE>
The accompanying notes are an integral part of the financial statements.
F5
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------ -------- ------------ ------------ -------------
<S> <C> <C> <C> <C>
Materials/Basic Industry (Continued)
Ameriyah Cement Co.-/- ................................... EGPT 84,386 $ 2,134,469 0.9
CEMENT
Industrias Penoles S.A. (CP) ............................. MEX 452,187 1,800,625 0.7
METALS - NON-FERROUS
Torah Portland Cement Co.-/- ............................. EGPT 60,900 1,665,794 0.7
CEMENT
De Beers Centenary AG - Linked Unit ...................... SAFR 68,900 1,644,432 0.7
MISC. MATERIALS & COMMODITIES
Apasco S.A. .............................................. MEX 254,481 1,554,315 0.6
CEMENT
North Cairo Flour Mills-/- ............................... EGPT 30,170 1,313,282 0.5
MISC. MATERIALS & COMMODITIES
Helioplis Housing-/- ..................................... EGPT 8,500 1,162,750 0.5
BUILDING MATERIALS & COMPONENTS
Pannonplast Rt. .......................................... HGRY 18,188 999,145 0.4
MISC. MATERIALS & COMMODITIES
Pohang Iron & Steel Co., Ltd.: ........................... KOR -- -- 0.5
METALS - STEEL
ADR{\/} ................................................ -- 52,475 852,719 --
Common ................................................. -- 2,580 114,060 --
Paints & Chemical Industry-/- ............................ EGPT 20,500 687,413 0.3
CHEMICALS
Grupo Industrial Minera Mexico "L" ....................... MEX 231,300 686,975 0.3
METALS - NON-FERROUS
Cimpor-Cimentos de Portugal, SGPS S.A. ................... PORT 23,585 597,004 0.2
CEMENT
Cosco Pacific Ltd. ....................................... HK 462,000 537,904 0.2
PAPER/PACKAGING
Hindalco Industries Ltd. ................................. IND 19,350 505,218 0.2
METALS - NON-FERROUS
Siam Cement Co., Ltd. - Foreign .......................... THAI 57,200 486,627 0.2
CEMENT
Israel Chemicals Ltd. .................................... ISRL 386,976 485,117 0.2
CHEMICALS
Maanshan Iron and Steel Co. "H"+X+ ....................... CHNA 2,874,000 457,312 0.2
METALS - STEEL
Sociedad Quimica y Minera de Chile S.A. - ADR{\/} ........ CHLE 8,500 440,938 0.2
CHEMICALS
PT Aneka Tambang-/- ...................................... INDO 940,000 366,574 0.2
METALS - NON-FERROUS
Dhan Fibres Ltd.-/- ...................................... PAK 4,273,000 325,286 0.1
CHEMICALS
Turk Sise ve Cam Fabrikalari AS-/- ....................... TRKY 3,564,000 306,035 0.1
GLASS
HI Cement Corp. .......................................... PHIL 3,197,000 291,464 0.1
CEMENT
Engro Chemicals Pakistan Ltd. ............................ PAK 85,412 269,787 0.1
CHEMICALS
Agros Holding S.A.-/- .................................... POL 11,876 249,123 0.1
MISC. MATERIALS & COMMODITIES
</TABLE>
The accompanying notes are an integral part of the financial statements.
F6
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
PORTFOLIO OF INVESTMENTS (cont'd)
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------ -------- ------------ ------------ -------------
<S> <C> <C> <C> <C>
Materials/Basic Industry (Continued)
Cahya Mata Sarawak Bhd. .................................. MAL 229,000 $ 222,878 0.1
BUILDING MATERIALS & COMPONENTS
Compania de Minas Buenaventura S.A. - ADR{\/} ............ PERU 11,800 211,663 0.1
METALS - NON-FERROUS
PT Indah Kiat Pulp & Paper Corp. Tbk ..................... INDO 517,000 198,015 0.1
PAPER/PACKAGING
Associated Cement Cos., Ltd. ............................. IND 5,086 163,542 0.1
CEMENT
Fauji Fertilizer Co., Ltd. ............................... PAK 71,900 160,119 0.1
MISC. MATERIALS & COMMODITIES
Dewan Salman Fibre Ltd.-/- ............................... PAK 4 3 --
CHEMICALS
------------
37,401,853
------------
Finance (15.1%)
State Bank of India Ltd. ................................. IND 646,650 4,679,037 1.9
BANKS-REGIONAL
Uniao Bancos Brasileiras "A" Preferred ................... BRZL 155,867,458 3,956,070 1.6
BANKS-MONEY CENTER
ABSA Group Ltd. .......................................... SAFR 631,687 3,742,844 1.5
BANKS-REGIONAL
Egyptian American Bank SAE-/- ............................ EGPT 72,790 2,344,266 1.0
BANKS-MONEY CENTER
Administradora de Fondos de Pensiones Provida S.A. -
ADR{\/} ................................................. CHLE 114,258 1,913,822 0.8
INVESTMENT MANAGEMENT
Malayan Banking Bhd. ..................................... MAL 401,800 1,556,990 0.6
BANKS-MONEY CENTER
Banco LatinoAmericano de Exportaciones S.A. (Bladex)
"E"{\/} ................................................. PAN 36,337 1,444,396 0.6
OTHER FINANCIAL
Global Menkul Degerler AS-/- ............................. TRKY 60,574,257 1,403,558 0.6
SECURITIES BROKER
Banco de A. Edwards - ADR{\/} ............................ CHLE 74,184 1,288,947 0.5
BANKS-MONEY CENTER
Credicorp Ltd. - ADR{\/} ................................. PERU 67,200 1,205,400 0.5
BANKS-MONEY CENTER
Aksigorta A.S. ........................................... TRKY 14,655,000 1,138,555 0.5
INSURANCE - MULTI-LINE
Commercial International Bank ............................ EGPT -- -- 0.4
BANKS-MONEY CENTER
144A GDR{.} {\/} ....................................... -- 37,000 804,750 --
Common ................................................. -- 14,000 323,853 --
Liberty Life Association of Africa Ltd. .................. SAFR 36,900 920,582 0.4
INSURANCE-LIFE
Banco Frances del Rio de la Plata S.A. - ADR{\/} ......... ARG 34,978 861,333 0.4
BANKS-MONEY CENTER
Turkiye Is Bankasi (Isbank) "C" .......................... TRKY 8,527,300 825,208 0.3
BANKS-MONEY CENTER
Kookmin Bank - GDR-/- {\/} ............................... KOR 100,650 644,160 0.3
BANKS-MONEY CENTER
BPI-SGPS S.A. ............................................ PORT 27,269 613,475 0.3
BANKS-MONEY CENTER
</TABLE>
The accompanying notes are an integral part of the financial statements.
F7
<PAGE>
GT GLOBAL EMERGING MARKETS 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>
Finance (Continued)
Thai Farmers Bank Public Co., Ltd. - Foreign ............. THAI 205,700 $ 562,861 0.2
BANKS-REGIONAL
SM Prime Holdings, Inc. .................................. PHIL 2,860,800 505,326 0.2
REAL ESTATE
Yapi ve Kredi Bankasi AS ................................. TRKY 16,419,347 501,299 0.2
BANKS-REGIONAL
C.G. Smith Ltd. .......................................... SAFR 109,100 476,320 0.2
INVESTMENT MANAGEMENT
Nedcor Ltd. .............................................. SAFR 22,000 461,954 0.2
BANKS-REGIONAL
Bank Hapoalim Ltd. ....................................... ISRL 191,250 452,638 0.2
BANKS-REGIONAL
Metroplex Bhd. ........................................... MAL 1,242,000 432,779 0.2
REAL ESTATE
JSC Kazkommertsbank Co. - GDR-/- {\/} .................... KAZ 19,530 410,130 0.2
BANKS-REGIONAL
Muslim Commercial Bank Ltd.-/- ........................... PAK 379,600 388,174 0.2
BANKS-MONEY CENTER
Bank Leumi Le - Israel ................................... ISRL 242,645 372,565 0.2
BANKS-REGIONAL
Turkiye Garanti Bankasi AS ............................... TRKY 6,533,800 338,410 0.1
BANKS-REGIONAL
Bank Slaski S.A. ......................................... POL 5,773 336,758 0.1
BANKS-MONEY CENTER
Belle Corp.-/- ........................................... PHIL 3,542,000 322,917 0.1
REAL ESTATE
Ayala Land, Inc. "B" ..................................... PHIL 670,000 262,464 0.1
REAL ESTATE
Banco Santander Chile - ADR{\/} .......................... CHLE 18,800 244,400 0.1
BANKS-REGIONAL
Land and House Public Co., Ltd. - Foreign ................ THAI 273,000 237,687 0.1
REAL ESTATE
Malaysian Assurance Alliance Bhd. ........................ MAL 79,100 142,565 0.1
INSURANCE - MULTI-LINE
Bangkok Bank Public Co., Ltd. - Foreign .................. THAI 39,600 137,910 0.1
BANKS-MONEY CENTER
C & P Homes, Inc. ........................................ PHIL 1,487,000 112,266 0.1
REAL ESTATE
HDFC Bank Ltd. ........................................... IND 500 1,118 --
BANKS-MONEY CENTER
Housing Development Finance Corp.-/- ..................... IND 5 422 --
OTHER FINANCIAL
------------
36,368,209
------------
Consumer Non-Durables (9.0%)
South African Breweries Ltd. ............................. SAFR 158,112 4,207,554 1.7
BEVERAGES - ALCOHOLIC
Fomento Economico Mexicano, S.A. de C.V. "B" ............. MEX 530,710 3,749,927 1.5
BEVERAGES - ALCOHOLIC
</TABLE>
The accompanying notes are an integral part of the financial statements.
F8
<PAGE>
GT GLOBAL EMERGING MARKETS 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>
Consumer Non-Durables (Continued)
Gruma S.A. "B"-/- ........................................ MEX 678,283 $ 2,664,393 1.1
FOOD
Eastern Tobacco Co.-/- ................................... EGPT 99,245 2,488,422 1.0
TOBACCO
Companhia Cervejaria Brahma Preferred .................... BRZL 3,909,129 2,446,752 1.0
BEVERAGES - ALCOHOLIC
C.G. Smith Foods Ltd. .................................... SAFR 123,000 1,764,449 0.7
FOOD
A-Ahram Beverages Co. S.A.E. - 144A GDR{.} -/- {\/} ...... EGPT 48,235 1,326,463 0.5
BEVERAGES - ALCOHOLIC
Embotelladora Andina S.A. "B" - ADR{\/} .................. CHLE 51,047 1,046,464 0.4
BEVERAGES - NON-ALCOHOLIC
San Miguel Corp. "B" ..................................... PHIL 877,800 987,838 0.4
BEVERAGES - ALCOHOLIC
Compania Cervecerias Unidas S.A. ADR{\/} ................. CHLE 30,046 732,371 0.3
BEVERAGES - ALCOHOLIC
Graboplast Rt. (Australian Certificates) ................. HGRY 10,319 556,323 0.2
OTHER CONSUMER GOODS
Kuala Lumpur Kepong Bhd. ................................. MAL 108,000 259,537 0.1
OTHER CONSUMER GOODS
Zaklady Piwowarskie w Zywcu S.A. (Zywiec) ................ POL 3,416 255,218 0.1
BEVERAGES - ALCOHOLIC
La Tondena Distillers, Inc. .............................. PHIL 149,400 91,513 --
BEVERAGES - ALCOHOLIC
------------
22,577,224
------------
Technology (3.7%)
Asustek Computer Inc. - Reg. S GDR-/- {c} {\/} ........... TWN 695,564 8,503,270 3.5
COMPUTERS & PERIPHERALS
Clal Electronics Industries Ltd. ......................... ISRL 2,159 312,828 0.1
SEMICONDUCTORS
LG Information & Communication ........................... KOR 1,956 112,470 0.1
TELECOM TECHNOLOGY
------------
8,928,568
------------
Capital Goods (2.5%)
New World Infrastructure Ltd.-/- ......................... HK 929,000 1,838,771 0.8
CONSTRUCTION
Cheung Kong Infrastructure Holdings ...................... HK 586,000 1,516,171 0.6
CONSTRUCTION
United Engineers Ltd. .................................... MAL 318,000 754,641 0.3
CONSTRUCTION
Irkutskenergo - ADR-/- {\/} .............................. RUS 48,200 650,700 0.3
ELECTRICAL PLANT/EQUIPMENT
Daewoo Heavy Industries .................................. KOR 86,000 501,667 0.2
INDUSTRIAL COMPONENTS
Elektrim Spolka Akcyjna S.A. ............................. POL 45,830 431,961 0.2
ELECTRICAL PLANT/EQUIPMENT
ECI Telecommunications Ltd.{\/} .......................... ISRL 9,100 251,388 0.1
TELECOM EQUIPMENT
</TABLE>
The accompanying notes are an integral part of the financial statements.
F9
<PAGE>
GT GLOBAL EMERGING MARKETS 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>
Capital Goods (Continued)
Sungmi Telecom Electronics Co. ........................... KOR 189 $ 9,247 --
TELECOM EQUIPMENT
Gujarat Telephone Cables-/- .............................. IND 6,200 853 --
TELECOM EQUIPMENT
------------
5,955,399
------------
Consumer Durables (2.3%)
Bajaj Auto Ltd. - GDR{\/} ................................ IND 81,000 1,441,800 0.6
AUTO PARTS
Arcelik AS ............................................... TRKY 9,393,800 1,049,901 0.4
APPLIANCES & HOUSEHOLD DURABLES
Qingling Motors Co., Ltd.+X+ ............................. CHNA 1,475,000 963,616 0.4
AUTOMOBILES
Tata Engineering and Locomotive Co., Ltd. ................ IND 107,410 941,208 0.4
AUTOMOBILES
Samsung Electronics Co.: ................................. KOR -- -- 0.3
CONSUMER ELECTRONICS
Common ................................................. -- 14,801 586,279 --
144A GDR{.} -/- {\/} ................................... -- 8,200 166,050 --
PT Astra International, Inc. ............................. INDO 592,000 441,114 0.2
AUTOMOBILES
------------
5,589,968
------------
Health Care (1.8%)
Ranbaxy Laboratories Ltd. ................................ IND 75,000 1,460,918 0.6
MEDICAL TECHNOLOGY & SUPPLIES
Richter Gedeon Rt. - Reg S GDR{c} {\/} ................... HGRY 14,046 1,306,278 0.5
PHARMACEUTICALS
Teva Pharmaceutical Industries Ltd. ...................... ISRL 16,640 774,717 0.3
PHARMACEUTICALS
Egypt International Pharmaceutical Industries Co.
(EIPICO) ................................................ EGPT 10,000 723,529 0.3
PHARMACEUTICALS
PT Kalbe Farma ........................................... INDO 524,000 321,114 0.1
PHARMACEUTICALS
Core Healthcare .......................................... IND 50 20 --
PHARMACEUTICALS
------------
4,586,576
------------ -----
TOTAL EQUITY INVESTMENTS (cost $277,841,143) ............... 243,493,543 100.2
------------ -----
<CAPTION>
NO. OF VALUE % OF NET
RIGHTS COUNTRY RIGHTS (NOTE 1) ASSETS
- ------------------------------------------------------------ -------- ------------ ------------ -------------
<S> <C> <C> <C> <C>
PT Matahari Putra Prima Rights, expire 12/3/97 ........... INDO -- 123,565 0.1
RETAILERS-APPAREL
Telecomunicacoes de Sao Paulo S.A. (TELESP) Rights, expire
11/12/97 ................................................ BRZL -- 224 --
TELEPHONE NETWORKS
------------ -----
TOTAL RIGHTS (cost $0) ..................................... 123,789 0.1
------------ -----
</TABLE>
The accompanying notes are an integral part of the financial statements.
F10
<PAGE>
GT GLOBAL EMERGING MARKETS 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>
Belle Corp. Warrants, expire 2002 (cost $0) .............. PHIL 708,400 $ 131 --
OIL
------------ -----
TOTAL INVESTMENTS (cost $277,841,143) * ................... 243,617,463 100.3
Other Assets and Liabilities ............................... (716,414) (0.3)
------------ -----
NET ASSETS ................................................. $242,901,049 100.0
------------ -----
------------ -----
</TABLE>
- --------------
-/- Non-income producing security.
{\/} U.S. currency denominated.
+X+ Denominated in Hong Kong Dollars.
{.} 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 $279,135,649 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 17,948,897
Unrealized depreciation: (53,467,083)
-------------
Net unrealized depreciation: $ (35,518,186)
-------------
-------------
</TABLE>
Abbreviations:
ADR--American Depository Receipt
GDR--Global Depository Receipt
The accompanying notes are an integral part of the financial statements.
F11
<PAGE>
GT GLOBAL EMERGING MARKETS 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>
Argentina (ARG/ARS) .................. 1.8 1.8
Brazil (BRZL/BRL) .................... 12.3 12.3
Chile (CHLE/CLP) ..................... 6.4 6.4
China (CHNA/RMB) ..................... 0.6 0.6
Egypt (EGPT/EGP) ..................... 9.0 9.0
Hong Kong (HK/HKD) ................... 3.0 3.0
Hungary (HGRY/HUF) ................... 1.6 1.6
India (IND/INR) ...................... 5.4 5.4
Indonesia (INDO/IDR) ................. 3.7 0.1 3.8
Ireland (IRE/IEP) .................... 0.6 0.6
Israel (ISRL/ILS) .................... 1.6 1.6
Kazakhstan (KAZ/KTS) ................. 0.2 0.2
Korea (KOR/KRW) ...................... 1.6 1.6
Malaysia (MAL/MYR) ................... 2.3 2.3
Mexico (MEX/MXN) ..................... 10.7 10.7
Pakistan (PAK/PKR) ................... 1.2 1.2
Panama (PAN/PND) ..................... 0.6 0.6
Peru (PERU/PES) ...................... 1.4 1.4
Philippines (PHIL/PHP) ............... 1.3 1.3
Poland (POL/PLZ) ..................... 0.5 0.5
Portugal (PORT/PTE) .................. 1.2 1.2
Romania (ROM/ROL) .................... 0.3 0.3
Russia (RUS/SUR) ..................... 4.0 4.0
South Africa (SAFR/ZAR) .............. 15.4 15.4
Sri Lanka (SLNKA/LKR) ................ 0.4 0.4
Taiwan (TWN/TWD) ..................... 3.5 3.5
Thailand (THAI/THB) .................. 1.8 1.8
Turkey (TRKY/TRL) .................... 2.7 2.7
United Kingdom (UK/GBP) .............. 0.9 0.9
United States (US/USD) ............... (0.3) (0.3)
Venezuela (VENZ/VEB) ................. 2.9 2.9
Zimbabwe (ZBBW/ZWD) .................. 1.3 1.3
------ ----- ----- -----
Total ............................... 100.2 0.1 (0.3) 100.0
------ ----- ----- -----
------ ----- ----- -----
</TABLE>
- --------------
{d} Percentages indicated are based on net assets of $242,901,049.
The accompanying notes are an integral part of the financial statements.
F12
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
STATEMENT OF ASSETS
AND LIABILITIES
October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $277,841,143) (Note 1).......................... $243,617,463
U.S. currency................................................................. $ 136,655
Foreign currencies (cost $10,678,505)......................................... 10,060,667 10,197,322
----------
Receivable for securities sold............................................................ 7,396,760
Receivable for Fund shares sold........................................................... 1,950,008
Dividends receivable...................................................................... 337,748
-----------
Total assets............................................................................ 263,499,301
-----------
Liabilities:
Payable for securities purchased.......................................................... 12,193,150
Payable for loan outstanding (Note 1)..................................................... 6,184,000
Payable for Fund shares repurchased....................................................... 1,396,848
Payable for investment management and administration fees (Note 2)........................ 246,040
Payable for service and distribution expenses (Note 2).................................... 199,887
Payable for printing and postage expenses................................................. 140,103
Payable for transfer agent fees (Note 2).................................................. 104,492
Payable for custodian fees (Note 1)....................................................... 43,774
Payable for professional fees............................................................. 42,768
Payable for registration and filing fees.................................................. 23,221
Payable for fund accounting fees (Note 2)................................................. 6,498
Payable for Directors' fees and expenses (Note 2)......................................... 4,348
Other accrued expenses.................................................................... 13,123
-----------
Total liabilities....................................................................... 20,598,252
-----------
Net assets.................................................................................. $242,901,049
-----------
-----------
Class A:
Net asset value and redemption price per share ($113,318,585 DIVIDED BY 9,291,855 shares
outstanding)............................................................................... $ 12.20
-----------
-----------
Maximum offering price per share (100/95.25 of $12.20) *.................................... $ 12.81
-----------
-----------
Class B:+
Net asset value and offering price per share ($127,658,086 DIVIDED BY 10,694,937 shares
outstanding)............................................................................... $ 11.94
-----------
-----------
Advisor Class:
Net asset value, offering price per share, and redemption price per share ($1,924,378
DIVIDED BY 156,831 shares outstanding)..................................................... $ 12.27
-----------
-----------
Net assets consist of:
Paid in capital (Note 4).................................................................. $289,238,339
Accumulated net realized loss on investments and foreign currency transactions............ (11,492,948)
Net unrealized depreciation on translation of assets and liabilities in foreign
currencies............................................................................... (620,662)
Net unrealized depreciation of investments................................................ (34,223,680)
-----------
Total -- representing net assets applicable to capital shares outstanding................... $242,901,049
-----------
-----------
<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.
F13
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
STATEMENT OF OPERATIONS
Year ended October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Dividend income (net of foreign withholding tax of $260,697).............................. $ 7,205,935
Interest income........................................................................... 1,168,490
-----------
Total investment income................................................................. 8,374,425
-----------
Expenses:
Investment management and administration fees (Note 2).................................... 3,907,922
Service and distribution expenses: (Note 2)
Class A.................................................................... $ 977,082
Class B.................................................................... 2,022,092 2,999,174
-----------
Transfer agent fees (Note 2).............................................................. 1,516,844
Custodian fees (Note 1)................................................................... 349,533
Printing and postage expenses............................................................. 237,674
Registration and filing fees.............................................................. 113,378
Fund accounting fees (Note 2)............................................................. 103,144
Audit fees................................................................................ 72,348
Legal fees................................................................................ 35,687
Amortization of organization costs (Note 1)............................................... 16,342
Directors' fees and expenses (Note 2)..................................................... 13,636
Other expenses (Note 1)................................................................... 385,661
-----------
Total expenses before reductions........................................................ 9,751,343
-----------
Expense reductions (Notes 1 & 5)...................................................... (326,286)
-----------
Total net expenses...................................................................... 9,425,057
-----------
Net investment loss......................................................................... (1,050,632)
-----------
Net realized and unrealized gain (loss) on investments and foreign currencies:
(Note 1)
Net realized gain on investments............................................. 29,128,765
Net realized loss on foreign currency transactions........................... (3,014,870)
-----------
Net realized gain during the year....................................................... 26,113,895
Net change in unrealized depreciation on translation of assets and
liabilities in foreign currencies........................................... (282,179)
Net change in unrealized depreciation of investments......................... (52,070,476)
-----------
Net unrealized depreciation during the year............................................. (52,352,655)
-----------
Net realized and unrealized loss on investments and foreign currencies...................... (26,238,760)
-----------
Net decrease in net assets resulting from operations........................................ $(27,289,392)
-----------
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F14
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31,
1997 1996
-------------- --------------
<S> <C> <C>
Decrease in net assets
Operations:
Net investment income (loss)............................................. $ (1,050,632) $ 2,628,437
Net realized gain (loss) on investments and foreign currency
transactions............................................................ 26,113,895 (5,528,958)
Net change in unrealized appreciation (depreciation) on translation of
assets and liabilities in foreign currencies............................ (282,179) 31,246
Net change in unrealized appreciation (depreciation) of investments...... (52,070,476) 22,530,391
-------------- --------------
Net increase (decrease) in net assets resulting from operations........ (27,289,392) 19,661,116
-------------- --------------
Class A:
Distributions to shareholders: (Note 1)
From net investment income............................................... (37,319) --
In excess of net investment income....................................... (104,807) --
Advisor Class:
Distributions to shareholders: (Note 1)
From net investment income............................................... (4,161) --
In excess of net investment income....................................... (11,686) --
-------------- --------------
Total distributions.................................................... (157,973) --
-------------- --------------
Capital share transactions: (Note 4)
Increase from capital shares sold and reinvested......................... 1,140,272,411 1,443,673,824
Decrease from capital shares repurchased................................. (1,314,030,266) (1,499,221,358)
-------------- --------------
Net decrease from capital share transactions........................... (173,757,855) (55,547,534)
-------------- --------------
Total decrease in net assets............................................... (201,205,220) (35,886,418)
Net assets:
Beginning of year........................................................ 444,106,269 479,992,687
-------------- --------------
End of year *............................................................ $ 242,901,049 $ 444,106,269
-------------- --------------
-------------- --------------
* Includes undistributed net investment income of........................ $ -- $ 41,480
-------------- --------------
-------------- --------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F15
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS A+
----------------------------------------------------------
YEAR ENDED OCTOBER 31,
----------------------------------------------------------
1997 (D) 1996 (D) 1995 (D) 1994 1993
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 14.26 $ 13.85 $ 18.81 $ 14.42 $ 11.10
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income (loss).......... -- 0.11 0.13 (0.02) 0.02*
Net realized and unrealized gain
(loss) on investments................ (2.05) 0.30 (4.32) 4.68 3.38
---------- ---------- ---------- ---------- ----------
Net increase (decrease) from
investment operations.............. (2.05) 0.41 (4.19) 4.66 3.40
---------- ---------- ---------- ---------- ----------
Distributions to shareholders:
From net investment income............ -- -- -- (0.01) (0.08)
From net realized gain on
investments.......................... -- -- (0.77) (0.26) --
In excess of net investment income.... (0.01) -- -- -- --
---------- ---------- ---------- ---------- ----------
Total distributions................. (0.01) -- (0.77) (0.27) (0.08)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period.......... $ 12.20 $ 14.26 $ 13.85 $ 18.81 $ 14.42
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Total investment return (c)............. (14.45)% 2.96% (23.04)% 32.58% 30.90%
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 113,319 $ 224,964 $ 252,457 $ 417,322 $ 187,808
Ratio of net investment income (loss) to
average net assets..................... (0.01)% 0.76% 0.89% (0.11)% 0.1%*
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 2.10% 1.96% 2.12% 2.06% 2.4%*
Without expense reductions............ 2.18% 2.08% 2.14% N/A N/A
Portfolio turnover rate++++............. 150% 104% 114% 100% 99%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0015 $ 0.0040 N/A N/A N/A
</TABLE>
- ----------------
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rate and average commission rate are calculated on
the basis of the Fund as a whole without distinguishing between the
classes of shares issued.
(a) 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.
* Includes reimbursement by Chancellor LGT Asset Management, Inc. of
Fund operating expenses of $0.02 for the year ended October 31, 1993.
Without such reimbursements, the expense ratios would have been 2.61%
and the ratio of net investment income to average net assets would
have been 0.36% (See Note 2).
* * Includes reimbursement by Chancellor LGT Asset Management, Inc. of
Fund operating expenses of $0.02. Without such reimbursements, the
expense ratio would have been 3.63% and the ratio of net investment
income to average net assets would have been (0.76%) (see Note 2).
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
F16
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
FINANCIAL HIGHLIGHTS (cont'd)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CLASS B++
-----------------------------------------------------------
APRIL 1,
1993
YEAR ENDED OCTOBER 31, TO
---------------------------------------------- OCTOBER 31,
1997 (D) 1996 (D) 1995 (D) 1994 1993
---------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 14.02 $ 13.68 $ 18.68 $ 14.39 $ 11.47
---------- ---------- ---------- ---------- -----------
Income from investment operations:
Net investment income (loss).......... (0.08) 0.04 0.06 (0.12) 0.00**
Net realized and unrealized gain
(loss) on investments................ (2.00) 0.30 (4.29) 4.67 2.92
---------- ---------- ---------- ---------- -----------
Net increase (decrease) from
investment operations.............. (2.08) 0.34 (4.23) 4.55 2.92
---------- ---------- ---------- ---------- -----------
Distributions to shareholders:
From net investment income............ -- -- -- -- --
From net realized gain on
investments.......................... -- -- (0.77) (0.26) --
In excess of net investment income.... -- -- -- -- --
---------- ---------- ---------- ---------- -----------
Total distributions................. -- -- (0.77) (0.26) --
---------- ---------- ---------- ---------- -----------
Net asset value, end of period.......... $ 11.94 $ 14.02 $ 13.68 $ 18.68 $ 14.39
---------- ---------- ---------- ---------- -----------
---------- ---------- ---------- ---------- -----------
Total investment return (c)............. (14.91)% 2.49% (23.37)% 31.77% 25.5%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 127,658 $ 216,004 $ 225,861 $ 291,289 $ 32,318
Ratio of net investment income (loss) to
average net assets..................... (0.51)% 0.26% 0.39% (0.61)% (0.4)%**(a)
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 2.60% 2.46% 2.62% 2.56% 2.9%**(a)
Without expense reductions............ 2.68% 2.58% 2.64% N/A N/A
Portfolio turnover rate++++............. 150% 104% 114% 100% 99%
Average commission rate per share paid
on portfolio transactions++++.......... $ 0.0015 $ 0.0040 N/A N/A N/A
<CAPTION>
ADVISOR CLASS+++
----------------------------------------
YEAR JUNE 1, 1995
ENDED YEAR ENDED TO
OCTOBER 31, OCTOBER 31, OCTOBER 31,
1997 (D) 1996 (D) 1995
----------- ----------- -------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 14.38 $ 13.88 $ 14.71
----------- ----------- -------------
Income from investment operations:
Net investment income (loss).......... 0.05 0.18 0.08
Net realized and unrealized gain
(loss) on investments................ (2.05) 0.32 (0.91)
----------- ----------- -------------
Net increase (decrease) from
investment operations.............. (2.00) 0.50 (0.83)
----------- ----------- -------------
Distributions to shareholders:
From net investment income............ (0.03) -- --
From net realized gain on
investments.......................... -- -- --
In excess of net investment income.... (0.08) -- --
----------- ----------- -------------
Total distributions................. (0.11) -- --
----------- ----------- -------------
Net asset value, end of period.......... $ 12.27 $ 14.38 $ 13.88
----------- ----------- -------------
----------- ----------- -------------
Total investment return (c)............. (14.05)% 3.60% (5.71)%(b)
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 1,924 $ 3,139 $ 1,675
Ratio of net investment income (loss) to
average net assets..................... 0.49% 1.26% 1.39%(a)
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 1.60% 1.46% 1.62%(a)
Without expense reductions............ 1.68% 1.58% 1.64%(a)
Portfolio turnover rate++++............. 150% 104% 114%
Average commission rate per share paid
on portfolio transactions++++.......... $0.0015 $ 0.0040 N/A
</TABLE>
- ----------------
+ All capital shares issued and outstanding as of March 31, 1993, were
reclassified as Class A shares.
++ Commencing April 1, 1993, the Fund began offering Class B shares.
+++ Commencing June 1, 1995, the Fund began offering Advisor Class shares.
++++ Portfolio turnover rate and average commission rate are calculated on
the basis of the Fund as a whole without distinguishing between the
classes of shares issued.
(a) 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.
* Includes reimbursement by Chancellor LGT Asset Management, Inc. of
Fund operating expenses of $0.02 for the year ended October 31, 1993.
Without such reimbursements, the expense ratios would have been 2.61%
and the ratio of net investment income to average net assets would
have been 0.36% (See Note 2).
* * Includes reimbursement by Chancellor LGT Asset Management, Inc. of
Fund operating expenses of $0.02. Without such reimbursements, the
expense ratio would have been 3.63% and the ratio of net investment
income to average net assets would have been (0.76%) (see Note 2).
N/A Not Applicable.
The accompanying notes are an integral part of the financial statements.
F17
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
NOTES TO
FINANCIAL STATEMENTS
October 31, 1997
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
GT Global Emerging Markets Fund ("Fund") is a separate series of G.T. Investment
Funds, Inc. ("Company"). The Company is organized as a Maryland corporation and
is registered under the Investment Company Act of 1940, as amended ("1940 Act"),
as a diversified, open-end management investment company. The Company has
thirteen series of shares in operation, each series corresponding to a distinct
portfolio of investments.
The Fund offers Class A, Class B, and Advisor Class shares, each of which has
equal rights as to assets and voting privileges. Class A and Class B each has
exclusive voting rights with respect to its distribution plan. Investment
income, realized and unrealized capital gains and losses, and the common
expenses of the Fund are allocated on a pro rata basis to each class based on
the relative net assets of each class to the total net assets of the Fund. Each
class of shares differs in its respective service and distribution expenses, and
may differ in its transfer agent, registration, and certain other class-specific
fees and expenses.
The 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 in the preparation of the
financial statements.
(A) PORTFOLIO VALUATION
The Fund calculates the net asset value of and completes orders to purchase,
exchange or repurchase Fund shares on each business day, with the exception of
those days on which the New York Stock Exchange is closed.
Equity securities are valued at the last sale price on the exchange on which
such securities are traded, or in the principal over-the-counter market in which
such securities are traded, as of the close of business on the day the
securities are being valued , or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by Chancellor LGT Asset
Management, Inc. (the "Manager") to be the primary market.
Fixed income investments are valued at the mean of representative quoted bid and
ask prices for such investments or, if such prices are not available, at prices
for investments of comparative maturity, quality and type; however, when GT
Capital deems it appropriate, prices obtained for the day of valuation from a
bond pricing service will be used. Short-term investments are valued at
amortized cost adjusted for foreign exchange translation and market fluctuation,
if any.
Investments for which market quotations are not readily available (including
restricted securities which are subject to limitations on their sale) are valued
at fair value as determined in good faith by or under the direction of the
Company's Board of Directors.
Portfolio securities which are primarily traded on foreign exchanges are
generally valued at the preceding closing values of such securities on their
respective exchanges, and those values are then translated into U.S. dollars at
the current exchange rates, except that when an occurrence subsequent to the
time a value was so established is likely to have materially changed such value,
then the fair value of those securities will be determined by consideration of
other factors by or under the direction of the Company's Board of Directors.
(B) FOREIGN CURRENCY TRANSLATION
The accounting records are maintained in U.S. dollars. The market values of
foreign securities, currency holdings, and other assets and liabilities are
recorded in the books and records of the Fund after translation to U.S. dollars
based on the exchange rates on that day. The cost of each security is determined
using historical exchange rates. Income and withholding taxes are translated at
prevailing exchange rates when earned or incurred.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign exchange gains or losses arise from sales and
maturities of short-term securities, forward foreign currency contracts, sales
of foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the difference between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains or losses arise from changes in the
value of assets and liabilities other than investments in securities at year
end, resulting from changes in exchange rates.
(C) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by the Fund, it is the Fund's
policy to always receive, as collateral, U.S. government securities or other
high quality debt securities of which the value, including accrued interest, is
at least equal to the amount to be repaid to the Fund under each agreement at
its maturity.
(D) FORWARD FOREIGN CURRENCY CONTRACTS
A forward foreign currency contract ("Forward Contract") is an agreement between
two parties to buy and sell a currency at a set price on a future date. The
market value of the Forward Contract
F18
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
fluctuates with changes in currency exchange rates. The Forward Contract is
marked-to-market daily and the change in market value is recorded by the Fund as
an unrealized gain or loss. When the Forward Contract is closed, the Fund
records a realized gain or loss equal to the difference between the value at the
time it was opened and the value at the time it was closed. The Fund could be
exposed to risk if a counterparty is unable to meet the terms of the contract or
if the value of the currency changes unfavorably. The Fund may enter into
Forwards Contracts in connection with planned purchases or sales of securities,
or to hedge against adverse fluctuations in exchange rates between currencies.
(E) OPTION ACCOUNTING PRINCIPLES
When the Fund writes a call or put option, an amount equal to the premium
received is included in the Fund's "Statement of Assets and Liabilities" as an
asset and an equivalent liability. The amount of the liability is subsequently
marked-to-market to reflect the current market value of the option. The current
market value of an option listed on a traded exchange is valued at its last bid
price, or, in the case of an over-the-counter option, is valued at the average
of the last bid prices obtained from brokers. If an option expires on its
stipulated expiration date or if the Fund enters into a closing purchase
transaction, a gain or loss is realized without regard to any unrealized gain or
loss on the underlying security, and the liability related to such option is
extinguished. If a written call option is exercised, a gain or loss is realized
from the sale of the underlying security and the proceeds of the sale are
increased by the premium originally received. If a written put option is
exercised, the cost of the underlying security purchased would be decreased by
the premium originally received. The Fund can write options only on a covered
basis, which, for a call, requires that the Fund hold the underlying securities
and, for a put, requires the Fund to set aside cash, U.S. government securities,
or other liquid, high grade debt securities in an amount not less than the
exercise price or otherwise provide adequate cover at all times while the put
option is outstanding. The Fund may use options to manage its exposure to the
stock market and to fluctuations in currency values or interest rates.
The premium paid by the Fund for the purchase of a call or put option is
included in the Fund's "Statement of Assets and Liabilities" as an investment
and subsequently "marked-to-market" to reflect the current market value of the
option. If an option which the Fund has purchased expires on the stipulated
expiration date, the Fund would realize a loss in the amount of the cost of the
option. If the Fund enters into a closing sale transaction, the Fund would
realize a gain or loss, depending on whether proceeds from the closing sale
transaction are greater or less than the cost of the option. If the Fund
exercises a call option, the cost of the securities acquired by exercising the
call is increased by the premium paid to buy the call. If the Fund exercises a
put option, it realizes a gain or loss from the sale of the underlying security,
and the proceeds from such sale are decreased by the premium originally paid.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Fund may forego the
opportunity of profit if the market value of the underlying security or index
increases and the option is exercised. The risk in writing a put option is that
the fund may incur a loss if the market value of the underlying security or
index decreases and the option is exercised. In addition, there is the risk the
Fund may not be able to enter into a closing transaction because of an illiquid
secondary market.
(F) FUTURES CONTRACTS
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract the
Fund is required to pledge to the broker an amount of cash or securities equal
to the minimum "initial margin" requirements of the exchange on which the
contract is traded. Pursuant to the contract, the Fund agrees to receive from or
pay to the broker an amount of cash equal to the daily fluctuation in value of
the contract. Such receipts or payments are known as "variation margin" and are
recorded by the Fund as unrealized gains or losses. When the contract is closed,
the Fund records a realized gain or loss equal to the difference between the
value of the contract at the time it was opened and the value at the time it was
closed. The potential risk to the Fund is that the change in value of the
underlying securities may not correlate to the change in value of the contracts.
The Fund may use futures contracts to manage its exposure to the stock market
and to fluctuations in currency values or interest rates.
(G) SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on a first-in,
first-out basis, unless otherwise specified. Dividends are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Where a high
level of uncertainty exists as to its collection, income is recorded net of all
withholding tax with any rebate recorded when received. The Fund may trade
securities on other than normal settlement terms. This may increase the risk if
the other party to the transaction fails to deliver and causes the Fund to
subsequently invest at less advantageous prices.
(H) PORTFOLIO SECURITIES LOANED
At October 31, 1997, stocks with an aggregate value of approximately $17,629,705
were on loan to brokers. The loans were secured by cash collateral of
$18,687,600 received by the Fund. For international securities, cash collateral
is received by the Fund against loaned securities in an amount at least equal to
105% of the market value of the loaned securities at the inception of each loan.
This collateral must be maintained at not less than 103% of the market value of
the loaned securities during the period of the loan. For domestic securities,
cash collateral is received by the Fund against loaned securities in the amount
at least equal to 102% of the market value of the loaned securities at the
inception of each loan. This collateral must be maintained at not less than 100%
of the market value of the loaned securities during the period of each loan. For
the year ended October 31, 1997, the Fund received fees of $186,729 which were
used to reduce the Fund's custodian and administrative expenses.
F19
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
(I) TAXES
It is the policy of the Fund to meet the requirements for qualification as a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended ("Code"). It is also the intention of the Fund to make distributions
sufficient to avoid imposition of any excise tax under Section 4982 of the Code.
Therefore, no provision has been made for Federal taxes on income, capital
gains, or unrealized appreciation of securities held, and excise tax on income
and capital gains. The Fund currently has a capital loss carryforward of
$10,198,442, of which $5,776,568 expires in 2003 and $4,421,874 expires in 2004.
(J) DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders are recorded by the Fund on the ex-date. Income
and capital gain distributions are determined in accordance with Federal income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund and timing differences.
(K) DEFERRED ORGANIZATIONAL EXPENSES
Expenses incurred by the Fund in connection with its organization, its initial
registration with the Securities and Exchange Commission and with various states
and the initial public offering of its shares aggregated $150,006. These
expenses were being amortized on a straightline basis over a five-year period.
(L) FOREIGN SECURITIES
There are certain additional considerations and risks associated with investing
in foreign securities and currency transactions that are not inherent in
investments of domestic origin. The Fund's investments in emerging market
countries may involve greater risks than investments in more developed markets
and the prices of such investments may be volatile. These risks of investing in
foreign and emerging markets may include foreign currency exchange rate
fluctuations, perceived credit risk, adverse political and economic developments
and possible adverse foreign government intervention.
(M) INDEXED SECURITIES
The Fund may invest in indexed securities whose value is linked either directly
or indirectly to changes in foreign currencies, interest rates, equities,
indices, or other reference instruments. Indexed securities may be more volatile
than the reference instrument itself, but any loss is limited to the amount of
the original investment.
(N) RESTRICTED SECURITIES
The Fund is permitted to invest in privately placed restricted securities. These
securities may be resold in transactions exempt from registration or to the
public if the securities are registered. Disposal of these securities may
involve time-consuming negotiations and expense, and prompt sale at an
acceptable price may be difficult.
(O) LINE OF CREDIT
The Fund, along with certain other funds ("GT Funds") advised 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 Fund and the GT Funds
to borrow an aggregate maximum amount of $200,000,000. The Fund is limited to
borrowing up to 33 1/3% of the value of each Fund's total assets. On October 31,
1997, the Fund had $6,184,000 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 the Fund was $9,375,490 with a weighted average interest rate of 6.37%.
Interest expense for the Fund for the year ended October 31, 1997 was $165,714,
included in "Other Expenses" on the Statement of Operations.
2. RELATED PARTIES
Chancellor LGT Asset Management, Inc. is the Fund's investment manager and
administrator. Fund pays investment management and administration fees to the
Manager at the annualized rate of 0.975% on the first $500 million of average
daily net assets of the Fund; 0.95% on the next $500 million; 0.925% on the next
$500 million and 0.90% on amounts thereafter. These fees are computed daily and
paid monthly.
GT Global, Inc. ("GT Global"), an affiliate of the Manager, serves as the Fund's
distributor. The Fund offers Class A, Class B, and Advisor Class shares for
purchase.
Class A shares are subject to initial sales charges imposed at the time of
purchase, in accordance with the schedule included in the Fund's current
prospectus. GT Global collects the sales charges imposed on sales of Class A
shares, and reallows a portion of such charges to dealers through which the
sales are made. For the year ended October 31, 1997, GT Global retained $39,500
of such sales charges. Purchases of Class A shares exceeding $500,000 may be
subject to a contingent deferred sales charge ("CDSC") upon redemption, in
accordance with the Fund's current prospectus. GT Global collected CDSCs in the
amount of $13,158 for the year ended October 31, 1997. GT Global also makes
ongoing shareholder servicing and trail commission payments to dealers whose
clients hold Class A shares.
Class B shares are not subject to initial sales charges. When Class B shares are
sold, GT Global, from its own resources, pays commissions to dealers through
which the sales are made. Certain redemptions of Class B shares made within six
years of purchase are subject to CDSCs, in accordance with the Fund's current
prospectus. For the year ended October 31, 1997, GT Global collected CDSCs in
the amount of $1,581,636. In addition, GT Global makes ongoing shareholder
servicing and trail commission payments to dealers whose clients hold Class B
shares.
Pursuant to Rule 12b-1 under the 1940 Act, the Company's Board of Directors has
adopted separate distribution plans with respect to the Fund's Class A shares
("Class A Plan") and Class B shares ("Class B Plan"), pursuant to which the Fund
reimburses GT Global for a portion of its shareholder servicing and distribution
expenses. Under the Class A Plan, the Fund may pay GT Global a service fee at
the annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class A shares for GT Global's expenditures incurred in servicing and
maintaining shareholder accounts, and may pay GT
F20
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
Global a distribution fee at the annualized rate of up to 0.50% of the average
daily net assets of the Fund's Class A shares, less any amounts paid by the Fund
as the aforementioned service fee, for GT Global's expenditures incurred in
providing services as distributor. All expenses for which GT Global is
reimbursed under the Class A Plan will have been incurred within one year of
such reimbursement.
Pursuant to the Fund's Class B Plan, the Fund may pay GT Global a service fee at
the annualized rate of up to 0.25% of the average daily net assets of the Fund's
Class B shares for GT Global's expenditures incurred in servicing and
maintaining shareholder accounts, and may pay GT Global a distribution fee at
the annualized rate of up to 0.75% of the average daily net assets of the Fund's
Class B shares for GT Global's expenditures incurred in providing services as
distributor. Expenses incurred under the Class B Plan in excess of 1.00%
annually may be carried forward for reimbursement in subsequent years as long as
that Plan continues in effect.
The Manager and GT Global voluntarily have undertaken to limit the Fund's
expenses (exclusive of brokerage commissions, taxes, interest, and extraordinary
expenses) to the maximum annual rate of 2.40% 2.90%, and 1.90% of the average
daily net assets of the Fund's Class A, Class B and Advisor Class shares,
respectively. If necessary, this limitation will be effected by waivers by the
Manager of investment management and administration fees, waivers by GT Global
of payments under the Class A Plan and/or Class B Plan and/or reimbursements by
the Manager or GT Global of portions of the Fund's other operating expenses.
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 LGT and GT Global, is the transfer agent of the Fund. For performing
shareholder servicing, reporting, and general transfer agent services, GT
Services receives an annual maintenance fee of $17.50 per account, a new account
fee of $4.00 per account, a per transaction fee of $1.75 for all transactions
other than exchanges and per exchange fee of $2.25. GT Services also is
reimbursed by the Fund for its out-of-pocket expenses for such items as postage,
forms, telephone charges, stationery and office supplies.
The Manager is the pricing and accounting agent for the Fund. The monthly fee
for these services to the Manager is a percentage, not to exceed 0.03% annually,
of the Fund's average daily net assets. The annual fee rate is derived by
applying 0.03% to the first $5 billion of assets of all registered mutual funds
advised by the Manager and 0.02% to the assets in excess of $5 billion and
allocating the result according to the Fund's average daily net assets.
The Company pays each of its Directors who is not an employee, officer or
director of the Manager, GT Global or GT Services $5,000 per year plus $300 for
each meeting of the board or any committee thereof attended by the Director.
3. PURCHASES AND SALES OF SECURITIES
For the period then ended October 31, 1997, purchases and sales of investment
securities by the Fund, other than short-term investments, aggregated
$551,048,488 and $663,636,335 respectively. There were no purchases or sales of
U.S. government obligations by the Fund for the year ended October 31, 1997.
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, 200,000,000 were
classified as shares of the Fund; 400,000,000 were classified as shares of GT
Global Government Income Fund; 200,000,000 were classified as shares of GT
Global 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
Emerging Markets Fund; 200,000,000 were classified as shares of GT Global
Currency Fund (inactive); 200,000,000 were classified as shares of GT Global
Growth & Income Fund; 200,000,000 were classified as shares of GT Global Small
Companies Fund (inactive); 200,000,000 were classified as shares of GT Global
Latin America Growth Fund; 400,000,000 were classified as shares of GT Global
Telecommunications Fund; 200,000,000 were classified as shares of GT Global High
Income Fund; 200,000,000 were classified as shares of GT Global Financial
Services Fund; 200,000,000 were classified as shares of GT Global Natural
Resources Fund; 200,000,000 were classified as shares of GT Global
Infrastructure Fund; and 200,000,000 were classified as shares of GT Global
Consumer Products and Services Fund. The shares of each of the foregoing series
of the Company were divided equally into two classes, designated Class A and
Class B common stock. With respect to the issuance of Advisor Class shares,
100,000,000 shares were classified as shares of each of the 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:
F21
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
CAPITAL SHARE TRANSACTIONS
<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............................. 57,294,454 $ 859,844,827 75,574,030 $1,106,260,084
Shares issued in connection with
reinvestment of distributions......... 8,654 123,333 -- --
----------- ------------- ----------- -------------
57,303,108 859,968,160 75,574,030 1,106,260,084
Shares repurchased...................... (63,783,507) (962,241,730) (78,034,654) (1,146,692,253)
----------- ------------- ----------- -------------
Net decrease............................ (6,480,399) $(102,273,570) (2,460,624) $ (40,432,169)
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1997 OCTOBER 31, 1996
-------------------------- --------------------------
CLASS B SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold............................. 16,394,355 $ 245,887,976 22,439,885 $ 323,192,109
Shares repurchased...................... (21,109,926) (316,251,415) (23,539,619) (339,644,019)
----------- ------------- ----------- -------------
Net decrease............................ (4,715,571) $ (70,363,439) (1,099,734) $ (16,451,910)
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1997 OCTOBER 31, 1996
-------------------------- --------------------------
ADVISOR CLASS SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold............................. 2,213,447 $ 34,400,471 966,362 $ 14,221,631
Shares issued in connection with
reinvestment of distributions......... 1,106 15,804 -- --
----------- ------------- ----------- -------------
2,214,553 34,416,275 966,362 14,221,631
Shares repurchased...................... (2,275,943) (35,537,121) (868,859) (12,885,086)
----------- ------------- ----------- -------------
Net increase (decrease)................. (61,390) $ (1,120,846) 97,503 $ 1,336,545
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
</TABLE>
5. EXPENSE REDUCTIONS
The Manager has directed certain portfolio trades to brokers who paid a portion
of the Fund's expenses. For the year ended October 31, 1997, the Fund's expenses
were reduced by $139,557 under these arrangements.
6. HOLDINGS OF 5% VOTING SECURITIES OF PORTFOLIO COMPANIES
Investments of 5% or more of an issuer's outstanding voting securities by the
Fund are defined in the Investment Company Act of 1940 as an affiliated company.
There were no investments in affiliated companies at October 31, 1997.
Transactions during the period with companies that are or were affiliates are as
follows:
<TABLE>
<CAPTION>
NET
PURCHASES SALES REALIZED DIVIDEND
COST PROCEEDS GAIN INCOME
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Sun Brewing Ltd. - 144A GDR............................................................... -- -- -- --
</TABLE>
F22
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
NOTES
- --------------------------------------------------------------------------------
<PAGE>
GT GLOBAL EMERGING MARKETS FUND
GT GLOBAL FUNDS
GT GLOBAL OFFERS A BROAD RANGE OF FUNDS TO COMPLEMENT MANY INVESTORS'
PORTFOLIOS. FOR MORE INFORMATION AND A PROSPECTUS ON ANY OF THE GT GLOBAL
FUNDS, PLEASE CONTACT YOUR INVESTMENT ADVISOR OR CALL GT GLOBAL DIRECTLY AT
1-800-824-1580. THE PROSPECTUS CONTAINS MORE COMPLETE INFORMATION, INCLUDING
CHARGES, EXPENSES AND THE RISKS OF GLOBAL AND EMERGING MARKET INVESTING.
INVESTORS SHOULD READ THE PROSPECTUS CAREFULLY BEFORE INVESTING.
GROWTH FUNDS
/ / GLOBALLY DIVERSIFIED FUNDS
GT GLOBAL NEW DIMENSION FUND
Captures global growth opportunities by investing directly in the six GT Global
Theme Funds
GT GLOBAL WORLDWIDE GROWTH FUND
Invests around the world, including the U.S.
GT GLOBAL INTERNATIONAL GROWTH FUND
Provides portfolio diversity by investing outside the U.S.
GT GLOBAL EMERGING MARKETS FUND
Gives access to the growth potential of developing economies
GT GLOBAL DEVELOPING MARKETS FUND
Invests in debt and equity securities of developing market issuers
/ / GLOBAL THEME FUNDS
GT GLOBAL CONSUMER PRODUCTS AND SERVICES FUND
Focuses on worldwide opportunities from the demand for consumer products and
services
GT GLOBAL FINANCIAL SERVICES FUND
Focuses on the worldwide opportunities from the demand for financial services
and products
GT GLOBAL HEALTH CARE FUND
Invests in growing health care industries worldwide
GT GLOBAL INFRASTRUCTURE FUND
Seeks companies that build, improve or maintain infrastructure
GT GLOBAL NATURAL RESOURCES FUND
Concentrates on companies that own, explore or develop natural resources
GT GLOBAL TELECOMMUNICATIONS FUND
Invests in companies worldwide that develop, manufacture or sell
telecommunications services or equipment
/ / REGIONALLY DIVERSIFIED FUNDS
GT GLOBAL NEW PACIFIC GROWTH FUND
Offers access to the emerging and established markets of the Pacific Rim,
excluding Japan
GT GLOBAL EUROPE GROWTH FUND
Focuses on investment opportunities in the new, unified Europe
GT GLOBAL LATIN AMERICA GROWTH FUND
Invests in the emerging markets of Latin America
/ / SINGLE COUNTRY FUNDS
GT GLOBAL AMERICA SMALL CAP GROWTH FUND
Invests in equity securities of small U.S. companies
GT GLOBAL AMERICA MID CAP GROWTH FUND
Concentrates on medium-sized companies in the U.S.
GT GLOBAL AMERICA VALUE FUND
Focuses on equity securities of large cap U.S. companies believed to be
undervalued
GT GLOBAL JAPAN GROWTH FUND
Provides U.S. investors with direct access to the Japanese market
GROWTH AND INCOME FUND
GT GLOBAL GROWTH & INCOME FUND
Invests in blue-chip stocks and government securities
INCOME FUNDS
GT GLOBAL GOVERNMENT INCOME FUND
Earns monthly income from global government securities
GT GLOBAL STRATEGIC INCOME FUND
Allocates its assets among debt securities from the U.S., developed foreign
countries and emerging markets
GT GLOBAL HIGH INCOME FUND
Invests in debt securities in emerging markets
GT GLOBAL FLOATING RATE FUND
Invests primarily in senior secured floating rate loans with the potential to
achieve a high level of current income
MONEY MARKET FUND
GT GLOBAL DOLLAR FUND
Invests in high-quality, U.S. dollar-denominated money market securities
worldwide for stability and preservation of capital
[LOGO]
THIS REPORT MUST BE ACCOMPANIED OR PRECEDED BY A CURRENT PROSPECTUS.
<PAGE>
[LOGO]
GT Global, Inc.
Fifty California Street
27th Floor
San Francisco, California
94111-4624
DATED MATERIAL
PLEASE EXPEDITE
GT Global Emerging Markets Fund
EMGAR712XXXMER.676
December, 1997
