G T GLOBAL DEVELOPING MARKETS FUND INC, N-30D, 1997-03-05

G T GLOBAL DEVELOPING MARKETS FUND INC
N-30D, 1997-03-05

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<PAGE>
CHANCELLOR LGT
ASSET MANAGEMENT
OVER 25 YEARS
OF INVESTING
WORLDWIDE
G.T. GLOBAL
DEVELOPING
MARKETS
FUND, INC.
ANNUAL REPORT
DECEMBER 31, 1996

[LOGO]
<PAGE>
TABLE
OF CONTENTS

<TABLE>
<S> <C>
Message from the
President............ 1

Report from the Fund
Managers and Key
Portfolio Holdings... 2

Report of Independent
Auditors............. F1

Financial
Statements........... F2

Portfolio holdings'
and views of the
Funds' managers
described in this
annual report are as
of the date of the
interview, unless
otherwise noted, and
are subject to
change.
</TABLE>

<PAGE>

G.T. GLOBAL DEVELOPING MARKETS FUND
MESSAGE FROM THE PRESIDENT

Dear Investor,

Fiscal 1996 has been a year of economic strengthening, and the GT Global
Funds have benefited from low inflation and low interest rates worldwide.
We're proud of their performance over the past year and remain enthusiastic
about their long-term potential.

Consistent, above-average performance of GT Global Funds is our priority. To
that end, we enhanced the breadth and depth of our investment capabilities
this fall when Liechtenstein Global Trust (LGT), the parent company of GT
Global, acquired a premier institutional money manager, Chancellor Capital
Management. On October 31, 1996, Chancellor merged with LGT Asset Management,
the Funds' advisor, and the combined entity is now known as Chancellor LGT
Asset Management. This acquisition increased assets entrusted to LGT to over
$80 billion.

We are confident about the partnership's success because both firms share a
commitment to providing investors around the world with solutions to their
investment needs through combined, top-notch expertise. Individual investors
now have access to the same high-quality management services enjoyed by over
320 institutional investors, including some of the country's largest
organizations.

Chancellor's strengths--disciplined U.S. equity and fixed income processes
and professionals, coupled with proven fundamental and quantitative
investment capabilities--represent an ideal complement to LGT's advantages as
an experienced global investment manager with an extensive global
infrastructure. Chancellor LGT Asset Management's global investment team
includes 12 economists, 98 portfolio managers, 72 analysts and 19 traders
located in nine regional offices.

Warren Shaw, LGT's new Global Chief Investment Officer, has been the
principal architect of Chancellor's investment policies, with excellent
results. The disciplined, repeatable process he created leverages the
effectiveness of a strong investment team approach.

As always, we appreciate your continued confidence. Should you or your
adviser have any questions regarding GT Global Funds, please call us at
800-824-1580. One of our registered representatives will be happy to assist
you.

Sincerely,

/s/ WILLIAM J. GUILFOYLE

William J. Guilfoyle
President
G.T. Global Developing Markets Fund

1
<PAGE>

INTERVIEW WITH PORTFOLIO MANAGERS JANUARY, 1997
JIM BOGIN AND SIMON NOCERA

Q HOW DID THE FUND PERFORM?
A The Fund continued to enjoy strong gains,
returning a total of 23.59% based on net asset value
(NAV) over the 12 months to December 31, 1996.
The Fund's one-year performance as of the end of the
period, based on total return of NAV, placed it second
within its peer group of 16 emerging market funds,
according to Micropal.(1)

Although the Fund's NAV has fared well within the
universe of emerging markets, discounts of closed-end
funds are currently at a high level. The share price of
the Fund, as traded on the New York Stock Exchange,
was at a 16% discount to NAV on December 31. As
interest in this class increases, we believe investors will
recognize funds that continue to provide superior
returns and effective management, and we look for the
Fund's discount to narrow.

DIVERGENT RETURNS ACROSS EQUITY MARKETS
ONE-YEAR RETURNS TO 12/31/96*

RUSSIA VENEZUELA POLAND CHILE SOUTH AFRICA THAILAND
152.92 131.24 58.84 -13.54 -18.06 -36.59

* Countries represented by their respective MSCI index. Past performance of
the indices is no guarantee of their future performance or the future
performance of the Fund.

MANY EMERGING STOCK MARKETS BENEFITED FROM
IMPROVING FUNDAMENTALS -- SOME EVEN EXPERIENCED
SPECTACULAR RETURNS. OTHERS, HOWEVER, WERE WEIGHED
DOWN BY POLITICAL INSTABILITY AND DETERIORATING
ECONOMIC CONDITIONS.

Q WHAT COMPANIES PERFORMED WELL FOR THE FUND?
A In Venezuela, Electricidad de Caracas enjoyed
strong gains. The Venezuelan market was rerated in
1996 after the currency was allowed to trade freely
once again, following a respite of more than three
years. The government indicated they would start to
embrace fiscal reforms suggested by the IMF as well
as begin to privatize state-owned companies. The
Venezuelan stock market is tiny in global terms, and
when other investors came into the market, our
stocks surged.

Panamerican Beverages, one of the largest Coca-Cola
bottlers outside the U.S., still has room for margin
improvement, and volumes recovered in several of
their markets.

Brazilian banks also benefited the Fund -- Unibanco
and Banco Itau, in particular. Brazilian banks were
very cheap in absolute terms and had a very low level
of loans with much room to grow. Net interest
margins are among the highest in the world, and
profits have been recovering. Brahma, the brewery, was
rerated by investors at the same time volumes and
profits have been growing. It still trades on multiples
lower than other beer companies in the world, due to
the perceived risk in Brazil.

Hong Kong companies that did well include
Peregrine and Dickson Concepts. Peregrine, the Hong
Kong-based merchant bank, enjoyed a good year in
many of its core businesses, including stock broking
and corporate finance. Meanwhile, Dickson's stores
have been doing extremely well, and the market
reacted enthusiastically to news of a listing of its
French holding, ST Dupont.

Q WHICH FIXED INCOME MARKETS CONTRIBUTED TO
THE FUND'S PERFORMANCE?
A Emerging market debt enjoyed excellent perfor-
mance as a result of the panic selloff in Mexico and the
resulting turbulence in emerging markets in general.
The Fund's significant weighting in the non-core
Latin, higher-yielding markets accounts for much of
its strong performance. Russia, up 114% and Panama,
up 83% (in the J.P. Morgan Emerging Markets Brady
[EMBI] Index), stand out as the biggest contributors
to Fund performance.

Q WHY HAVE MANY EMERGING FIXED INCOME
MARKETS ENJOYED SUCH STRONG PERFORMANCE?
A While many people have been surprised by the
significant outperformance of emerging market debt

CONTINUED P.3

(1) The Fund was ranked second out of 16 funds for the two-year period ended
12/31/96. Past performance is no guarantee of future results. Micropal is
an internationally recognized mutual fund research organization.

2
<PAGE>

in 1995 and 1996, a few observations can help explain
its occurrence. First, value has come back from an
extremely low base. The potential for outperformance
was created by the massive correction emerging
markets experienced after the panic selloff following
the Mexican peso crisis.

Also, post-crisis, government securities in these
markets behaved less like typical fixed income invest-
ments, that is, driven by fundamentals, and more like
equities whose value was driven by growth expecta-
tions. At present, we believe the distortion created by
Mexico has been fully corrected, and the market is in a
transition phase, moving from an equity environment
to a typical fixed income environment.

In our view, the universe of emerging markets, with
the exception of a few countries, is doing very well. At
an average of 5%, economic growth continues to be
about twice as fast as in the industrialized countries. It
is also coming on the heels of improving macroeco-
nomic performance, measured in terms of lower infla-
tion, lower fiscal deficits and declining current account
deficits. In other words, we aren't seeing large distor-
tions as we did in Mexico in 1994. Also, at present, a
fairly good liquidity environment exists, which means
money is available to finance investment and growth.
Fundamentally, then, we judge these countries to be in
very good shape.

Nevertheless, we view some countries as still facing
uncertainties. The Russian government is having some
difficulties collecting revenues and running a balanced
fiscal policy. Generally, a government that cannot
collect revenue cannot have a credible budget. As a
result, the foundations of its policy stance can become
shaky and uncertain, which can be very disturbing for
the market. Moreover, Russian politics have been
precarious of late due to concerns over Yeltsin's health,
Lebed's dismissal and quite a bit of infighting at the
administrative level.

Although we monitor these factors very carefully, we
still think the most relevant element continues to be
the fundamental condition of the economy, and value
is definitely present. Going forward, we expect funda-
mentaleconomic conditions to stabilize. While Russia
might not be showing economic growth, at least infla-
tion is coming down, and authorities appear to be
addressing the fiscal situation with a sense of urgency
and seriousness.

Q COULD YOU DESCRIBE YOUR INVESTMENT PROCESS?
A We examine the political and economic funda-
mentals of each country and determine, based on valu-
ation, whether debt or equity appears more attractive.

Q WHAT WAS THE FUND'S INVESTMENT STRATEGY?
A We continued to increase our debt position during
the year. More and more emerging nations had their
debt rerated, and our overweightings in countries
where the perceived risk fell, such as Russia and
Venezuela, did extremely well. An important part of
our strategy last year included a relatively low
weighting in South Africa, Thailand and South Korea
markets which did poorly.

The largest change in exposure over the last 12
months was in eastern Europe, where we held 4.5% in
Polish fixed income investments and 0.9% in Russia at
the end of December 1995. When Poland achieved
investment grade rating, we felt the value was quickly
disappearing and moved into Russia, decreasing
Poland to 1.5% while increasing Russia to 4.1% by
the end of the year. We did so, not because of the
Russian election or Yeltsin, but primarily because we
believe that despite the uncertainties, fundamentals in
general are improving and the Russian economy is
poised to recover. We continue to feel the market is
one of the cheapest available, and under the current
conditions intend to maintain the Fund's core position
in Russia.

In Panama, bond yields have been driven lower on
the back of expectations that Panama is soon to
achieve investment grade rating. A strong commit-
ment to structural reform has been made, and
Panama's privatization and economic reform program
is very much in place. This combination, together
with a good fiscal surplus, has attracted a huge flow of
funds into Panamanian fixed income. As a result, we
raised the Fund's Panamanian fixed income position
from 0.2% to 1.6%.

Q WHY IS HONG KONG CURRENTLY THE FUND'S
LARGEST GEOGRAPHIC HOLDING ON THE EQUITY
SIDE?
A We have found good companies at attractive valu-
ations. While uncertainty exists over what will happen

CONTINUED P.4

3
<PAGE>

INTERVIEW WITH PORTFOLIO MANAGERS CONTINUED

after Hong Kong is handed over to China later this
year, we continue to believe it will be an important
world business center. Our holdings in Hong Kong
are, in most cases, exposed to China and include
companies in merchant banking, property, newspapers
and high-end consumer luxury goods.

Q ARE LATIN AMERICAN COUNTRIES HONORING THEIR
COMMITMENTS TO ECONOMIC REFORM SINCE THE
PESO CRISIS?
A Yes, for the most part things are moving in the
right direction. Brazil's public sector deficit is still an
issue, but low interest rates have given them a lot of
room to maneuver, and they really are privatizing.
Argentina is estimated to grow 6% this year, though
unemployment continues to be a problem. Mexico is
also a recovering economy; however, stock market
valuations are not as cheap as we would like.

Q WHERE DO YOU EXPECT TO FIND FIXED INCOME
OPPORTUNITIES GOING FORWARD?
A While we do not anticipate a repeat of 1996's
outperformance in emerging market debt, we believe
there is still value to be found as these bonds move
from equity-type securities, valued on expectations, to
fixed income-type securities, valued more on funda-
mentals. We believe emerging market fixed income
should continue to exhibit above-average perfor-
mance, provided the U.S. remains stable (U.S. 30-year
at 6 1/2%-7%) and no massive correction occurs in
U.S. Treasuries.

In our opinion, the greatest risk over the next 12
months is not necessarily from the country or the
value element but primarily from the global yield
side -- in particular, the massive convergence in yields
in Europe, both at the long and short end of the yield
curve. As an example, Italy traded in Italian lira at
roughly 500 bps over U.S. Treasuries nine months ago.
Now it's trading at 140 -- a level we believe is not
warranted by the fundamental situation.

However, the convergence has occurred on the back of
the political push to achieve European monetary
union (EMU), and we have no reason to expect the
political willingness to push for EMU will change any
time soon. On the contrary, it is picking up quite a bit
of momentum. Based on political indicators, it may go
forward, but the system being devised is based on
fragile fundamental conditions, a similar situation to
what occurred in the 1992 currency crisis in the
Exchange Rate Mechanism (ERM). In our view, if
there is any risk with regard to global yields, it comes
from Europe.

ATTRACTIVE YIELDS IN EMERGING MARKETS

U.S.
30-Year J.P.Morgan
Treasury EMBI
12/90 8.31 4.8
8.225 14.63
8.222 13.81
8.235 13.2
8.193 12.81
8.246 12.82
8.417 12.44
8.382 12.17
8.086 11.63
7.809 11.34
7.894 11.48
7.978 11.79
7.451 11.03
7.785 11.12
7.8 11.26
7.946 11.65
8.052 11.44
7.833 11.22
7.784 11.08
7.456 10.65
7.476 10.63
7.375 10.89
7.629 11.53
7.621 12.36
7.383 12.24
7.212 12.03
6.959 11.72
6.912 11.4
6.943 11.37
6.979 11.09
6.677 10.6
6.566 10.18
6.235 9.79
8/93 6.034 9.72
5.957 8.95
6.288 9.31
6.336 8.69
6.21 8.65
6.671 9.99
7.101 12
7.309 12.26
7.394 11.51
7.622 13.45
7.385 13.15
7.56 12.68
7.818 13.01
7.959 13.73
7.988 13.95
7.881 15.11
7.757 15.67
7.508 16.6
7.43 17.12
7.339 15.47
6.667 13.78
6.624 13.61
6.904 13.87
6.764 13.64
6.485 13.21
6.347 13.38
6.135 12.91
5.955 12.04
6.029 11.05
6.24 12.47
6.6 12.58
6.79 12.18
6.93 12.3
7.06 11.91
7.03 12
7.11 13.82
6.92 12.64
6.64 12.71
7.118 11.72
6.923 10.89
6.642 10.75
6.351 9.98
12/96 6.642 10.1

Source: Datastream, J.P. Morgan Emerging Markets Bond
Index Monitor, Various Issues

WE BELIEVE EMERGING MARKET DEBT FUNDAMENTALS ARE
IMPROVING. ON AVERAGE, YIELDS ARE CURRENTLY OVER
3.5% MORE THAN U.S. TREASURY BONDS, WHICH WE
BELIEVE COMPENSATES FOR ADDITIONAL RISK. THE YIELD
OVER U.S. TREASURIES HAS RANGED FROM AS LITTLE AS
2.3% BEFORE THE MEXICAN PESO CRISIS TO AS MUCH AS
9% IN THE AFTERMATH OF THAT EVENT. RIGHT NOW, THE
YIELD GAP SUGGESTS THAT DESPITE THEIR EXCELLENT
RECENT PERFORMANCE, EMERGING MARKET BONDS ARE NOT
YET OVERBOUGHT OR EXPENSIVE. PAST PERFORMANCE OF
THE INDICES IS NO GUARANTEE OF THEIR FUTURE PERFOR-
ANCE OR OF FUTURE PERFORMANCE OF THE FUND.

Q WHAT COUNTRIES ARE YOU LIKELY TO AVOID?
A We have been holding back on Thailand, where a
financial bubble appears to be ending in tears. In
general, there are not too many countries we need to
avoid altogether. Things are looking better in most
countries; it's just a matter of price.

On the fixed income side, there are also uncertainties
in some of the smaller countries such as Bulgaria and
Venezuela. In Bulgaria's case, quite a bit of uncertainty
is evident over whether the country will be able to halt
the deteriorating political and economic situation.
Uncertainty in Venezuela centers around the govern-
ment's ability to continue along the path of stabilizing
the economy. Even though questions remain about
whether these countries will be successful, they are
relatively marginal countries and thus unlikely to drag
down the entire asset class. On a positive note,
investors now seem to be becoming more selective
rather than looking at emerging markets as a single
trading bloc.

4
<PAGE>

ABOUT THE PORTFOLIO MANAGERS

JAMES M. BOGIN - Portfolio Manager for Chancellor
LGT Asset Management since 1993. Previously, Mr.
Bogin was a Fund Manager for Nomura Investment
Management from 1989 to 1993. He received his B.A.
from Harvard College.

SIMON E. NOCERA - Chief Investment Officer of
Emerging Market Debt for Chancellor LGT Asset
Management since 1996; Portfolio Manager and
Director of Research since 1992. Previously, Mr.
Nocera was Senior Vice President and Director of
Global Fixed Income Research for the Putnam
Companies from 1991-92 and Economist for the
International Monetary Fund from 1986-91.

GEOGRAPHIC ALLOCATION OF NET ASSETS %

1996 1995
DECEMBER 31 DECEMBER 31

Argentina 5.2 7.9
Belize N/A 0.2
Brazil 12.3 9.6
Bulgaria 1.3 4.5
Canada N/A 0.1
Chile 1.3 1.6
China 0.3 N/A
Colombia 5.5 4.3
Costa Rica 0.1 0.2
Czech Republic 2.5 1.6
Ecuador 2.9 3.1
Hong Kong 11.5 11.1
Hungary N/A N/A
India 4.2 3.6
Indonesia 1.4 0.2
Kazakhstan 0.2 N/A
Korea N/A 4.4
Luxembourg 0.2 N/A
Malaysia 0.9 N/A
Mexico 8.5 7.3
Morocco 2.0 2.3
Nigeria 2.5 4.1
Pakista N/A 2.2
Panama 4.4 3.0
Peru N/A 2.8
Philippines 2.8 0.6
Poland 2.3 5.2
Portugal 3.3 N/A
Russia 8.0 0.9
Singapore N/A 2.3
South Africa 3.4 5.7
Thailand 0.9 N/A
Turkey 0.3 0.5
United Kingdom N/A 2.5
U.S. & Other 5.4 2.6
Uruguay 0.1 0.4
Venezuela 6.3 5.2

5
<PAGE>

SECTOR ALLOCATION OF NET ASSETS %
DECEMBER 31, 1996

Finance 23.8
Energy 10.8
Materials/Basic Industry 7.7
Services 6.5
Consumer Non-Durables 4.0
Consumer Durables 2.0
Multi-Industry/Misc. 1.8
Capital Goods 0.3
Fixed Income Investments 37.1
Short Term & Other 6.0

Allocations will change based on current market conditions.

G.T. GLOBAL DEVELOPING MARKETS FUND % of
KEY PORTFOLIO HOLDINGS(2) Country Net Assets
<S> <C> <C>

BANCO LATINOAMERICANO DE EXPORTACIONES S.A. Panama 2.8
(BLADEX) This bank specializes in trade finance across
Latin America and the Caribbean. Bladex makes mainly
short-term, dollar-denominated loans to banks in the
region who loan funds to businesses in their respective
countries.

PEREGRINE INVESTMENT HOLDINGS LTD. A premier investment Hong Kong 2.7
bank of Southeast Asia. The company has underwriting,
brokerage and merchant banking operations in several
nations in the region.

LUKOIL HOLDING Russia's largest private oil and gas Russia 2.5
company, LUKoil holds 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.

DICKSON CONCEPTS INTERNATIONAL LTD A wholesale and retail Hong Kong 2.3
distributor of watches, writing instruments, jewelry,
lighters, clothing, leather goods and other merchandise.
Sales in Hong Kong and Southeast Asia compose the
majority of earnings. In the UK, the company also owns
Harvey Nichols, a high-end retailer.

UNIAO BANCOS BRASILEIRAS A major Brazilian bank whose Brazil 2.2
services include asset management and foreign exchange
services. The bank also acts as lead manager for initial
and secondary offerings.

BANCO TOTTA & ACORES A commercial bank with offices in Portugal 2.1
Portugal, the UK, Italy, Latin America and the
Portuguese-speaking countries of Africa.

C.A. LA ELECTRICIDAD DE CARACAS Generates electric power Venezuela 2.1
and other related services.

GENERAL MINING UNION CORP. (GENCOR) A diversified South Africa 2.0
international holding company for a group of companies
with interests in natural resources.

KIMBERLY-CLARK DE MEXICO, S.A. DE C.V. The largest Mexico 2.0
manufacturer of diapers, tissue paper, notebooks and
paper in Mexico. The company's management is conservative
and has concentrated on lowering costs every year to
retain its competitive position in the marketplace.

TAI CHEUNG HOLDINGS, LTD. Involved in property Hong Kong 1.9
development, investment and management.
</TABLE>

(2) There can be no assurance the Fund will continue to hold
these securities.

6
<PAGE>

DIVIDEND REINVESTMENT PLAN

The G.T. Global Developing Markets Fund, Inc.,
("Fund") Dividend Reinvestment Plan offers you a
way to reinvest income from dividends and capital
gain distributions (collectively referred to as "divi-
dends"),if any, in shares of the Fund. State Street
Bank and Trust Company, 225 Franklin Street,
Boston, MA 02266 ("State Street"), acts as your Plan
Agent in administering the Plan. All reinvestments are
in full and fractional shares. The complete Terms and
Conditions of the Dividend Reinvestment Plan may
be obtained from the Fund at the address on the back
cover of this annual report. Please note: If shares are
not held in your name, you should contact your
brokerage firm, bank or other nominee for more
information.

You are automatically enrolled in the Plan unless you
elect to receive dividends or distributions in cash. If
you own shares in your own name, you should notify
State Street, the Plan Agent, in writing if you wish to
receive dividends in cash.

If the Fund declares a dividend, you, as a participant
in the Plan, will automatically receive shares of the
Fund. If the Fund's net asset value per share on the
valuation date equals or is less than the market price
per share, the Plan Agent will invest the dividend
amount in newly issued Fund shares on your behalf.
The number of newly issued shares to be credited to
your account (net of any applicable withholding taxes)
will be determined by dividing the dollar amount of
the dividend by the greater of the net asset value per
share on the valuation date or 95% of the market price
per share on such date. If the net asset value per share
on the valuation date is greater than the market price
per share, or if the Fund should declare a dividend
payable only in cash, the Plan Agent will invest the
dividend amount in shares purchased on the New York
Stock Exchange (NYSE) or otherwise on the open
market to the extent available. The number of shares
to be credited to your account (net of any applicable
withholding taxes) will be determined by dividing the
dollar amount of the dividend to which you are enti-
tled by the average price (including brokerage commis-
sions) of all shares purchased by the Plan Agent in
connection with the dividends.

There is no direct charge to participants for reinvesting
dividends since the Plan Agent's fees are paid by the
Fund. Whenever shares are purchased on the NYSE or
otherwise on the open-market, each participant will
pay a pro rata portion of the brokerage commissions
incurred by the Plan Agent. Please note: The auto-
matic reinvestment of dividends does not relieve you
of any income tax which may be payable or required to
be withheld on dividends.

Not later than 60 days after the distribution is paid,
you will receive annually an account statement from
the Plan Agent showing total dividends, date of
investment, shares acquired and price per share, and
total shares of record held by you and by the Plan
Agent for you.

You are entitled to vote all shares of record, including
shares purchased for you by the Plan Agent according
to the Plan. If you vote by Proxy, your proxy will
include all such shares. As long as you participate in
the Plan, the Plan Agent will hold the shares it has
acquired for you in safekeeping.

Experience under the Plan may indicate that changes
are desirable. Accordingly, the Fund and the Plan
Agent reserve the right to terminate the Plan as
applied to any dividends paid subsequent to notice of
the termination sent to the participants of the Plan at
least 30 days before the record date for such dividend.
In addition, the Fund or the Plan Agent reserves the
right to amend the Plan, but (except when necessary
or appropriate to comply with applicable law, rules or
policies of a regulatory authority) with at least 30
days' prior written notice to participants in the Plan.
Any amendment of the Plan will be deemed to be
accepted by a participant unless prior to the effective
date thereof the Plan Agent receives written notice of
the termination of that participant's account under
the Plan.

You may withdraw from the Plan without penalty at
any time. Withdrawal requests should be directed in
writing to the Plan Agent and should include the
name of the Fund and the shareholder's name and
address as they appear on the share certificate. An elec-
tion to withdraw from the Plan will be deemed to be
an election by a shareholder to take all subsequent
dividends in cash. Elections will only be effective for
dividends declared after, and with a record date of at

7
<PAGE>

least 10 days after, such elections are received by the
Plan Agent. If you do withdraw from the Plan, you
will receive, without charge, a certificate issued in your
name for all full shares held in the Plan and a cash
adjust for any fractional shares you hold (or, if the
shares are not then in certificated form, the shares will
be transferred to you).

If you hold shares in your own name, please address all
notices, correspondence, questions, or other commu-
nication regarding the Plan to the Plan Agent at the
address noted above. If shares are not held in your
name, you should contact your brokerage firm, bank,
or other nominee for more information.

<PAGE>
G.T. GLOBAL
DEVELOPING
MARKETS
FUND, INC.

FINANCIAL
STATEMENTS
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.

REPORT OF INDEPENDENT ACCOUNTANTS

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

To the Shareholders and Board of Directors of G.T. Global Developing Markets
Fund, Inc. ("Fund"):

We have audited the accompanying statement of assets and liabilities of G.T.
Global Developing Markets Fund, Inc., including the portfolio of investments, as
of December 31, 1996, the related statement of operations for the year then
ended, the statements of changes in net assets for each of the two years in the
period then ended, and the financial highlights for each of the periods
indicated herein. These financial statements and the financial highlights are
the responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and the financial highlights based on our
audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1996, by correspondence with the custodians and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements and the financial highlights referred
to above present fairly, in all material respects, the financial position of
G.T. Global Developing Markets Fund, Inc. as of December 31, 1996, the results
of its operations for the year then ended, the changes in its net assets for
each of the two years in the period then ended, and the financial highlights for
each of the periods indicated herein, in conformity with generally accepted
accounting principles.

COOPERS & LYBRAND L.L.P.

BOSTON, MASSACHUSETTS
FEBRUARY 14, 1997

F1
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.

PORTFOLIO OF INVESTMENTS

December 31, 1996

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

<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (23.8%)
Banco LatinoAmericano de Exportaciones S.A. (Bladex)
"E"{\/} .................................................. PAN 277,800 $ 14,098,350 2.8
OTHER FINANCIAL
Peregrine Investment Holdings Ltd. ........................ HK 7,955,000 13,628,620 2.7
INVESTMENT MANAGEMENT
Uniao Bancos Brasileiras "A" Preferred .................... BRZL 334,200,000 10,905,169 2.2
BANKS-MONEY CENTER
Banco Totta & Acores "B" - Registered ..................... PORT 570,814 10,768,130 2.1
BANKS-MONEY CENTER
Tai Cheung Holdings Ltd. .................................. HK 10,000,000 9,438,841 1.9
REAL ESTATE
Banco Itau S.A. Preferred ................................. BRZL 20,890,000 9,048,513 1.8
BANKS-REGIONAL
Banco Ganadero S.A. - ADR{\/} ............................. COL 402,500 8,653,750 1.7
BANKS-REGIONAL
Suramericana de Seguros S.A. .............................. COL 464,609 8,496,974 1.7
INSURANCE - MULTI-LINE
Ayala Land, Inc. "B" ...................................... PHIL 6,895,200 7,877,228 1.6
REAL ESTATE
State Bank of India Ltd. - GDR-/- {\/} .................... IND 361,000 6,270,570 1.2
BANKS-MONEY CENTER
Administradora de Fondos de Pensiones Provida S.A. -
ADR{\/} .................................................. CHLE 248,400 4,657,500 0.9
INVESTMENT MANAGEMENT
Malaysian Assurance Alliance Bhd. ......................... MAL 892,000 4,345,188 0.9
INSURANCE - MULTI-LINE
Bank Gdanski S.A. - GDR{\/} ............................... POL 337,100 4,239,033 0.8
BANKS-REGIONAL
PSIL Bangkok Bank Co., Ltd. (Entitlement
Certificates){\/} ........................................ THAI 500,000 3,685,000 0.7
OTHER FINANCIAL
Banco de Colombia: ........................................ COL -- -- 0.7
BANKS-MONEY CENTER
144A GDR{.} {\/} ........................................ -- 357,200 2,634,350 --
Common .................................................. -- 2,365,000 952,018 --
Banco Commercial S.A. - Reg. S GDR{c} {\/} ................ URGY 29,300 476,125 0.1
BANKS-REGIONAL
------------
120,175,359
------------
Energy (10.8%)
LUKoil Holding - ADR{\/} .................................. RUS 269,400 12,392,400 2.5
GAS PRODUCTION & DISTRIBUTION
C.A. La Electricidad de Caracas ........................... VENZ 10,188,891 10,343,943 2.1
ELECTRICAL & GAS UTILITIES
Companhia Energetica de Minas Gerais (Cemig) - ADR{\/} .... BRZL 275,350 9,086,550 1.8
ELECTRICAL & GAS UTILITIES
Triton Energy Ltd.-/- ..................................... US 165,100 8,007,350 1.6
OIL
Benton Oil & Gas Co.-/- ................................... US 321,600 7,276,200 1.4
OIL
Czeske Energeticke Zavody (CEZ AS)-/- ..................... CZCH 134,030 4,827,289 1.0
ELECTRICAL & GAS UTILITIES
</TABLE>

The accompanying notes are an integral part of the financial statements.

F2
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.

PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1996

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Energy (Continued)
Empresa Nacional de Electricidad S.A. - ADR{\/} ........... CHLE 135,800 $ 2,104,900 0.4
ELECTRICAL & GAS UTILITIES
------------
54,038,632
------------
Materials/Basic Industry (7.7%)
General Mining Union Corp. (Gencor) ....................... SAFR 2,750,000 9,997,861 2.0
METALS - NON-FERROUS
Kimberly-Clark de Mexico, S.A. de C.V. "A" ................ MEX 504,000 9,962,120 2.0
PAPER/PACKAGING
Gujarat Ambuja Cements - GDR{\/} .......................... IND 1,053,040 8,687,580 1.7
CEMENT
Anglo American Corporation of South Africa Ltd. ........... SAFR 74,900 4,124,626 0.8
GOLD
Oryx Gold Holdings Ltd.-/- ................................ SAFR 2,235,600 3,231,962 0.6
GOLD
Industrias Penoles S.A. "CP" .............................. MEX 871,000 3,088,967 0.6
METALS - NON-FERROUS
------------
39,093,116
------------
Services (6.5%)
Dickson Concepts International Ltd. ....................... HK 3,122,800 11,709,491 2.3
WHOLESALE & INTERNATIONAL TRADE
SPT Telecom-/- ............................................ CZCH 62,453 7,779,628 1.5
TELEPHONE NETWORKS
Amway Asia Pacific Ltd.{\/} ............................... HK 160,000 6,780,000 1.4
WHOLESALE & INTERNATIONAL TRADE
South China Morning Post (Holdings) Ltd. .................. HK 7,940,000 6,570,468 1.3
BROADCASTING & PUBLISHING
------------
32,839,587
------------
Consumer Non-Durables (4.0%)
Companhia Cervejaria Brahma Preferred ..................... BRZL 17,020,000 9,305,381 1.9
BEVERAGES - ALCOHOLIC
Panamerican Beverages, Inc. "A"{\/} ....................... MEX 115,400 5,409,375 1.1
BEVERAGES - NON-ALCOHOLIC
Bavaria ................................................... COL 1,249,459 5,091,722 1.0
BEVERAGES - ALCOHOLIC
Noble China-/- {/\} ....................................... CHNA 103,700 206,764 --
BEVERAGES - ALCOHOLIC
------------
20,013,242
------------
Consumer Durables (2.0%)
Johnson Electric Holdings Ltd. ............................ HK 3,500,000 9,684,510 1.9
AUTO PARTS
Tata Engineering and Locomotive Co., Ltd. - GDR{\/} ....... IND 48,000 510,000 0.1
AUTOMOBILES
------------
10,194,510
------------
</TABLE>

The accompanying notes are an integral part of the financial statements.

F3
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.

PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1996

TOTAL EQUITY INVESTMENTS (cost $252,541,405) ................ 286,641,946 56.9
------------ -----
<CAPTION>

PRINCIPAL VALUE % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Government & Government Agency Obligations (26.1%)
Argentina (4.4%)
Republic of Argentina:
Discount Bond, 6.375% due 3/31/23+ .................... USD 11,237,000 8,673,559 1.7
Par Bond, 5.25% due 3/31/23++ ......................... USD 8,470,000 5,399,625 1.1
BOCON Pre 4, 5.375% due 9/1/02[.] + ................... USD 4,443,000 4,777,336 0.9
Floating Rate Bond, 6.625% due 3/31/05+ ............... USD 4,194,400 3,656,993 0.7
Brazil (4.0%)
Federal Republic of Brazil:
C Bond, 4.5% due 4/15/14 (Effective rate at year end is
7.08125%, including "payment-in-kind" bonds.)[.]
++ ................................................... USD 24,899,773 18,363,746 3.6
MYDFA Floating Rate Note, 6.6875% due 9/15/07 - 144A+
{.} .................................................. USD 2,346,000 2,011,695 0.4
Bulgaria (1.3%)
Bulgaria, Discount Bond Series A, 6.6875% due 7/28/24 -
EURO+ .................................................. USD 11,344,000 6,444,810 1.3
Costa Rica (0.1%)
Banco Central de Costa Rica, Principal Bond Series A,
6.25% due 5/21/10 ...................................... USD 900,000 735,750 0.1
Ecuador (2.9%)
Ecuador:
Past Due Interest Bond, 3% due 2/27/15 - Bearer
(Effective rate at year end is 5.1525%, including
"payment-in-kind" bonds).[.] + ....................... USD 17,527,297 10,779,287 2.1
Discount Bond, 6.5% due 2/28/25 - EURO+ ............... USD 4,650,000 3,208,500 0.6
Past Due Interest Bond, 3% due 2/27/15 - Registered
(Effective rate at year end is 5.1525%, including
"payment-in-kind" bonds.)[.] + ....................... USD 1,321,738 812,869 0.2
Kazakhstan (0.2%)
Republic of Kazakhstan, 9.25% due 12/20/99 - 144A{.} .... USD 820,000 826,663 0.2
</TABLE>

The accompanying notes are an integral part of the financial statements.

F4
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.

PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1996

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

<TABLE>
<CAPTION>
PRINCIPAL VALUE % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Government & Government Agency Obligations (Continued)
Mexico (3.0%)
United Mexican States:
Global Bond, 11.5% due 5/15/26 ........................ USD 2,926,000 $ 3,094,245 0.6
11.375% due 9/15/16 - 144A{.} ......................... USD 2,380,000 2,487,100 0.5
7.5625% due 8/6/01 - 144A+ {.} ........................ USD 2,109,000 2,113,956 0.4
Discount Bond Series C, 6.375% due 12/31/19+ +/+ ...... USD 2,331,000 2,010,488 0.4
Banco Nacional de Comercio Exterior, S.N.C. (BNCE) Trust
Division, 11.25% due 5/30/06 - 144A{.} ................. USD 4,394,000 4,679,610 0.9
Petroleos Mexicanos (PEMEX), 6.5% due 3/8/99+ ........... USD 1,000,000 986,250 0.2
Nigeria (2.5%)
Central Bank of Nigeria, Par Bond, 6.25% due
11/15/20+/+ ............................................ USD 18,000,000 12,420,000 2.5
Panama (1.6%)
Panama, Interest Reduction Bond, 3.5% due 7/17/14 -
144A++ {.} ............................................. USD 11,525,000 7,981,063 1.6
Philippines (0.6%)
Republic of Philippines, 8.75% due 10/7/16 - 144A{.} .... USD 3,127,000 3,254,034 0.6
Poland (1.3%)
Poland, Past Due Interest Bond, 4% due 10/27/14 -
EURO++ ................................................. USD 7,500,000 6,337,500 1.3
Venezuela (4.2%)
Republic of Venezuela:
Debt Conversion Bond, 6.5% due 12/18/07+ .............. USD 9,500,000 8,383,750 1.7
Front Loaded Interest Reduction Bond Series A, 6.625%
due 3/31/07+ ......................................... USD 6,750,000 6,024,375 1.2
Par Bond Series A, 6.75% due 3/31/20+/+ ............... USD 5,500,000 4,207,500 0.8
Front Loaded Interest Reduction Bond Series B, 6.4375%
due 3/31/07+ ......................................... USD 2,750,000 2,454,375 0.5
------------
Total Government & Government Agency Obligations (cost
$113,935,636) .............................................. 132,125,079
------------
Sovereign Debt (6.1%)
Morocco (2.0%)
Kingdom of Morocco, Tranche A Loan Agreement, 6.375% due
1/1/09+ ................................................ USD 12,250,000 10,106,250 2.0
Russia (4.1%)
Bank for Foreign Economic Affairs (Vnesheconombank)
Loan Agreement - Assignment ** -/- {j} ................. USD 22,635,000 18,023,119 3.6
Bank for Foreign Economic Affairs (Vnesheconombank)
Loan Agreement - Assignment ** -/- ..................... DEM 4,186,000 2,299,850 0.5
------------
Total Sovereign Debt (cost $22,218,547) ..................... 30,429,219
------------
Corporate Bonds (4.9%)
Argentina (0.8%)
Banco de Credito Argentina, 8.5% due 12/18/98 -
144A{.} ................................................ USD 3,000,000 2,996,250 0.6
Central Termica Guemes S.A., 12% due 11/26/01 -
144A{.} ................................................ USD 1,020,000 1,037,850 0.2
Brazil (0.4%)
Tevecap S.A., 12.625% due 11/26/04 - 144A{.} ............ USD 840,000 858,900 0.2
TV Filme, Inc., 12.875% due 12/15/04 - 144A{.} .......... USD 844,000 848,748 0.2
</TABLE>

The accompanying notes are an integral part of the financial statements.

F5
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.

PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1996

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Corporate Bonds (Continued)
China (0.3%)
AES China Generating Co., Ltd., 10.125% due 12/15/06 .... USD 1,385,000 $ 1,433,475 0.3
Colombia (0.4%)
Celcaribe S.A. Units, 13.5% due 3/15/04 - 144A++ {.} {F}
-/- .................................................... USD 200 2,120,000 0.4
India (0.4%)
Reliance Industries Ltd., Convertible Bond, 3.5% due
11/03/99 ............................................... USD 1,690,000 1,795,625 0.4
Indonesia (1.4%)
PT Tjiwi Kimia, 13.25% due 8/1/01 ....................... USD 2,000,000 2,270,000 0.4
PT Polysindo International Finance, 13% due 6/15/01:
EURO .................................................. USD 1,380,000 1,549,050 0.3
DTC ................................................... USD 280,000 314,300 0.1
Tri Polyta Finance BV, 11.375% due 12/1/03 .............. USD 1,537,000 1,610,008 0.3
FSW International Finance Co., 12.5% due 11/1/06 -
144A{.} ................................................ USD 1,350,000 1,436,063 0.3
Luxembourg (0.2%)
Millicom International Cellular, effective yield 13.5%,
due 6/1/06 - 144A{.} ................................... USD 1,500,000 937,500 0.2
Mexico (0.4%)
Grupo Industrial Durango, S.A., 12.625% due 8/1/03 ...... USD 1,933,000 2,104,554 0.4
Philippines (0.1%)
CE Casecnan Water & Energy Series B, 11.95% due 11/15/10
- Reg. S{c} ............................................ USD 365,000 420,663 0.1
Filinvest Capital, Convertible Bond, 3.75% due 2/1/02 -
144A{.} ................................................ USD 137,000 132,205 --
Poland (0.2%)
Poland Communications, Inc., 9.875% due 11/01/03 -
144A{.} ................................................ USD 866,000 866,000 0.2
Turkey (0.3%)
Sultan Ltd., 8.33984% due 6/11/99+ ...................... USD 1,700,000 1,636,250 0.3
------------
Total Corporate Bonds (cost $24,039,360) .................... 24,367,441
------------ -----

TOTAL FIXED INCOME INVESTMENTS (cost $160,193,543) .......... 186,921,739 37.1
------------ -----

UNDERLYING
NOMINAL VALUE % OF NET
OPTIONS CURRENCY AMOUNT (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Brazil C Bond, due 4/15/14, Call Options, strike price
$74.1875, expire 3/3/97-/- ............................... USD 48,575,486 754,183 0.2
GOVERNMENT & GOVERNMENT AGENCY OBLIGATIONS
Venezuela Debt Conversion Bond, due 12/18/07, Call Options,
strike price $87.188, expire 3/5/97-/- ................... USD 11,250,000 222,255 --
GOVERNMENT & GOVERNMENT AGENCY OBLIGATIONS
------------ -----

TOTAL OPTIONS (cost $1,389,128) ............................. 976,438 0.2
------------ -----
</TABLE>

The accompanying notes are an integral part of the financial statements.

F6
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.

PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1996

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE % OF NET
SHORT-TERM INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Treasury Bills (1.4%)
Mexico (1.4%)
Mexican Cetes: .......................................... MXN -- -- 1.4
Current yield 22.53%, due 1/16/97 ..................... -- 27,865,770 $ 3,509,167 --
Current yield 23.64%, due 1/23/97 ..................... -- 20,438,200 2,560,971 --
Current yield 24.21%, due 1/30/97 ..................... -- 5,558,850 693,086 --
Current yield 24.96%, due 2/20/97 ..................... -- 1,454,930 178,745 --
Current yield 24.56%, due 2/6/97 ...................... -- 606,220 75,212 --
------------
Total Treasury Bills (cost $6,887,783) ...................... 7,017,181
------------
Structured Notes (1.3%)
Russia (1.3%)
Russian Federation GKO (Treasury Bills) Linked Notes with
cancellable currency forwards attached: ................ USD -- -- 1.3
Due 7/2/97 ............................................ -- 4,761,328 4,025,560 --
Due 7/30/97 ........................................... -- 3,238,274 2,674,944 --
(Notes issued by Credit Suisse First Boston (Cayman)
Ltd. These notes are linked to the local price in
Russian rubles of 26,330 and 17,896 Titles of Russian
treasury bills maturing 7/2/97 and 7/30/97,
respectively. These 7/2/97 and 7/30/97 notes include
options to sell the Russian ruble proceeds at maturity
for US dollars at the contracted forward rates of
6,333.41 and 6,399.46, respectively.)
------------
Total Structured Notes (cost $6,667,343) .................... 6,700,504
------------
Commercial Paper - Indexed (0.5%)
Philippines (0.5%)
National Westminster Bank PLC, Currency-Linked CD,
12.3798% due 2/28/97 (cost $2,500,000) ................. USD 2,500,000 2,445,750 0.5
------------
Commercial Paper - Discounted (0.2%)
Thailand (0.2%)
Phatra Thanakit Co., Ltd., current yield 10.41%, due
5/9/97
(cost $947,326) ........................................ THB 25,000,000 941,068 0.2
------------ -----

TOTAL SHORT-TERM INVESTMENTS (cost $17,002,452) ............. 17,104,503 3.4
------------ -----
</TABLE>

The accompanying notes are an integral part of the financial statements.

F7
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.

PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1996

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated December 31, 1996, with State Street Bank & Trust
Co., due
January 2, 1997, for an effective yield of 6.25%,
collateralized by $2,210,000 U.S. Treasury Bonds, 8.125%
due 8/15/19 (market value of collateral is $2,651,106,
including accrued interest). (cost $2,598,452) ........... $ 2,598,452 0.5
------------ -----

TOTAL INVESTMENTS (cost $433,724,980) * .................... 494,243,078 98.1
Other Assets and Liabilities ................................ 9,769,301 1.9
------------ -----

NET ASSETS .................................................. $504,012,379 100.0
------------ -----
------------ -----
</TABLE>

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

{\/} U.S. currency denominated.
{.} Security exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers.
{/\} Security is denominated in CAD.
-/- Non-income producing security.
{c} Security issued under Regulation S. Rule 144A and additional
restrictions may apply in the resale of such securities.
+ The coupon rate shown on floating rate note represents the rate at
period end.
** Underlying loan agreement currently in default.
{j} All or part of the Fund's holdings in this security is segregated
as collateral for when-issued securities. See Note 1 to the
Financial Statements.
++ The coupon rate shown on step-up coupon bond represents the rate at
period end.
{F} The principal amount should be read as units.
[.] Bond pays stated or additional interest with "payment-in-kind"
(PIK) bonds.
+/+ Issued with detachable warrants or value recovery rights. The
current market value of each warrant or right is zero.
* For Federal income tax purposes, cost is $434,696,083 and
appreciation (depreciation) is as follows:

<TABLE>
<S> <C>
Unrealized appreciation: $ 75,166,464
Unrealized depreciation: (15,619,469)
-------------
Net unrealized appreciation: $ 59,546,995
-------------
-------------
</TABLE>

Abbreviations:
ADR--American Depository Receipt
GDR--Global Depository Receipt

The accompanying notes are an integral part of the financial statements.

F8
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.

PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1996

- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at December 31, 1996, was concentrated in
the following countries:

<TABLE>
<CAPTION>
PERCENTAGE OF NET ASSETS {D}
-------------------------------------------
FIXED INCOME,
RIGHTS & SHORT-TERM
COUNTRY (COUNTRY CODE/CURRENCY CODE) EQUITY WARRANTS & OTHER TOTAL
- -------------------------------------- ------ ------------- ---------- -----
<S> <C> <C> <C> <C>
Argentina (ARG/ARS) .................. 5.2 5.2
Brazil (BRZL/BRL) .................... 7.7 4.4 0.2 12.3
Bulgaria (BUL/LEV) ................... 1.3 1.3
Chile (CHLE/CLP) ..................... 1.3 1.3
China (CHNA/RMB) ..................... 0.3 0.3
Colombia (COL/COP) ................... 5.1 0.4 5.5
Costa Rica (CR/CRI) .................. 0.1 0.1
Czech Republic (CZCH/CSK) ............ 2.5 2.5
Ecuador (ECDR/ECS) ................... 2.9 2.9
Hong Kong (HK/HKD) ................... 11.5 11.5
India (IND/INR) ...................... 3.8 0.4 4.2
Indonesia (INDO/IDR) ................. 1.4 1.4
Kazakhstan (KAZ/KTS) ................. 0.2 0.2
Luxembourg (LUX/LUF) ................. 0.2 0.2
Malaysia (MAL/MYR) ................... 0.9 0.9
Mexico (MEX/MXN) ..................... 3.7 3.4 1.4 8.5
Morocco (MOR/MAD) .................... 2.0 2.0
Nigeria (NGE/NEN) .................... 2.5 2.5
Panama (PAN/PND) ..................... 2.8 1.6 4.4
Philippines (PHIL/PHP) ............... 1.6 0.7 0.5 2.8
Poland (POL/PLZ) ..................... 0.8 1.5 2.3
Portugal (PORT/PTE) .................. 3.3 3.3
Russia (RUS/SUR) ..................... 2.6 4.1 1.3 8.0
South Africa (SAFR/ZAR) .............. 3.4 3.4
Thailand (THAI/THB) .................. 0.7 0.2 0.9
Turkey (TRKY/TRL) .................... 0.3 0.3
United States & Other (US/USD) ....... 3.0 2.4 5.4
Uruguay (URGY/UYP) ................... 0.1 0.1
Venezuela (VENZ/VEB) ................. 2.1 4.2 6.3
------ ----- ----- -----
Total ............................... 56.9 37.1 6.0 100.0
------ ----- ----- -----
------ ----- ----- -----
</TABLE>

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

{d} Percentages indicated are based on net assets of $504,012,379.

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

FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
DECEMBER 31, 1996

<TABLE>
<CAPTION>
MARKET VALUE CONTRACT DELIVERY UNREALIZED
CONTRACTS TO SELL: (U.S. DOLLARS) PRICE DATE APPRECIATION
- ---------------------------------------- -------------- ----------- -------- --------------
<S> <C> <C> <C> <C>
Deutsche Marks.......................... 3,038,782 1.48850 02/13/97 $ 91,886
--------------
THE VALUE OF CONTRACTS TO SELL AS A
PERCENTAGE OF NET ASSETS IS 0.60%.
Total Open Forward Foreign Currency
Contracts (Receivable amount
$3,130,668).......................... $ 91,886
--------------
--------------
</TABLE>

- ----------------
See Note 1 to the financial statements.

The accompanying notes are an integral part of the financial statements.

F9
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.

STATEMENT OF ASSETS
AND LIABILITIES
December 31, 1996

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

<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $433,724,980) (Note 1).... $ 494,243,078
U.S. currency............................................. $134,479
Foreign currencies (cost $4,165).......................... 4,060 138,539
--------
Segregated cash (Note 1)............................................ 4,000,000
Receivable for securities sold...................................... 8,220,070
Interest receivable................................................. 2,831,350
Dividends and dividend withholding tax reclaims receivable.......... 269,354
Unamortized organizational costs (Note 1)........................... 144,242
Receivable for open forward foreign currency contracts, net (Note
1)................................................................. 91,886
Miscellaneous receivable............................................ 2,700
Cash held as collateral for securities loaned (Note 1).............. 21,260,009
-------------
Total assets...................................................... 531,201,228
-------------
Liabilities:
Payable for securities purchased.................................... 4,954,775
Payable for investment management and administration fees (Note
2)................................................................. 682,328
Payable for professional fees....................................... 43,323
Payable for custodian fees.......................................... 39,778
Payable for printing and postage expenses........................... 36,934
Payable for Directors' fees and expenses (Note 2)................... 12,149
Payable for fund accounting fees (Note 2)........................... 9,825
Payable for registration and filing fees............................ 2,127
Payable for transfer agent fees (Note 2)............................ 1,664
Other accrued expenses.............................................. 145,937
Collateral for securities loaned (Note 1)........................... 21,260,009
-------------
Total liabilities................................................. 27,188,849
-------------
Net assets............................................................ $ 504,012,379
-------------
-------------
Net asset value per share ($504,012,380 DIVIDED BY 36,416,667 shares
outstanding)......................................................... $ 13.84
-------------
-------------
Net assets consist of:
Paid in capital (Note 4)............................................ $ 545,109,494
Undistributed net investment income................................. 363,782
Accumulated net realized loss on investments and foreign currency
transactions....................................................... (102,069,253)
Net unrealized appreciation on translation of assets and liabilities
in foreign currencies.............................................. 90,258
Net unrealized appreciation of investments.......................... 60,518,098
-------------
Total -- representing net assets applicable to capital shares
outstanding.......................................................... $ 504,012,379
-------------
-------------
</TABLE>

The accompanying notes are an integral part of the financial statements.

F10
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.

STATEMENT OF OPERATIONS

Year ended December 31, 1996

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

<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Interest income........................................................ $20,641,051
Dividend income (net of foreign withholding tax of $420,409)........... 7,351,830
Other income........................................................... 74,487
-----------
Total investment income.............................................. 28,067,368
-----------
Expenses:
Investment management fees (Note 2).................................... 6,673,159
Administration fees (Note 2)........................................... 1,191,681
Custodian fees (Note 1)................................................ 332,166
Transfer agent fees (Note 2)........................................... 190,834
Fund accounting fees (Note 2).......................................... 119,321
Professional fees...................................................... 101,382
Amortization of organization costs (Note 1)............................ 70,949
Printing and postage expenses.......................................... 65,880
Directors' fees and expenses (Note 2).................................. 38,064
Registration and filing fees........................................... 3,000
Other expenses......................................................... 37,139
-----------
Total expenses before reductions..................................... 8,823,575
-----------
Expense reductions (Notes 1 & 5)................................... (162,760)
-----------
Total net expenses................................................... 8,660,815
-----------
Net investment income.................................................... 19,406,553
-----------
Net realized and unrealized gain on investments and foreign
currencies: (Note 1)
Net realized gain on investments.......................... $ 1,845,666
Net realized loss on foreign currency transactions........ (900,512)
-----------
Net realized gain during the year.................................... 945,154
Net change in unrealized appreciation on translation of
assets and liabilities in foreign currencies............. 91,835
Net change in unrealized appreciation of investments...... 78,628,364
-----------
Net unrealized appreciation during the year.......................... 78,720,199
-----------
Net realized and unrealized gain on investments and foreign currencies... 79,665,353
-----------
Net increase in net assets resulting from operations..................... $99,071,906
-----------
-----------
</TABLE>

The accompanying notes are an integral part of the financial statements.

F11
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.

STATEMENTS OF CHANGES IN NET ASSETS

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

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1996 DECEMBER 31, 1995
----------------- -----------------
<S> <C> <C>
Increase (Decrease) in net assets
Operations:
Net investment income..................................... $ 19,406,553 $ 26,375,900
Net realized gain (loss) on investments and foreign
currency transactions.................................... 945,154 (78,379,558)
Net change in unrealized appreciation (depreciation) on
translation of assets and liabilities in foreign
currencies............................................... 91,835 (3,021)
Net change in unrealized appreciation of investments...... 78,628,364 47,401,359
----------------- -----------------
Net increase (decrease) in net assets resulting from
operations............................................. 99,071,906 (4,605,320)
----------------- -----------------
Distributions to shareholders: (Note 1)
From net investment income................................ (17,407,047) (26,292,834)
Capital share transactions: (Note 4)
Adjustment to estimate of initial offering expenses....... -- 373,757
----------------- -----------------
Total increase (decrease) in net assets................. 81,664,859 (30,524,397)
Net assets:
Beginning of year......................................... 422,347,520 452,871,917
----------------- -----------------
End of year*.............................................. $504,012,379 $422,347,520
----------------- -----------------
----------------- -----------------
--------------
*Includes undistributed/accumulated net investment
income/(loss) of......................................... $ 363,782 $ (7,034)
----------------- -----------------
</TABLE>

The accompanying notes are an integral part of the financial statements.

F12
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.

FINANCIAL HIGHLIGHTS

- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding,
total investment return, ratios and supplemental data. This information has been
derived from information provided in the financial statements and market price
data for the shares.

<TABLE>
<CAPTION>
JANUARY 11, 1994
(COMMENCEMENT
YEAR ENDED OF OPERATIONS)
DECEMBER 31, TO
---------------------- DECEMBER 31,
1996 1995 1994
---------- ---------- ----------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 11.60 $ 12.44 $ 15.00
---------- ---------- ----------------
Income from investment operations:
Net investment income................. 0.53 0.72 0.35
Net realized and unrealized gain
(loss) on investments................ 2.19 (0.84) (2.46)
---------- ---------- ----------------
Net increase (decrease) from
investment operations.............. 2.72 (0.12) (2.11)
---------- ---------- ----------------
Distributions to shareholders:
From net investment income............ (0.48) (0.72) (0.35)
From net realized gain on
investments.......................... -- -- (0.10)
---------- ---------- ----------------
Total distributions................. (0.48) (0.72) (0.45)
---------- ---------- ----------------
Net asset value, end of period.......... $ 13.84 $ 11.60 $ 12.44
---------- ---------- ----------------
---------- ---------- ----------------
Market value, end of period............. $ 11.63 $ 9.75 $ 9.75
---------- ---------- ----------------
---------- ---------- ----------------

Total investment return (based on market
value)................................. 24.18% 6.60% (32.16)%+
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 504,012 $ 422,348 $ 452,872
Ratio of net investment income to
average net assets..................... 4.07% 6.33% 2.75 %++
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 1.82% 1.77% 2.01 %++
Without expense reductions............ 1.85% 1.80% 2.01 %++
Portfolio turnover rate................. 138% 75% 56 %
Average commission rate per share paid
on portfolio transactions.............. $ 0.0022 N/A N/A
</TABLE>

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

+ Not annualized
++ Annualized
N/A Not Applicable

The accompanying notes are an integral part of the financial statements.
F13
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.

NOTES TO FINANCIAL STATEMENTS

December 31, 1996

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

1. SIGNIFICANT ACCOUNTING POLICIES
G.T. Global Developing Markets Fund, Inc. ("Fund") is organized as a Maryland
corporation and is registered under the Investment Company Act of 1940, as
amended ("1940 Act") as a non-diversified, closed-end management investment
company. The following is a summary of significant accounting policies
consistently followed by the Fund in the preparation of the financial
statements. The policies are in conformity with generally accepted accounting
principles, and the financial statements may include certain estimates made by
management.

(A) PORTFOLIO VALUATION
Equity securities are valued at the last sale price on the exchange on which
such securities are traded or on the principal over-the-counter market on which
such securities are traded, as of the close of business on the day the
securities are being valued, or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by Chancellor LGT Asset
Management, Inc. (the "Manager") to be the primary market.

Fixed income investments are valued at the mean of representative quoted bid and
asked prices for securities or, if such prices are not available, at prices for
securities of comparative maturity, quality and type; however, when the Manager
deems it appropriate, prices obtained for the day of valuation from a bond
pricing service will be used. Short-term investments with a maturity of 60 days
or less are valued at amortized cost, adjusted for foreign exchange translation
and market fluctuation, if any.

Investments for which market quotations are not readily available (including
restricted securities which are subject to limitations on their sale) are valued
at fair value as determined in good faith by or under the direction of the
Fund's Board of Directors.

Portfolio securities which are primarily traded on foreign exchanges are
generally valued at the preceding closing values of such securities on their
respective exchanges, and those values are then translated into U.S. dollars at
the current exchange rates, except that when an occurrence subsequent to the
time a value was so established is likely to have materially changed such value,
then the fair value of those securities will be determined by consideration of
other factors by or under the direction of the Fund's Board of Directors.

(B) FOREIGN CURRENCY TRANSLATION
The accounting records of the Fund are maintained in U.S. dollars. The market
values of foreign securities, currency holdings, other assets and liabilities
are recorded in the books and records of the Fund after translation to U.S.
dollars based on the exchange rates on that day. The cost of each security is
determined using historical exchange rates. Income and withholding taxes are
translated at prevailing exchange rates when earned or incurred.

The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
existing from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.

Reported net realized foreign exchange gains and losses arise from sales and
maturities of short-term investments, forward foreign currency contracts, sales
of foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the differences between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains and losses arise from changes in the
value of assets and liabilities other than investments in securities at year
end, resulting from changes in exchange rates.

(C) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by the Fund, it is the Fund's
policy to always receive, as collateral, United States government securities or
other high quality debt securities of which the value, including accrued
interest, is at least equal to the amount to be repaid to the Fund under each
agreement at its maturity.

(D) FORWARD FOREIGN CURRENCY CONTRACTS
A forward foreign currency contract ("Forward Contract") is an agreement between
two parties to buy and sell a currency at a set price on a future date. The
market value of the Forward Contract fluctuates with changes in currency
exchange rates. The Forward Contract is marked-to-market daily and the change in
market value is recorded by the Fund as an unrealized gain or loss. When the
Forward Contract is closed, the Fund records a realized gain or loss equal to
the difference between the value at the time it was opened and the value at the
time it was closed. The Fund could be exposed to risk if a counterparty is
unable to meet the terms of a contract or if the value of the currency changes
unfavorably. The Fund may enter into Forward Contracts in connection with
planned purchases or sales of securities or to hedge against adverse
fluctuations in exchange rates between currencies.

(E) OPTION ACCOUNTING PRINCIPLES
When the Fund writes a call or put option, an amount equal to the premium
received is included in the Fund's "Statement of Assets and Liabilities" as an
asset and an equivalent liability. The amount of the liability is subsequently
marked-to-market to reflect the current market value of the option. The current
market value of an option listed on a traded exchange is valued at its last bid
price, or, in the case of an over-the-counter option, is valued at the average
of the last bid prices obtained from brokers, unless a quotation from only one
broker is available, in which case only that broker's price will be used. If an
option expires on its stipulated expiration date or if the Fund enters into a
closing purchase transaction, a gain or loss is

F14
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.

realized without regard to any unrealized gain or loss on the underlying
security, and the liability related to such option is extinguished. If a written
call option is exercised, a gain or loss is realized from the sale of the
underlying security and the proceeds of the sale are increased by the premium
originally received. If a written put option is exercised, the cost of the
underlying security purchased would be decreased by the premium originally
received. The Fund can write options only on a covered basis, which, for a call,
requires that the Fund hold the underlying security, and, for a put, requires
the Fund to set aside cash, U.S. government securities or other liquid
securities in an amount not less than the exercise price or otherwise provide
adequate cover at all times while the put option is outstanding. The Fund may
use options to manage its exposure to the stock and bond markets and to
fluctuations in currency values or interest rates.

The premium paid by the Fund for the purchase of a call or put option is
included in the Fund's "Statement of Assets and Liabilities" as an investment
and subsequently "marked-to-market" to reflect the current market value of the
option. If an option which the Fund has purchased expires on the stipulated
expiration date, the Fund realizes a loss in the amount of the cost of the
option. If the Fund enters into a closing sale transaction, the Fund realizes a
gain or loss, depending on whether proceeds from the closing sale transaction
are greater or less than the cost of the option. If the Fund exercises a call
option, the cost of the securities acquired by exercising the call is increased
by the premium paid to buy the call. If the Fund exercises a put option, it
realizes a gain or loss from the sale of the underlying security, and the
proceeds from such sale are decreased by the premium originally paid.

The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Fund may forego the
opportunity of profit if the market value of the underlying security or index
increases and the option is exercised. The risk in writing a put option is that
the Fund may incur a loss if the market value of the underlying security or
index decreases and the option is exercised. In addition, there is the risk the
Fund may not be able to enter into a closing transaction because of an illiquid
secondary market.

(F) FUTURES CONTRACTS
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract the
Fund is required to pledge to the broker an amount of cash or securities equal
to the minimum "initial margin" requirements of the exchange on which the
contract is traded. Pursuant to the contract, the Fund agrees to receive from or
pay to the broker an amount of cash equal to the daily fluctuation in value of
the contract. Such receipts or payments are known as "variation margin" and are
recorded by the Fund as unrealized gains or losses. When the contract is closed,
the Fund records a realized gain or loss equal to the difference between the
value of the contract at the time it was opened and the value at the time it was
closed. The potential risk to the Fund is that the change in value of the
underlying securities may not correlate to the change in value of the contracts.
The Fund may use futures contracts to manage its exposure to the stock and bond
markets and to fluctuations in currency values or interest rates.

(G) SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on a first-in,
first-out basis, unless otherwise specified. Dividends are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Where a high
level of uncertainty exists as to collection of income on securities, income is
recorded net of all withholding tax with any rebate recorded when received. The
Fund may trade securities on other than normal settlement terms. This may
increase the market risk if the other party to the transaction fails to deliver
and causes the Fund to subsequently invest at less advantageous prices.

(H) PORTFOLIO SECURITIES LOANED
At December 31, 1996, stocks with an aggregate value of approximately
$19,925,944 were on loan to brokers. The loans were secured by cash collateral
of $21,260,009 received by the Fund. For international securities, cash
collateral is received by the Fund against loaned securities in an amount at
least equal to 105% of the market value of the loaned securities at the
inception of each loan. This collateral must be maintained at not less than 103%
of the market value of the loaned securities during the period of the loan. For
domestic securities, cash collateral is received by the Fund against loaned
securities in an amount at least equal to 102% of the market value of the loaned
securities at the inception of each loan. This collateral must be maintained at
not less than 100% of the market value of the loaned securities during the
period of each loan. For the year ended December 31, 1996, the Fund received
securities lending income of $96,761 which was used to reduce the Fund's
custodian fees.

(I) TAXES
It is the policy of the Fund to meet the requirements for qualification as a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended ("Code"). It is also the intention of the Fund to make distributions
sufficient to avoid imposition of any excise tax under Section 4982 of the Code.
Therefore, no provision has been made for Federal taxes on income, capital
gains, and unrealized appreciation of securities held, or excise tax on income
and capital gains. The Fund currently has a capital loss carryforward of
$96,686,329 of which $18,650,929 expires in 2002 and $78,035,400 expires in
2003.

(J) DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders are recorded by the Fund on the ex-date. Income
and capital gain distributions are determined in accordance with Federal income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund and timing differences.

F15
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.

(K) DEFERRED ORGANIZATIONAL EXPENSES
Expenses incurred by the Fund in connection with its organization, its
registration with the Securities and Exchange Commission and with various states
aggregated $353,775. These expenses are being amortized on a straightline basis
over a five-period period.

(L) FOREIGN SECURITIES
There are certain additional considerations and risks associated with investing
in foreign securities and currency transactions that are not inherent in
investments of domestic origin. The Fund's investments in emerging market
countries may involve greater risks than investments in more developed markets
and the prices of such investments may be volatile. These risks of investing in
foreign and emerging markets may include foreign currency exchange rate
fluctuations, perceived credit risk, adverse political and economic developments
and possible adverse foreign government intervention.

(M) INDEXED SECURITIES
The Fund may invest in indexed securities whose value is linked either directly
or indirectly to changes in foreign currencies, interest rates, equities,
indices, or other reference instruments. Indexed securities may be more volatile
than the reference instrument itself, but any loss is limited to the amount of
the original investment.

(N) RESTRICTED SECURITIES
The Fund is permitted to invest in privately placed restricted securities. These
securities may be resold in transactions exempt from registration or to the
public if the securities are registered. Disposal of these securities may
involve time-consuming negotiations and expense, and prompt sale at an
acceptable price may be difficult.

(O) SECURITIES PURCHASED ON A WHEN-ISSUED OR FORWARD COMMITMENT BASIS
The Fund may trade securities on a when-issued or forward commitment basis, with
payment and delivery scheduled for a future date. These transactions are subject
to market fluctuations and are subject to the risk that the value at delivery
may be more or less than the trade date purchase price. Although the Fund will
generally purchase these securities with the intention of acquiring such
securities, they may sell such securities before the settlement date. These
securities are identified on the accompanying Portfolio of Investments. The Fund
has purchased and sold when-issued securities during the year and has set aside
sufficient cash and liquid securities as collateral for these commitments.

(P) LINE OF CREDIT
The Fund, along with certain other funds advised by the Manager, has a line of
credit with the Bank of Boston. The arrangement with the bank allows all
specified funds to borrow an aggregate maximum amount of $100,000,000.

2. RELATED PARTIES
Chancellor LGT Asset Management, Inc. is the Fund's investment manager and
administrator. On October 31, 1996, Chancellor Capital Management, Inc. merged
with LGT Asset Management, Inc., and the surviving entity was renamed Chancellor
LGT Asset Management, Inc. The Fund pays the Manager investment management fees,
which are computed weekly and paid monthly, at the annualized rate of 1.40% of
the Fund's average weekly net assets. The Manager also acts as administrator of
the Fund. The Fund pays the Manager administration fees, which are computed and
paid monthly, at an annualized rate of 0.25% of the Fund's average weekly net
assets.

The Manager is the pricing and accounting agent for the fund. The monthly fee
for these services to the Manager is a percentage, not to exceed 0.03% annually,
of the Fund's average daily net assets. The annual fee rate is derived by
applying 0.03% to the first $5 billion of assets of all registered mutual funds
advised by the Manager and 0.02% to the assets in excess of $5 billion and
allocating the result according to the Fund's average daily net assets.

The Fund pays each of its Directors who is not an employee, officer or director
of the Manager or any of its affiliated companies $5,000 per period plus $300
for each meeting of the board attended by the Director.

3. PURCHASES AND SALES OF SECURITIES
For the year ended December 31, 1996, purchases and sales of investment
securities by the Fund, other than U.S. government obligations and short-term
investments, aggregated $618,009,486 and $638,476,610, respectively. There were
no purchases or sales of U.S. government obligations by the Fund for the year.

4. CAPITAL SHARES
At December 31, 1996, the Fund is authorized to issue 100 million shares of
capital stock, $0.001 par value, all of which is classified as Common Stock.

5. EXPENSE REDUCTIONS
The Manager has directed certain portfolio trades to brokers who paid a portion
of the Fund's expenses. For the year ended December 31, 1996, the Fund's
expenses were reduced by $65,999 under these arrangements.

6. WRITTEN OPTIONS
The Fund's written options contract activity for the year ended December 31,
1996, was as follows:

<TABLE>
<CAPTION>
UNDERLYING NOMINAL
AMOUNT IN USD PREMIUMS
----------------------- -------------
<S> <C> <C>
Options outstanding at December 31,
1995................................... $ 0 $ 0
Options written during the year ended
December 31, 1996...................... 10,390,000 235,750
Options cancelled in closing purchase
transactions (loss of $309,650
realized).............................. (7,390,000) (172,750)
Options expired prior to exercise (gain
of $63,000 realized)................... (3,000,000) (63,000)
Options exercised....................... 0 0
----------------------- -------------
Options outstanding at December 31,
1996................................... $ 0 $ 0
----------------------- -------------
----------------------- -------------
</TABLE>

F16
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.

PROXY RESULTS (UNAUDITED)
During the year ended December 31, 1996, G.T. Global Developing Markets Fund,
Inc. stockholders voted on the following proposals. The proposals were approved
at the second annual meeting of the stockholders on July 16, 1996. The
description of the proposals and number of shares voted are as follows:
<TABLE>
<CAPTION>
SHARES VOTED
SHARES VOTED WITHHELD
FOR AUTHORITY
--------------- ---------------
<S> <C> <C> <C> <C>
1. To elect the Fund's Board of Directors: C. Derek Anderson...................... 32,386,034 2,536,607
Frank S. Bayley........................ 32,417,943 2,504,698
David A. Minella....................... 32,461,231 2,461,409
Arthur C. Patterson.................... 32,378,462 2,541,779
Ruth H. Quigley........................ 32,421,181 2,501,459

SHARES VOTED SHARES VOTED SHARES VOTED
FOR AGAINST ABSTAIN
--------------- --------------- ---------------
<S> <C> <C> <C> <C>
2. To elect Coopers & Lybrand L.L.P. as the Fund's independent accountants: 33,391,569 1,238,086 292,986
<CAPTION>

SHARES VOTED SHARES VOTED SHARES VOTED
FOR AGAINST ABSTAIN
--------------- --------------- ---------------
<S> <C> <C> <C> <C>
3. To take all necessary legal and other action to convert the Fund from 8,997,665 10,004,687 1,178,792
closed-end to open-end status:
</TABLE>

F17
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.

NOTES

- --------------------------------------------------------------------------------
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.

NOTES

- --------------------------------------------------------------------------------
<PAGE>
[LOGO]

GT Global, Inc.
Fifty California Street
27th Floor
San Francisco, California
94111-4624

DATED MATERIAL
PLEASE EXPEDITE

G.T. GLOBAL DEVELOPING MARKETS FUND, INC.
DEVAR702M