<PAGE>
CHANCELLOR LGT
ASSET MANAGEMENT
OVER 25 YEARS
OF INVESTING
WORLDWIDE
G.T. GLOBAL
DEVELOPING
MARKETS
FUND, INC.
SEMIANNUAL REPORT
JUNE 30, 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
Portfolio holdings and views of
the Fund's managers described in
this semiannual report are as of
the date of the interview,
unless otherwise noted, and are
subject to change.
</TABLE>
<PAGE>
MESSAGE FROM THE CHAIRMAN
Dear Investor,
This report is written in a style we hope you find enjoyable to read and easy
to understand. Our intention is to provide our shareholders with meaningful
information about the performance of GT Global Funds. We think it is
important to help investors develop a global perspective about their
investments, including developments in individual economies around the world.
Specifically, we address how macroeconomic and political events within
countries influence investment results and, ultimately, Fund performance.
In this semiannual report, we describe our management process and offer
insights into the Fund's investment strategy. Companies and countries in
which the Fund invests are discussed, as well as issues pertinent to
decisions affecting the Funds. Biographical information on portfolio
managers' background and experience is also included, and through our
question and answer format, we make it possible for shareholders to be
included in the thought processes that form the basis of their investment
decisions.
We make every effort to communicate as clearly as possible because we want
you, our shareholders, to have a useful understanding of what is happening
with your investments in GT Global Funds, and why.
We would also like to emphasize that today--as global investing continues to
become increasingly complex, information travels as quickly as a keystroke,
and critical decisions must be made within shorter time frames--prudent
advice, professional management, global diversification and investing for the
long term have never been more important.
As always, we appreciate and value our shareholders in GT Global Funds.
Sincerely,
/s/ William J. Guilfoyle
William J. Guilfoyle
CHAIRMAN OF THE BOARD AND PRESIDENT
GT GLOBAL FUNDS
<PAGE>
INTERVIEW WITH PORTFOLIO MANAGERS
ALLAN CONWAY AND MICHAEL MABBUTT
We appointed Allan Conway as Head of Emerging Markets Equity Investment in
January 1997. Mr. Conway has an exceptional track record, with over 15 years
of emerging markets experience. Most recently, from 1992-1997, he served as
the Director of International Equities at Hermes. Since his appointment, he
has instituted significant changes, beginning with augmenting existing risk
control measures with more disciplined, quantitative measures designed to
manage risk more effectively.
He is also building a highly regarded and experienced emerging markets equity
team that will include six portfolio managers dedicated to a top-down
approach. Based in London with Mr. Conway, they will be supported by regional
research/country portfolio management professionals.
On the fixed income side, we are pleased to announce the appointment of
Cheng-Hock Lau(1) as Chief Investment Officer, Developed Market Debt. Prior to
joining Chancellor LGT Asset Management in 1995, Mr. Lau spent a total of 13
years with Fiduciary Trust, Bankers Trust and Glaxo Enterprises as a Fund
Manager for Global Fixed Income.
Michael Mabbutt also joined Chancellor LGT as Head of Global Emerging Market
Debt this year. From 1992-96, Mr. Mabbutt was a Senior Fixed Income Manager
at Barings Asset Management, and from 1986-92 he was a Fixed Income
Investment Manager at Norwich Life.
Q HOW DID THE FUND PERFORM?
A Over the first six months of the year,
the performance of emerging fixed income and equity markets was buoyed by a
supportive global financial environment in which liquidity remained strong
and inflation was minimal. In this setting, the Fund performed well,
returning 11.20% based on net asset value (NAV) over the six months to June
30, 1997. Over the longer horizon, the Fund continues to enjoy a strong
long-term track record. Based on total return of NAV for the three year
period ended June 30, 1997, the Fund has placed third within its peer group
of 15 emerging market funds, according to Micropal.(2)
Despite the Fund's excellent long-term track record, it has been subject to a
persistent discount. Concern about the discount prompted the Fund's Board of
Directors to approve a proposal initially brought forth by management in
March to convert the Fund from a closed-end investment company to an open-end
mutual fund. The board believes converting the Fund to an open-end vehicle is
the optimal way to accurately reflect the value of the Fund's holdings and is
in the best interests of its shareholders. The move towards open-ending is
expected to occur in the fourth quarter of 1997, subject to shareholder
approval. Since the announcement of the board's approval on June 18, 1997,
the Fund's discount to NAV has narrowed, ending the reporting period at 8.4%,
as traded on the New York Stock Exchange.
Q HOW DID REGIONAL MARKETS PERFORM IN GENERAL?
A Latin American markets prospered under the inflow of foreign portfolio
investments. Depending on the country in question, foreign investors were
attracted by prospects of further economic reform and/or the reality of a
pickup in domestic demand. All the regional markets performed well, with
Brazil leading the way. The Brazilian market flourished under a host of
successes including a landmark US$3 billion issue of a 30-year bond.
Inflation fell to 7%--its lowest level in 30 years--and constitutional
changes will permit President Cardoso to run for a second term, which augurs
well for public finance reform.
In contrast, regional markets throughout Asia experienced considerable
volatility and divergent performances. For example, India topped the list of
outperformers. Investors were encouraged by an easing in monetary policy,
plentiful liquidity, attractive valuations and stronger economic growth.
Meanwhile, Thailand continued to suffer under the burden of a currency
devaluation and crisis in its property and financial sectors.
Continued p.3
(1) Mr. Lau was an employee of Chancellor Capital Management until October
31, 1996, when LGT Asset Management merged with Chancellor. The resulting
entity was renamed Chancellor LGT Asset Management and is the investment
advisor to GT Global Mutual Funds.
(2) The Fund was ranked third out of 16 funds for the one-year period ended
6/30/97. Past performance is no guarantee of future results. Micropal is an
internationally recognized mutual fund research organization. Micropal rankings
do not take sales charges into account.
2
<PAGE>
INTERVIEW WITH THE PORTFOLIO MANAGERS -- CONTINUED
Among the major markets of eastern Europe, homogeneous returns were far from
evident. Russian returns continued skyward with little pause for breath.
Enthusiasm over a new, reform-minded cabinet, progress on tax issues and an
improvement in economic growth, fueled rises in share prices. The Czech
market, on the other hand, struggled with the consequences of an opaque and
inefficient market. Many of these problems are only being addressed
belatedly, following a series of bank failures and corruption scandals.
Q WHAT COMPANIES PERFORMED WELL FOR THE FUND?
A The Brazilian bellwether stock Telebras continued its stellar performance
during the period, showing a U.S. dollar price return of 98%, on continuing
optimism over privatization and attractive fundamentals. Another Brazilian
company, Cemig, the integrated electric utility of Minas Gerais, also performed
well during the period, as 33% of the voting shares were sold to Southern
Electric of the U.S. We believe this will be a driving force in achieving
greater efficiencies within the company. In Venezuela, Electricidad de Caracas,
the electricity distributor for Caracas, produced a U.S. dollar return of 64%,
on the back of a 75% increase in local tariffs and pressure by the government to
achieve structural economic reform within Venezuela.
Elsewhere, LUKoil, the Russian oil producer and refiner, rose 69% in U.S.
dollars. Among the most liquid and investor-friendly of the larger Russian
companies, it has benefited from U.S. institutions' recent asset allocation
towards the Russian market.
Q WHAT WAS THE FUND'S INVESTMENT STRATEGY WITH
RESPECT TO EQUITIES OVER THE PERIOD?
A As part of the evolutionary change across our emerging market equity
products, risk control guidelines have been enhanced by creating prescribed
tracking error ranges at the global and country levels. Put into place during
the period under review, this has resulted in some significant movement in
Fund positions. Additionally, the portfolio was repositioned somewhat
following the change in management. Some of the larger shifts included
reducing Fund positions in Hong Kong, Russia, Argentina, and Mexico, where we
were able to realize healthy profits. Positions were increased in countries
where we find more attractive returns, including Egypt, Hungary, Israel,
India and Korea.
Egypt, for example, is currently one of our favorite emerging equity markets.
Attractive fundamentally, with strong economic growth, a small current
account deficit, stable currency and substantial foreign exchange reserves,
this market has been seen as a relatively safe haven during the recent
turmoil in many emerging equity markets. Looking forward, we believe strong
earnings growth and undemanding valuations bode well for the market.
Q WHAT HAS DRIVEN RETURNS IN EMERGING FIXED
INCOME MARKETS?
A Emerging market bonds (again) significantly outperformed their
conventional counterparts in the developed world over the first half of 1997.
Sluggish GDP growth and low interest rates in Europe and Japan have continued
to finance a pool of global liquidity searching for higher yields and
returns. For several reasons, emerging bond markets have proved an extremely
attractive target for these capital flows. Investors have realized (we
believe rightly) that as long as U.S. Treasuries are reasonably stable, then,
even without the spread narrowing, emerging market bonds can deliver superior
returns. Second, emerging bond markets have attracted a wide variety of
investors such as pension funds, insurance companies and global fixed income
portfolios. These longer-term investors have given the market the credibility
we believe it deserves. Finally, the economic fundamentals of many emerging
countries have continued to improve, driven by a political willingness to
implement IMF (International Monetary Fund) sponsored reforms.
Q WHAT WAS YOUR INVESTMENT STRATEGY OVER THE
PERIOD FOR LATIN AMERICAN FIXED INCOME?
A For the first time in many years, Latin America is viewed as a success
story. On an absolute basis, Argentina is the Fund's largest position in the
region. Growth of 5% this year and continued low inflation of 1% a year
reinforces the country's notable transition since the currency convertibility
plan was introduced in 1991. We remain positive about its bond market,
largely based on our belief that risk of devaluation has declined
substantially.
Continued p.4
3
<PAGE>
INTERVIEW WITH THE PORTFOLIO MANAGERS -- CONTINUED
During the first half of this year, Standard & Poor's (the U.S. credit rating
agency) made a landmark decision by allowing domestic corporate bonds to be
rated higher than sovereign. They did so on the basis that more than 40% of
Argentina's economy is now represented by U.S. dollars and, because dollars
and pesos are equally accepted, the government would have a difficult time
restricting access to foreign exchange by domestic corporates to pay off
foreign debt. Based on our confidence in the sustainability of the peso's
peg, we feel Argentine peso bonds, which generally earn higher interest rates
than dollar instruments, represent an attractive investment.
Despite the market's recent success, the Fund has reduced its weighting in
Brazil over the period, largely on concerns over Brazil's budget and current
account deficits (estimated at 4% to 5% of GDP this year). Privatization has
also been frustratingly slow, which is likely to continue as presidential
elections are not too far off.
In Mexico, growth is estimated to be a healthy 5% this year, inflation is
expected to fall to 18% from 26% last year and the budget and current account
deficits appear to be a manageable 1% of GDP. Despite all these positive
developments, however, Mexican yield spreads are the tightest in Latin
America, and we have reduced our holdings because we feel other Latin
American markets present more attractive opportunities.
Q WHY HAS THE FUND MAINTAINED SUCH A LOW EXPO-
SURE TO ASIAN FIXED INCOME MARKETS?
A In our opinion, Asia is currently the most risky region for fixed
income markets relative to other regions. Many of these countries are
continuing to run significant current account deficits, and we view the
resulting risk of currency depreciation to be considerable. Current account
deficits have largely been the result of a weakening yen. A weaker yen makes
Japanese exports more competitive at the expense of other Asian countries,
many of which are also heavily dependent on electronics and automobiles. We
have also recently witnessed a spillover effect from the Thai baht
devaluation.
Equity investors, on the other hand, are more protected because a decline in
currencies can be positive for export-dependent economies. Quite often,
however, bonds in these countries have short-term maturities (less than one
year). To this extent, they do not rise in price because, typically, yields
will go up to defend the currency.
Q WHAT HAVE THE FUND'S FIXED INCOME INVESTMENTS
BEEN IN EASTERN EUROPE?
A Russian fixed income has done very well, and the Fund's exposure to
Russia has increased purely on market appreciation. The most significant
development over the past six months has been the almost entire replacement
of the cabinet by new, younger, reformists, precipitating a rally in the
market. Meanwhile, inflation continues to fall, the currency remains stable
and, most importantly, seven years of negative GDP growth is expected to
reverse. The government is also beginning to sort out its revenue problems,
becoming more strict with companies that are not paying taxes. Recently a law
was introduced that allows the liquidation of companies which fail to pay.
Additionally, the recent IMF agreements have been well received by the
markets.
The Fund has doubled its fixed income weighting in Bulgaria, 1997's
top-performing fixed income market (based on the J.P. Morgan Index). The
country has witnessed a miraculous turnaround since its economic collapse
earlier this year. A new government was elected in May with a substantial
majority and an IMF-designed currency board was in place by July. As a
result, inflation has plummeted from a peak of 250% for the month of February
1997 to under 1% per month currently. Yields have collapsed and foreign
exchange reserves have tripled, to US$1.5 billion. Moreover, a rigorous
economic program has been agreed to with the IMF, which includes, among other
provisions, privatization and a 1997 budget deficit target of 6% of GDP
(compared to 11% in 1996).
Q WHAT DROVE YOUR DECISION TO INTRODUCE A POSI-
TION IN SOUTH AFRICAN FIXED INCOME?
A Last year, the South African rand experienced a big devaluation, and
inflation soared. However, as soon as investors perceived that inflation had
peaked at 9.9% in April of this year, they expected that the bank would
reduce interest rates. As markets rallied and South African yields fell
sharply, the Fund has benefited.
Continued p.5
4
<PAGE>
INTERVIEW WITH THE PORTFOLIO MANAGERS -- CONTINUED
Q WHAT IS YOUR OUTLOOK FOR EQUITY MARKETS OVER
THE REMAINDER OF THE YEAR?
A We continue to believe emerging equity markets should present sound
returns. We expect continued strength to be underpinned by a supportive
global financial environment in which inflationary pressures will, for the
time being, remain minimal throughout the world. As a result, we feel central
banks in the developed world will have little need to increase interest
rates. Emerging markets should also benefit from plenty of liquidity, which
can support the prices of financial assets.
Several additional trends bode well for emerging equity markets. A strong
cyclical upturn unfolding throughout Latin America and China should, in our
opinion, provide regional support. For eastern European markets, the
potential for a pickup in activity in Germany and other core economies of
Europe augurs well. Meanwhile, ongoing economic reform in many of the EMEA
(emerging markets of Europe, Middle East and Africa) should provide investors
with substantial opportunities.
VALUE IN EMERGING MARKET EQUITIES
MSCI EM MSCI AC Asia MSCI Emerging
MSCI U.S. Latin America Free ex-Japan Markets
Price-to-Earnings 21.8 17.8 20.3 19.6
Price-to-Cash Flow 13.2 9 12.5 9.9
Price-to-Book Value 3.85 1.42 2.2 1.86
IN RELATION TO THEIR PAST AND IN RELATION TO THE U.S., MANY EMERGING EQUITY
MARKETS APPEAR UNDERVALUED.
Source: Morgan Stanley Capital International, June 30, 1997. Earnings estimates
are aggregated from IBES company--level data.
Q WHAT IS YOUR OUTLOOK FOR EMERGING FIXED
INCOME MARKETS?
A It is highly unlikely that the returns witnessed in 1995 and 1996 will
be repeated. Nevertheless, we believe the strong economic fundamentals of
emerging countries in general will continue to justify lower yield spreads to
U.S. Treasuries. It is also likely that at least one of the big four Latin
American countries-- Argentina, Brazil, Mexico, Venezuela--will receive an
upgrade from the two U.S. credit rating agencies within the next 6 to 12
months. This would have a very positive impact on the whole market,
especially if they were to receive "investment grade" status.
But, as we continue to stress, we believe the major risk to emerging market
bonds remains a move to tighter monetary policies in Europe and/or Japan and
the potentially destabilizing effect on global interest rates and liquidity.
In the absence of these policy changes, we believe emerging market bonds will
provide superior returns, although, of course, with corresponding volatility.
Q WHAT IS YOUR CURRENT STRATEGY FOR THE ASSET
ALLOCATION OF THE FUND?
A Because the Fund has the ability to allocate resources between income
and equity, we can shift resources to where perceived opportunities are
highest. Over the last several years, the Fund's bond allocation, which is
evaluated on a monthly basis, has ranged from approximately 37%-44%. This
emphasis on emerging market bonds proved correct as the asset class
experienced some spectacular returns following the Mexican peso crisis, and
equity markets lagged.
Since then, yields have fallen and spreads on the J.P. Morgan Emerging
Markets Bond Index (Plus) have narrowed from 493 in December to 376 to the
end of June. However, there is a limit to how far emerging market bond yields
can fall. They cannot fall below U.S. Treasuries because that would imply a
better credit rating than the U.S. government's. On a risk-adjusted basis,
therefore, we believe returns are going to be much better in equity markets
than in bond markets, and we have shifted some of the Fund's assets toward
equities. This doesn't mean spreads can't go lower, but our aim is to get the
best returns for the risks we are taking.
5
<PAGE>
GEOGRAPHIC ALLOCATION OF NET ASSETS %
<TABLE>
<CAPTION>
1997 1996
JUNE 30 JUNE 30
<S> <C> <C>
Argentina 5.3 5.4
Brazil 12.5 12.9
Bulgaria 3.4 1.2
Canada -- 0.5
Chile 4.0 3.2
China 1.4 0.1
Colombia 0.8 5.5
Costa Rica -- 0.1
Czech Republic -- 3.3
Ecuador 1.0 1.7
Egypt 3.0 --
Greece 0.5 --
Hong Kong 2.9 10.4
Hungary 0.7 0.6
India 3.5 3.5
Indonesia 3.9 1.2
Israel 1.7 --
Korea 2.9 3.1
Luxembourg -- 0.2
Malaysia 7.1 1.0
Mexico 6.7 5.6
Morocco -- 1.8
Nigeria -- 3.0
Pakistan -- 0.6
Panama 1.4 5.1
Philippines 1.7 3.2
Poland 1.8 3.8
Portugal 0.6 2.2
Russia 8.1 3.5
Singapore -- 1.2
South Africa 9.4 3.6
Switzerland -- 1.1
Taiwan 2.0 --
Thailand 2.7 --
Turkey 4.0 --
United Kingdom -- 0.5
U.S. & Other 4.1 5.7
Uruguay -- 0.4
Venezuela 2.2 4.8
Zimbabwe 0.7 --
</TABLE>
SECTOR ALLOCATION OF NET ASSETS %
JUNE 30, 1997
<TABLE>
<S> <C>
Finance 16.4
Energy 12.1
Services 11.7
Materials/Basic Industry 11.0
Multi-Industry/Misc. 7.5
Consumer Non-Durables 4.7
Consumer Durables 2.9
Capital Goods 2.9
Technology 2.0
Health Care 1.2
Fixed Income Investments 21.5
Short Term & Other 6.1
</TABLE>
A complete listing of holdings and allocations may be found in the Financial
Statements section of this report.
6
<PAGE>
<TABLE>
<CAPTION>
G.T. GLOBAL DEVELOPING MARKETS FUND Country % of
Net Assets
<S> <C> <C>
KEY EQUITY HOLDINGS
TELECOMUNICACOES BRASILEIRAS S.A. (TELEBRAS) A holding company for the Brazil 4.1
telecommunications system in Brazil. The company is composed of 28 operating
state companies and offers domestic and international telephone and data
transmission services throughout Brazil.
ASUSTEK COMPUTER INC. Manufactures and markets pentium Pro, Pentium, 486-based Taiwan 1.9
mainboards and other peripherals such as audio, video and network cards. Asustek
sells its products in Taiwan and exports to America, Asia and Europe.
MALAYAN BANKING BHD Offers a full range of banking products and services to a Malaysia 1.4
wide variety of customer segments in Malaysia and selected customer segments in
Singapore and Brunei.
GENERAL MINING UNION CORP. (GENCOR) A diversified international holding company South Africa 1.4
for a group of companies with interests in natural resources. Subsidiary
companies mine for gold, platinum and coal, as well as aluminum and related
commodities, chrome and ferroalloys and manganese and its alloys.
BANCO LATINOAMERICANO DE EXPORTACIONES S.A. (BLADEX) Invests its funds Panama 1.4
primarily in loans and provides other bank services.
BARLOW LTD. A holding company for a group which produces and distributes South Africa 1.3
products used in the building and construction, mining and other industries and
motor vehicle retailing. The Group's manufacturing operations serve markets in
the UK, continental Europe, the U.S., Australia and the Far East.
TELEFONOS DE MEXICO, S.A. DE C.V. Provides national and international long- Mexico 1.2
distance and local telephone service to 7,320 communities throughout Mexico. The
company also provides voice, data, image signal and cellular transmission
services.
PETROLEO BRASILEIRO S.A. (PETROBRAS) Produces oil and natural gas liquid. The Brazil 1.2
company's main products are oil products and fuel alcohol. Also, Petrobras
provides maritime freight services.
RASHID HUSSAIN BHD. Through its subsidiaries, Rashid Hussain offers Malaysia 1.2
stockbrokerage services, underwriting and placement of shares, nominee and share
custodian Malayan Banking services, asset management, property holding and
property management services.
LUKOIL HOLDING Prospects for, extracts, transports and refines oil and gas. The Russia 1.1
company also produces petrochemicals and other products. Lukoil holds 18% of
Russia's oil and gas extracting market and 11% of its refining market.
</TABLE>
7
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Directors of G.T. Global Developing Markets
Fund, Inc. ("Fund"):
We have audited the accompanying statement of assets and liabilities of G.T.
Global Developing Markets Fund, Inc., including the portfolio of investments, as
of June 30, 1997, the related statement of operations for the six months then
ended, the statements of changes in net assets for the six months then ended and
for the year ended December 31, 1996, and the financial highlights for each of
the periods indicated herein. These financial statements and the financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and the financial
highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of June
30, 1997, by correspondence with the custodians and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and the financial highlights referred
to above present fairly, in all material respects, the financial position of
G.T. Global Developing Markets Fund, Inc. as of June 30, 1997, the results of
its operations for the six months then ended, the changes in its net assets for
the six months then ended and for the year ended December 31, 1996, and the
financial highlights for the periods indicated herein, in conformity with
generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
AUGUST 15, 1997
F1
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.
PORTFOLIO OF INVESTMENTS
June 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ----------------------------------------------------------- -------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (16.4%)
Malayan Banking Bhd. .................................... MAL 736,600 $ 7,735,249 1.4
BANKS-MONEY CENTER
Banco LatinoAmericano de Exportaciones S.A. (Bladex)
"E"{\/} ................................................ PAN 176,831 7,647,941 1.4
OTHER FINANCIAL
Rashid Hussain Bhd. ..................................... MAL 1,021,000 6,473,549 1.2
SECURITIES BROKER
Uniao Bancos Brasileiras "A" Preferred .................. BRZL 142,972,483 5,244,759 0.9
BANKS-MONEY CENTER
Amalgamated Banks of South Africa-/- .................... SAFR 672,136 4,823,730 0.9
BANKS-REGIONAL
Malaysian Resources Corp., Bhd. ......................... MAL 1,565,000 4,310,184 0.8
REAL ESTATE
China Resources Enterprise Ltd. ......................... HK 828,000 4,061,548 0.7
REAL ESTATE INVESTMENT TRUST
Turkiye Is Bankasi (Isbank) "C" ......................... TRKY 7,423,000 2,901,173 0.5
BANKS-MONEY CENTER
State Bank of India Ltd.: ............................... IND -- -- 0.5
BANKS-MONEY CENTER
Common ................................................ -- 216,000 2,055,776 --
GDR{\/} ............................................... -- 27,640 732,460 --
Kookmin Bank - GDR-/- {\/} .............................. KOR 128,480 2,730,200 0.5
BANKS-MONEY CENTER
Administradora de Fondos de Pensiones Provida S.A. -
ADR{\/} ................................................ CHLE 123,166 2,694,256 0.5
INVESTMENT MANAGEMENT
Metroplex Bhd. .......................................... MAL 2,512,000 2,608,060 0.5
REAL ESTATE
Thai Farmers Bank Ltd. - Foreign ........................ THAI 588,200 2,500,077 0.4
BANKS-REGIONAL
PSIL Bangkok Bank Co., Ltd. (Entitlement
Certificates){\/} ...................................... THAI 500,000 2,461,000 0.4
OTHER FINANCIAL
Yapi ve Kredi Bankasi AS ................................ TRKY 102,500,000 2,348,383 0.4
BANKS-MONEY CENTER
PT Lippo Bank - Foreign ................................. INDO 2,057,500 2,115,899 0.4
BANKS-MONEY CENTER
Banco de A. Edwards - ADR{\/} ........................... CHLE 100,934 2,106,997 0.4
BANKS-MONEY CENTER
Siam Commercial Bank PLC - Foreign ...................... THAI 493,800 2,022,519 0.4
BANKS-MONEY CENTER
Akbank T.A.S. ........................................... TRKY 23,390,000 2,009,586 0.4
BANKS-REGIONAL
Malaysian Assurance Alliance Bhd. ....................... MAL 341,200 1,987,573 0.4
INSURANCE - MULTI-LINE
Bank Negara Indonesia - Foreign ......................... INDO 2,820,000 1,798,026 0.3
BANKS-REGIONAL
Global Menkul Degerler AS-/- ............................ TRKY 69,103,256 1,722,925 0.3
SECURITIES BROKER
Commercial International Bank: .......................... EGPT -- -- 0.3
BANKS-MONEY CENTER
144A GDR{.} {\/} ...................................... -- 58,000 1,209,300 --
Common ................................................ -- 23,940 500,996 --
</TABLE>
The accompanying notes are an integral part of the financial statements.
F2
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ----------------------------------------------------------- -------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (Continued)
Ayala Land, Inc. "B" .................................... PHIL 1,723,800 $ 1,586,419 0.3
REAL ESTATE
Turkiye Garanti Bankasi AS .............................. TRKY 41,290,000 1,558,113 0.3
BANKS-REGIONAL
Bank Hapoalim Ltd.-/- ................................... ISRL 703,576 1,468,776 0.3
BANKS-REGIONAL
Korea Exchange Bank ..................................... KOR 219,900 1,451,936 0.3
BANKS-MONEY CENTER
Commercial Bank of Korea ................................ KOR 211,300 1,135,201 0.2
BANKS-REGIONAL
Aksigorta ............................................... TRKY 15,080,000 955,202 0.2
INSURANCE - MULTI-LINE
Ergo Bank S.A. .......................................... GREC 13,218 793,917 0.1
BANKS-MONEY CENTER
BPI-SGPS S.A. ........................................... PORT 40,637 790,805 0.1
BANKS-MONEY CENTER
Banco Frances del Rio de la Plata S.A. - ADR{\/} ........ ARG 24,268 788,710 0.1
BANKS-MONEY CENTER
Alpha Credit Bank ....................................... GREC 11,465 780,026 0.1
BANKS-REGIONAL
Bank Leumi Le - Israel-/- ............................... ISRL 406,668 618,340 0.1
BANKS-REGIONAL
Bank Slaski S.A. ........................................ POL 7,316 523,367 0.1
BANKS-MONEY CENTER
Banco de Colombia - 144A GDR{.} {\/} .................... COL 77,200 453,550 0.1
BANKS-MONEY CENTER
PT Jaya Real Property - Foreign ......................... INDO 336,000 452,653 0.1
REAL ESTATE
Banco Ganadero S.A. - ADR{\/} ........................... COL 16,800 436,800 0.1
BANKS-REGIONAL
Egyptian American Bank SAE-/- ........................... EGPT 2,663 105,031 --
BANKS-MONEY CENTER
Phatra Thanakit Co., Ltd. - Foreign ..................... THAI 77,000 95,209 --
INVESTMENT MANAGEMENT
------------
90,796,221
------------
Energy (12.1%)
Petroleo Brasileiro S.A. (Petrobras) Preferred-/- ....... BRZL 23,852,040 6,625,173 1.2
OIL
LUKoil Holding - ADR{\/} ................................ RUS 78,379 6,113,562 1.1
GAS PRODUCTION & DISTRIBUTION
Centrais Eletricas Brasileiras S.A.-Eletrobras "B" -
ADR{\/} ................................................ BRZL 220,958 6,102,860 1.1
ELECTRICAL & GAS UTILITIES
Sasol Ltd. .............................................. SAFR 429,556 5,635,229 1.0
ENERGY SOURCES
Surgutneftegaz - ADR{\/} ................................ RUS 90,368 4,789,504 0.9
OIL
Empresa Nacional de Electricidad S.A. - ADR{\/} ......... CHLE 202,653 4,572,358 0.8
ELECTRICAL & GAS UTILITIES
</TABLE>
The accompanying notes are an integral part of the financial statements.
F3
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ----------------------------------------------------------- -------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Energy (Continued)
Chilgener S.A. - ADR-/- {\/} ............................ CHLE 152,401 $ 4,267,228 0.8
ELECTRICAL & GAS UTILITIES
Companhia Energetica de Minas Gerais (Cemig) -
ADR{\/} ................................................ BRZL 82,874 4,216,629 0.8
ELECTRICAL & GAS UTILITIES
C.A. La Electricidad de Caracas ......................... VENZ 2,486,529 3,987,926 0.7
ELECTRICAL & GAS UTILITIES
Korea Electric Power Corp. - ADR{\/} .................... KOR 190,870 3,566,883 0.6
ELECTRICAL & GAS UTILITIES
Light - Participacoes S.A.-/- ........................... BRZL 7,485,850 2,983,214 0.5
ELECTRICAL & GAS UTILITIES
Light - Servicos de Electricidade S.A. .................. BRZL 5,322,290 2,648,735 0.5
ELECTRICAL & GAS UTILITIES
Enersis S.A. ADR{\/} .................................... CHLE 62,748 2,231,476 0.4
ELECTRICAL & GAS UTILITIES
Manila Electric Co. "B" ................................. PHIL 361,110 1,781,567 0.3
ELECTRICAL & GAS UTILITIES
PTT Exploration and Production Public Co., Ltd. -
Foreign ................................................ THAI 112,200 1,630,108 0.3
OIL
Belle Corp.-/- .......................................... PHIL 4,710,000 1,376,357 0.2
OIL
Bombay Suburban Electric Supply (BSES) Ltd.-/- .......... IND 200,000 1,332,867 0.2
ELECTRICAL & GAS UTILITIES
Yukong Ltd. ............................................. KOR 53,680 1,302,619 0.2
OIL
YPF S.A. - ADR{\/} ...................................... ARG 37,760 1,161,120 0.2
OIL
Perez Companc S.A. "B"-/- ............................... ARG 100,460 806,855 0.1
OIL
Guangdong Electric Power Development Co., Ltd. "B" ...... CHNA 833,160 682,936 0.1
ENERGY SOURCES
Electricity Generating Public Co., Ltd. - Foreign ....... THAI 136,200 334,185 0.1
ELECTRICAL & GAS UTILITIES
EDP-Electricidade de Portugal S.A. ...................... PORT 9,030 165,721 --
ELECTRICAL & GAS UTILITIES
------------
68,315,112
------------
Services (11.7%)
Telecomunicacoes Brasileiras S.A. (Telebras): ........... BRZL -- -- 4.1
TELEPHONE NETWORKS
ADR{\/} ............................................... -- 115,091 17,465,059 --
Common ................................................ -- 40,244,258 5,458,116 --
Telefonos de Mexico, S.A. de C.V. "L" - ADR{\/} ......... MEX 142,738 6,815,740 1.2
TELEPHONE NETWORKS
Pick'n Pay Stores Ltd. .................................. SAFR 3,640,456 5,458,075 1.0
RETAILERS-OTHER
Compania de Telefonos de Chile S.A. - ADR{\/} ........... CHLE 128,402 4,237,266 0.8
TELEPHONE NETWORKS
Cifra S.A. de C.V.: ..................................... MEX -- -- 0.5
RETAILERS-OTHER
"B" ADR{\/} ........................................... -- 1,000,000 1,580,000 --
"B" ................................................... -- 592,636 1,104,522 --
</TABLE>
The accompanying notes are an integral part of the financial statements.
F4
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ----------------------------------------------------------- -------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Services (Continued)
Telecomunicacoes de Sao Paulo S.A. (TELESP) Preferred ... BRZL 7,715,118 $ 2,519,149 0.4
TELEPHONE NETWORKS
Konsortium Perkapalan Berhad ............................ MAL 370,000 2,184,664 0.4
TRANSPORTATION - SHIPPING
Mahanagar Telephone Nigam Ltd. .......................... IND 233,600 1,984,783 0.4
TELECOM - OTHER
Advanced Info. Service "L" .............................. THAI 221,100 1,930,781 0.3
WIRELESS COMMUNICATIONS
PT Telekomunikasi Indonesia - Foreign ................... INDO 1,173,500 1,918,825 0.3
TELECOM - OTHER
Telecomasia (Local)-/- .................................. THAI 1,361,600 1,644,127 0.3
TELEPHONE NETWORKS
Compania Anonima Nacional Telefonos de Venezuela (CANTV)
- ADR{\/} .............................................. VENZ 37,626 1,622,621 0.3
TELEPHONE NETWORKS
SM Prime Holdings, Inc. ................................. PHIL 4,441,000 1,314,603 0.2
RETAILERS-APPAREL
Telefonica de Argentina S.A. "B" - ADR{\/} .............. ARG 32,028 1,108,970 0.2
TELEPHONE NETWORKS
PT Matahari Putra Prima - Foreign ....................... INDO 517,500 1,043,089 0.2
RETAILERS-APPAREL
Migros Turk T.A.S. ...................................... TRKY 1,305,000 923,349 0.2
RETAILERS-FOOD
Portugal Telecom S.A. - Registered ...................... PORT 20,551 829,046 0.1
TELEPHONE NETWORKS
Sonae Investimentos-Sociedade Gestora de Participacoes
Sociais S.A. ........................................... PORT 18,602 777,796 0.1
RETAILERS-OTHER
Hellenic Telecommunications Organization S.A. ........... GREC 30,660 719,876 0.1
TELEPHONE NETWORKS
PT Steady Safe Transportation - Foreign ................. INDO 554,500 650,072 0.1
TRANSPORTATION - ROAD & RAIL
Danubius Hotel and Spa Rt.-/- ........................... HGRY 21,940 648,360 0.1
LEISURE & TOURISM
Philippine Long Distance Telephone Co. .................. PHIL 15,610 506,510 0.1
TELEPHONE - LONG DISTANCE
Investec-Consultoria Internacional S.A.-/- .............. PORT 14,612 498,053 0.1
BROADCASTING & PUBLISHING
Indian Hotels Co., Ltd. ................................. IND 25,850 471,446 0.1
LEISURE & TOURISM
Blue Square Chain Investments & Properties Ltd.-/- ...... ISRL 29,644 288,626 0.1
RETAILERS-FOOD
Estabelecimentos Jeronimo Martins & Filho, Sociedade
Gestora de Participacoes Sociais S.A. .................. PORT 3,854 269,233 --
RETAILERS - OTHER
PT Indosat - Foreign .................................... INDO 58,000 173,571 --
TELECOM - OTHER
------------
66,146,328
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F5
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ----------------------------------------------------------- -------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Materials/Basic Industry (11.0%)
General Mining Union Corp. (Gencor) ..................... SAFR 1,662,487 $ 7,660,893 1.4
METALS - NON-FERROUS
Kimberly-Clark de Mexico, S.A. de C.V. "A" .............. MEX 1,389,779 5,600,419 1.0
PAPER/PACKAGING
SA Iron & Steel Industrial Corp., Ltd. (ISCOR) .......... SAFR 7,933,404 5,247,539 0.9
METALS - STEEL
PT Gudang Garam - Foreign ............................... INDO 949,500 3,983,916 0.7
MISC. MATERIALS & COMMODITIES
Sappi Ltd. .............................................. SAFR 398,303 3,600,578 0.6
FOREST PRODUCTS
Suez Cement Co. - Reg S GDR-/- {c} {\/} ................. EGPT 158,195 3,195,539 0.6
CEMENT
Pohang Iron & Steel Co., Ltd. - ADR{\/} ................. KOR 88,870 2,843,840 0.5
METALS - STEEL
Apasco S.A. ............................................. MEX 369,933 2,655,356 0.5
CEMENT
Helwan Portland Cement Co.-/- ........................... EGPT 124,280 2,630,822 0.5
CEMENT
Industrias Penoles S.A. "CP" ............................ MEX 548,803 2,619,271 0.5
METALS - NON-FERROUS
Cosco Pacific Ltd. ...................................... HK 994,000 2,303,183 0.4
PAPER/PACKAGING
Anglo American Corporation of South Africa Ltd. ......... SAFR 37,760 2,274,924 0.4
GOLD
Siam Cement Co., Ltd. - Foreign ......................... THAI 117,100 2,027,079 0.4
CEMENT
Ameriyah Cement Co.-/- .................................. EGPT 67,800 1,652,344 0.3
CEMENT
Maanshan Iron and Steel Co. "H" ......................... CHNA 7,091,000 1,482,860 0.3
METALS - STEEL
Torah Portland Cement Co.-/- ............................ EGPT 50,650 1,282,090 0.2
CEMENT
Eregli Demir Ve Celik Fabrikalari T.A.S. ................ TRKY 6,806,621 1,135,201 0.2
METALS - STEEL
Titan Cement Co., S.A. .................................. GREC 22,586 1,114,049 0.2
BUILDING MATERIALS & COMPONENTS
Paints & Chemical Industry-/- ........................... EGPT 31,400 1,058,219 0.2
CHEMICALS
Pannonplast Rt. ......................................... HGRY 20,732 1,040,474 0.2
MISC. MATERIALS & COMMODITIES
Turk Sise ve Cam Fabrikalari AS-/- ...................... TRKY 16,264,000 1,030,199 0.2
GLASS
Helioplis Housing-/- .................................... EGPT 8,000 946,814 0.2
BUILDING MATERIALS & COMPONENTS
Cahya Mata Sarawak Bhd. ................................. MAL 97,000 791,837 0.1
BUILDING MATERIALS & COMPONENTS
North Cairo Flour Mills-/- .............................. EGPT 15,170 790,313 0.1
MISC. MATERIALS & COMMODITIES
Israel Chemicals Ltd.-/- ................................ ISRL 654,789 772,596 0.1
CHEMICALS
</TABLE>
The accompanying notes are an integral part of the financial statements.
F6
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ----------------------------------------------------------- -------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Materials/Basic Industry (Continued)
Oryx Gold Holdings Ltd.-/- .............................. SAFR 698,990 $ 708,930 0.1
GOLD
Cimpor-Cimentos de Portugal, SGPS S.A. .................. PORT 21,964 511,911 0.1
CEMENT
Agros Holding S.A.-/- ................................... POL 16,123 429,456 0.1
MISC. MATERIALS & COMMODITIES
------------
61,390,652
------------
Multi-Industry/Miscellaneous (7.5%)
Barlow Ltd. ............................................. SAFR 657,524 7,154,406 1.3
CONGLOMERATE
Sime Darby Bhd. ......................................... MAL 1,245,000 4,144,244 0.7
MISCELLANEOUS
Bimantara Citra - Foreign ............................... INDO 2,369,500 4,142,483 0.7
CONGLOMERATE
Delta Corporation Ltd. (subdivision)-/- ................. ZBBW 2,472,400 3,797,016 0.7
MULTI-INDUSTRY
Renong Bhd. ............................................. MAL 2,519,000 3,294,115 0.6
MULTI-INDUSTRY
Shanghai Industrial Holdings Ltd. ....................... HK 520,000 3,235,400 0.6
MULTI-INDUSTRY
Haci Omer Sabanci Holding Reg S - ADR-/- {c} {\/} ....... TRKY 343,073 3,087,657 0.6
MULTI-INDUSTRY
Suramericana de Seguros S.A. ............................ COL 102,214 2,644,436 0.5
CONGLOMERATE
ITC Ltd.-/- ............................................. IND 136,000 2,140,811 0.4
MULTI-INDUSTRY
San Luis "CPO"-/- ....................................... MEX 248,277 1,841,521 0.3
CONGLOMERATE
Koc Holding AS .......................................... TRKY 7,535,000 1,777,123 0.3
CONGLOMERATE
Koor Industries Ltd.: ................................... ISRL -- -- 0.2
CONGLOMERATE
Common ................................................ -- 5,700 504,688 --
ADR{\/} ............................................... -- 22,043 388,508 --
Mosenergo: .............................................. RUS -- -- 0.2
MISCELLANEOUS
Reg S ADR{c} {\/} ..................................... -- 10,964 455,006 --
144A ADR{.} {\/} ...................................... -- 10,000 415,000 --
GT Taiwan Fund{\/}+X+ ................................... TWN 49,751 762,687 0.1
COUNTRY FUNDS
Graboplast Rt. .......................................... HGRY 13,452 632,021 0.1
MISCELLANEOUS
Banco Comercial Portugues "A", Convertible Preferred, 8%
till 6/30/03{\/} ....................................... PORT 6,615 453,128 0.1
MISCELLANEOUS
Discount Investment Corp. ............................... ISRL 3,871 309,507 0.1
MULTI-INDUSTRY
------------
41,179,757
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F7
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ----------------------------------------------------------- -------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Consumer Non-Durables (4.7%)
South African Breweries Ltd. ............................ SAFR 197,892 $ 6,075,727 1.1
BEVERAGES - ALCOHOLIC
Gruma S.A. "B"-/- ....................................... MEX 1,021,073 4,757,550 0.8
FOOD
Companhia Cervejaria Brahma Preferred ................... BRZL 4,662,721 3,551,724 0.6
BEVERAGES - ALCOHOLIC
Fomento Economico Mexicano, S.A. de C.V. "B"-/- ......... MEX 387,105 2,305,763 0.4
BEVERAGES - ALCOHOLIC
San Miguel Corp. "B" .................................... PHIL 851,600 2,246,156 0.4
BEVERAGES - ALCOHOLIC
Hindustan Lever Ltd.-/- ................................. IND 40,650 1,636,802 0.3
PERSONAL CARE/COSMETICS
Eastern Tobacco Co.-/- .................................. EGPT 64,075 1,621,913 0.3
TOBACCO
Embotelladora Andina S.A.: .............................. CHLE -- -- 0.3
BEVERAGES - NON-ALCOHOLIC
"B" ADR{\/} ........................................... -- 41,497 866,250 --
"A" ADR{\/} ........................................... -- 34,400 737,450 --
Bavaria ................................................. COL 106,425 764,503 0.1
BEVERAGES - ALCOHOLIC
A-Ahram Beverages Co. S.A.E. - GDR-/- {\/} .............. EGPT 36,514 746,711 0.1
BEVERAGES - ALCOHOLIC
Ng Fung Hong Ltd. ....................................... HK 462,000 691,795 0.1
FOOD
La Tondena Distillers, Inc. ............................. PHIL 137,900 332,321 0.1
BEVERAGES - NON-ALCOHOLIC
Zaklady Piwowarskie w Zywcu S.A. (Zywiec) ............... POL 4,461 285,178 0.1
BEVERAGES - ALCOHOLIC
------------
26,619,843
------------
Consumer Durables (2.9%)
Johnson Electric Holdings Ltd. .......................... HK 1,375,500 4,101,571 0.7
AUTO PARTS
Samsung Electronics Co. - 144A GDR{.} -/- {\/} .......... KOR 55,070 3,221,595 0.6
CONSUMER ELECTRONICS
Arcelik AS .............................................. TRKY 16,609,500 2,238,477 0.4
APPLIANCES & HOUSEHOLD
PT Astra International - Foreign ........................ INDO 405,000 1,665,981 0.3
AUTO PARTS
Qingling Motors Co., Ltd.-/- ............................ CHNA 2,708,000 1,398,255 0.3
AUTOMOBILES
Bajaj Auto Ltd. ......................................... IND 52,800 1,360,246 0.2
AUTOMOBILES
Tata Engineering and Locomotive Co., Ltd.: .............. IND -- -- 0.2
AUTOMOBILES
GDR{\/} ............................................... -- 48,000 736,800 --
Common ................................................ -- 25,000 316,084 --
BEC World Public Co., Ltd. .............................. THAI 77,800 667,372 0.1
CONSUMER ELECTRONICS
</TABLE>
The accompanying notes are an integral part of the financial statements.
F8
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ----------------------------------------------------------- -------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Consumer Durables (Continued)
Mahindra & Mahindra Ltd.-/- ............................. IND 43,300 $ 524,445 0.1
AUTOMOBILES
------------
16,230,826
------------
Capital Goods (2.9%)
United Engineers Ltd. ................................... MAL 659,000 4,752,843 0.8
CONSTRUCTION
Hindalco Industries Ltd.: ............................... IND -- -- 0.8
INDUSTRIAL COMPONENTS
144A GDR{.} {\/} ...................................... -- 73,400 2,594,690 --
Common ................................................ -- 63,600 1,739,883 --
ECI Telecommunications Ltd.{\/} ......................... ISRL 73,000 2,171,750 0.4
TELECOM EQUIPMENT
Cheung Kong Infrastructure Holdings ..................... HK 471,000 1,364,944 0.2
CONSTRUCTION
New World Infrastructure Ltd.-/- ........................ HK 482,000 1,362,601 0.2
INDUSTRIAL COMPONENTS
IJM Corporation Bhd. .................................... MAL 589,000 1,237,052 0.2
CONSTRUCTION
Irkutskenergo - ADR{\/} ................................. RUS 36,412 609,901 0.1
ELECTRICAL PLANT/EQUIPMENT
C & P Homes, Inc. ....................................... PHIL 1,382,000 519,233 0.1
CONSTRUCTION
Elektrim Spolka Akcyjna S.A. ............................ POL 58,947 513,207 0.1
ELECTRICAL PLANT/EQUIPMENT
Sungmi Telecom Electronics Co. .......................... KOR 1,400 186,561 --
ELECTRICAL PLANT/EQUIPMENT
------------
17,052,665
------------
Technology (2.0%)
Asustek Computer Inc. Reg. S - GDR-/- {c} {\/} .......... TWN 956,400 10,831,230 1.9
COMPUTERS & PERIPHERALS
Clal Electronics Industries Ltd. ........................ ISRL 2,754 356,681 0.1
SEMICONDUCTORS
------------
11,187,911
------------
Health Care (1.2%)
Teva Pharmaceutical Industries Ltd. ..................... ISRL 28,162 1,826,178 0.3
MEDICAL TECHNOLOGY & SUPPLIES
Richter Gedeon Rt. - GDR{\/} ............................ HGRY 17,552 1,614,784 0.3
PHARMACEUTICALS
Ranbaxy Laboratories Ltd. ............................... IND 79,850 1,522,734 0.3
MEDICAL TECHNOLOGY & SUPPLIES
Egypt International Pharmaceuticals-/- .................. EGPT 19,000 1,175,847 0.2
PHARMACEUTICALS
</TABLE>
The accompanying notes are an integral part of the financial statements.
F9
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ----------------------------------------------------------- -------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Health Care (Continued)
PT Kalbe Farma - Foreign ................................ INDO 479,000 $ 640,374 0.1
MEDICAL TECHNOLOGY & SUPPLIES
------------
6,779,917
------------ -----
TOTAL EQUITY INVESTMENTS (cost $381,434,874) .............. 405,699,232 72.4
------------ -----
<CAPTION>
PRINCIPAL VALUE % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- ----------------------------------------------------------- -------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Government & Government Agency Obligations (14.6%)
Argentina (4.2%)
Republic of Argentina:
BOCON Pro 1, 3.2424% due 4/1/07+ .................... ARS 9,345,700 9,845,220 1.7
Global Bond, 11% due 10/9/06 ........................ USD 7,657,000 8,529,898 1.5
Global Bond, 11.375% due 1/30/17 .................... USD 3,849,000 4,292,597 0.8
Discount Bond, 6.875% due 3/31/23+ .................. USD 600,000 519,375 0.1
BOCON Pre 1, 3.2424% due 4/1/01+ .................... ARS 298,800 356,091 0.1
Brazil (1.7%)
Federal Republic of Brazil:
Debt Conversion Bond Series L, 6.9375% due
4/15/12+ ........................................... USD 6,377,000 5,265,011 0.9
Debt Conversion Bond Registered, 6.9375% due
4/15/12+ ........................................... USD 5,623,000 4,642,489 0.8
Bulgaria (3.2%)
Republic of Bulgaria:
Interest Arrears Bond, 6.5625% due 7/28/11 -
Euro+ .............................................. USD 13,583,000 9,822,207 1.7
Discount Bond Series A, 6.6875% due 7/28/24 -
Euro+ .............................................. USD 11,442,000 8,438,475 1.5
Ecuador (1.0%)
Republic of Ecuador, Discount Bond, 6.4375% due 2/28/25
- Euro+ .............................................. USD 7,542,000 5,416,099 1.0
Mexico (1.2%)
United Mexican States:
Global Bond, 11.5% due 5/15/26 ...................... USD 3,336,000 3,818,886 0.7
Par Bond Series A, 6.25% due 12/31/19+/+ ............ USD 3,534,000 2,736,641 0.5
Poland (1.4%)
Republic of Poland:
12% due 6/12/01 ..................................... PLZ 15,923,000 3,950,455 0.7
Past Due Interest Bond, 4% due 10/27/14 - Euro++
{j} ................................................ USD 4,300,000 3,695,313 0.7
Russia (0.0%)
City of St. Petersburg, 9.5% due 6/18/02 - 144A{.} .... USD 250,000 250,313 --
South Africa (0.7%)
Republic of South Africa, 13% due 8/31/10 ............. ZAR 20,173,000 4,072,762 0.7
Venezuela (1.2%)
Republic of Venezuela:
Debt Conversion Bond, 6.75% due 12/18/07+ ........... USD 4,000,000 3,710,000 0.7
Par Bond Series B, 6.75% due 3/31/20+/+ ............. USD 3,750,000 2,957,813 0.5
------------
Total Government & Government Agency Obligations (cost
$79,921,652) ............................................. 82,319,645
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F10
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- ----------------------------------------------------------- -------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Sovereign Debt (4.1%)
Russia (4.1%)
Bank for Foreign Economic Affairs (Vnesheconombank)
Loan Agreement ** -/- {j} ............................ USD 22,635,000 $ 20,757,963 3.7
Bank for Foreign Economic Affairs (Vnesheconombank)
Loan Agreement ** -/- ................................ DEM 4,186,000 2,338,053 0.4
------------
Total Sovereign Debt (cost $12,011,123) ................... 23,096,016
------------
Corporate Bonds (2.8%)
Argentina (0.5%)
Supermercados Norte, 10.875% due 2/9/04 - 144A{.} ..... USD 1,193,000 1,222,706 0.2
Central Termica Guemes S.A., 12% due 11/26/01 -
144A{.} .............................................. USD 1,020,000 1,068,144 0.2
Acindar Industrial Argentina, 11.25% due 2/15/04 ...... USD 661,000 697,355 0.1
Brazil (0.6%)
RBS Participacoes S.A., 11% due 4/1/07 - 144A{.} ...... USD 1,107,000 1,162,350 0.2
Tevecap S.A., 12.625% due 11/26/04 - 144A{.} .......... USD 840,000 908,250 0.2
TV Filme, Inc., 12.875% due 12/15/04 - 144A{.} ........ USD 844,000 887,255 0.2
China (0.7%)
Panda Global Energy Co., 12.5% due 4/15/04 -
144A{.} .............................................. USD 2,139,000 2,074,830 0.4
Greater Beijing First, 9.5% due 6/15/07 - 144A{.} ..... USD 960,000 974,400 0.2
Road King Infrastructure, 9.5% due 7/15/07 -
144A{.} .............................................. USD 700,000 704,375 0.1
Indonesia (0.4%)
PT Tjiwi Kimia, 13.25% due 8/1/01 ..................... USD 1,507,000 1,716,096 0.3
Indah Kiat Financial Mauritius, 10% due 7/1/07 -
144A{.} .............................................. USD 530,000 529,338 0.1
Mexico (0.3%)
Copamex Industrias S.A., 11.375% due 4/30/04 -
144A{.} .............................................. USD 996,000 1,068,210 0.2
Grupo Mexico de Desarrollo, 8.25% due 2/17/01 ......... USD 860,000 597,700 0.1
Russia (0.3%)
Lukinter Finance, 3.5% due 5/6/02 - 144A{.} ........... USD 1,213,000 1,522,315 0.3
------------
Total Corporate Bonds (cost $14,421,367) .................. 15,133,324
------------ -----
TOTAL FIXED INCOME INVESTMENTS (cost $106,354,142) ........ 120,548,985 21.5
------------ -----
<CAPTION>
UNDERLYING
NOMINAL VALUE % OF NET
OPTIONS CURRENCY AMOUNT (NOTE 1) ASSETS
- ----------------------------------------------------------- -------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Republic of Bulgaria Floating Interest Rate Bond 'A'
7/28/12, Call Option, strike 45.9375 expires 7/17/97 ... USD 10,115,000 1,118,972 0.2
GOVERNMENT & GOVERNMENT AGENCY OBLIGATIONS
Republic of Brazil Debt Conversion Bond 4/15/12, Call
Option, strike 80.222, expires 9/16/97 ................. USD 17,370,000 464,422 0.1
GOVERNMENT & GOVERNMENT AGENCY OBLIGATIONS
</TABLE>
The accompanying notes are an integral part of the financial statements.
F11
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
UNDERLYING
NOMINAL VALUE % OF NET
OPTIONS CURRENCY AMOUNT (NOTE 1) ASSETS
- ----------------------------------------------------------- -------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Republic of Venezuela Debt Conversion Bond 12/18/07, Call
Option, strike 91, expires 8/26/97 ..................... USD 9,250,000 $ 187,683 --
GOVERNMENT & GOVERNMENT AGENCY OBLIGATIONS
------------ -----
TOTAL OPTIONS (cost $772,565) ............................. 1,771,077 0.3
------------ -----
<CAPTION>
NO. OF VALUE % OF NET
RIGHTS COUNTRY RIGHTS (NOTE 1) ASSETS
- ----------------------------------------------------------- -------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Chilgener S.A. Rights, expire 7/7/97{\/} ................ CHLE 31,143 104,329 --
ELECTRICAL & GAS UTILITIES
Hellenic Telecommunication Organization S.A. Rights,
expire 7/18/97 ......................................... GREC 30,660 3,767 --
TELEPHONE NETWORKS
Rashid Hussain Bhd. Rights for Warrants, expire
8/5/97 ................................................. MAL 145,857 -- --
OTHER FINANCIAL
------------ -----
TOTAL RIGHTS (cost $0) .................................... 108,096 --
------------ -----
<CAPTION>
PRINCIPAL VALUE % OF NET
SHORT-TERM INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- ----------------------------------------------------------- -------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Structured Notes (1.4%)
Russia (1.4%)
Russian Federation GKO (Treasury Bills) Linked Notes
withcancellable currency forwards attached:
Due 4/15/98 ........................................ USD 5,446,000 8,191,637 1.4
(Notes issued by Credit Suisse First Boston (Cayman)
Ltd. These notes are linked to the local price in
Russian rubles of 54,460 Titles of Russian treasury
bills maturing 4/8/98.) (cost $7,178,464)
Government & Government Agency Obligations (0.3%)
Indonesia (0.3%)
Dharmala Intiutama International Promissory Note,
effective yield 15.19% due 10/27/97 (cost
$1,610,308) .......................................... IDR 4,000,000,000 1,567,393 0.3
------------ -----
TOTAL SHORT-TERM INVESTMENTS (cost $8,788,772) ............ 9,759,030 1.7
------------ -----
</TABLE>
The accompanying notes are an integral part of the financial statements.
F12
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- ----------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated June 30, 1997, with State Street Bank & Trust Co.,
due July 1, 1997, for an effective yield of 5.75%,
collateralized by $9,360,000 U.S. Treasury Bills, 6.125%
due 3/31/98 (market value of collateral is $9,525,366,
including accrued interest). (cost $9,334,491) ......... $ 9,334,491 1.7
------------ -----
TOTAL INVESTMENTS (cost $506,684,844) * .................. 547,220,911 97.6
Other Assets and Liabilities .............................. 13,377,933 2.4
------------ -----
NET ASSETS ................................................ $560,598,844 100.0
------------ -----
------------ -----
</TABLE>
- --------------
{\/} U.S. currency denominated.
-/- Non-income producing security.
{.} Security exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers.
{c} Security issued under Regulation S. Rule 144A and additional
restrictions may apply in the resale of such securities.
** Underlying loan agreement currently in default.
+ The coupon rate shown on floating rate note represents the rate at
period end.
+/+ Issued with detachable warrants or value recovery rights. The
current market value of each warrant or right is zero.
{j} All or part of the Fund's holdings in this security is segregated
as collateral for when-issued securities. See Note 1 to the
Financial Statements.
++ The coupon rate shown on step-up coupon bond represents the rate at
period end.
+X+ The G.T. Global Developing Markets Fund, Inc. (the "Fund") has
invested in the GT Global Taiwan Fund, a fund managed by LGT Asset
Management Ltd. who is an affiliate of the Fund's manager,
Chancellor LGT Asset Management, Inc.
* For Federal income tax purposes, cost is $507,655,947 and
appreciation (depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 51,174,996
Unrealized depreciation: (11,610,032)
-------------
Net unrealized appreciation: $ 39,564,964
-------------
-------------
</TABLE>
Abbreviations:
ADR--American Depository Receipt
GDR--Global Depository Receipt
The accompanying notes are an integral part of the financial statements.
F13
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.
PORTFOLIO OF INVESTMENTS (cont'd)
June 30, 1997
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at June 30, 1997, was concentrated in the
following countries:
<TABLE>
<CAPTION>
PERCENTAGE OF NET ASSETS {D}
-------------------------------------------
FIXED INCOME,
RIGHTS & SHORT-TERM
COUNTRY (COUNTRY CODE/CURRENCY CODE) EQUITY WARRANTS & OTHER TOTAL
- -------------------------------------- ------ ------------- ---------- -----
<S> <C> <C> <C> <C>
Argentina (ARG/ARS) .................. 0.6 4.7 5.3
Brazil (BRZL/BRL) .................... 10.1 2.3 0.1 12.5
Bulgaria (BUL/LEV) ................... 3.2 0.2 3.4
Chile (CHLE/CLP) ..................... 4.0 4.0
China (CHNA/RMB) ..................... 0.7 0.7 1.4
Colombia (COL/COP) ................... 0.8 0.8
Ecuador (ECDR/ECS) ................... 1.0 1.0
Egypt (EGPT/EGP) ..................... 3.0 3.0
Greece (GREC/GRD) .................... 0.5 0.5
Hong Kong (HK/HKD) ................... 2.9 2.9
Hungary (HGRY/HUF) ................... 0.7 0.7
India (IND/INR) ...................... 3.5 3.5
Indonesia (INDO/IDR) ................. 3.2 0.4 0.3 3.9
Israel (ISRL/ILS) .................... 1.7 1.7
Korea (KOR/KRW) ...................... 2.9 2.9
Malaysia (MAL/MYR) ................... 7.1 7.1
Mexico (MEX/MXN) ..................... 5.2 1.5 6.7
Panama (PAN/PND) ..................... 1.4 1.4
Philippines (PHIL/PHP) ............... 1.7 1.7
Poland (POL/PLZ) ..................... 0.4 1.4 1.8
Portugal (PORT/PTE) .................. 0.6 0.6
Russia (RUS/SUR) ..................... 2.3 4.4 1.4 8.1
South Africa (SAFR/ZAR) .............. 8.7 0.7 9.4
Taiwan (TWN/TWD) ..................... 2.0 2.0
Thailand (THAI/THB) .................. 2.7 2.7
Turkey (TRKY/TRL) .................... 4.0 4.0
United States & Other (US/USD) ....... 4.1 4.1
Venezuela (VENZ/VEB) ................. 1.0 1.2 2.2
Zimbabwe (ZBBW/ZWD) .................. 0.7 0.7
------ ----- ----- -----
Total ............................... 72.4 21.5 6.1 100.0
------ ----- ----- -----
------ ----- ----- -----
</TABLE>
- --------------
{d} Percentages indicated are based on net assets of $560,598,844.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
JUNE 30, 1997
<TABLE>
<CAPTION>
MARKET VALUE CONTRACT DELIVERY UNREALIZED
CONTRACTS TO SELL: (U.S. DOLLARS) PRICE DATE APPRECIATION
- ---------------------------------------- -------------- ----------- -------- --------------
<S> <C> <C> <C> <C>
Deutsche Marks.......................... 1,667,986 1.67438 08/13/97 $ 64,004
--------------
THE VALUE OF CONTRACTS TO SELL AS A
PERCENTAGE OF NET ASSETS IS 0.30%.
Total Open Forward Foreign Currency
Contracts (Receivable amount
$1,731,990).......................... $ 64,004
--------------
--------------
</TABLE>
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
F14
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.
STATEMENT OF ASSETS
AND LIABILITIES
June 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (cost $506,684,844) (Note 1)................. $547,220,911
U.S. currency....................................................... $ 598
Foreign currencies (cost $14,877,210)............................... 15,209,832 15,210,430
-----------
Receivable for securities sold................................................... 19,797,548
Interest receivable.............................................................. 2,470,017
Dividends and dividend withholding tax reclaims receivable....................... 1,012,312
Unamortized organizational costs (Note 1)........................................ 109,155
Receivable for open forward foreign currency contracts (Note 1).................. 64,004
Cash held as collateral for securities loaned (Note 1)........................... 38,768,656
------------
Total assets................................................................... 624,653,033
------------
Liabilities:
Payable for securities purchased................................................. 24,293,241
Payable for investment management and administration fees (Note 2)............... 730,616
Payable for printing and postage expenses........................................ 68,122
Payable for professional fees.................................................... 47,957
Payable for Directors' fees and expenses (Note 2)................................ 12,750
Payable for transfer agent fees.................................................. 10,250
Payable for custodian fees....................................................... 10,195
Payable for fund accounting fees (Note 2)........................................ 9,246
Payable for registration and filing fees......................................... 2,127
Other accrued expenses........................................................... 101,029
Collateral for securities loaned (Note 1)........................................ 38,768,656
------------
Total liabilities.............................................................. 64,054,189
------------
Net assets......................................................................... $560,598,844
------------
------------
Net asset value per share ($560,598,844 DIVIDED BY 36,416,667 shares
outstanding)...................................................................... $ 15.39
------------
------------
Net assets consist of:
Paid in capital (Note 4)......................................................... $545,109,494
Undistributed net investment income.............................................. 7,627,240
Accumulated net realized loss on investments and foreign currency transactions... (32,738,231)
Net unrealized appreciation on translation of assets and liabilities in foreign
currencies...................................................................... 64,274
Net unrealized appreciation of investments....................................... 40,536,067
------------
Total -- representing net assets applicable to capital shares outstanding.......... $560,598,844
------------
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F15
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.
STATEMENT OF OPERATIONS
Six months ended June 30, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income: (Note 1)
Interest income............................................................................ $ 8,297,254
Dividend income (net of foreign withholding tax of $184,613)............................... 3,761,245
-----------
Total investment income.................................................................. 12,058,499
-----------
Expenses:
Investment management fees (Note 2)........................................................ 3,689,362
Administration fees (Note 2)............................................................... 659,522
Custodian fees............................................................................. 134,669
Professional fees.......................................................................... 68,418
Fund accounting fees (Note 2).............................................................. 65,953
Amortization of organization costs (Note 1)................................................ 35,087
Printing and postage expenses.............................................................. 31,856
Transfer agent fees........................................................................ 19,910
Directors' fees and expenses (Note 2)...................................................... 15,204
Other expenses............................................................................. 167,974
-----------
Total expenses before reductions......................................................... 4,887,955
Expense reductions (Notes 1 & 5)....................................................... (92,914)
-----------
Total net expenses....................................................................... 4,795,041
-----------
Net investment income........................................................................ 7,263,458
-----------
Net realized and unrealized gain (loss) on investments and foreign currencies:
(Note 1)
Net realized gain on investments.............................................. $69,561,832
Net realized loss on foreign currency transactions............................ (230,810)
-----------
Net realized gain during the period...................................................... 69,331,022
Net change in unrealized appreciation on translation of assets and liabilities
in foreign currencies........................................................ (25,984)
Net change in unrealized appreciation of investments.......................... (19,982,031)
-----------
Net unrealized depreciation during the period............................................ (20,008,015)
-----------
Net realized and unrealized gain on investments and foreign currencies....................... 49,323,007
-----------
Net increase in net assets resulting from operations......................................... $56,586,465
-----------
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F16
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, DECEMBER 31,
1997 1996
------------ ------------
<S> <C> <C>
Increase in net assets
Operations:
Net investment income............................................... $ 7,263,458 $19,406,553
Net realized gain on investments and foreign currency
transactions....................................................... 69,331,022 945,154
Net change in unrealized appreciation (depreciation) on translation
of assets and liabilities in foreign currencies.................... (25,984 ) 91,835
Net change in unrealized appreciation (depreciation) of
investments........................................................ (19,982,031 ) 78,628,364
------------ ------------
Net increase in net assets resulting from operations.............. 56,586,465 99,071,906
Distributions to shareholders: (Note 1)
From net investment income.......................................... -- (17,407,047 )
------------ ------------
Total increase in net assets.................................... 56,586,465 81,664,859
Net assets:
Beginning of period................................................. 504,012,379 422,347,520
------------ ------------
End of period *..................................................... $560,598,844 $504,012,379
------------ ------------
------------ ------------
* Includes undistributed net investment income of.................... $ 7,627,240 $ 363,782
------------ ------------
------------ ------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F17
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
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
SIX MONTHS YEAR ENDED OF OPERATIONS)
ENDED DECEMBER 31, TO
JUNE 30, ---------------------- DECEMBER 31,
1997 1996 1995 1994
------------ ---------- ---------- ----------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 13.84 $ 11.60 $ 12.44 $ 15.00
------------ ---------- ---------- ----------------
Income from investment operations:
Net investment income................. 0.20 0.53 0.72 0.35
Net realized and unrealized gain
(loss) on investments................ 1.35 2.19 (0.84) (2.46)
------------ ---------- ---------- ----------------
Net increase (decrease) from
investment operations.............. 1.55 2.72 (0.12) (2.11)
------------ ---------- ---------- ----------------
Distributions to shareholders:
From net investment income............ -- (0.48) (0.72) (0.35)
From net realized gain on
investments.......................... -- -- -- (0.10)
------------ ---------- ---------- ----------------
Total distributions................. -- (0.48) (0.72) (0.45)
------------ ---------- ---------- ----------------
Net asset value, end of period.......... $ 15.39 $ 13.84 $ 11.60 $ 12.44
------------ ---------- ---------- ----------------
------------ ---------- ---------- ----------------
Market value, end of period............. $ 14.06 $ 11.63 $ 9.75 $ 9.75
------------ ---------- ---------- ----------------
------------ ---------- ---------- ----------------
Total investment return (based on market
value)................................. 20.90 %+ 24.18% 6.60% (32.16)%+
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 560,599 $ 504,012 $ 422,348 $ 452,872
Ratio of net investment income to
average net assets..................... 2.75 %++ 4.07% 6.33% 2.75 %++
Ratio of expenses to average net assets:
With expense reductions (Notes 1 &
5)................................... 1.82 %++ 1.82% 1.77% 2.01 %++
Without expense reductions............ 1.85 %++ 1.85% 1.80% 2.01 %++
Portfolio turnover rate................. 217 %++ 138% 75% 56 %
Average commission rate per share paid
on portfolio transactions.............. $ 0.0019 $ 0.0022 N/A N/A
</TABLE>
- ----------------
+ Not annualized
++ Annualized
N/A Not Applicable
The accompanying notes are an integral part of the financial statements.
F18
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.
NOTES TO FINANCIAL STATEMENTS
June 30, 1997
- --------------------------------------------------------------------------------
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 preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of
significant accounting policies in conformity with generally accepted accounting
principles consistently followed by the Fund in the preparation of the financial
statements.
(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
F19
<PAGE>
G.T. GLOBAL DEVELOPING MARKETS FUND, INC.
case of an over-the-counter option, is valued at the average of the last bid
prices obtained from brokers, unless a quotation from only one broker is
available, in which case only that broker's price will be used. If an option
expires on its stipulated expiration date or if the Fund enters into a closing
purchase transaction, a gain or loss is realized without regard to any
unrealized gain or loss on the underlying security, and the liability related to
such option is extinguished. If a written call option is exercised, a gain or
loss is realized from the sale of the underlying security and the proceeds of
the sale are increased by the premium originally received. If a written put
option is exercised, the cost of the underlying security purchased would be
decreased by the premium originally received. The Fund can write options only on
a covered basis, which, for a call, requires that the Fund hold the underlying
security, and, for a put, requires the Fund to set aside cash, U.S. government
securities or other liquid securities in an amount not less than the exercise
price or otherwise provide adequate cover at all times while the put option is
outstanding. The Fund may use options to manage its exposure to the stock and
bond markets and to fluctuations in currency values or interest rates.
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 June 30, 1997, stocks with an aggregate value of approximately $36,477,608
were on loan to brokers. The loans were secured by cash collateral of
$38,768,656 received by the Fund. For international securities, cash collateral
is received by the Fund against loaned securities in an amount at least equal to
105% of the market value of the loaned securities at the inception of each loan.
This collateral must be maintained at not less than 103% of the market value of
the loaned securities during the period of the loan. For domestic securities,
cash collateral is received by the Fund against loaned securities in an amount
at least equal to 102% of the market value of the loaned securities at the
inception of each loan. This collateral must be maintained at not less than 100%
of the market value of the loaned securities during the period of each loan. For
the period ended June 30, 1997, the Fund received securities lending income of
$86,176 which was used to reduce the Fund's custodian fees and administrative
expenses.
(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
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G.T. GLOBAL DEVELOPING MARKETS FUND, INC.
from generally accepted accounting principles. These differences are primarily
due to differing treatments of income and gains on various investment securities
held by the Fund and timing differences.
(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 period and has set
aside liquid securities as collateral for these commitments.
(P) LINE OF CREDIT
The Fund, along with certain other Funds advised by the Manager, has a line of
credit with BankBoston and State Street Bank. The arrangements with the banks
allow the Fund to borrow an aggregate maximum amount of $200,000,000. The Fund
is limited to borrowing up to 33 1/3% of the value of the Fund's total assets.
For the period ended June 30, 1997, the Fund had no outstanding loan balance.
2. RELATED PARTIES
Chancellor LGT Asset Management, Inc. is the Fund's investment manager and
administrator. The Fund pays the Manager investment management fees, which are
computed weekly and paid monthly, at the annualized rate of 1.40% of the Fund's
average weekly net assets. The Manager also acts as administrator of the Fund.
The Fund pays the Manager administration fees, which are computed and paid
monthly, at an annualized rate of 0.25% of the Fund's average weekly net assets.
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 six months ended June 30, 1997, purchases and sales of investment
securities by the Fund, other than U.S. government obligations and short-term
investments, aggregated $530,548,719 and $525,917,109, respectively. There were
no purchases or sales of U.S. government obligations by the Fund for the period.
4. CAPITAL SHARES
At June 30, 1997, the Fund is authorized to issue 100 million shares of capital
stock, $0.001 par value, all of which is classified as Common Stock.
5. EXPENSE REDUCTIONS
The Manager has directed certain portfolio trades to brokers who paid a portion
of the Fund's expenses. For the six months ended June 30, 1997, the Fund's
expenses were reduced by $6,738 under these arrangements.
6. SUBSEQUENT EVENT
On August 13, 1997, the Fund's Board of Directors approved certain matters
required to convert the Fund from a closed-end investment company to an open-end
mutual fund. A shareholder meeting has been called for October 20, 1997 at which
shareholders as of August 22, 1997 may vote on a plan to convert the Fund into a
newly organized GT Global Mutual Fund also to be named GT Global Developing
Markets Fund. If the Fund's shareholders approve the conversion to a mutual
fund, the conversion is expected to occur soon after the shareholder meeting.
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G.T. GLOBAL DEVELOPING MARKETS FUND, INC.
NOTES
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[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.
DEVSAR708040M
