<PAGE> 1
G. T. G L O B A L V A R I A B L E
I N V E S T M E N T F U N D S
LOGO SUPPLEMENT TO PROSPECTUS DATED MARCH 1, 1995
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The following information supplements and should be read in conjunction with the
section of the Funds' Prospectus entitled "Financial Highlights":
Contained below is per share operating performance data for a share of G.T.
Global: Variable Infrastructure Fund and G.T. Global: Variable Natural Resources
Fund outstanding, total investment return ratios and supplemental data for the
period shown. This information is supplemented by the unaudited financial
statements and accompanying notes appearing in the Statement of Additional
Information.
G.T. GLOBAL VARIABLE INVESTMENT TRUST
<TABLE>
<CAPTION>
JANUARY 31, 1995
(COMMENCEMENT OF OPERATIONS)
THROUGH JUNE 30, 1995
(UNAUDITED)
----------------------------------------------------
G.T. GLOBAL: VARIABLE
----------------------------------------------------
INFRASTRUCTURE FUND NATURAL RESOURCES FUND
---------------------- --------------------------
<S> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period......................................... $ 12.00 $ 12.00
------- -------
Income from investment operations:
Net investment income (loss)............................................... 0.07(a) 0.08(a)
Net realized and unrealized gain (loss) on investments..................... 1.16 1.20
------- -------
Net increase (decrease) from investment operations........................... 1.23 1.28
------- -------
Net asset value, end of period............................................... $ 13.23 $ 13.28
================= =====================
Total investment return+(b).................................................. 10.25% 10.67%
Ratios and supplemental data:
Net assets, end of period (in 000's)......................................... $ 575 $ 576
Ratio of net investment income (loss) to average net assets:
With reimbursement by G.T. Capital and expense reductions++................ 2.28% 3.51%
Without reimbursement by G.T. Capital and expense reductions++............. (22.04)% (28.83)%
Ratio of expenses to average net assets:
With reimbursement by G.T. Capital and expense reductions++................ 1.25% 1.16%
Without reimbursement by G.T. Capital and expense reductions++............. 25.57% 33.50%
Portfolio turnover rate+..................................................... 90% 195%
</TABLE>
- ------------------
+ Not annualized.
++ Annualized.
(a) Including reimbursement by G.T. Capital of Variable Infrastructure Fund and
Variable Natural Resources Fund operating expenses of $0.77 and $0.73,
respectively.
(b) Total investment return does not include sales charges.
VARSU507 July 31, 1995
<PAGE> 2
G. T. G L O B A L V A R I A B L E
I N V E S T M E N T F U N D S
LOGO SUPPLEMENT TO PROSPECTUS DATED MARCH 1, 1995
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The following policies have been adopted relating to how the G.T. Global:
Variable New Pacific Fund, the G.T. Global: Variable Europe Fund, the G.T.
Global: Variable America Fund, and the G.T. Global: Variable International Fund
("Funds") seek their objectives of long-term growth of capital: Each Fund will
seek its objective by investing, under normal circumstances, at least 65% of its
assets in equity securities of issuers domiciled in its Primary Investment Area,
as listed on page seven in the prospectus. Each Fund may also invest up to 35%
of its assets in (1) the equity securities of issuers domiciled outside of its
Primary Investment Area, including, e.g. (a) securities of issuers in countries
that are not located in the Primary Investment Area but are linked by tradition,
economic markets, cultural similarities or geography to the countries in such
Primary Investment Area; and (b) securities of issuers located elsewhere in the
world which have operations in the Primary Investment Area or which stands to
benefit from political and economic events in the Primary Investment Area; and
(2) convertible bonds and debt securities. These policies replace the previous
policies reflected on page seven, paragraph two, sentence two; page seven,
paragraph four, sentence one and two; and page seven, paragraph six, sentence
one. Under the previous policies, at least 80% of a Fund's assets, under normal
circumstances, were invested in equity securities of issuers located in its
Primary Investment Area and only 20% of its assets could be invested otherwise.
These policy changes are effective July 1, 1995.
July 1, 1995
VARSU506
<PAGE> 3
G. T. G L O B A L V A R I A B L E
I N V E S T M E N T F U N D S
LOGO SUPPLEMENT TO PROSPECTUS DATED MARCH 1, 1995
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The following information supersedes and replaces the description of the Fund's
portfolio management team contained in the section of the Fund's Prospectus
entitled "Management":
"The investment professionals primarily responsible for the portfolio management
of the Fund are as follows:
MONEY MARKET FUND
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND LAST FIVE YEARS
- ----------------------- --------------------------- -----------------------------------------------
<S> <C> <C>
Gary Kreps Overall supervision Chief Investment Officer--Global Fixed Income
San Francisco since Fund inception Investments for G.T. Capital since 1992. From
in 1993 1988 to 1992, Mr. Kreps was the Senior Vice
President for Global Fixed Income of Putnam
Management Co. (Boston).
Jeffrey W. Gorman Portfolio Manager Portfolio Manager for G.T. Capital since May
San Francisco since 1995 1995; Money Market Analyst and Trader for G.T.
Capital since April 1994; Investment Operations
Specialist for G.T. Capital from February 1993
to April 1994; Financial Services
Representative for G.T. Capital from June 1992
to February 1993; prior thereto, a student at
the University of California at Berkeley.
Joyce Ng Assistant Research Analyst Assistant Research Analyst--Global Fixed Income
San Francisco since 1995 for G.T. Capital since January 1995; Senior
Financial Analyst for G.T. Capital from April
1994 to January 1995; Pricing Analyst for G.T.
Capital from October 1990 to March 1994; Mutual
Fund Accountant for G.T. Capital from January
1990 to September 1990."
</TABLE>
June 23, 1995
<PAGE> 4
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-------------------------------------------------
G. T. G L O B A L V A R I A B L E
LOGO
I N V E S T M E N T F U N D S
G.T. GLOBAL: VARIABLE NEW PACIFIC FUND
G.T. GLOBAL: VARIABLE EUROPE FUND
G.T. GLOBAL: VARIABLE LATIN AMERICA FUND
G.T. GLOBAL: VARIABLE AMERICA FUND
G.T. GLOBAL: VARIABLE INTERNATIONAL FUND
G.T. GLOBAL: VARIABLE INFRASTRUCTURE FUND
G.T. GLOBAL: VARIABLE NATURAL RESOURCES FUND
G.T. GLOBAL: VARIABLE TELECOMMUNICATIONS FUND
G.T. GLOBAL: VARIABLE EMERGING MARKETS FUND
G.T. GLOBAL: VARIABLE GROWTH & INCOME FUND
G.T. GLOBAL: VARIABLE GLOBAL GOVERNMENT INCOME FUND
G.T. GLOBAL: VARIABLE STRATEGIC INCOME FUND
G.T. GLOBAL: VARIABLE U.S. GOVERNMENT INCOME FUND
G.T. GLOBAL: MONEY MARKET FUND
50 CALIFORNIA STREET, 27TH FLOOR
SAN FRANCISCO, CALIFORNIA 94111
(415) 392-6181
TOLL FREE: (800) 824-1580
STATEMENT OF ADDITIONAL INFORMATION DATED MARCH 1, 1995
AS REVISED JULY 31, 1995.
- --------------------------------------------------------------------------------
THIS STATEMENT OF ADDITIONAL INFORMATION RELATES TO THE G.T. GLOBAL VARIABLE
INVESTMENT FUNDS (INDIVIDUALLY A "FUND;" COLLECTIVELY, THE "FUNDS"). EACH FUND
IS ORGANIZED AS A SEPARATE SERIES OF EITHER G.T. GLOBAL VARIABLE INVESTMENT
SERIES OR G.T. GLOBAL VARIABLE INVESTMENT TRUST (INDIVIDUALLY, THE "COMPANY",
COLLECTIVELY, THE "COMPANIES"). THIS STATEMENT OF ADDITIONAL INFORMATION
CONCERNING THE FUNDS, WHICH IS NOT A PROSPECTUS, SUPPLEMENTS AND SHOULD BE READ
IN CONJUNCTION WITH THE FUNDS' CURRENT PROSPECTUS DATED MARCH 1, 1995, A
COPY OF WHICH IS AVAILABLE WITHOUT CHARGE BY WRITING TO THE ABOVE ADDRESS OR BY
CALLING THE FUNDS AT THE TOLL-FREE PHONE NUMBER PRINTED ABOVE. SHARES OF EACH
FUND ARE OFFERED ONLY TO SEPARATE ACCOUNTS THAT FUND VARIABLE ANNUITY CONTRACTS
("VA CONTRACTS") OFFERED BY CERTAIN LIFE INSURANCE COMPANIES ("PARTICIPATING
INSURANCE COMPANIES").
G.T. CAPITAL MANAGEMENT, INC. ("G.T. CAPITAL") SERVES AS THE FUNDS' INVESTMENT
MANAGER AND ADMINISTRATOR. THE FUNDS' TRANSFER AGENT IS G.T. GLOBAL INVESTOR
SERVICES, INC. ("G.T. SERVICES" OR "TRANSFER AGENT").
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAGE NO.
<S> <C>
Investment Objectives and Policies.................................................... 2
Options, Futures and Currency Strategies.............................................. 16
Risk Factors.......................................................................... 27
Investment Limitations................................................................ 31
Execution of Portfolio Transactions................................................... 43
Trustees and Executive Officers....................................................... 45
Management............................................................................ 47
Valuation of Shares................................................................... 49
Information Relating to Sales and Redemptions ........................................ 51
Taxes................................................................................. 51
Additional Information................................................................ 54
Investment Results.................................................................... 54
Description of Debt Ratings........................................................... 73
Appendix.............................................................................. 77
Financial Statements.................................................................. 81
</TABLE>
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Statement of Additional Information Page 1
<PAGE> 5
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------------------------------------------------
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVES AND POLICIES
- --------------------------------------------------------------------------------
Each Fund has its own investment objective(s) and investment policies. The
objective(s) and policies of each Fund determine the types of securities in
which that Fund may invest.
The investment objective of each of the following Global Growth Funds, as
defined in the Prospectus, is long-term growth of capital:
G.T. GLOBAL: VARIABLE NEW PACIFIC FUND
("New Pacific Fund"), G.T. GLOBAL: VARIABLE INTERNATIONAL FUND ("International
Fund"), G.T. GLOBAL: VARIABLE EUROPE FUND ("Europe Fund") and G.T. GLOBAL:
VARIABLE AMERICA FUND ("America Fund"). G.T. GLOBAL: VARIABLE LATIN AMERICA FUND
("Latin America Fund") seeks capital appreciation. The investment objective of
each of G.T. GLOBAL: VARIABLE EMERGING MARKETS FUND ("Emerging Markets Fund")
and G.T. GLOBAL: VARIABLE TELECOMMUNICATIONS FUND ("Telecommunications Fund") is
long-term growth of capital. The investment objective of each of G.T. GLOBAL:
VARIABLE INFRASTRUCTURE FUND ("Infrastructure Fund") and G.T. GLOBAL: VARIABLE
NATURAL RESOURCES FUND ("Natural Resources Fund") is long-term capital growth.
The investment objectives of G.T. GLOBAL: VARIABLE GROWTH & INCOME FUND ("Growth
& Income Fund") are long-term capital appreciation together with current income.
G.T. GLOBAL: VARIABLE STRATEGIC INCOME FUND ("Strategic Income Fund") seeks high
current income as its primary investment objective. The Strategic Income Fund's
secondary investment objective is capital appreciation. G.T. GLOBAL: VARIABLE
GLOBAL GOVERNMENT INCOME FUND ("Global Government Income Fund") primarily seeks
high current income. The Global Government Income Fund's secondary investment
objectives are capital appreciation and protection of principal through active
management of the maturity structure and currency exposure. The investment
objective of G.T. GLOBAL: VARIABLE U.S. GOVERNMENT INCOME FUND ("U.S. Government
Income Fund") is a high level of current income, consistent with the
preservation of capital. The investment objective of G.T. GLOBAL: MONEY MARKET
FUND ("Money Market Fund") is maximum current income consistent with liquidity
and conservation of capital.
Each Fund seeks to achieve its investment objective(s) through a distinct set of
investment policies. In determining the appropriate distribution of investments
among various countries and geographic regions for the Funds, G.T. Capital
ordinarily considers the following factors: prospects for relative economic
growth between the different countries in which each Fund may invest; expected
levels of inflation; government policies influencing business conditions; the
outlook for currency relationships; and the range of the individual investment
opportunities available to international investors.
In analyzing companies for investment by each Fund, G.T. Capital ordinarily
looks for one or more of the following characteristics: above-average earnings
growth per share; high return on invested capital; healthy balance sheet; sound
financial and accounting policies and overall financial strength; strong
competitive advantages; effective research and product development and
marketing; efficient service; pricing flexibility; strength of management; and
general operating characteristics which will enable the companies to compete
successfully in their respective marketplaces. In certain countries,
governmental restrictions and other limitations on investment may affect the
maximum percentage of equity ownership in any one company by a Fund or the Funds
in the aggregate. In addition, in some instances only special classes of
securities may be purchased by foreigners and the market prices, liquidity and
rights with respect to those securities may vary from shares owned by nationals.
There may be times when, in the opinion of G.T. Capital, prevailing market,
economic or political conditions warrant reducing the proportion invested in
equity securities of issuers domiciled in a Fund's area of investment focus
below the applicable percentage of the Fund's assets and increasing the
proportion held in cash or short-term obligations denominated in U.S. dollars or
other currencies. A portion of each Fund's assets normally will be held in U.S.
dollars or short-term interest-bearing U.S. dollar-denominated securities to
provide for ongoing expenses and redemptions.
- --------------------------------------------------------------------------------
----------------------------------------------------
Statement of Additional Information Page 2
<PAGE> 6
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------------------------------------------------
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
At this time, G.T. Capital is not aware of the existence of any investment or
exchange control regulations which might substantially impair the operations of
the Funds as described in the Prospectus and this Statement of Additional
Information. Although restrictions may in the future make it undesirable to
invest in certain countries, G.T. Capital does not believe that any current
repatriation restrictions would affect its decisions to invest in the countries
eligible for investment by any Fund. It should be noted, however, that this
situation could change at any time.
Each of the GLOBAL GROWTH FUNDS under normal circumstances invests at least 80%
of its assets in equity securities of issuers domiciled in the respective Funds'
"Primary Investment Area."
For investment purposes, an issuer typically is considered as domiciled in a
particular country if it is incorporated under the laws of that country, and
either (i) at least 50% of the value of its assets are located in that country;
or (ii) it normally derives at least 50% of its income from operations or sales
in that country. However, these are not absolute requirements, and certain
companies incorporated in a particular country and considered by G.T. Capital to
be domiciled in that country may have substantial off-shore operations or
subsidiaries and/or export sales exceeding in size the assets or sales in that
country.
SPECIAL RISKS
Special Considerations Affecting Europe. Currently, the Europe Fund includes
European countries in its Primary Investment Area. The countries that are
members of the European Economic Community ("Common Market") (Belgium, Denmark,
France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal,
Spain and the United Kingdom) eliminated certain import tariffs and quotas,
limitations on the employment of non-citizens and other trade barriers that
existed with respect to one another, over the past several years. G.T. Capital
believes that this deregulation should improve the prospects for economic growth
in many European countries. Among other things, the deregulation could enable
companies domiciled in one country to avail themselves of lower labor costs
existing in other countries. In addition, this deregulation could benefit
companies domiciled in one country by opening additional markets for their goods
and services in other countries. Since, however, it is not clear at this time
the exact effect these Common Market reforms will have on business in the Common
Market, it is impossible to predict the impact of the implementation of this
program on the securities owned by the Europe Fund.
Special Considerations Affecting Japan and Hong Kong. The concentration of
investments by a Fund in Japan means that the Fund may be more volatile than a
Fund that is broadly diversified geographically. Overseas trade is important to
Japan's economy. Japan has few natural resources and must export to pay for its
imports of these basic requirements. Because of the concentration of Japanese
exports in highly visible products, Japan has had difficult relations with its
trading partners, particularly the U.S., where the trade imbalance is the
greatest. It is possible that trade sanctions or other protectionist measures
could impact Japan adversely in both the short and the long term. The Japanese
securities markets are less regulated than those in the United States. Evidence
has emerged from time to time of distortion of market prices to serve political
or other purposes. Shareholders' rights are not always equally enforced.
Hong Kong is a British colony which will transfer sovereignty to the Peoples
Republic of China in 1997. China has espoused policies antagonistic to free
enterprise capitalism and democracy. There can be no guarantee that property
rights will continue to be safeguarded in Hong Kong after 1997, although,
recently China has moved progressively towards free enterprise, and has
established stock exchanges of its own.
Special Considerations Affecting Emerging Markets. Investing in the securities
of issuers domiciled in emerging markets, including the markets of Latin America
and certain Asian markets such as Taiwan, Malaysia and Indonesia, may entail
special risks relating to the potential political and economic instability and
the risks of expropriation, nationalization, confiscation or the imposition of
restrictions on foreign investment and on repatriation of capital invested. In
the event of such expropriation, nationalization or other confiscation by any
country, a Fund could lose its entire investment in any such country.
Emerging securities markets are substantially smaller, less developed, less
liquid and more volatile than the major securities markets. The limited size of
emerging securities markets and limited trading volume in issuers compared to
the
- --------------------------------------------------------------------------------
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Statement of Additional Information Page 3
<PAGE> 7
- --------------------------------------------------------------------------------
------------------------------------------------
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
volume of trading in U.S. securities could cause prices to be erratic for
reasons apart from factors that affect the quality of the securities. For
example, limited market size may cause prices to be unduly influenced by traders
who control large positions. Adverse publicity and investors' perceptions,
whether or not based on fundamental analysis, may decrease the value and
liquidity of portfolio securities in these markets.
Most emerging market countries have experienced substantial, and in some periods
extremely high, rates of inflation for many years. Inflation and rapid
fluctuations in inflation rates have had and may continue to have negative
effects on the economies and securities markets of certain emerging market
countries.
The INFRASTRUCTURE FUND normally invests at least 65% of its total assets in
securities of companies throughout the world that design, develop or provide
products and services significant to a country's infrastructure.
In analyzing companies for investment by the Infrastructure Fund, G.T. Capital
ordinarily looks for several of the following characteristics: above-average per
share earnings growth; high return on invested capital; a healthy balance sheet;
sound financial and accounting policies and overall financial strength; strong
competitive advantages; effective research and product development and
marketing; development of new technologies; efficient service; pricing
flexibility; strong management; and general operating characteristics which will
enable the companies to compete successfully in their respective markets.
The NATURAL RESOURCES FUND normally invests at least 65% of its assets in
securities of companies throughout the world that own, explore or develop
natural resources and other basic commodities, or supply goods and services to
such companies. In analyzing the natural resource industry, G.T. Capital has
identified four areas that it expects will create investment opportunities: (i)
improving supply/demand fundamentals, which may result in higher commodity
prices; (ii) privatization of state-owned natural resource businesses; (iii)
management which can improve production efficiencies without correspondingly
increasing commodity prices; and (iv) service companies with emerging
technologies that can enhance productivity or reduce production costs. Of
course, there is no certainty that these factors will produce the anticipated
results.
The TELECOMMUNICATIONS FUND normally invests at least 65% of its total assets in
common and preferred stocks and warrants to acquire such stocks, issued by
companies throughout the world engaged in the development, manufacture or sale
of telecommunications services or equipment. In analyzing the telecommunications
industry, G.T. Capital has identified four areas that it expects will create
investment opportunities and lead to growth in the sector: (a) the deregulation
of companies in the industry, which will allow competition to promote greater
efficiencies; (b) the privatization of state-owned telecommunications
businesses; (c) the development of infrastructure in underdeveloped countries
and upgrading of services in other countries; and (d) emerging technologies,
that will enhance productivity and reduce costs in the telecommunications
industry. Of course, there is no certainty that these factors will produce the
anticipated results.
G.T. Capital believes that there are opportunities for continued growth in
demand for components, products, media and systems to collect, store, retrieve,
transmit, process, distribute, record, reproduce and use information. The
pervasive societal impact of communications and information has been accelerated
by the lower costs and higher efficiencies that result from the blending of
computers with telecommunications systems. Accordingly, companies engaged in the
production of methods for using electronic and, potentially, video technology to
communicate information are expected to be important in the Telecommunications
Fund's holdings. Older technologies, such as photography and print also may be
represented.
The Telecommunications Fund and G.T. Capital believe that a global portfolio of
telecommunications investments may be less subject to market risk (the risk
attendant to investing in a particular market) and price fluctuation, than a
portfolio invested solely in U.S. telecommunications securities. Under the
Telecommunications Fund's policies, G.T. Capital may shift the country
allocations of the investments as market conditions in individual countries
change. Moreover, the number of different investment opportunities from which
the Telecommunications Fund may choose is significantly broader than that of a
fund investing solely in U.S. telecommunications securities.
The LATIN AMERICA FUND normally invests at least 65% of its total assets in
securities of a broad
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Statement of Additional Information Page 4
<PAGE> 8
- --------------------------------------------------------------------------------
------------------------------------------------
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
range of Latin American issuers. Under normal market conditions, the Fund
expects to invest primarily in equity and debt securities issued by companies
and governments in Mexico, Chile, Brazil, and Argentina. Although the Latin
America Fund can normally invest up to 35% of its total assets in U.S.
securities, the Fund reserves the right to be primarily invested in U.S.
securities for temporary defensive purposes or pending investment of the
proceeds of the sale of its shares.
It should be noted that some Latin American countries require governmental
approval for the repatriation of investment income, capital, or the proceeds of
securities sales by foreign investors. For instance, at present, capital
invested directly in Chile cannot under most circumstances be repatriated for at
least one year. The Latin America Fund could be adversely affected by delays in,
or a refusal to grant, any required governmental approval for repatriation, as
well as by the application to it of other restrictions on investments.
Several Latin American countries have adopted debt conversion programs, pursuant
to which investors may use external debt of a country, directly or indirectly,
to make investments in local companies. The terms of the various programs vary
from country to country, although each program includes significant restrictions
on the application of the proceeds received in the conversion and on the
remittance of profits on the investment and of the invested capital. The Latin
America Fund intends to acquire Sovereign Debt to hold and trade in appropriate
circumstances, as well as to use to participate in Latin American debt
conversion programs. See "Risk Factors" in the Funds' Prospectus and "Risk
Factors" below. G.T. Capital will evaluate opportunities to enter into debt
conversion transactions as they arise but does not currently intend to invest
more than 5% of the Latin America Fund's assets in such programs.
As described in the Prospectus, several Latin American countries have issued
so-called "Brady Bonds." In Venezuela, bearer bonds known as Frontloaded
Interest Reduction Bonds, Debt Conversion Bonds and New Money Bonds have been
issued. Each of the foregoing types of bonds provides for a dollar-for-dollar
exchange of loans for bonds. At present, Frontloaded Interest Reduction Bonds
have a 12-year average life and pay below market rates for the first six years.
Debt Conversion Bonds also have a 12-year average life, pay interest at the
London InterBank Offer Rate ("LIBOR") plus 13/16% and, for every $1.00 in face
amount, enable the holder to purchase, at par, $0.20 face amount, which have an
average life of 11 years and pay interest at LIBOR plus 7/8% or 1%.
Political and Economic Risks. Even though opportunities for investment may exist
in Latin American countries, any change in the leadership or policies of the
governments of those countries or in the leadership or policies of any other
government which exercises a significant influence over those countries, may
halt the expansion of or reverse the liberalization of foreign investment
policies now occurring and thereby eliminate any investment opportunities which
may currently exist.
Investors should note that upon the accession to power of authoritarian regimes,
the governments of a number of Latin American countries previously expropriated
large quantities of real and personal property, similar to the property which
will be represented by the securities purchased by the Latin America Fund. The
claims of property owners against those governments were never finally settled.
There can be no assurance that any property represented by securities purchased
by the Latin America Fund will not also be expropriated, nationalized, or
otherwise confiscated. If such confiscation were to occur, the Latin America
Fund could lose a substantial portion of its investments in such countries. The
Latin America Fund's investments would similarly be adversely affected by
exchange control regulations in any of those countries.
Further, there is a risk that an emergency situation may arise in one or more
Latin American markets as a result of which prices for portfolio securities in
such markets may not be readily available. Section 22(e) of the Investment
Company Act of 1940, as amended ("1940 Act") permits a registered investment
company to suspend redemption of its shares for any period during which an
emergency, as determined by the Securities and Exchange Commission ("SEC"),
exists. Accordingly, if the Latin America Fund believes that appropriate
circumstances exist, it will promptly apply to the SEC for a determination that
an emergency, within the meaning of Section 22(e) of the 1940 Act, is present.
During the period commencing from the Latin America Fund's identification of
such conditions until the date of SEC action, the
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Statement of Additional Information Page 5
<PAGE> 9
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G.T. GLOBAL VARIABLE INVESTMENT FUNDS
securities held by the Fund in the affected markets will be valued at fair value
determined in good faith by or under the direction of the Company's Board of
Trustees.
The Latin America Fund invests in securities denominated in currencies of Latin
American countries. Accordingly, changes in the value of these currencies
against the U.S. dollar will result in corresponding changes in the U.S. dollar
value of the Latin America Fund's assets denominated in those currencies. Such
changes will also affect the Latin America Fund's income.
In addition, many of the currencies of Latin American countries have experienced
steady devaluations relative to the U.S. dollar, and major devaluations have
historically occurred in certain countries.
Some Latin American countries also may have managed currencies which are not
free floating against the U.S. dollar. In addition, there is a risk that certain
Latin American countries may restrict the free conversion of their currencies
into other currencies. Further, certain Latin American currencies may not be
internationally traded. Certain of these currencies have experienced a steady
devaluation relative to the U.S. dollar. Any devaluations in the currencies in
which the securities held by the Latin America Fund are denominated may have a
detrimental impact on the Fund.
Illiquid Securities. On December 31, 1994, the market capitalizations of listed
equity securities on the major exchanges in Argentina, Brazil (Sao Paulo only
for market capitalization), Chile, and Mexico were US$24.2 billion, $94.8
billion, $38.8 billion, and $108.4 billion, respectively. By comparison, at
December 31, 1994, the market capitalization of the New York Stock Exchange
("NYSE") alone was US$4.4 trillion. A high proportion of the shares of many
Latin American companies may be held by a limited number of persons, which may
further limit the number of shares available for investment by the Latin America
Fund. A limited number of issuers in most, if not all, Latin American securities
markets may represent a disproportionately large percentage of market
capitalization and trading value. The limited liquidity of Latin American
securities markets also may affect the Latin America Fund's ability to acquire
or dispose of securities at the price and time it wishes. In addition, certain
Latin American securities markets, including those of Argentina, Brazil, Chile,
and Mexico, are susceptible to being influenced by large investors trading
significant blocks of securities or by large dispositions of securities
resulting from the failure to meet margin calls when due.
Accordingly, at any one time more than 15% of the Latin America Fund's net
assets may consist of illiquid securities, either because of adverse events
which occur following the purchase of the securities which cause them to become
illiquid, or because liquid securities are sold to meet cash needs of the Fund.
Illiquid securities are more difficult to value accurately due to, among other
things, the fact that such securities often trade infrequently or only in
smaller amounts. The Latin America Fund, however, will make every effort to hold
illiquid securities that reflect no more than 15% of the Fund's net assets.
The high volatility of certain Latin American securities markets is evidenced by
dramatic movements in the Brazilian and Mexican markets in recent years. The
stock markets in Brazil declined sharply in mid 1989, and closed briefly,
following a large settlement failure. Another significant decline occurred in
the first quarter of 1990. In 1987, the Mexican stock exchange experienced a
severe correction, its index declining over 70 percent. In June, 1992, the
Mexican stock exchange experienced a decline of approximately 14% of its index.
This market volatility may result in greater volatility in the Latin America
Fund's net asset value than would be the case for funds investing in domestic
securities. If the Latin America Fund were to experience unexpected cash
requirements, whether through the unexpected net redemption of Fund shares or
otherwise, it could be forced to sell securities without regard to investment
merit, thereby decreasing the asset base over which Fund expenses can be spread
and possibly reducing the Fund's rate of return.
Foreign Investment Restrictions. Certain countries prohibit or impose
substantial restrictions on investments in their capital markets, particularly
their equity markets, by foreign entities such as the Latin America Fund. As
illustrations, certain countries require governmental approval prior to
investments by foreign persons or limit the amount of investment by foreign
persons in a particular company or limit the investment by foreign persons to
only a specific class of securities of a company that may have less advantageous
terms than securities of the company available for purchase by nationals.
Moreover, the national policies of certain
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countries may restrict investment opportunities in issuers or industries deemed
sensitive to national interests. In addition, some countries require
governmental approval for the repatriation of investment income, capital or the
proceeds of securities sales by foreign investors. The Latin America Fund could
be adversely affected by delays in, or a refusal to grant, any required
governmental approval for repatriation, as well as by the application to it of
other restrictions on investments.
As of 1994, the relevant foreign investment restrictions in each of the four
principal economies of Latin America, which are susceptible to significant and
immediate changes, can be summarized as follows:
ARGENTINA. Previous restrictions on foreign investment have been abolished and
prior approval of such investment is no longer required (except where required
in specific statutes governing certain activities) ensuring equal treatment of
national and foreign capital applied to economic activities. At present, foreign
capital can move freely in and out of Argentina and no foreign exchange
restrictions are applied to dividend or capital gains remittance.
BRAZIL. Under regulations adopted by the government of Brazil, the Latin
America Fund is able to purchase Brazilian securities without regard to any
diversification or repatriation restrictions. However, the regulations require
that the Latin America Fund's investments be limited to securities issued by
publicly-held corporations acquired on the Brazilian stock exchanges or on
over-the-counter markets organized by the Commissao de Valores Mobiliarios
("CVM") or units of certain Financial Investment Funds. The Latin America Fund's
authority to invest in Brazil pursuant to this regulation remains subject to
approval by the CVM. In addition, the Latin America Fund is required to appoint
a Brazilian administrator to perform certain functions with respect to its
holdings of Brazilian securities.
CHILE. Direct investment by foreign investors in Chile is subject to certain
Chilean investment restrictions, including a requirement that invested capital
must remain in Chile for a minimum of one year. The remittance of dividends and
capital gains can be effected without material restrictions on timing and
amount. Indirect investments, however, may be made through already established
investment funds and such investments will not be subject to the restriction
regarding residency of capital, although they will be subject to the
limitations, described below, regarding investments by the Latin America Fund in
the securities of other investment companies. In addition to investing
indirectly in the Chilean market, the Latin America Fund may establish its own
foreign investment fund in Chile for which a Chilean administrator will be
required. The Latin America Fund may also gain access to investment in Chile via
American Depositary Receipts ("ADRs") currently traded in the U.S. on the New
York Stock Exchange. Several Chilean companies plan ADR listings in the U.S. in
1994. G.T. Global believes these events significantly broaden the Latin America
Fund's ability to gain access to the Chilean market.
MEXICO. Generally, foreigners may directly acquire shares of Mexican companies
up to a limit of 49 percent of the share capital of the issuer without prior
approval. Foreigners may acquire shares in the share capital of certain Mexican
listed companies usually reserved to Mexican nationals, and may acquire in
excess of the 49 percent limit referred to above, through trust arrangements
with Nacional Financiera, S.N.C. ("Nafin"), the Mexican government development
finance bank. Under this arrangement Nafin will acquire the securities that the
Fund purchases and then issue Ordinary Certificates of Participation ("CEPOS").
As a holder of the CEPOS, the Latin America Fund would have all rights of the
shares acquired, but it would not have voting rights. There are no restrictions
on the movement of capital in and out of Mexico. Dividends and capital gains can
also be freely remitted, subject to any withholding tax.
VENEZUELA. G.T. Global believes that the Latin America Fund may invest a
greater percentage of its assets than previously in Venezuela if political and
economic conditions change materially. The following are relevant foreign
investment restrictions relating to Venezuela.
In order to stabilize the country's financial system, the government suspended
foreign exchange trading on July 6, 1994. The market was "officially" opened
July 11, however, the Bolivar did not begin trading until January 10, 1995 at a
level of 212 and 220 (the level held since December 1994).
The Venezuelan Exchange Administration Board issued Resolution No. 41 regarding
foreign investment registration and repatriation for
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capital dividends and interest. The Resolution provides that all investment
should be registered with the Superintendency of Foreign Investment (SEIX) and
the Technical Administration Exchange Office (OTAC). Article 2 of the Resolution
states that "investments" is defined as those transactions executed through the
local stock exchange (this prohibits OTC transaction proceeds from being
eligible for repatriation).
Resolution No. 41 also required re-filing by funds previously approved. The Fund
has complied with the regulations and has obtained approval by the Regulatory
Commission. This avoids jeopardizing the assets held by the Fund.
In November 1994 the government passed a Resolution allowing foreign investors
to repatriate without restrictions under the new controlled exchange system. It
is now possible to repatriate any capital or income provided that the OTAC has
proof that the investor has obtained a tax identification code and complied with
all tax return filing requirements.
The EMERGING MARKETS FUND seeks its investment objective by investing, under
normal circumstances, at least 65% of its total assets in equity securities of
companies in emerging markets. The Emerging Markets Fund does not consider the
following countries to be emerging markets: Australia, Austria, Belgium, Canada,
Denmark, England, Finland, France, Germany, Ireland, Italy, Japan, the
Netherlands, New Zealand, Norway, Spain, Sweden, Switzerland and United States.
The Emerging Markets Fund normally may invest up to 35% of its assets in a
combination of (i) debt securities of government or corporate issuers in
emerging markets; (ii) equity and debt securities of issuers in developed
countries, including the United States; (iii) securities of issuers in emerging
markets not included in the list of emerging markets set forth in the Emerging
Markets Fund's current Prospectus, if investing therein becomes feasible and
desirable subsequent to the date of the Emerging Markets Fund's current
Prospectus; and (iv) cash and money market instruments.
In determining what countries constitute emerging markets, G.T. Capital will
consider, among other things, data, analysis, and classification of countries
published or disseminated by the International Bank for Reconstruction and
Development (commonly known as the World Bank) and the International Finance
Corporation.
Although the Emerging Markets Fund values its assets daily in terms of U.S.
dollars, the Emerging Markets Fund does not intend to convert its holdings of
foreign currencies into U.S. dollars on a daily basis. The Emerging Markets Fund
will do so from time to time, and investors should be aware of the costs of
currency conversion. Although foreign exchange dealers do not charge a fee for
conversion, they do realize a profit based on the difference ("spread") between
the prices at which they are buying and selling various currencies. Thus, a
dealer may offer to sell a foreign currency to the Emerging Markets Fund at one
rate, while offering a lesser rate of exchange should the Emerging Markets Fund
desire to sell that currency to the dealer.
The Emerging Markets Fund may be prohibited under the 1940 Act from purchasing
the securities of any foreign company that, in its most recent fiscal year,
derived more than 15% of its gross revenues from securities-related activities
("securities-related companies"). In a number of countries, commercial banks act
as securities broker/dealers, investment advisers and underwriters or otherwise
engage in securities-related activities, which may limit the Emerging Markets
Fund's ability to hold securities issued by banks. The SEC has proposed a rule
which, if adopted, may permit the Emerging Markets Fund to invest in certain of
these securities subject to certain restrictions. The Emerging Markets Fund has
obtained an exemption from the SEC to permit the Emerging Markets Fund to invest
in a manner that is consistent with the SEC's proposed rule.
The GROWTH & INCOME FUND seeks its investment objectives by assembling a global
portfolio of both equity securities and debt obligations allocated among diverse
international markets.
For investment purposes, an issuer is typically considered as located in a
particular country if it is incorporated under the laws of that country, at
least 50% of the value of its assets are located in that country, and it
normally derives at least 50% of its income from operations or sales in that
country. However, these are not absolute requirements, and certain companies
incorporated in a particular country and considered by G.T. Capital to be
located in that country may have substantial off-shore operations or
subsidiaries and/or export sales exceeding in size the assets or sales in that
country.
In certain countries, governmental restrictions and other limitations on
investment may affect
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the Growth and Income Fund's ability to invest. For example, in some instances
only special classes of securities may be purchased by foreigners and the market
prices, liquidity and rights with respect to those securities may vary from
shares owned by nationals. G.T. Capital is not aware at this time of the
existence of any investment or exchange control regulations which might
substantially impair the operations of the Growth & Income Fund as described in
the Prospectus and this Statement of Additional Information. Although
restrictions may in the future make it undesirable to invest in certain
countries, G.T. Capital does not believe that any current repatriation
restrictions would affect its decisions to invest in the countries eligible for
investment by the Growth & Income Fund. It should be noted, however, that this
situation could change at any time. The Growth & Income Fund has no present
intention of making any significant investment in any country or stock market
where the political or economic situation might be considered by G.T. Capital to
be at risk of substantial or total loss because of such political or economic
situation.
G.T. Capital attempts to identify those countries and industries where economic
and political factors are likely to produce above-average growth rates and to
further identify companies in such countries and industries that are best
positioned and managed to benefit from these factors. In evaluating possible
equity investments, G.T. Capital attempts to identify and acquire
only securities it deems to represent high or improving investment quality.
Securities representing high investment quality generally will include those of
well-known, established and successful issuers that G.T. Capital believes will
continue to be successful in the future. Securities representing improving
investment quality may include those of an issuer which, for instance, has
improved its sales or earnings or of an issuer the balance sheet and financial
condition of which are improving. G.T. Capital will avoid equity securities that
appear overly speculative or risky, even if they have otherwise attractive
features or investment potential.
In evaluating debt securities considered for investment by the Growth & Income
Fund, G.T. Capital analyzes their yield, maturity, issue classification and
quality characteristics, coupled with expectations regarding the local and world
economies, movements in the general level and term of interest rates, currency
values, political developments, and variations of the supply of funds available
for investment in the world bond market relative to the demands placed upon it.
G.T. Capital may increase the average maturity of the portion of the Fund's
holdings invested in debt obligations when it expects interest rates to decline,
and may decrease such maturity when it expects interest rates to rise. There are
no limitations on the maximum or minimum maturities of the debt securities
considered by the Growth & Income Fund for investment or on the average weighted
maturity of the debt portion of the Fund's holdings.
Should the rating of any debt security be revised while such security is owned
by the Growth & Income Fund, G.T. Capital will evaluate what action, if any, is
appropriate with respect to such security. See "Description of Debt Ratings."
G.T. Capital generally evaluates currencies on the basis of fundamental economic
criteria (e.g., relative inflation and interest rate levels
and trends, growth rate forecasts, balance of payments status and economic
policies) as well as technical and political data. If the currency in which a
security is denominated appreciates against the U.S. dollar, the dollar value of
the security will increase. Conversely, if the exchange rate of the foreign
currency declines, the dollar value of the security will decrease. However, the
Growth & Income Fund may seek to protect itself against such negative currency
movements through the use of hedging techniques.
According to G.T. Capital, as of December 31, 1994, 63% of the total equity
market
capitalization worldwide was represented by
non-U.S. equity securities, and more than 63%
of the value of all outstanding government
debt obligations throughout the world was represented by obligations denominated
in currencies other than the U.S. dollar. Moreover, from time to time, the
equity and debt securities of issuers located outside the United States have
substantially outperformed the equity and debt securities of U.S. issuers.
Accordingly, G.T. Capital believes that the Growth & Income Fund's policy of
investing in equity and debt securities of issuers throughout the world may
enable the achievement of results superior to those produced by mutual funds
with similar objectives to those of the Fund that invest solely in U.S. equity
and debt securities.
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G.T. GLOBAL VARIABLE INVESTMENT FUNDS
The STRATEGIC INCOME FUND seeks to achieve its investment objectives by
investing in U.S. and foreign debt securities.
The Strategic Income Fund may invest up to 50% of its assets in debt securities
in emerging markets. The Strategic Income Fund does not consider the following
countries to be emerging markets: Australia, Austria, Belgium, Canada, Denmark,
England, Finland, France, Germany, Ireland, Italy, Japan, the Netherlands, New
Zealand, Norway, Spain, Sweden, Switzerland, and the United States. In
determining what countries constitute emerging markets G.T. Capital will
consider, among other things, data analysis, and classification of countries
published or disseminated by the International Bank for Reconstruction and
Development (commonly known as the World Bank) and the International Finance
Corporation.
A company in an emerging market means: (i) a company the principal securities
trading market for which is an emerging market, as defined above; (ii) a company
that (alone or on a consolidated basis) derives 50% or more of its total
revenues from either goods produced, sales made or services performed in
emerging markets; or (iii) a company organized under the laws of, and with a
principal office in, an emerging market.
In determining the appropriate distribution of investments among various
countries and geographic regions for the Strategic Income Fund, G.T. Capital
ordinarily considers the following factors: prospects for relative economic
growth between the different countries in which the Fund may invest; expected
levels of inflation; government policies influencing business conditions; the
outlook for currency relationships; and the range of the individual investment
opportunities available to international investors.
The Strategic Income Fund may invest in the following types of money market
instruments (i.e., debt instruments with less than 13 months remaining until
maturity) denominated in U.S. dollars or other currencies: (a) obligations
issued or guaranteed by the U.S. or foreign governments, their agencies,
instrumentalities or municipalities; (b) obligations of international
organizations designed or supported by multiple foreign governmental entities to
promote economic construction or development; (c) finance company obligations,
corporate commercial paper and other short-term commercial obligations; (d) bank
obligations (including certificates of deposit, time deposits and bankers'
acceptances), subject to the restriction that the Strategic Income Fund may not
invest more than 25% of its total assets in bank securities; (e) repurchase
agreements with respect to all of the foregoing; and (f) other substantially
similar short-term debt securities with comparable characteristics.
The GLOBAL GOVERNMENT INCOME FUND seeks to achieve its investment objectives by
investing primarily in high quality debt securities issued or guaranteed by the
U.S. and foreign governments (including foreign states, provinces or
municipalities), their agencies and instrumentalities.
The Global Government Income Fund invests primarily in debt obligations
allocated among diverse international markets and denominated in various
currencies, including U.S. dollars, or in multinational currency units such as
European Currency Units. The Global Government Income Fund is designed for
investors who wish to accept the risks entailed in such investments, which are
different from those associated with a portfolio consisting entirely of U.S.
investments. The Global Government Income Fund will not invest in a foreign
currency or in securities denominated in a foreign currency if such currency is
not at the time of investment considered by G.T. Capital to be fully
exchangeable into U.S. dollars (or a multinational currency unit) without legal
restriction. The Global Government Income Fund may purchase securities that are
issued by the government or a company or financial institution of one nation but
denominated in the currency of another nation (or a multinational currency
unit).
The Global Government Income Fund may invest in the following types of money
market instruments (i.e., debt instruments with less than 13 months remaining
until maturity) denominated in U.S. dollars or other currencies: (a) obligations
issued or guaranteed by the U.S. or foreign governments, their agencies,
instrumentalities or municipalities; (b) obligations of international
organizations designed or supported by multiple foreign governmental entities to
provide economic reconstruction or development; (c) finance company obligations,
corporate commercial
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G.T. GLOBAL VARIABLE INVESTMENT FUNDS
paper and other short-term commercial obligations; (d) bank obligations
(including certificates of deposit, time deposits and bankers' acceptances),
subject to the restriction that the Global Government Income Fund may not invest
more than 25% of its total assets in bank securities; (e) repurchase agreements
with respect to the foregoing; and (f) other substantially similar short-term
debt securities with comparable characteristics.
The U.S. GOVERNMENT INCOME FUND seeks to achieve its investment objective by
investing primarily in U.S. government and U.S. government agency securities.
The U.S. Government Income Fund may also invest in mortgage-related securities,
including collateralized mortgage obligations ("CMOs"), fixed-rate mortgage
obligations and adjustable rate mortgage obligations ("ARMs").
ARMs are pass-through mortgage securities which are collateralized by mortgages
with adjustable rather than fixed interest rates. The ARMs in which the U.S.
Government Income Fund invests are issued primarily by the Government National
Mortgage Association ("GNMA"), the Federal National Mortgage Association
("FNMA"), and the Federal Home Loan Mortgage Corporation ("FHLMC"). The
underlying mortgages collateralizing ARMs issued by GNMA are fully guaranteed by
the Federal Housing Administration or the Veterans Administration. The
underlying mortgages which collateralize ARMs issued by FNMA or FHLMC are
typically conventional residential mortgages conforming to minimum standards
prescribed by the U.S. government agency.
The U.S. Government Income Fund may also invest in CMOs, which are generally
issued by government agencies. All CMOs purchased by the U.S. Government Income
Fund either will be issued by a U.S. government agency or will be rated in the
highest category by a nationally recognized statistical rating organization. The
U.S. Government Income Fund may purchase CMOs that are:
(1) collateralized by pools of mortgages in which each mortgage is guaranteed
as to payment of principal and interest by an agency or instrumentality of
the U.S. government;
(2) collateralized by pools of mortgages in which payment of principal and
interest are guaranteed by the issuer and the guarantee is collateralized by
U.S. government securities; or
(3) securities in which the proceeds of the issuance are invested in mortgage
securities, and payment of the principal and interest is supported by the
credit of an agency or instrumentality of the U.S. government.
Resets. The interest rates on the mortgages underlying the ARMs and CMOs in
which the U.S. Government Income Fund may invest generally are reset at
intervals of one year or less in response to changes in a predetermined interest
rate index. There are two main categories of indices: those based on U.S.
Treasury securities and those derived from a calculated measure such as a
cost-of-funds index or a moving average of mortgage rates. Commonly used indices
include the one-year and three-year constant maturity Treasury rates ("CMT");
the three-month Treasury bill rate; the 180-day Treasury bill rate; the Eleventh
District Federal Home Loan Bank Cost-of-Funds Index ("EDCOFI"); the Median
National Cost-of-Funds Index; the one-month, three-month, six-month, or one-year
London Interbank Offered Rate ("LIBOR"); or an established index based on prime
lending rates or certificate of deposit rates. Some indices, such as the
one-year CMT rate, closely mirror changes in market interest rate levels.
Others, such as the EDCOFI, tend to lag behind changes in market rate levels and
tend to be somewhat less volatile. The net asset value of the U.S. Government
Income Fund's shares could fluctuate to the extent interest rates on underlying
mortgages differ from prevailing market interest rates during periods between
interest rate reset dates.
Caps and Floors. The underlying mortgages which collateralize the ARMs and CMOs
in which the U.S. Government Income Fund invests will frequently have caps and
floors which limit the maximum amount by which the loan rate may change up or
down, either at each reset or adjustment interval or over the life of the loan.
This provides the mortgage borrower with some degree of protection against large
changes in monthly payments. Some residential mortgage loans restrict periodic
adjustments by limiting changes in the borrower's monthly principal and interest
payments rather than limiting interest rate changes. These payment caps may
result in negative amortization, i.e., an increase in the balance of the
mortgage loan.
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G.T. GLOBAL VARIABLE INVESTMENT FUNDS
The MONEY MARKET FUND seeks to obtain its investment objective by investing in
high quality, U.S. dollar-denominated money market instruments.
The Money Market Fund may purchase variable and floating rate securities with
remaining maturities in excess of 13 months. Such securities must comply with
conditions established by the SEC under which they may be considered to have
remaining maturities of 13 months or less. The yield of these securities varies
in relation to changes in specific money market rates such as the prime rate.
These changes are reflected in adjustments to the yields of the variable and
floating rate securities, and different securities may have different adjustment
rates. To the extent that the Money Market Fund invests in such variable and
floating rate securities, it is G.T. Capital's view that the Money Market Fund
may be able to take advantage of the higher yield that is usually paid on
longer-term securities. G.T. Capital further believes that the variable and
floating rates paid on such securities may substantially reduce the wide
fluctuations in market value caused by interest rate changes and other factors
which are typical of longer-term debt securities.
The Money Market Fund may acquire participation interests in securities in which
it is permitted to invest. Participation interests are pro rata interests in
securities held by others.
Although the Money Market Fund may invest in instruments of non-U.S. issuers,
all such instruments will be denominated in U.S. dollars and be of high quality.
Obligations of non-U.S. issuers are subject to the same risks that pertain to
domestic issues, notably credit risk, market risk and liquidity risk.
Nonetheless, these instruments present risks that are different from those
presented by investment in instruments of U.S. issuers. Obligations of foreign
entities may be subject to certain sovereign risks, including adverse political
and economic developments in a foreign country, the extent and quality of
government regulation of financial markets and institutions, interest
limitations, currency controls, foreign withholding taxes, and expropriation or
nationalization of foreign issuers and their assets. There may be less publicly
available information about foreign issuers than about domestic issuers, and
foreign issuers may not be subject to the same accounting, auditing and
financial recordkeeping standards and requirements as are domestic issuers.
Accordingly, while the Money Market Fund's ability to invest in these
instruments may provide it with the potential to produce greater income, and
therefore a higher yield for the Fund, than money market funds investing solely
in instruments of domestic issuers, the Money Market Fund presents greater risk
than such other funds.
INVESTMENTS IN OTHER INVESTMENT COMPANIES
With respect to certain countries, investments by a Fund currently may be made
only by acquiring shares of other investment companies with local government
approval to invest in those countries. The Funds (except for the Money Market
Fund) may invest in the securities of investment companies within the limits of
the 1940 Act. These limitations currently provide that, in general, each Fund
may not purchase shares of another investment company if (a) such a purchase
would cause a Fund to own more than 3 percent of the total outstanding voting
stock of the investment company, or (b) such a purchase would cause a Fund to
have more than 5 percent of its assets invested in the investment company or
more than 10 percent of its assets invested in an aggregate of all such
investment companies. Investment through investment companies also may involve
the payment of substantial premiums above the value of the securities held by
such companies. The Funds do not intend to invest in such investment companies
unless, in the judgment of G.T. Capital, the potential benefits of such
investments justify the payment of any applicable premiums or sales charges. The
yield of such securities will be reduced by the operating expenses of such
companies including payments to the investment managers of those investment
companies. At such time as direct investment in these countries is allowed, the
Funds anticipate investing directly in these markets.
DEPOSITORY RECEIPTS
Each Fund, except for the Global Government Income Fund, the U.S. Government
Income Fund and the Money Market Fund, may hold securities of foreign issuers in
the form of American Depository Receipts ("ADRs"), American Depository Shares
("ADSs") and European Depository Receipts ("EDRs")
or other securities convertible into securities
of eligible issuers. These securities may not necessarily be denominated in the
same currency
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G.T. GLOBAL VARIABLE INVESTMENT FUNDS
as the securities for which they may be exchanged. ADRs and ADSs are typically
issued by an American bank or trust company that evidences ownership of
underlying securities issued by a foreign corporation. EDRs, which are sometimes
referred to as Continental Depository Receipts ("CDRs"), are receipts issued in
Europe, typically by foreign banks and trust companies that evidence ownership
of either foreign or domestic securities. Generally, ADRs and ADSs in registered
form are designed for use in U.S. securities markets and EDRs and CDRs in bearer
form are designed for use in European securities markets. For purposes of the
Funds' respective investment policies, the Funds' investments in ADRs, ADSs,
EDRs, and CDRs will be deemed to be investments in the equity securities
representing securities of foreign issuers into which they may be converted.
ADR facilities may be established as either "unsponsored" or "sponsored." While
ADRs issued under these two types of facilities are in some respects similar,
there are distinctions between them relating to the rights and obligations of
ADR holders and the practices of market participants. A depository may establish
an unsponsored facility without participation
by (or even necessarily the acquiescence of)
the issuer of the deposited securities, although typically the depository
requests a letter of
non-objection from such issuer prior to
the establishment of the facility. Holders of unsponsored ADRs generally bear
all the costs of such facilities. The depository usually charges fees upon the
deposit and withdrawal of the deposited securities, the conversion of dividends
into U.S. dollars, the disposition of non-cash distributions, and the
performance of other services. The depository of an unsponsored facility
frequently is under no obligation to distribute shareholder communications
received from the issuer of the deposited securities or to pass through voting
rights to ADR holders with respect to the deposited securities. Sponsored ADR
facilities are created in generally the same manner as unsponsored facilities,
except that the issuer of the deposited securities enters into a deposit
agreement with the depository. The deposit agreement sets out the rights and
responsibilities of the issuer, the depository and the ADR holders. With
sponsored facilities, the issuer of the deposited securities generally will bear
some of the costs relating to the facility (such as dividend payment fees of the
depository), although ADR holders continue to bear certain other costs (such as
deposit and withdrawal fees). Under the terms of most sponsored arrangements,
depositories agree to distribute notices of shareholder meetings and voting
instructions, and to provide shareholder communications and other information to
the ADR holders at the request of the issuer of the deposited securities. The
Funds may invest in sponsored and unsponsored ADRs.
SAMURAI AND YANKEE BONDS
Subject to their respective fundamental investment limitations, the New Pacific
Fund, the International Fund, the Strategic Income Fund, and the Global
Government Income Fund may invest in yen-denominated bonds sold in Japan by
non-Japanese issuers ("Samurai bonds"), and the America Fund, the Strategic
Income Fund and the Global Government Income Fund may invest in U.S.
dollar-denominated bonds sold in the United States by non-U.S. issuers ("Yankee
bonds"). As compared with bonds issued in their countries of domicile, such bond
issues normally carry a higher interest rate but are less actively traded. It is
the policy of each Fund to invest in Samurai or Yankee bond issues only after
taking into account considerations of quality and liquidity, as well as yield.
These bonds would be issued by governments which are members of the Organization
for Economic Cooperation and Development or have AAA ratings.
WARRANTS OR RIGHTS
Warrants or rights may be acquired by the Funds, except for the Money Market
Fund, in connection with other securities or separately, and may provide the
Funds with the right to purchase at a later date other securities of the issuer.
The Pacific Fund, the International Fund, and the Europe Fund will not purchase
warrants in excess of 10% of their respective net assets taken at cost or at
market value, whichever is lower. The other Funds will not purchase warrants or
rights, valued at the lower of cost or market, in excess of 5% of the value of
their respective net assets and not more than 2% of such assets will be invested
in warrants and rights which are not listed on the American Stock Exchange or
New York Stock Exchange ("NYSE"). Warrants or rights acquired by a Fund in units
or attached to securities will be deemed to be without value for purpose of this
restriction. These limits are not fundamental
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G.T. GLOBAL VARIABLE INVESTMENT FUNDS
policies of the Funds and may be changed by a Fund's Board of Trustees without
shareholder approval.
LENDING OF SECURITIES
For the purpose of realizing additional income, each Fund, except the Money
Market Fund, may make secured loans of securities held by that Fund which amount
to not more than 30% of its total assets. Securities loans are made to broker-
dealers or institutional investors pursuant to agreements requiring that the
loans continuously be secured by collateral at least equal at all times to the
value of the securities lent plus any accrued interest, "marked to market" on a
daily basis. The collateral received will consist of cash, U.S. short-term
government securities, bank letters of credit or such other collateral as may be
permitted under the Fund's investment policies and by regulatory agencies and
approved by that Fund's Board of Trustees. While the securities loan is
outstanding, the Fund will continue to receive the equivalent of the interest or
dividends paid by the issuer on the securities, as well as interest on the
investment of the collateral or a fee from the borrower. The Fund has a right to
call each loan and obtain the securities on five business days' notice. All
Funds will not have the right to vote equity securities while they are being
lent, but each will call in a loan in anticipation of any important vote. The
risks in lending securities, as with other extensions of secured credit, consist
of possible delay in receiving additional collateral or in recovery of the
securities or possible loss of rights in the collateral should the borrower fail
financially. Loans will be made only to firms deemed by
G.T. Capital to be of good standing and will not
be made unless, in the judgment of G.T. Capital,
the consideration to be earned from such loans
would justify the risk.
COMMERCIAL BANK OBLIGATIONS
For the purposes of the Funds' respective investment policies regarding bank
obligations, obligations of foreign branches of U.S. banks and of foreign banks
are obligations of the issuing bank and may be general obligations of the parent
bank. Such obligations may, however, be limited by the terms of a specific
obligation and by government regulation. As with investment in non-U.S.
securities in general, investments in
the obligations of foreign branches of U.S. banks
and of foreign banks may subject a Fund to investment risks that are different
in some respects from those of investments in obligations of domestic issuers.
Although a Fund typically will acquire obligations issued and supported by the
credit of U.S. or foreign banks having total assets at the time of purchase in
excess of $1 billion, this $1 billion figure is not a fundamental investment
policy or restriction of such Fund. For purposes of calculation with respect to
the $1 billion figure, the assets of a bank will be deemed to include the assets
of its U.S. and non-U.S. branches.
REPURCHASE AGREEMENTS
Each Fund will invest only in repurchase agreements collateralized at all times
in an amount at least equal to the repurchase price plus accrued interest. To
the extent that the proceeds from any sale of such collateral upon default in
the obligation to repurchase were less than the repurchase price, the Fund would
suffer a loss. If the financial institution which is party to the repurchase
agreement petitions for bankruptcy or otherwise becomes subject to bankruptcy or
other liquidation proceedings, there may be restrictions on the Fund's ability
to sell the collateral and the Fund could suffer a loss. However, with respect
to financial institutions whose bankruptcy or liquidation proceedings are
subject to the U.S. Bankruptcy Code, the Fund intends to comply with provisions
under the U.S. Bankruptcy Code that would allow it immediately to resell the
collateral. There is no limitation on the amount of the Fund assets may be
subject to repurchase agreements at any given time. A Fund will not enter into a
repurchase agreement with a maturity of more than seven days if, as a result
more than 15% (10% for the Money Market Fund) of the value of their net assets
would be invested in such repurchase agreements and other illiquid investments.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND "ROLL" TRANSACTIONS
Each Fund's (other than the Money Market Fund) borrowings will not exceed
33 1/3% of the Fund's total assets, i.e., the Fund's total assets at all times
will equal at least 300% of the amount of outstanding borrowing. If market
fluctuations in the value of a Fund's securities holdings or other factors cause
the ratio of the Fund's total assets to outstanding borrowings to fall below
300%, within three days (excluding Sundays and holidays) of such event the Fund
may be
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G.T. GLOBAL VARIABLE INVESTMENT FUNDS
required to sell securities to restore the 300% asset coverage, even though from
an investment standpoint such sales might be disadvantageous. Each Fund also may
borrow up to 5% of its total assets for temporary or emergency purposes other
than to provide cash to meet redemptions of Fund shares. Any borrowing by a Fund
may cause greater fluctuation in its net asset value than would be the case if
the Fund did not borrow.
Each Fund (except the Money Market Fund and the Strategic Income Fund) currently
is prohibited from borrowing money in order to purchase securities. In the event
that a Fund is permitted to employ leverage in the future, it would be subject
to certain additional risks. Use of leverage creates an opportunity for greater
growth of capital but would exaggerate any increases or decreases in the Fund's
net asset value. When the income and gains on securities purchased with the
proceeds of borrowings exceed the costs of such borrowings, the Fund's earnings
or net asset value will increase faster than otherwise would be the case;
conversely if such income and gains fail to exceed such costs, the Fund's
earnings or net asset value would decline faster than would otherwise be the
case.
Excluding the Money Market Fund, each Fund may enter into reverse repurchase
agreements.
A reverse repurchase agreement is a borrowing transaction in which a Fund
transfers possession of a security to another party, such as a bank or
broker/dealer in return for cash, and agrees to repurchase the security in the
future at an agreed upon price, which includes an interest component. Reverse
repurchase agreements involve the risk that the market value of the securities
retained in lieu of sale by a Fund may decline below the price of the securities
the Fund had sold but is obligated to repurchase. In the event the buyer of
securities under a reverse repurchase agreement files for bankruptcy or becomes
insolvent, such buyer or its trustee or receiver may receive an extension of
time to determine whether to enforce the Fund's obligation to repurchase the
securities, and the Fund's use of the proceeds of the reverse repurchase
agreement may effectively be restricted pending such decision.
The Funds (except for the Latin America Fund and the Money Market Fund) also may
engage in "roll" borrowing transactions, which involve the sale of GNMA
certificates or other securities together with a commitment (for which a Fund
may receive a fee) to purchase similar, but not identical, securities at a
future date. Each Fund will maintain, in a segregated account with a custodian,
cash, U.S. government securities or other liquid, high grade debt securities in
an amount sufficient to cover its obligations under "roll" transactions and
reverse repurchase agreements with broker/dealers (but no segregation is
required for reverse repurchase agreements with banks).
The Strategic Income Fund also may enter into "dollar rolls," in which the Fund
sells fixed income securities for delivery in the current month, and
simultaneously contracts to repurchase substantially similar (same type, coupon
and maturity) securities on a specified future date. During the roll period, the
Strategic Income Fund would forego principal and interest paid on such
securities. The Strategic Income Fund would be compensated by the difference
between the current sales price and the forward price for the future purchase,
as well as by the interest earned on the cash proceeds of the initial sale.
SHORT SALES
The Funds (except for the Money Market Fund, the New Pacific Fund, the
International Fund, the Europe Fund and the America Fund) are authorized to make
short sales of securities, although they have no current intention of doing so.
However, the Strategic Income Fund, the Global Government Income Fund, the
Growth & Income Fund and the U.S. Government Income Fund may only make short
sales "against the box."
A short sale is a transaction in which a Fund sells a security in anticipation
that the market price of that security will decline. A Fund may make short sales
(i) as a form of hedging to offset potential declines in long positions in
securities it owns, or anticipates acquiring, or in similar securities, and (ii)
in order to maintain investment flexibility. When a Fund makes a short sale of a
security it does not own, it must borrow the security sold short and deliver it
to the broker-dealer or other intermediary through which it made the short sale.
The Fund may have to pay a fee to borrow particular securities and will often be
obligated to pay over any payments received on such borrowed securities.
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G.T. GLOBAL VARIABLE INVESTMENT FUNDS
The Fund's obligation to replace the borrowed security when the borrowing is
called or expires will be secured by collateral (usually cash, U.S. government
securities or other highly liquid securities similar to those borrowed)
deposited with the intermediary. The Fund also will be required to deposit
similar collateral with its custodian to the extent necessary so that the value
of both collateral deposits in the aggregate is at all times equal to at least
100% of the
current market value of the security sold short. Depending on arrangements made
with the intermediary from which it borrowed the security, regarding payment of
any amounts received by the Fund on such security, the Fund may not receive any
payments (including interest) on its collateral deposited with such
intermediary.
If the price of the security sold short increases between the time of the short
sale and the time the Fund replaces the borrowed security, the Fund will incur a
loss; conversely, if the price declines, the Fund will realize a gain. Any gain
will be decreased, and any loss increased, by the transaction costs associated
with the transaction. Although the Fund's gain is limited by the price at which
it sold the security short, its potential loss theoretically is unlimited.
The Infrastructure Fund, the Natural Resources Fund, the Telecommunications
Fund, the Emerging Markets Fund, and the Latin America Fund will not make a
short sale if, after giving effect to such sale, the market value of the
securities sold short exceeds 25% of the value of their respective total assets,
or their respective aggregate short sales of the securities of any one issuer
exceed the lesser of 2% of net assets or 2% of the securities of any class of
the issuer. Moreover, the Infrastructure Fund, the Natural Resources Fund, the
Telecommunications Fund and the Latin America Fund may engage in short sales
only with respect to securities listed on a national securities exchange.
The Funds might make a short sale "against the box" in order to hedge against
market risks when G.T. Capital believes that the price of a security may
decline, causing a decline in the value of a security owned by a Fund or a
security convertible into or exchangeable for such security, or when G.T.
Capital wants to sell the security a Fund owns at a current attractive price,
but also wishes to defer recognition of gain or loss for federal income tax
purposes and for purposes of satisfying certain tests applicable to regulated
investment companies, such as the Funds, under the Internal Revenue Code of
1986, as amended ("Code"). In such case, any future losses in a Fund's long
position should be reduced by a gain in the short position. Conversely, any gain
in the long position should be reduced by a loss in the short position. The
extent to which such gains or losses in the long position are reduced will
depend upon the amount of the securities sold short relative to the amount of
the securities the Fund owns, either directly or indirectly, and, in the case
where the Fund owns convertible securities, changes in
the investment values or conversion premiums of
such securities. There will be certain additional transaction costs associated
with short sales "against the box," but the respective Funds will endeavor to
offset these costs with income
from the investment of the cash proceeds of
short sales.
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OPTIONS, FUTURES AND CURRENCY
STRATEGIES
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SPECIAL RISKS OF OPTIONS, FUTURES
AND CURRENCY STRATEGIES
The use of options, futures contracts and forward currency contracts ("Forward
Contracts") involves special considerations and risks, as described below. Risks
pertaining to particular instruments are described in the sections that follow.
(1) Successful use of most of these instruments depends upon G.T. Capital's
ability to predict movements of the overall securities and currency markets,
which requires different skills than predicting changes in the prices of
individual securities. While G.T. Capital is experienced in the use of these
instruments, there can be no assurance that any particular strategy adopted will
succeed.
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G.T. GLOBAL VARIABLE INVESTMENT FUNDS
(2) There might be imperfect correlation, or even no correlation, between price
movements of an instrument and price movements of the investments being hedged.
For example, if the value of an instrument used in a short hedge increased by
less than the decline in value of the hedged investment, the hedge would not be
fully successful. Such a lack of correlation might occur due to factors
unrelated to the value of the investments being hedged, such as speculative or
other pressures on the markets in which the hedging instrument is traded. The
effectiveness of hedges using hedging instruments on indices will depend on the
degree of correlation between price movements in the index and price movements
in the investments being hedged.
(3) Hedging strategies, if successful, can reduce risk of loss by wholly or
partially offsetting the negative effect of unfavorable price movements in the
investments being hedged. However, hedging strategies can also reduce
opportunity for gain by offsetting the positive effect of favorable price
movements in the hedged investments. For example, if a Fund entered into a short
hedge because G.T. Capital projected a decline in the price of a security in the
Fund's portfolio, and the price of that security increased instead, the gain
from that increase might be wholly or partially offset by a decline in the price
of the hedging instrument. Moreover, if the price of the hedging instrument
declined by more than the increase in the price of the security, the Fund could
suffer a loss. In either such case, the Fund would have been in a better
position had it not hedged at all.
(4) As described below, a Fund might be required to maintain assets as "cover,"
maintain segregated accounts or make margin payments when it takes positions in
instruments involving obligations to third parties (i.e., instruments other than
purchased options). If a Fund were unable to close out its positions in such
instruments, it might be required to continue to maintain such assets or
accounts or make such payments until the position expired or matured. The
requirements might impair the Fund's ability to sell a portfolio security or
make an investment at a time when it would otherwise be favorable to do so, or
require that the Fund sell a portfolio security at a disadvantageous time. The
Fund's ability to close out a position in an instrument prior to expiration or
maturity depends on the existence of a liquid secondary market or, in the
absence of such a market, the ability and willingness of the other party to the
transaction ("contra party") to enter into a transaction closing out the
position. Therefore, there is no assurance that any position can be closed out
at a time and price that is favorable to the Fund.
(5) These strategies might result in the loss of principal under certain
conditions. The Fund might need to defer closing out certain options, futures
contracts, options on futures contracts and Forward Contracts in order to
continue to qualify for the beneficial tax treatment afforded regulated
investment companies under the Internal Revenue Code of 1986, as amended. See
"Taxes."
WRITING CALL OPTIONS
All Funds, other than the Money Market Fund, may write (sell) call options on
securities, currencies and (except for the Strategic Income Fund, the Global
Government Income Fund and the U.S. Government Income Fund) stock indices. Call
options generally will be written on securities and currencies that, in the
opinion of G.T. Capital, are not expected to make any major price moves in the
near future but that, over the long term, are deemed to be attractive
investments for the Fund.
A call option gives the holder (buyer) the right to purchase a security or
currency at a specified price (the exercise price) at any time until (American
style) or on (European style) a certain date (the expiration date). As long as
the obligation of the writer of a call option continues, he may be assigned an
exercise notice, requiring him to deliver the underlying security or currency
against payment of the exercise price. This obligation terminates upon the
expiration of the call option, or such earlier time at which the writer effects
a closing purchase transaction by purchasing an option identical to that
previously sold.
Portfolio securities or currencies on which call options may be written will be
purchased solely on the basis of investment considerations consistent with each
Fund's investment objective(s). When writing a call option, a Fund, in return
for the premium, gives up the opportunity for profit from a price increase in
the underlying security or currency above the exercise price, and retains the
risk of loss should the price of the security or currency decline. Unlike one
who owns securities or currencies not subject to an option, a Fund has no
control over
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G.T. GLOBAL VARIABLE INVESTMENT FUNDS
when it may be required to sell the underlying securities or currencies, since
most options may be exercised at any time prior to the option's expiration. If a
call option that a Fund has written expires, the Fund will realize a gain in the
amount of the premium; however, such gain may be offset by a decline in the
market value of the underlying security or currency during the option period. If
the call option is exercised, the Fund will realize a gain or loss from the sale
of the underlying security or currency, which will be increased or offset by the
premium received. A Fund does not consider a security or currency covered by a
call option to be "pledged" as that term is used in the Fund's investment
limitations that limit the pledging or mortgaging of its assets.
Writing call options can serve as a limited short hedge because declines in the
value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security or currency
appreciates to a price higher than the exercise price of the call option, it can
be expected that the option will be exercised and a Fund will be obligated to
sell the security or currency at less than its market value.
The premium that a Fund receives for writing a call option is deemed to
constitute the market value of an option. The premium a Fund will receive from
writing a call option will reflect, among other things, the current market price
of the underlying investment, the relationship of the exercise price to such
market price, the historical price volatility of the underlying investment, and
the length of the option period. In determining whether a particular call option
should be written, G.T. Capital will consider the reasonableness of the
anticipated premium and the likelihood that a liquid secondary market will exist
for those options.
Closing transactions will be effected in order to realize a profit on an
outstanding call option, to prevent an underlying security or currency from
being called, or to permit the sale of the underlying security or currency.
Furthermore, effecting a closing transaction will permit a Fund to write another
call option on the underlying security or currency with either a different
exercise price or expiration date or both.
A Fund will pay transaction costs in connection with the writing of options and
in entering into closing purchase contracts. Transaction costs relating to
options activity normally are higher than those applicable to purchases and
sales of portfolio securities.
The exercise price of the options may be below, equal to or above the current
market values of the underlying securities or currencies at the time the options
are written. From time to time, a Fund may purchase an underlying security or
currency for delivery in accordance with the exercise of an option, rather than
delivering the security or currency currently held by it. In such cases,
additional costs will be incurred.
A Fund will realize a profit or loss from a closing purchase transaction if the
cost of the transaction is less or more, respectively, than the premium received
from writing the option. Because increases in the market price of a call option
generally will reflect increases in the market price of the underlying security
or currency, any loss resulting from the repurchase of a call option is likely
to be offset in whole or in part by appreciation of the underlying security or
currency owned by the Fund.
WRITING PUT OPTIONS
The Funds, other than the Money Market Fund, may write put options on
securities, currencies and (except for the Strategic Income Fund, the Global
Government Income Fund and the U.S. Government Income Fund) stock indices. A put
option gives the purchaser of the option the right to sell, and the writer
(seller) the obligation to buy, the underlying security or currency at the
exercise price at any time until (American style) or on (European style) the
expiration date. The operation of put options in other respects, including their
related risks and rewards, is substantially identical to that of call options.
A Fund generally would write put options in circumstances where G.T. Capital
wishes to purchase the underlying security or currency for the Fund at a price
lower than the current market price of the security or currency. In such event,
the Fund would write a put option at an exercise price that, reduced by the
premium received on the option, reflects the lower price it is willing to pay.
Since the Fund also would receive interest on debt securities or currencies
maintained to cover the exercise price of the option, this technique could be
used to enhance current return during periods of market uncertainty. The risk in
such a transaction would be that the market price of the underlying
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G.T. GLOBAL VARIABLE INVESTMENT FUNDS
security or currency would decline below the exercise price less the premiums
received.
Writing put options can serve as a limited long hedge because increases in the
value of the hedged investment would be offset to the extent of the premium
received for writing the option. However, if the security or currency
depreciates to a price lower than the exercise price of the put option, it can
be expected that the put option will be exercised and a Fund will be obligated
to purchase the security or currency at more than its market value.
PURCHASING PUT OPTIONS
Each Fund, other than the Money Market Fund, may purchase put options on
securities, currencies and (except for the Strategic Income Fund, the Global
Government Income Fund and the U.S. Government Income Fund) stock indices. As
the holder of a put option, a Fund would have the right to sell the underlying
security or currency at the exercise price at any time until (American style) or
on (European style) the expiration date. A Fund may enter into closing sale
transactions with respect to such option, exercise such option or permit such
option to expire.
A Fund may purchase a put option on an underlying security or currency
("protective put") owned by the Fund as a hedging technique in order to protect
against an anticipated decline in the value of the security or currency. Such
hedge protection is provided only during the life of the put option when the
Fund, as the holder of the put option, is able to sell the underlying security
or currency at the put exercise price regardless of any decline in the
underlying security's market price or currency's exchange value. For example, a
put option may be purchased in order to protect unrealized appreciation of a
security or currency when G.T. Capital deems it desirable to continue to hold
the security or currency because of tax considerations. The premium paid for the
put option and any transaction costs would reduce any profit otherwise
realizable when the security or currency eventually is sold.
A Fund also may purchase put options at a time when the Fund does not own the
underlying security or currency. By purchasing put options on a security or
currency it does not own, a Fund seeks to benefit from a decline in the market
price of the underlying security or currency. If the put option is not sold when
it has remaining value, and if the market price of the underlying security or
currency remains equal to or greater than the exercise price during the life of
the put option, the Fund will lose its entire investment in the put option. In
order for the purchase of a put option to be profitable, the market price of the
underlying security or currency must decline sufficiently below the exercise
price to cover the premium and transaction costs, unless the put option is sold
in a closing sale transaction.
PURCHASING CALL OPTIONS
Each Fund, other than the Money Market Fund, may purchase call options on
securities, currencies and (except for the Strategic Income Fund, the Global
Government Income Fund and the U.S. Government Income Fund) stock indices. As
the holder of a call option, a Fund would have the right to purchase the
underlying security or currency at the exercise price at any time until
(American style) or on (European style) the expiration date. A Fund may enter
into closing sale transactions with respect to such option, exercise such option
or permit such option to expire.
Call options may be purchased by a Fund for the purpose of acquiring the
underlying security or currency for its portfolio. Utilized in this fashion, the
purchase of call options would enable a Fund to acquire the security or currency
at the exercise price of the call option plus the premium paid. At times the net
cost of acquiring the security or currency in this manner may be less than the
cost of acquiring the security or currency directly. This technique also may be
useful to the Funds in purchasing a large block of securities that would be more
difficult to acquire by direct market purchases. So long as it holds such a call
option, rather than the underlying security or currency itself, a Fund is
partially protected from any unexpected decline in the market price of the
underlying security or currency and, in such event, could allow the call option
to expire, incurring a loss only to the extent of the premium paid for the
option.
Each Fund also may purchase call options on underlying securities or currencies
it owns in order to protect unrealized gains on call options previously written
by it. A call option could
be purchased for this purpose where tax considerations make it inadvisable to
realize such gains through a closing purchase transaction. Call
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G.T. GLOBAL VARIABLE INVESTMENT FUNDS
options also may be purchased at times to avoid realizing losses that would
result in a reduction of a Fund's current return. For example, where a Fund has
written a call option on an underlying security or currency having a current
market value below the price at which such security or currency was purchased by
the Fund, an increase in the market price could result in the exercise of the
call option written by the Fund and the realization of a loss on the underlying
security or currency. Accordingly, the Fund could purchase a call option on the
same underlying security or currency, which could be exercised to fulfill the
Fund's delivery obligations under its written call (if it is exercised). This
strategy could allow the Fund to avoid selling the portfolio security or
currency at a time when it has an unrealized loss; however, the Fund would have
to pay a premium to purchase the call option plus transaction costs.
Aggregate premiums paid for put and call options will not exceed 5% of the
Fund's total assets at the time of purchase.
Each Fund may attempt to accomplish objectives similar to those involved in
using Forward Contracts by purchasing put or call options on currencies. A put
option gives a Fund as purchaser the right (but not the obligation) to sell a
specified amount of currency at the exercise price at any time until (American
style) or on (European style) the expiration date of the option. A call option
gives a Fund as purchaser the right (but not the obligation) to purchase a
specified amount of currency at the exercise price at any time until (American
style) or on (European style) the expiration date of the option. A Fund might
purchase a currency put option, for example, to protect itself against a decline
in the dollar value of a currency in which it holds or anticipates holding
securities. If the currency's value should decline against the dollar, the loss
in currency value should be offset, in whole or in part, by an increase in the
value of the put. If the value of the currency instead should rise against the
dollar, any gain to the Fund would be reduced by the premium it had paid for the
put option. A currency call option might be purchased, for example, in
anticipation of, or to protect against, a rise in the value against the dollar
of a currency in which the Fund anticipates purchasing securities.
Options may be either listed on an exchange or traded over-the-counter ("OTC").
Listed options are third-party contracts (i.e., performance of the obligations
of the purchaser and seller is guaranteed by the exchange or clearing
corporation), and have standardized strike prices and expiration dates. OTC
options are two-party contracts with negotiated strike prices and expiration
dates. A Fund will not purchase an OTC option unless it believes that daily
valuations for such options are readily obtainable. OTC options differ from
exchange-traded options in that OTC options are transacted with dealers directly
and not through a clearing corporation (which guarantees performance).
Consequently, there is a risk of non-performance by the dealer. Since no
exchange is involved, OTC options are valued on the basis of a quote provided by
the dealer. In the case of OTC options, there can be no assurance that a liquid
secondary market will exist for any particular option at any specific time.
The Securities and Exchange Commission ("SEC") staff considers purchased OTC
options to be illiquid securities. A fund may also sell OTC options and, in
connection therewith, segregate assets or cover its obligations with respect to
OTC options written by the Fund. The assets used as cover for OTC options
written by a Fund will be considered illiquid unless the OTC options are sold to
qualified dealers who agree that the Fund may repurchase any OTC option it
writes at a maximum price to be calculated by a formula set forth in the option
agreement. The cover for an OTC option written subject to this procedure would
be considered illiquid only to the extent that the maximum repurchase price
under the formula exceeds the intrinsic value of the option.
A Fund's ability to establish and close out positions in exchange-listed options
depends on the existence of a liquid market. Each Fund intends to purchase or
write only those exchange-traded options for which there appears to be a liquid
secondary market. However, there can be no assurance that such a market will
exist at any particular time. Closing transactions can be made for OTC options
only by negotiating directly with the contra party, or by a transaction in the
secondary market if any such market exists. Although each Fund will enter into
OTC options only with contra parties that are expected to be capable of entering
into closing transactions with the Fund, there is no assurance that the Fund
will in fact be able to close out an OTC option position at a favorable price
prior to expiration. In the event of insolvency of the contra party, the
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G.T. GLOBAL VARIABLE INVESTMENT FUNDS
Fund might be unable to close out an OTC option position at any time prior to
its expiration.
INDEX OPTIONS
Puts and calls on indices are similar to puts and calls on securities or futures
contracts except that all settlements are in cash and gain or loss depends on
changes in the index in question (and thus on price movements in the securities
market or a particular market sector generally) rather than on price movements
in individual securities or futures contracts. When a Fund writes a call on an
index, it receives a premium and agrees that, prior to the expiration date, the
purchaser of the call, upon exercise of the call, will receive from the Fund an
amount of cash if the closing level of the index upon which the call is based is
greater than the exercise price of the call. The amount of cash is equal to the
difference between the closing price of the index and the exercise price of the
call times a specified multiple (the "multiplier"), which determines the total
dollar value for each point of such difference. When a Fund buys a call on an
index, it pays a premium and has the same rights as to such call as are
indicated above. When a Fund buys a put on an index, it pays a premium and has
the right, prior to the expiration date, to require the seller of the put, upon
the Fund's exercise of the put, to deliver to the Fund an amount of cash if the
closing level of the index upon which the put is based is less than the exercise
price of the put, which amount of cash is determined by the multiplier, as
described above for calls. When a Fund writes a put on an index, it receives a
premium and the purchaser has the right, prior to the expiration date, to
require the Fund to deliver to it an amount of cash equal to the difference
between the closing level of the index and the exercise price times the
multiplier, if the closing level is less than the exercise price.
The risks of investment in index options may be greater than options on
securities. Because index options are settled in cash, when a Fund writes a call
on an index it cannot provide in advance for its potential settlement
obligations by acquiring and holding the underlying securities. A Fund can
offset some of the risk of writing a call index option position by holding a
diversified portfolio of securities similar to those on which the underlying
index is based. However, a Fund cannot, as a practical matter, acquire and hold
a portfolio containing exactly the same securities as underlie the index and, as
a result, bears a risk that the value of the securities held will vary from the
value of the index.
Even if a Fund could assemble a securities portfolio that exactly reproduced the
composition of the underlying index, it still would not be fully covered from a
risk standpoint because of the "timing risk" inherent in writing index options.
When an index option is exercised, the amount of cash that the holder is
entitled to receive is determined by the difference between the exercise price
and the closing index level on the date when the option is exercised. As with
other kinds of options, the Fund as the call writer will not know that it has
been assigned until the next business day at the earliest. The time lag between
exercise and notice of assignment poses no risk for the writer of a covered call
on a specific underlying security, such as common stock, because there the
writer's obligation is to deliver the underlying security, not to pay its value
as of a fixed time in the past. So long as the writer already owns the
underlying security, it can satisfy its settlement obligations by simply
delivering it, and the risk that its value may have declined since the exercise
date is borne by the exercising holder. In contrast, even if the writer of an
index call holds securities that exactly match the composition of the underlying
index, it will not be able to satisfy its assignment obligations by delivering
those securities against payment of the exercise price. Instead, it will be
required to pay cash in an amount based on the closing index value on the
exercise date; and by the time it learns that it has been assigned, the index
may have declined, with a corresponding decline in the value of its securities
portfolio. This "timing risk" is an inherent limitation on the ability of index
call writers to cover their risk exposure by holding securities positions.
If a Fund has purchased an index option and exercises it before the closing
index value for that day is available, it runs the risk that the level of the
underlying index may subsequently change. If such a change causes the exercised
option to fall out-of-the-money, the Fund will be required to pay the difference
between the closing index value and the exercise price of the option (times the
applicable multiplier) to the assigned writer.
INTEREST RATE, CURRENCY AND STOCK INDEX FUTURES CONTRACTS
The Funds, except for the Money Market Fund, may enter into interest rate or
currency futures
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G.T. GLOBAL VARIABLE INVESTMENT FUNDS
contracts, and the Funds, except for the Strategic Income Fund, the Global
Government Income Fund, the U.S. Government Income Fund and the Money Market
Fund, may enter into stock index futures contracts ("Futures" or "Futures
Contracts"), as a hedge against changes in prevailing levels of interest rates,
currency exchange rates or stock price levels in order to establish more
definitely the effective return on securities or currencies held or intended to
be acquired by the Funds. The Funds' hedging may include sales of Futures as an
offset against the effect of expected increases in interest rates, or declines
in currency exchange rates or stock prices and purchases of futures as an offset
against the effect of expected declines in interest rates or increases in
currency exchange rates or stock prices.
The Funds only will enter into Futures Contracts that are traded on futures
exchanges and are standardized as to maturity date and underlying financial
instrument. Futures exchanges and trading thereon in the United States are
regulated under the Commodity Exchange Act by the Commodity Futures Trading
Commission ("CFTC"). Futures are exchanged in London at the London International
Financial Futures Exchange.
Although techniques other than sales and purchases of Futures Contracts could be
used to reduce the Funds' exposure to interest rate and currency exchange rate
fluctuations, a Fund may be able to hedge its exposure more effectively and at a
lower cost through using Futures Contracts.
A Futures Contract provides for the future sale by one party and purchase by
another party of a specified amount of a specific financial instrument (security
or currency) for a specified price at a designated date, time and place. A index
Futures Contract provides for the delivery, at a designated date, time and
place, of an amount of cash equal to a specified dollar amount times the
difference between the index value at the close of trading on the contract and
the price at which the Futures Contract is originally struck; no physical
delivery of the securities comprising the index is made. Brokerage fees are
incurred when a Futures Contract is bought or sold, and margin deposits must be
maintained at all times during which the Futures Contract is outstanding.
Although Futures Contracts typically require future delivery of and payment for
financial instruments or currencies, Futures Contracts usually are closed out
before the delivery date. Closing out an open Futures Contract sale or purchase
is effected by entering into an offsetting Futures Contract purchase or sale,
respectively, for the same aggregate amount of the identical financial
instrument or currency and the same delivery date. If the offsetting purchase
price is less than the original sale price, the Fund realizes a gain; if it is
more, the Fund realizes a loss. Conversely, if the offsetting sale price is more
than the original purchase price, the Fund realizes a gain; if it is less, the
Fund realizes a loss. The transaction costs also must be included in these
calculations. There can be no assurance, however, that the Funds will be able to
enter into an offsetting transaction with respect to a particular Futures
Contract at a particular time. If a Fund is not able to enter into an offsetting
transaction, the Fund will continue to be required to maintain the margin
deposits on the Futures Contract.
As an example of an offsetting transaction, the contractual obligations arising
from the sale of one Futures Contract of September Deutschemarks on an exchange
may be fulfilled at any time before delivery under the Futures Contract is
required (i.e., on a specified date in September, the "delivery month") by the
purchase of another Futures Contract of September Deutschemarks on the same
exchange. In such instance, the difference between the price at which the
Futures Contract was sold and the price paid for the offsetting purchase, after
allowance for transaction costs, represents the profit or loss to the Fund.
The Funds' Futures transactions will be entered into for hedging purposes; that
is, Futures Contracts will be sold to protect against a decline in the price of
securities or currencies that a Fund owns, or Futures Contracts will be
purchased to protect the Funds against an increase in the price of securities or
currencies it has committed to purchase or expects to purchase.
"Margin" with respect to Futures Contracts is the amount of funds that must be
deposited by a Fund in order to initiate Futures trading and to maintain the
Fund's open positions in Futures Contracts. A margin deposit made when the
Futures Contract is entered into ("initial margin") is intended to ensure the
Fund's performance under the Futures Contract. The
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G.T. GLOBAL VARIABLE INVESTMENT FUNDS
margin required for a particular Futures Contract is set by the exchange on
which the Futures Contract is traded and may be significantly modified from time
to time by the exchange during the term of the Futures Contract.
Subsequent payments, called "variation margin," to and from the futures
commission merchant through which the Fund entered into the Futures Contract
will be made on a daily basis as the price of the underlying security, currency
or index fluctuates making the Futures Contract more or less valuable, a process
known as marking-to-market.
Risks of Using Futures Contracts. The prices of Futures Contracts are volatile
and are influenced by, among other things, actual and anticipated changes in
interest and currency rates, which in turn are affected by fiscal and monetary
policies and national and international political and economic events.
There is a risk of imperfect correlation between changes in prices of Futures
Contracts and prices of the Fund's securities or currencies being hedged. The
degree of imperfection of correlation depends upon circumstances such as:
variations in speculative market demand for Futures and for securities or
currencies, including technical influences in Futures trading; and differences
between the financial instruments being hedged and the instruments underlying
the standard Futures Contracts available for trading. A decision of whether,
when and how to hedge involves skill and judgment, and even a well-conceived
hedge may be unsuccessful to some degree because of unexpected market behavior
or interest or currency rate trends.
Because of the low margin deposits required, Futures trading involves an
extremely high degree of leverage. As a result, a relatively small price
movement in a Futures Contract may result in immediate and substantial loss, as
well as gain, to the investor. For example, if at the time of purchase, 10% of
the value of the Futures Contract is deposited as margin, a subsequent 10%
decrease in the value of the Futures Contract would result in a total loss of
the margin deposit, before any deduction for the transaction costs, if the
account were then closed out. A 15% decrease would result in a loss equal to
150% of the original margin deposit, if the Futures Contract were closed out.
Thus, a purchase or sale of a Futures Contract may result in losses in excess of
the amount invested in the Futures Contract.
Most U.S. futures exchanges limit the amount of fluctuation permitted in Futures
Contract and option on Futures Contract prices during a single trading day. The
daily limit establishes the maximum amount that the price of a Futures Contract
or option may vary either up or down from the previous day's settlement price at
the end of a trading session. Once the daily limit has been reached in a
particular type of Futures Contract or option, no trades may be made on that day
at a price beyond that limit. The daily limit governs only price movement during
a particular trading day and therefore does not limit potential losses, because
the limit may prevent the liquidation of unfavorable positions. Futures Contract
and option prices occasionally have moved to the daily limit for several
consecutive trading days with little or no trading, thereby preventing prompt
liquidation of positions and subjecting some traders to substantial losses.
If a Fund were unable to liquidate a Futures or option on Futures position due
to the absence of a liquid secondary market or the imposition of price limits,
it could incur substantial losses. The Fund would continue to be subject to
market risk with respect to the position. In addition, except in the case of
purchased options, the Fund would continue to be required to make daily
variation margin payments and might be required to maintain the position being
hedged by the Future or option or to maintain cash or securities in a segregated
account.
Certain characteristics of the Futures market might increase the risk that
movements in the prices of Futures Contracts or options on Futures might not
correlate perfectly with movements in the prices of the investments being
hedged. For example, all participants in the Futures and options on Futures
markets are subject to daily variation margin calls and might be compelled to
liquidate Futures or options on Futures positions whose prices are moving
unfavorably to avoid being subject to further calls. These liquidations could
increase price volatility of the instruments and distort the normal price
relationship between the Futures or options and the investments being hedged.
Also, because of initial margin deposit requirements in the Futures market are
less onerous than margin requirements in the securities markets, there might be
increased participation by speculators in the Futures
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G.T. GLOBAL VARIABLE INVESTMENT FUNDS
markets. This participation also might cause temporary price distortions. In
addition, activities of large traders in both the Futures and securities markets
involving arbitrage, "program trading" and other investment strategies might
result in temporary price distortions.
OPTIONS ON FUTURES CONTRACTS
Options on Futures Contracts are similar to options on securities or currencies
except that options on Futures Contracts give the purchaser the right, in return
for the premium paid, to assume a position in a Futures Contract (a long
position if the option is a call and short position if the option is a put) at a
specified exercise price at any time during the period of the option. Upon
exercise of the option, the delivery of the Futures position by the writer of
the option to the holder of the option will be accompanied by delivery of the
accumulated balance in the writer's Futures margin account, which represents the
amount by which the market price of the Futures Contract, at exercise, exceeds
(in the case of a call) or is less than (in the case of a put) the exercise
price of the option on the Futures Contract. If an option is exercised on the
last trading day prior to the expiration date of the option, the settlement will
be made entirely in cash equal to the difference between the exercise price of
the option and the closing level of the securities, currencies or index upon
which the Futures Contract is based on the expiration date. Purchasers of
options who fail to exercise their options prior to the exercise date suffer a
loss of the premium paid.
The purchase of call options on Futures can serve as a long hedge, and the
purchase of put options on Futures can serve as a short hedge. Writing call
options on Futures can serve as a limited short hedge, and writing put options
on Futures can serve as a limited long hedge, using a strategy similar to that
used for writing options on securities, foreign currencies or indices.
If a Fund writes an option on a Futures Contract, it will be required to deposit
initial and variation margin pursuant to requirements similar to those
applicable to Futures Contracts. Premiums received from the writing of an option
on a Futures Contract are included in the initial margin deposit.
A Fund may seek to close out an option position by selling an option covering
the same Futures Contract and having the same exercise price and expiration
date. The ability to establish and close out positions on such options is
subject to the maintenance of a liquid secondary market.
LIMITATION ON USE OF FUTURES, OPTIONS ON FUTURES AND CERTAIN OPTIONS ON
CURRENCIES
To the extent that a Fund enters into Futures Contracts, options on Futures
Contracts, and options on foreign currencies traded on a CFTC-regulated
exchange, in each case other than for bona fide hedging purposes (as defined by
the CFTC), the aggregate initial margin and premiums required to establish those
positions (excluding the amount by which options are "in-the-money") will not
exceed 5% of the liquidation value of a Fund's portfolio, after taking into
account unrealized profits and unrealized losses on any contracts the Fund has
entered into. In general, a call option on a Futures Contract is "in-the-money"
if the value of the underlying Futures Contract exceeds the strike, i.e.,
exercise, price of the call; a put option on a Futures Contract is
"in-the-money" if the value of the underlying Futures Contract is exceeded by
the strike price of the put. This guideline may be modified by each Fund's Board
of Trustee without a shareholder vote. This limitation does not limit the
percentage of a Fund's assets at risk to 5%.
FORWARD CURRENCY CONTRACTS
A Forward Contract is an obligation, usually arranged with a commercial bank or
other currency dealer, to purchase or sell a currency against another currency
at a future date and price as agreed upon by the parties. A Fund may either
accept or make delivery of the currency at the maturity of the Forward Contract.
A Fund may also, if its contra party agrees, prior to maturity, enter into a
closing transaction involving the purchase or sale of an offsetting contract.
A Fund engages in forward currency transactions in anticipation of, or to
protect itself against, fluctuations in exchange rates. A Fund might sell a
particular foreign currency forward, for example, when it holds bonds
denominated in a foreign currency but anticipates, and seeks to be protected
against, a decline in the currency against the U.S. dollar. Similarly, a Fund
might sell the U.S. dollar forward when it holds bonds denominated in U.S.
dollars but anticipates, and seeks to be protected against, a decline in the
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G.T. GLOBAL VARIABLE INVESTMENT FUNDS
U.S. dollar relative to other currencies. Further, a Fund might purchase a
currency forward to "lock in" the price of securities denominated in that
currency that it anticipates purchasing.
Forward Contracts are traded in the interbank market conducted directly between
currency traders (usually large commercial banks) and their customers. A Forward
Contract generally has no deposit requirement, and no commissions are charged at
any stage for trades. A Fund will enter into such Forward Contracts with major
U.S. or foreign banks and securities or currency dealers in accordance with
guidelines approved by that Fund's Board of Trustees.
A Fund may enter into Forward Contracts either with respect to specific
transactions or with respect to the overall investments of the Fund. The precise
matching of the Forward Contract amounts and the value of specific securities
generally will not be possible because the future value of such securities in
foreign currencies will change as a consequence of market movements in the value
of those securities between the date the Forward Contract is entered into and
the date it matures. Accordingly, it may be necessary for a Fund to purchase
additional foreign currency on the spot (i.e., cash) market (and bear the
expense of such purchase) if the market value of the security is less than the
amount of foreign currency the Fund is obligated to deliver and if a decision is
made to sell the security and make delivery of the foreign currency. Conversely,
it may be necessary to sell on the spot market some of the foreign currency the
Fund is obligated to deliver. The projection of short-term currency market
movements is extremely difficult, and the successful execution of a short-term
hedging strategy is highly uncertain. Forward Contracts involve the risk that
anticipated currency movements will not be predicted accurately, causing a Fund
to sustain losses on such contracts and transaction costs.
At or before the maturity of a Forward Contract requiring a Fund to sell a
currency, the Fund may either sell a security and use the sale proceeds to make
delivery of the currency or retain the security and offset its contractual
obligation to deliver the currency by purchasing a second contract pursuant to
which the Fund will obtain, on the same maturity date, the same amount of the
currency that it is obligated to deliver. Similarly, a Fund may close out a
Forward Contract requiring it to purchase a specified currency by, if its contra
party agrees, entering into a second Forward Contract entitling it to sell the
same amount of the same currency on the maturity date of the first Forward
Contract. The Fund would realize a gain or loss as a result of entering into
such an offsetting Forward Contract under either circumstance to the extent the
exchange rate or rates between the currencies involved moved between the
execution dates of the first Forward Contract and the offsetting Forward
Contract.
The cost to a Fund of engaging in Forward Contracts varies with factors such as
the currencies involved, the length of the contract period and the market
conditions then prevailing. Because Forward Contracts usually are entered into
on a principal basis, no fees or commissions are involved. The use of Forward
Contracts does not eliminate fluctuations in the prices of the underlying
securities a Fund owns or intends to acquire, but it does establish a rate of
exchange in advance. In addition, while Forward Contracts limit the risk of loss
due to a decline in the value of the hedged currencies, they also limit any
potential gain that might result should the value of the currencies increase.
FOREIGN CURRENCY STRATEGIES -- SPECIAL CONSIDERATIONS
A Fund may use options on foreign currencies, Futures on foreign currencies,
options on Futures on foreign currencies and Forward Contracts, to hedge against
movements in the values of the foreign currencies in which the Fund's securities
are denominated. Such currency hedges can protect against price movements in a
security that the Fund owns or intends to acquire that are attributable to
changes in the value of the currency in which it is denominated. Such hedges do
not, however, protect against price movements in the securities that are
attributable to other causes.
A Fund might seek to hedge against changes in the value of a particular currency
when no Futures Contract, Forward Contract or option involving that currency is
available or one of such contracts is more expensive than certain other
contracts. In such cases, the Fund may hedge against price movements in that
currency by entering into a contract on another currency or basket of
currencies, the values of which G.T. Capital believes will have a positive
correlation to the value of the currency being hedged. The risk
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G.T. GLOBAL VARIABLE INVESTMENT FUNDS
that movements in the price of the contract will not correlate perfectly with
movements in the price of the currency being hedged is magnified when this
strategy is used.
The value of Futures Contracts, options on Futures Contracts, Forward Contracts
and options on foreign currencies depends on the value of the underlying
currency relative to the U.S. dollar. Because foreign currency transactions
occurring in the interbank market might involve substantially larger amounts
than those involved in the use of Futures Contracts, Forward Contracts or
options, a Fund could be disadvantaged by dealing in the odd lot market
(generally consisting of transactions of less than $1 million) for the
underlying foreign currencies at prices that are less favorable than for round
lots.
There is no systematic reporting of last sale information for foreign currencies
or any regulatory requirements that quotations available through dealers or
other market sources be firm or revised on a timely basis. Quotation information
generally is representative of very large transactions in the interbank market
and thus might not reflect odd-lot transactions where rates might be less
favorable. The interbank market in foreign currencies is a global, round-
the-clock market. To the extent the U.S. options or Futures markets are closed
while the markets for the underlying currencies remain open, significant price
and rate movements might take place in the underlying markets that cannot be
reflected in the markets for the Futures contracts or options until they reopen.
Settlement of Futures Contracts, Forward Contracts and options involving foreign
currencies might be required to take place within the country issuing the
underlying currency. Thus, a Fund might be required to accept or make delivery
of the underlying foreign currency in accordance with any U.S. or foreign
regulations regarding the maintenance of foreign banking arrangements by U.S.
residents and might be required to pay any fees, taxes and charges associated
with such delivery assessed in the issuing country.
COVER
Transactions using Forward Contracts, Futures Contracts and options (other than
options that a Fund has purchased) expose the Fund to an obligation to another
party. A Fund will not enter into any such transactions unless it owns either
(1) an offsetting ("covered") position in securities, currencies, or other
options, Forward Contracts or Futures Contracts, or (2) cash, receivables and
short-term debt securities with a value sufficient at all times to cover its
potential obligations not covered as provided in (1) above. Each Fund will
comply with SEC guidelines regarding cover for these instruments and, if the
guidelines so require, set aside cash, U.S. government securities or other
liquid, high-grade debt securities in a segregated account with its custodian in
the prescribed amount.
Assets used as cover or held in a segregated account cannot be sold while the
position in the corresponding Forward Contract, Futures Contract or option is
open, unless they are replaced with other appropriate assets. If a large portion
of a Fund's assets are used for cover or segregated accounts, it could affect
portfolio management or the Fund's ability to meet redemption requests or other
current obligations.
INTEREST RATE AND CURRENCY SWAPS
The Strategic Income Fund usually will enter into swaps on a net basis, that is,
the two payment streams are netted out in a cash settlement on the payment date
or dates specified in the instrument, with the Fund's receiving or paying, as
the case may be, only the net amount of the two payments. The net amount of the
excess, if any, of the Strategic Income Fund's obligations over its entitlements
with respect to each swap, will be accrued on a daily basis, and an amount of
cash, U.S. government securities or other liquid high grade debt obligations
having an aggregate net asset value at least equal to the accrued excess, will
be maintained in an account by a custodian that satisfies the requirement of the
1940 Act. The Strategic Income Fund will also establish and maintain such
segregated accounts with respect to its total obligations under any swaps that
are not entered into on a net basis and with respect to any caps or floors that
are written by the Fund. G.T. Capital and the Strategic Income Fund believe that
swaps, caps and floors do not constitute senior securities under the 1940 Act
and, accordingly, will not treat them as being subject to the Fund's borrowing
restrictions.
The Strategic Income Fund will not enter into any swap, cap, floor, collar or
other derivative transaction unless, at the time of entering into the
transaction, the unsecured long-term debt rating
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G.T. GLOBAL VARIABLE INVESTMENT FUNDS
of the counterparty combined with any credit enhancements is rated at least A by
Moody's or S&P or has an equivalent rating from a nationally recognized
statistical rating organization or is determined to be of equivalent credit
quality by G.T. Capital. If a counterparty defaults, the Strategic Income Fund
may have contractual remedies pursuant to the agreements related to the
transactions. The swap market has grown substantially in recent years, with a
large number of banks and investment banking firms acting both as principals and
as agents utilizing standardized swap documentation. As a result, the swap
market has become relatively liquid. Caps, floors and collars are more recent
innovations for which standardized documentation has not yet been fully
developed, and, for that reason, they are less liquid than swaps.
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RISK FACTORS
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Emerging Countries. Investing in securities in emerging countries may entail
greater risks than investing in securities in developed countries. These risks
include (i) less social, political and economic stability; (ii) the small
current size of the markets for such securities and the currently low or
nonexistent volume of trading, which result in a lack of liquidity and in
greater price volatility; (iii) certain national policies which may restrict the
Funds' respective investment opportunities, including restrictions on investment
in issuers or industries deemed sensitive to national interests; (iv) foreign
taxation; and (v) the absence of developed structures governing private or
foreign investment or allowing for judicial redress for injury to private
property. Investing in the securities of companies in emerging markets,
including the markets of Latin America and certain Asian markets such as Taiwan,
Malaysia and Indonesia, may entail special risks relating to the potential
political and economic instability and the risks of expropriation,
nationalization, confiscation or the imposition of restrictions on foreign
investment, convertibility of currencies into U.S. dollars and on repatriation
of capital invested. In the event of such expropriation, nationalization or
other confiscation by any country, a Fund could lose its entire investment in
any such country.
Settlement mechanisms in emerging securities markets may be less efficient and
reliable than in more developed markets. In such emerging securities markets
there may be share registration and delivery delays or failures.
Most Latin American countries have experienced substantial, and in some periods
extremely high, rates of inflation for many years. Inflation and rapid
fluctuations in inflation rates and corresponding currency devaluations have had
and may continue to have negative effects on the economies and securities
markets of certain Latin American countries.
Political, Social and Economic Risks. Investing in securities of non-U.S.
companies may entail additional risks due to the potential political, social and
economic instability of certain countries and the risks of expropriation,
nationalization, confiscation or the imposition of restrictions on foreign
investment; convertibility of currencies into U.S. dollars and on repatriation
of capital invested. In the event of such expropriation, nationalization or
other confiscation by any country, a Fund could lose its entire investment in
any such country.
An investment in a fund that invests in the emerging markets (including the
Latin America Fund, the Emerging Markets Fund, the Infrastructure Fund, the
Natural Resources Fund, the Strategic Income Fund and the International Fund) is
subject to the political and economic risks associated with investments in
emerging markets. Even though opportunities for investment may exist in emerging
markets, any change in the leadership or policies of the governments of those
countries or in the leadership or policies of any other government which
exercises a significant influence over those countries, may halt the expansion,
or reverse the liberalization, of foreign investment policies now occurring and
thereby eliminate any investment opportunities which may currently exist.
Investors should note that upon the accession to power of authoritarian regimes,
the governments of a number of emerging market countries previously expropriated
large quantities of real and personal property similar to the property which
will be represented by the securities
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G.T. GLOBAL VARIABLE INVESTMENT FUNDS
purchased by the Funds. The claims of property owners against those governments
were never finally settled. There can be no assurance that any property
represented by securities purchased by the Funds will not also be expropriated,
nationalized, or otherwise confiscated. If such confiscation were to occur, a
Fund could lose its entire investment in such countries. A Fund's investments
would similarly be adversely affected by exchange control regulation in any of
those countries.
Certain countries in which a Fund may invest may have groups that advocate
radical religious or revolutionary philosophies or support ethnic independence.
Any disturbance on the part of such individuals could carry the potential for
widespread destruction or confiscation of property owned by individuals and
entities foreign to such country and could cause the loss of a Fund's investment
in those countries. Instability may also result from, among other things: (i)
authoritarian governments or military involvement in political and economic
decision-making, including changes in government through extra-constitutional
means; (ii) popular unrest associated with demands for improved political,
economic and social conditions; and (iii) hostile relations with neighboring or
other countries. Such political, social and economic instability could disrupt
the principal financial markets in which the Fund invests and adversely affect
the value of a Fund's assets.
Sovereign Debt. Sovereign Debt generally offers high yields, reflecting not only
perceived credit risk, but also the need to compete with other local investments
in domestic financial markets. Certain Latin American countries are among the
largest debtors to commercial banks and foreign governments.
In recent years, some of the Latin American countries in which the Latin America
Fund and the Strategic Income Fund expect to invest have encountered
difficulties in servicing their Sovereign Debt. Some of these countries have
withheld payments of interest on and/or principal of Sovereign Debt. These
difficulties have also led to agreements to restructure external debt
obligations -- in particular, commercial bank loans, typically by rescheduling
principal payments, reducing interest rates and extending new credits to finance
interest
payments on existing debt. In the future, holders of Sovereign Debt may be
requested to participate in similar reschedulings of such debt.
The ability of emerging market governments to make timely payments on their
Sovereign Debt is likely to be influenced strongly by a country's balance of
trade and its access to trade and other international credits. A country whose
exports are concentrated in a few commodities could be vulnerable to a decline
in the international prices of one or more of such commodities. Increased
protectionism on the part of a country's trading partners could also adversely
affect its exports. Such events could diminish a country's trade account
surplus, if any. To the extent that a country receives payment for its exports
in currencies other than hard currencies, its ability to make hard currency
payments could be affected.
Illiquid Securities. Each Fund, other than the Money Market Fund, may invest up
to 15% of its net assets in illiquid securities. The Money Market Fund may
invest up to 10% of its net assets in illiquid securities. Securities may be
considered illiquid if a Fund cannot reasonably expect within seven days to sell
the security approximately the amount at which the Fund values such securities.
See "Investment Limitations." The sale of illiquid securities if they can be
sold at all, generally will require more time and result in higher brokerage
charges or dealer discounts and other selling expenses than the sale of liquid
securities such as securities eligible for trading on securities exchanges or in
the OTC markets. Moreover, restricted securities, which may be illiquid for
purposes of this limitation, often sell, if at all, at a price lower than
similar securities that are not subject to restrictions on resale.
Rule 144A under the Securities Act of 1933 ("1933 Act") establishes a "safe
harbor" from the registration requirements of the 1933 Act
for resales of certain securities to qualified institutional buyers.
Institutional markets for restricted securities that might develop as a result
of Rule 144A could provide both readily ascertainable values for restricted
securities and the ability to liquidate an investment to satisfy share
redemption orders. Such markets might include automated systems for the trading,
clearance and settlement of unregistered securities of domestic and foreign
issuers, such as the PORTAL System sponsored by the National Association of
Securities Dealers, Inc. An
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G.T. GLOBAL VARIABLE INVESTMENT FUNDS
insufficient number of qualified institutional buyers interested in purchasing
Rule 144A-eligible restricted securities held by the Funds, however, could
affect adversely the marketability of such portfolio securities, and,
consequently, the Funds might be unable to dispose of such securities promptly
or at favorable prices.
With respect to liquidity determinations generally, a Fund's Board of Trustees
has the ultimate responsibility for determining whether specific securities,
including restricted securities pursuant to Rule 144A under the 1933 Act, are
liquid or illiquid. The Board of Trustees monitors the liquidity of securities
held by a Fund based on reports furnished periodically by G.T. Capital. G.T.
Capital takes into account a number of factors in reaching liquidity decisions,
including, but not limited to: (i) the frequency of trading in the security;
(ii) the number of dealers who make quotes for the security; (iii) the number of
dealers who have undertaken to make a market in the security; (iv) the number of
other potential purchasers; and (v) the nature of the security and how trading
is effected (e.g., the time needed to sell the security, how offers are
solicited, and the mechanics of transfer). G.T. Capital monitors the liquidity
of securities in the respective Funds' portfolios and periodically reports on
such decisions to the Boards of Trustees.
Religious, Political or Ethnic Instability. Certain countries in which a Fund
may invest may have vocal minorities that advocate radical religious or
revolutionary philosophies or support ethnic independence. Any disturbance on
the part of such individuals could carry the potential for wide-spread
destruction or confiscation of property owned by individuals and entities
foreign to such country and could cause the loss of a Fund's investment in those
countries.
Foreign Investment Restrictions. Certain countries prohibit or impose
substantial restrictions on investments in their capital markets, particularly
their equity markets, by foreign entities such as a Fund. These restrictions or
controls may at times limit or preclude investment in certain securities and may
increase the cost and expenses of a Fund. For example, certain countries require
prior governmental approval before to investments by foreign persons maybe made
or may limit the amount of investment by foreign persons in a particular
company, or limit the investment by foreign persons to only a specific class of
securities of a company that may have less advantageous terms than securities of
the company available for purchase by nationals. Moreover, the national policies
of certain countries may restrict investment opportunities in issuers or
industries deemed sensitive to national interests. In addition, some countries
require governmental approval for the repatriation of investment income, capital
or the proceeds of securities sales by foreign investors. In addition, if there
is a deterioration in a country's balance of payments, or for other reasons, a
country may impose restrictions on foreign capital remittances abroad. A Fund
could be adversely affected by delays in, or a refusal to grant, any required
governmental approval for repatriation, as well as by the application to it of
other restrictions on investments.
Non-Uniform Corporate Disclosure Standards and Governmental Regulation. Foreign
companies are subject to accounting, auditing and financial standards and
requirements that differ in some cases significantly from those applicable to
U.S. companies. In particular, the assets, liabilities and profits appearing on
the financial statements of such a company may not reflect its financial
position or results of operations in the way they would be reflected had such
financial statements been prepared in accordance with U.S. generally accepted
accounting principles. Most of the securities held by a Fund will not be
registered with the SEC or regulators of any foreign country, nor will the
issuers thereof be subject to the SEC's reporting requirements. Thus, there will
be less available information concerning foreign issuers of securities held by
the Fund than is available concerning U.S. issuers. In instances where the
financial statements of an issuer are not deemed to reflect accurately the
financial situation of the issuer, G.T. Capital will take appropriate steps to
evaluate the proposed investment, which may include on-site inspection of the
issuer, interviews with its management and consultations with accountants,
bankers and other specialists. There is substantially less publicly available
information about foreign companies than there are reports and ratings published
about U.S. companies and the U.S. government. In addition, where public
information is available, it may be less reliable than such information
regarding U.S. issuers. Issuers of securities on foreign jurisdictions are
generally not subject to the same degree of regulation as are U.S. issuers with
respect to such matters as restrictions on
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G.T. GLOBAL VARIABLE INVESTMENT FUNDS
market manipulation, insider trading rules, shareholder proxy requirements and
timely disclosure of information.
Currency Fluctuations. Because each Fund (except the Money Market Fund), under
normal circumstances will invest a substantial portion, and the America Fund to
a lesser extent, of its total assets in the securities of foreign issuers which
are denominated in foreign currencies, the strength or weakness of the U.S.
dollar against such foreign currencies will account for a significant part of a
Fund's investment performance. A decline in the value of any particular currency
against the U.S. dollar will cause a decline in the U.S. dollar value of a
Fund's holdings of securities and cash denominated in such currency and,
therefore, will cause an overall decline in the Fund's net asset value and any
net investment income and capital gains derived from such securities to be
distributed in U.S. dollars to investors in the Fund. Moreover, if the value of
the foreign currencies in which a Fund receives its income falls relative to the
U.S. dollar between receipt of the income and the making of Fund distributions,
the Fund may be required to liquidate securities in order to make distributions
if the Fund has insufficient cash in U.S. dollars to meet distribution
requirements.
The rate of exchange between the U.S. dollar and other currencies is determined
by several factors including the supply and demand for particular currencies,
central bank efforts to support particular currencies, the movement of interest
rates, the pace of business activity in certain other countries, and the U.S.
and other economic and financial conditions affecting the world economy.
Although each Fund values its assets daily in terms of U.S. dollars, the Funds
do not intend to convert their holdings of foreign currencies into U.S. dollars
on a daily basis. Each Fund will do so, from time to time, and investors should
be aware of the costs of currency conversion. Although foreign exchange dealers
do not charge a fee for conversion, they do realize a profit based on the
difference ("spread") between the prices at which they are buying and selling
various currencies. Thus, a dealer may offer to sell a foreign currency to a
Fund at one rate, while offering a lesser rate of exchange should a Fund desire
to sell that currency to the dealer.
Adverse Market Characteristics. Securities of many foreign issuers may be less
liquid and their prices more volatile than securities of comparable U.S.
issuers. In addition, foreign securities markets and brokers generally are
subject to less governmental supervision and regulation than in the United
States, and foreign securities transactions usually are subject to fixed
commissions, which generally are higher than negotiated commissions on U.S.
transactions. In addition, foreign securities transactions may be subject to
difficulties associated with the settlement of such transactions. Delays in
settlement could result in temporary periods when assets of a Fund are
uninvested and no return is earned thereon. The inability of a Fund to make
intended security purchases due to settlement problems could cause the Fund to
miss attractive investment opportunities. Inability to dispose of a security due
to settlement problems either could result in losses to a Fund due to subsequent
declines in value of that security or, if a Fund has entered into a contract to
sell that security, could result in possible liability to the purchaser, G.T.
Capital will consider such difficulties when determining the allocation of each
Fund's assets, although G.T. Capital does not believe that such difficulties
will have a material adverse effect on a Fund's trading activities.
The Fund may use foreign custodians, which may involve risks in addition to
those related to the use of U.S. custodians. Such risks include uncertainties
relating to: (i) determining the financial strength, reputation and standing of
the foreign custodian; (ii) maintaining appropriate safeguards to protect the
Fund's investments and (iii) possible difficulties in obtaining and enforcing
judgments against such custodians.
Withholding Taxes. A Fund's net investment income from foreign issuers may be
subject to withholding taxes by the foreign issuer's country, thereby reducing
the Fund's net investment income or delaying the receipt of income when those
taxes may be recaptured. See "Taxes."
Special Considerations Affecting Europe. The countries that are members of the
European Economic Community ("Common Market") (Belgium, Denmark, France, Greece,
Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain, the United Kingdom and
Germany) eliminated certain import tariffs and quotas and other trade barriers
with respect to one another over the past
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G.T. GLOBAL VARIABLE INVESTMENT FUNDS
several years. G.T. Capital believes that this deregulation should improve the
prospects for economic growth in many European countries. Among other things,
the deregulation could enable companies domiciled in one country to avail
themselves of lower labor costs existing in other countries. In addition, this
deregulation could benefit companies domiciled in one country by opening
additional markets for their goods and services in other countries. Since,
however, it is not clear at this time what the exact form or effect of these
Common Market reforms will be on business in Western Europe or the emerging
European markets, it is impossible to predict the long-term impact of the
implementation of these programs on the securities owned by the Fund.
Special Considerations Affecting Japan and Hong Kong. The concentration of
investments by a Fund in Japan means that the Fund may be more volatile than a
fund that is broadly diversified geographically. Overseas trade is important to
Japan's economy. Japan has few natural resources and must export to pay for its
imports of these basic requirements. Because of the concentration of Japanese
exports in highly visible products, Japan has had difficult relations with its
trading partners, particularly the United States, where the trade imbalance is
the greatest. It is possible that trade sanctions or other protectionist
measures could impact Japan adversely in both the short and the long term. The
Japanese securities markets are less regulated than those in the United States.
Evidence has emerged from time to time of distortion of market prices to serve
political or other purposes. Shareholders' rights are not always equally
enforced.
Hong Kong is a British colony which will transfer sovereignty to the Peoples
Republic of China in 1997. China has espoused policies antagonistic to free
enterprise capitalism and democracy. There can be no guarantee that property
rights will continue to be safeguarded in Hong Kong after 1997, although
recently China has moved toward free enterprise, and has established stock
exchanges of its own.
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INVESTMENT LIMITATIONS
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Each Fund is subject to the following fundamental investment policies which
(unless otherwise noted) may not be changed without approval by the holders of
the lesser of (i) 67% or more of the outstanding shares of the Fund represented
at a shareholders' meeting at which more than 50% of the outstanding shares of
the Fund are represented at the meeting in person or by proxy, or (ii) more than
50% of the outstanding shares of the Fund.
NEW PACIFIC FUND, INTERNATIONAL FUND, EUROPE FUND AND AMERICA FUND
Fundamental Investment Limitations.
No Fund may:
(1) Invest in companies for the purpose of exercising control or management;
(2) Purchase or sell real estate; provided that a Fund may invest in
securities secured by real estate or interests therein or issued by companies
that invest in real estate or interests therein;
(3) Purchase or sell interests in oil, gas or other mineral exploration or
development programs, except that a Fund may invest in the securities of
companies that engage in these activities;
(4) Purchase or sell commodities or commodity contracts, except that a Fund
may purchase and sell financial and currency futures contracts and options
thereon, and may purchase and sell currency forward contracts, options on
foreign currencies and may otherwise engage in other transactions in foreign
currencies;
(5) Mortgage, pledge or in any other manner transfer as security for any
indebtedness,
any of its assets except to secure permitted borrowings. Collateral
arrangements with respect to initial or variation margin for futures contracts
will not be deemed to be a pledge of a Fund's assets;
(6) Borrow money in excess of 33 1/3% of a Fund's total assets (including the
amount borrowed), less all liabilities and indebtedness (other than
borrowing). Transactions
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G.T. GLOBAL VARIABLE INVESTMENT FUNDS
involving options, futures contracts, options on futures contracts and forward
currency contracts, and collateral arrangements relating thereto will not be
deemed to be borrowings;
(7) Purchase securities on margin or effect short sales, except that a Fund
may obtain such short-term credits as may be necessary for the clearance of
purchases or sales of securities and except in connection with the use of
options, futures contracts, options thereon or forward currency contracts. A
Fund may make deposits of margin in connection with futures and forward
contracts and options thereon;
(8) Participate on a joint or a joint and several basis in any trading account
in securities. (The "bunching" of orders for the sale or purchase of
marketable securities with other accounts under the management of G.T. Capital
to save brokerage costs or average prices among them is not deemed to result
in a securities trading account);
(9) Make loans, except that a Fund may purchase debt securities and enter into
repurchase agreements and make loans of securities;
(10) Purchase or retain the securities of an issuer if, to the knowledge of
the Fund, one or more of the Trustees or officers of that Company or G.T.
Capital individually own beneficially more than 1/2 of 1% of the securities of
such issuer and together own beneficially more than 5% of such securities;
(11) Underwrite securities of other issuers, except to the extent that, in
connection with the disposition of securities, a Fund may be deemed an
underwriter under federal or state securities laws; and
(12) Invest more than 25% of the value of a Fund's total assets in securities
of issuers conducting their principal business activities in any one industry,
except that this limitation shall not apply to securities issued or guaranteed
as to principal and interest by the U.S. government or any of its agencies or
instrumentalities.
For purposes of the concentration policy of the Fund contained in limitation
(12) above, the Fund intends to comply with the SEC staff position that
securities issued or guaranteed as to principal and interest by any single
foreign government or any supranational organizations in the aggregate are
considered to be securities of issuers in the same industry.
The following investment policies of each Fund, which are not fundamental
policies and may be changed by the Company's Board of Trustees without
shareholder or investor approval, are that each Fund will not:
(1) Invest more than 15% of its net assets in illiquid securities, a term
which means securities that cannot be disposed of within seven days in the
normal course of business at approximately the amount at which the Fund has
valued the securities and includes, among other things, repurchase agreements
maturing in more than seven days;
(2) Invest more than 5% of its assets in securities of companies which,
together with any predecessor, have been in operation for less than three
years;
(3) Borrow money except for temporary or emergency purposes (not for
leveraging) not in excess of 33 1/3% of the value of the Fund's total assets;
and
(4) Enter into a futures contract, an option on a futures contract, or an
option on foreign currency traded on a CFTC-regulated exchange, in each case
other than for bona fide hedging purposes (as defined by the CFTC), if the
aggregate initial margin and premiums required to establish all of these
positions (excluding the amount by which options are "in-the-money") exceeds
5% of the liquidation value of a Fund's portfolio, after taking into account
unrealized profits and unrealized losses on any contracts the Fund has entered
into.
A Fund will not knowingly exercise rights or otherwise acquire securities when
to do so would jeopardize the Fund's status under the 1940 Act as a diversified
investment company. A Fund may exchange securities, exercise conversion or
subscription rights, warranties, or other rights to purchase common stock or
other equity securities and may hold, except to the extent limited by the 1940
Act, any such securities so acquired without regard to the Fund's investment
policies and restrictions. The original cost of the securities so acquired will
be included in any subsequent determination of a Fund's compliance with the
investment percentage limitations referred to above and in the Funds'
Prospectus.
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G.T. GLOBAL VARIABLE INVESTMENT FUNDS
INFRASTRUCTURE FUND, NATURAL RESOURCES FUND
Fundamental Investment Limitations.
Neither Fund may:
(1) Buy or sell real estate (including real estate limited partnerships);
however, each Fund may invest in debt securities secured by real estate or
interests therein or issued by companies which invest in real estate or
interests therein, including real estate investment trusts;
(2) Buy or sell commodities or commodity contracts, except that each Fund may
purchase and sell financial and currency futures contracts and options
thereon, and may purchase and sell currency forward contracts, options on
foreign currencies and may otherwise engage in other transactions in foreign
currencies;
(3) Underwrite securities of other issuers, except to the extent that the
disposition of an investment position may technically cause it to be
considered an underwriter as that term is defined under the Securities Act of
1933;
(4) Make loans, except that each Fund may purchase debt securities and enter
into repurchase agreements and may make loans of portfolio securities;
(5) Purchase securities on margin, provided that each Fund may obtain such
short-term credits as may be necessary for the clearance of purchases and
sales of securities; except that it may make margin deposits in connection
with futures contracts;
(6) Borrow money except from banks not in excess of 33 1/3% of the value of
each Fund's total assets, (including the amount borrowed), less all
liabilities and indebtedness (other than the borrowing). This restriction
shall not prevent either Fund from entering into reverse repurchase
agreements, provided that reverse repurchase agreements, and any other
transactions constituting borrowing by a Fund may not exceed one-third of that
Fund's total assets. Transactions involving options, futures contracts,
options on futures contracts and forward currency contracts, as described in
the Prospectus and Statement of Additional Information, and collateral
arrangements relating thereto will not be deemed to be borrowings;
(7) Mortgage, pledge, or hypothecate any of its assets, provided that this
restriction shall not apply to the transfer of securities in connection with
any permissible borrowing or to collateral arrangements in connection with
permissible activities; or
(8) Invest in direct interests or leases in oil, gas, or other mineral
exploration or development programs; however, each Fund may invest in the
securities of companies that engage in these activities.
In addition, each Fund has adopted as a fundamental investment policy a
classification as a "diversified" investment company under the 1940 Act. This
means that, with respect to 75% of the Fund's total assets, no more than 5% will
be invested in the securities of any one issuer, and the Fund will purchase no
more than 10% of the outstanding voting securities of any one issuer. This
policy cannot be changed without approval by the holders of a majority of the
Fund's outstanding voting securities as defined above and in the Prospectus.
The following investment policies of each Fund are not fundamental policies and
may be changed by vote of the Company's Board of Trustees without shareholder
approval. Neither Fund may:
(1) Invest in securities of an issuer if the investment would cause the Fund
to own more than 10% of any class of securities of any one issuer;
(2) Invest in companies for the purpose of exercising control or management;
(3) Invest more than 15% of its net assets in illiquid securities, including
securities that are illiquid by virtue of the absence of a readily available
market;
(4) Invest more than 5% of its total assets in securities of companies having,
together with their predecessors, a record of less than three years of
continuous operation;
(5) Purchase or retain the securities of any issuer, if those individual
officers and Trustees of the Company, the Fund's investment adviser, or
distributor, each owning beneficially more than 1/2 of 1% of the securities of
such issuer, together own more than 5% of the securities of such issuer;
(6) Enter into a futures contract, an option on a futures contract, or an
option on foreign
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G.T. GLOBAL VARIABLE INVESTMENT FUNDS
currency traded on a CFTC-regulated exchange, in each case other than for bona
fide hedging purposes (as defined by the CFTC), if the aggregate initial
margin and premiums required to establish all of those positions (excluding
the amount by which options are "in-the-money") exceeds 5% of the liquidation
value of a Fund's portfolio, after taking into account unrealized profits and
unrealized losses on any contracts the Fund has entered into;
(7) Borrow money except for temporary or emergency purposes (not for
leveraging) in excess of 33 1/3% of the value of the Fund's total assets.
While borrowings exceed 5% of the Infrastructure Fund's or Natural Resources
Fund's total assets, such Fund will not make any additional investments; and
(8) Invest more than 10% of its total assets in shares of other investment
companies and may not invest more than 5% of its total assets in any one
investment company or acquire more than 3% of the outstanding voting
securities of any one investment company.
TELECOMMUNICATIONS FUND
Fundamental Investment Limitations.
The Fund may not:
(1) Invest 25% or more of the value of its total assets in the securities of
issuers conducting their principal business activities in the same industry,
other than the telecommunications industry, except that this limitation shall
not apply to securities issued or guaranteed as to principal and interest by
the U.S. government or any of its agencies or instrumentalities;
(2) Buy or sell real estate (including real estate limited partnerships);
however, the Fund may invest in debt securities secured by real estate or
interests therein or issued
by companies which invest in real estate or interests therein, including real
estate investment trusts;
(3) Purchase or sell commodities or commodity contracts, except that the Fund
may purchase and sell financial and currency futures contracts and options
thereon, and may purchase and sell currency forward contracts, options on
foreign currencies and may otherwise engage in other transactions in foreign
currencies.
(4) Engage in the business of underwriting securities of other issuers, except
to the extent that the disposition of an investment position may technically
cause it to be considered an underwriter as that term is defined under the
Securities Act of 1933;
(5) Make loans, except that the Fund may purchase debt securities and enter
into repurchase agreements and may make loans of securities;
(6) Purchase securities on margin, provided that the Fund may obtain such
short-term credits as may be necessary for the clearance of purchases and
sales of securities except that it may make margin deposits in connection with
futures contracts;
(7) Borrow money except from banks not in excess of 33 1/3% of the value of
the Fund's total assets, including the amount borrowed, less all liabilities
and indebtedness (other than the borrowing). This restriction shall not
prevent the Fund from entering into reverse repurchase agreements, provided
that reverse repurchase agreements, and any other transactions constituting
borrowing by the Fund may not exceed one-third of the Fund's total assets,
respectively. Transactions involving options, futures contracts, options on
futures contracts and forward currency contracts, as described in the Funds'
Prospectus and Statement of Additional Information, and collateral
arrangements relating thereto will not be deemed to be borrowings;
(8) Mortgage, pledge, or hypothecate any of its assets, provided that this
restriction shall not apply to the transfer of securities in connection with
any permissible borrowing or to collateral arrangements in connection with
permissible activities; or
(9) Invest in direct interests or leases in oil, gas, or other mineral
exploration or development programs; however, the Fund may invest in the
securities of companies that engage in these activities.
In addition, the Fund has adopted as a fundamental investment policy to be
classified as a "diversified" investment company under the 1940 Act. This means
that, with respect to 75% of the Fund's total assets, respectively, no more than
5% will be invested in the securities of any
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G.T. GLOBAL VARIABLE INVESTMENT FUNDS
one issuer, and the Fund will purchase no more than 10% of the outstanding
voting securities of any one issuer. This policy cannot be changed without the
approval by the holders of a majority of the outstanding voting securities of
the Fund, as defined above and in the Funds' Prospectus.
For purposes of the concentration policy contained in limitation (1) above, the
Telecommunications Fund intends to comply with the SEC staff position that
securities issued or guaranteed as to principal and interest by any single
foreign government or any supranational organizations in the aggregate are
considered to be securities of issuers in the same industry.
The following investment policies of the Fund, which are not fundamental
policies and may be changed by the Company's Board of Trustees without
shareholder approval, are that the Fund will not:
(1) Invest in securities of an issuer if the investment would cause the Fund
to own more than 10% of any class of securities of any one issuer;
(2) Invest in companies for the purpose of exercising control or management;
(3) Invest more than 15% of its net assets in illiquid securities, including
securities that are illiquid by virtue of the absence of a readily available
market;
(4) Invest more than 5% of its total assets in securities of companies having,
together with their predecessors, a record of less than three years of
continuous operation;
(5) Purchase or retain the securities of any issuer, if those individual
officers and Trustees of the Company, the Fund's investment adviser or
distributor, each owning beneficially more than 1/2 of 1% of the securities of
such issuer, together own more than 5% of the securities of such issuer;
(6) Enter into a futures contract, an option on a futures contract, or an
option on foreign currency traded on a CFTC-regulated exchange, in each case
other than for bona fide hedging purposes (as defined by the CFTC), if the
aggregate initial margin and premiums required to establish all of those
positions (excluding the amount by which options are "in-the-money") exceeds
5% of the liquidation value of a Fund's portfolio, after taking into account
unrealized profits and unrealized losses on any contracts the Fund has entered
into; or
(7) Borrow money except for temporary or emergency purposes (not for
leveraging) not in excess of 33 1/3% of the value of the Fund's total assets.
While borrowings exceed 5% of the Fund's total assets, the Fund will not make
any additional investments.
EMERGING MARKETS FUND
Fundamental Investment Limitations.
The Fund may not:
(1) Invest 25% or more of the value of its total assets in the securities of
issuers conducting their principal business activities in the same industry,
except that this limitation shall not apply to securities issued or guaranteed
as to principal and interest by the U.S. Government or any of its agencies or
instrumentalities;
(2) Purchase or sell real estate, provided that the Fund may invest in
securities secured by real estate or interests therein or issued by companies
that invest in real estate or interests therein;
(3) Purchase or sell commodities or commodity contracts, except that the Fund
may purchase and sell financial and currency futures contracts and options
thereon, and may purchase and sell currency forward contracts, options on
foreign currencies and may otherwise engage in transactions in foreign
currencies;
(4) Underwrite securities of other issuers, except to the extent that, in
connection with the disposition of portfolio securities, the Fund may be
deemed an underwriter under federal or state securities laws;
(5) Make loans, except that the Fund may purchase debt securities and enter
into repurchase agreements and make loans of portfolio securities;
(6) Purchase securities on margin, provided that the Fund may obtain such
short-term credits as may be necessary for the clearance of purchases and
sales of securities; except that it may make margin deposits in connection
with the use of options, futures contracts, options thereon or forward
currency contracts. The Fund may make deposits of margin in
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G.T. GLOBAL VARIABLE INVESTMENT FUNDS
connection with futures and forward contracts and options thereon;
(7) Borrow money in excess of 33 1/3% of the Fund's total assets (including
the amount borrowed), less all liabilities and indebtedness (other than
borrowing). Transactions involving options, futures contracts, options on
futures contracts and forward currency contracts, and collateral arrangements
relating thereto will not be deemed to be borrowings;
(8) Mortgage, pledge, or in any other manner transfer as security for any
indebtedness any of its assets, except to secure permitted borrowings.
Collateral arrangements with respect to initial or variation margin for
futures contracts will not be deemed to be a pledge of the Fund's assets;
(9) Invest in direct interests or leases in oil, gas, or other mineral
exploration or development programs, however, the Fund may invest in
securities of companies that engage in these activities; or
(10) With respect to 75% of its total assets, invest more than 5% of its
assets in the securities of any one issuer or purchase more than 10% of the
outstanding voting securities of any one issuer.
For purposes of concentration policy of the Fund contained in limitation (1)
above, the Fund intends to comply with the SEC staff position that securities
issued or guaranteed as to principal and interest by any single foreign
government or any supranational organizations in the aggregate are considered to
be securities of issuers in the same industry.
The following operating policies of the Fund are not fundamental policies and
may be changed by vote of a majority of the Company's Board of Trustees without
shareholder approval. The Fund may not:
(1) Invest in securities of an issuer if the investment would cause the Fund
to own more than 10% of any class of securities of any one issuer;
(2) Invest in companies for the purpose of exercising control or management;
(3) Purchase or retain the securities of any issuer, if, to the Fund's
knowledge, one or more of the officers or Trustees of the Fund, its investment
adviser, or distributor, each own beneficially more than 1/2 of 1% of the
securities of such issuer and together own beneficially more than 5% of the
securities of such issuer;
(4) Enter into a futures contract, an option on a futures contract, or an
option on foreign currency traded on a CFTC-regulated exchange, in each case
other than for bona fide hedging purposes (as defined by the CFTC), if the
aggregate initial margin and premiums required to establish all of those
positions (excluding the amount by which options are "in-the-money") exceeds
5% of the liquidation value of a Fund's portfolio, after taking into account
unrealized profits and unrealized losses on any contracts the Fund has entered
into;
(5) Borrow money, except for temporary or emergency purposes (not for
leveraging) not in excess of 33 1/3% of the value of the Fund's total assets
and except that the Fund may purchase securities when outstanding borrowings
represent no more than 5% of the Fund's assets;
(6) Invest more than 5% of its total assets in securities of companies having,
together with their predecessors, a record of less than three years of
continuous operation; or
(7) Invest more than 10% of its total assets in securities that are restricted
as to resale without registration under the 1933 Act.
LATIN AMERICA FUND
Fundamental Investment Limitations.
The Fund may not:
(1) Invest 25% or more of the value of its total assets in the securities of
issuers conducting their principal business activities in the same industry,
except that this limitation shall not apply to securities issued or guaranteed
as to principal and interest by the U.S. government or any of its agencies or
instrumentalities;
(2) Buy and sell real estate (including real estate limited partnerships) or
commodities or commodity contracts; however, the Fund may invest in debt
securities secured by real estate or interests therein or issued by companies
which invest in real estate or interests therein, including real estate
investment trusts, and may purchase or sell currencies (including forward
currency exchange contracts), futures contracts and related options generally
as
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Statement of Additional Information Page 36
<PAGE> 40
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G.T. GLOBAL VARIABLE INVESTMENT FUNDS
described in the Funds' Prospectus and Statement of Additional Information;
(3) Engage in the business of underwriting securities of other issuers, except
to the extent that the disposal of an investment position
may technically cause it to be considered an underwriter as that term is
defined under the Securities Act of 1933;
(4) Make loans, except that the Fund may purchase debt securities and enter
into repurchase agreements and may make loans of securities;
(5) Purchase securities on margin, provided that the Fund may obtain such
short-term credits as may be necessary for the clearance of purchases and
sales of securities; except that it may make margin deposits in connection
with futures contracts;
(6) Borrow money except from banks for temporary or emergency purposes not in
excess of 33 1/3% of the value of the Fund's total assets (at the lower of
cost or fair market value).
The Fund will not purchase securities while borrowings (including reverse
repurchase agreements) in excess of 5% of total assets
are outstanding. This restriction shall not
prevent the Fund from entering into reverse repurchase agreements provided
that reverse repurchase agreements, and any other transactions constituting
borrowing by the Fund, may not exceed one-third of the Fund's total assets. In
the event that the asset coverage for the Fund's borrowings falls below 300%,
the Fund will reduce, within three days (excluding Sundays and holidays), the
amount of its borrowings in order to provide for 300% asset coverage;
(7) Mortgage, pledge, or hypothecate any of its assets, provided that this
restriction shall not apply to the transfer of securities in connection with
any permissible borrowing or to collateral arrangements in connection with
permissible activities; and
(8) Invest in direct interests or leases in oil, gas, or other mineral
exploration or development programs; however, the Fund may invest in the
securities of companies that engage in these activities.
For purposes of the concentration policy of the Fund contained in limitation
(1), above, the Fund intends to comply with the SEC staff position that
securities issued or guaranteed as
to principal and interest by any single foreign government or any supranational
organizations
in the aggregate are considered to be securities
of issuers in the same industry.
The following investment policies of the Fund, which are not fundamental
policies and may be changed by the Company's Board of Trustees, without
shareholder or investor approval, are that the Fund will not:
(1) Invest in securities of an issuer if the investment would cause the Fund
to own more than 10% of any class of securities of any one issuer;
(2) Invest in companies for the purpose of exercising control or management;
(3) Invest more than 15% of its net assets in illiquid securities, including
securities that are illiquid by virtue of the absence of a readily available
market;
(4) Invest more than 5% of its total assets in securities of companies having,
together with their predecessors, a record of less than three years of
continuous operation;
(5) Purchase or retain the securities of any issuer, if those individual
officers and Trustees of the Company, the Fund or the Fund's investment
adviser, or distributor, each owning beneficially more than 1/2 of 1% of the
securities of such issuer, together own more than 5% of the securities of such
issuer; or
(6) Enter into a futures contract, an option on a futures contract, or an
option on foreign currency traded on a CFTC-regulated exchange, in each case
other than for bona fide hedging purposes (as defined by the CFTC), if the
aggregate initial margin and premiums required to establish all of those
positions (excluding the amount by which options are "in-the-money") exceeds
5% of the liquidation value of a Fund's portfolio, after taking into account
unrealized profits and unrealized losses on any contracts the Fund has entered
into.
GROWTH & INCOME FUND
Fundamental Investment Limitations.
The Fund may not:
(1) Invest 25% or more of the value of its total assets in the securities of
issuers conducting their principal business activities in the same
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<PAGE> 41
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------------------------------------------------
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
industry, except that this limitation shall not apply to securities issued or
guaranteed as to principal and interest by the U.S. government or any of its
agencies or instrumentalities;
(2) Invest in companies for the purpose of exercising control or management;
(3) Buy or sell real estate (including real estate limited partnerships) or
commodities or commodity contracts; however, the Fund may invest in debt
securities secured by real estate or interests therein or issued by companies
which invest in real estate or interests therein, including real estate
investment trusts, and may purchase or sell currencies (including forward
currency exchange contracts), futures contracts and related options generally
as described in the Funds' Prospectus and Statement of Additional information
and subject to investment policy (4) below;
(4) Acquire securities subject to restrictions on disposition or securities
for which there is no readily available market, or enter into repurchase
agreements or purchase time deposits maturing in more than seven days, or
purchase over-the-counter options or hold assets set aside to cover
over-the-counter options written by the Fund, if, immediately after and as a
result, the value of such securities would exceed, in the aggregate, 15% of
the Fund's net assets;
(5) Engage in the business of underwriting securities of other issuers, except
to the extent that the disposal of an investment position
may technically cause it to be considered an underwriter as that term is
defined under the Securities Act of 1933;
(6) Make loans, except that the Fund may purchase debt securities and enter
into repurchase agreements and make loans of securities;
(7) Purchase securities on margin, provided that the Fund may obtain such
short-term credits as may be necessary for the clearance of purchases and
sales of securities, except that it may make margin deposits in connection
with futures contracts subject to investment policy (4) below;
(8) Borrow money except from banks for temporary or emergency purposes not in
excess of 33 1/3% of the value of the Fund's total assets (at the lower of
cost or fair market value).
The Fund will not purchase securities while borrowings in excess of 5% of
total assets are outstanding. This restriction shall not prevent the Fund from
entering into reverse repurchase agreements and engaging in "roll"
transactions, provided that reverse repurchase agreements, "roll" transactions
and any other transactions constituting borrowing by the Fund may not exceed
one-third of the Fund's total assets. In the event that the asset coverage for
the Fund's borrowings falls below 300%, the Fund will reduce, within three
days (excluding Sundays and holidays), the amount of its borrowings in order
to provide for 300% asset coverage;
(9) Mortgage, pledge, or hypothecate any of its assets, provided that this
restriction shall not apply to the transfer of securities in connection with
any permissible borrowing or to collateral arrangements in connection with
permissible activities;
(10) Invest in interests in oil, gas, or other mineral exploration or
development programs; or
(11) Purchase or retain the securities of any issuer, if those individual
officers and Trustees of the Company, the Fund or the Fund's investment
adviser, or distributor, each owning beneficially more than 1/2 of 1% of the
securities of such issuer, together own more than 5% of the securities of such
issuer.
The following investment policies of the Fund, which are not fundamental
policies and may be changed by the Company's Board of Trustees, without
shareholder or investor approval, are that the Fund will not:
(1) Invest in securities of an issuer if the investment would cause the Fund
to own more than 10% of any class of securities of any one issuer;
(2) Sell securities short, except to the extent that the Fund
contemporaneously owns or has the right to acquire at no additional cost
securities identical to those sold short;
(3) Invest more than 5% of its total assets in securities of companies having,
together with their predecessors, a record of less than three years of
continuous operation; or
(4) Enter into a futures contract, an option on a futures contract, or an
option on foreign currency traded on a CFTC-regulated
- --------------------------------------------------------------------------------
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Statement of Additional Information Page 38
<PAGE> 42
- --------------------------------------------------------------------------------
------------------------------------------------
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
exchange, in each case other than for bona fide hedging purposes (as defined
by the CFTC), if the aggregate initial margin and premiums required to
establish all of those positions (excluding the amount by which options are
"in-the-money") exceeds 5% of the liquidation value of a Fund's portfolio,
after taking into account unrealized profits and unrealized losses on any
contracts the Fund has entered into.
STRATEGIC INCOME FUND
Fundamental Investment Limitations.
The Fund may not:
(1) Invest 25% or more of the value of its total assets in the securities of
issuers conducting their principal business activities in the same industry,
except that this limitation shall not apply to securities issued or guaranteed
as to principal and interest by the U.S. government or any of its agencies or
instrumentalities;
(2) Invest in companies for the purpose of exercising control or management;
(3) Buy or sell real estate (including real estate limited partnerships) or
commodities or commodity contracts; however the Fund may invest in debt
securities secured by real estate or interests therein or issued by companies
which invest in real estate or interests therein, including real estate
investment trusts, and may purchase or sell currencies (including forward
currency exchange contracts), futures contracts and related options generally
as described in the Funds' Prospectus and Statement of Additional Information
and subject to (13) below;
(4) Engage in the business of underwriting securities of other issuers, except
to the extent that the disposal of an investment position
may technically cause it to be considered an underwriter as that term is
defined under the Securities Act of 1933;
(5) Make loans, except that the Fund may invest in loans and participations,
purchase debt securities and enter into repurchase agreements and make loans
of securities;
(6) Sell securities short, except to the extent that the Fund
contemporaneously owns or
has the right to acquire at no additional cost securities identical to those
sold short;
(7) Purchase securities on margin provided that the Fund may obtain such
short-term credits as may be necessary for the clearance
of purchases and sales of securities, except
that the Fund may make margin deposits in connection with futures contracts
subject to (13) below;
(8) Borrow money in excess of 33 1/3% of the Fund's total assets (including
the amount borrowed), less all liabilities and indebtedness (other than
borrowing). The restriction shall not prevent the Fund from entering into
reverse repurchase agreements and engaging in "roll" transactions, provided
that reverse repurchase agreements, "roll" transactions and any other
transactions constituting borrowing by the Fund may not exceed one-third of
the Fund's total assets. In the event that the asset coverage for the Fund's
borrowings fall below 300%, the Fund, as the case may be, will reduce, within
three days (excluding Sundays and holidays), the amount of its borrowings in
order to provide for 300% asset coverage. Transactions involving options,
futures contracts, options on futures contracts and forward currency
contracts, and collateral arrangements relating thereto will not be deemed to
be borrowings;
(9) Mortgage or hypothecate any of its assets, provided that this restriction
shall not apply to the transfer of securities in connection with any
permissible borrowing;
(10) Invest in interests in oil, gas or other mineral exploration or
development programs;
(11) Invest more than 5% of its total assets in securities of companies
having, together with predecessors, a record of less than three years of
continuous operation;
(12) Purchase or retain the securities of any issuer, if those individual
officers and Trustees of the Company, the Fund or the Fund's investment
adviser, or distributor, each owning beneficially more than 1/2 of 1% of the
securities of such issuer, together own more than 5% of the securities of such
issuer; or
(13) Enter into a futures contract if, as a result thereof, more than 5% of
the Fund's total assets (taken at market value at the time
of entering into the contract), would be committed to margin on such futures
contracts.
- --------------------------------------------------------------------------------
----------------------------------------------------
Statement of Additional Information Page 39
<PAGE> 43
- --------------------------------------------------------------------------------
------------------------------------------------
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
For purposes of the Fund's concentration policy contained in limitation (1)
above, the Fund intends to comply with the SEC staff position that securities
issued or guaranteed as to principal and interest by any single foreign
government or any supranational organizations in the aggregate are considered to
be securities of issuers in the same industry.
The following investment policies of the Fund, which are not fundamental
policies and may be changed by action of the Company's Board of Trustees,
without shareholder or investor approval, are that the Fund will not:
(1) Invest more than 15% of its net assets in illiquid securities; or
(2) Invest in securities of an issuer if the investment would cause the Fund
to own more than 10% of any class of securities of any one issuer.
GLOBAL GOVERNMENT INCOME FUND
Fundamental Investment Limitations.
The Fund may not:
(1) Invest 25% or more of the value of its total assets in the securities of
issuers conducting their principal business activities in the same industry,
except that this limitation shall not apply to securities issued or guaranteed
as to principal and interest by the U.S. government or any of its agencies or
instrumentalities;
(2) Invest in companies for the purpose of exercising control or management;
(3) Buy or sell real estate (including real estate limited partnerships) or
commodities or commodity contracts; however, the Fund may invest in debt
securities secured by real estate or interests therein or issued by companies
which invest in real estate or interests therein, including real estate
investment trusts, and
may purchase or sell currencies (including
forward currency exchange contracts), futures contracts and related options
generally as described in the Funds' Prospectus and Statement of Additional
Information and subject to (14) below;
(4) Acquire securities subject to restrictions on disposition of securities
for which there is no readily available market, or enter into repurchase
agreements or purchase time deposits maturing in more than seven days, or
purchase over-the-counter options or hold assets set aside to cover
over-the-counter options written by the Fund, if, immediately after and as a
result, the value of such securities would exceed, in the aggregate, 15% of
the Fund's net assets;
(5) Engage in the business of underwriting securities of other issuers, except
to the extent that the disposal of an investment position
may technically cause it to be considered an underwriter as that term is
defined under the Securities Act of 1933;
(6) Make loans, except that the Fund may purchase debt securities and enter
into repurchase agreements and make loans of securities;
(7) Sell securities short, except to the extent that the Fund
contemporaneously owns or
has the right to acquire at no additional cost securities identical to those
sold short;
(8) Purchase securities on margin, provided that the Fund may obtain such
short-term credits as may be necessary for the clearance of purchases and
sales of securities, except that the Fund may make margin deposits in
connection with futures contracts subject to (14) below;
(9) Borrow money, except from banks or for temporary or emergency purposes not
in excess of 30% of the value of the Fund's total assets. The Fund will not
purchase securities while such borrowings are outstanding. This restriction
shall not prevent the Fund from entering into reverse repurchase agreements
and engaging in "roll" transactions, provided that reverse repurchase
agreements, "roll" transactions and any other transactions constituting
borrowing by the Fund may not exceed one-third of the Fund's total assets. In
the event that the asset coverage for the Fund's borrowings falls below 300%,
the Fund will reduce, within three days (excluding Sundays and holidays), the
amount of its borrowings in order to provide for 300% asset coverage;
(10) Mortgage, pledge, or hypothecate any of its assets, provided that this
restriction shall not apply to the transfer of securities in connection with
any permissible borrowing;
(11) Invest in interests in oil, gas, or other mineral exploration or
development programs;
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Statement of Additional Information Page 40
<PAGE> 44
- --------------------------------------------------------------------------------
------------------------------------------------
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
(12) Invest more than 5% of its total assets in securities of companies
having, together with their predecessors, a record of less than three years of
continuous operation;
(13) Purchase or retain the securities of any issuer, if those individual
officers and Trustees of the Company, the Fund or the Fund's investment
adviser, or distributor, each owning beneficially more than 1/2 of 1% of the
securities of such issuer, together own more than 5% of the securities of such
issuer; or
(14) Enter into a futures contract if, as a result thereof, more than 5% of
the Fund's total assets (taken at market value at the time of entering into
the contract), would be committed to margin on such futures contracts.
For purposes of the Fund's concentration policy contained in limitation (1)
above, the Fund intends to comply with the SEC staff position that securities
issued or guaranteed as to principal and interest by any single foreign
government or any supranational organizations in the aggregate are considered to
be securities of issuers in the same industry.
An investment policy of the Fund which may be changed by the Company's Board of
Trustees, without shareholder or investor approval, is that the Fund will not
invest in securities of an issuer if the investment would cause the Fund to own
more than 10% of any class of securities of any one issuer.
U.S. GOVERNMENT INCOME FUND
Fundamental Investment Limitations.
The Fund may not:
(1) Invest 25% or more of the value of its total assets in the securities of
issuers conducting their principal business activities in the same industry,
except that this limitation shall not apply to securities issued or guaranteed
as to principal and interest by the U.S. government or any of its agencies or
instrumentalities;
(2) Buy or sell real estate (including real estate limited partnerships) or
commodities or commodity contracts; however the Fund may invest in debt
securities secured by real estate or interests therein or issued by companies
which invest in real estate or interests therein, including real estate
investment trusts, and may purchase or sell currencies (including forward
currency exchange contracts), futures contracts and related options generally
as described in the Funds' Prospectus and Statement of Additional Information
and subject to investment policy (6) below;
(3) Engage in the business of underwriting securities of other issuers, except
to the extent that the disposal of an investment position may technically
cause it to be considered an underwriter as that term is defined under the
Securities Act of 1933;
(4) Make loans, except that the Fund may invest in loans and participations,
purchase debt securities and enter into repurchase agreements and make loans
of securities;
(5) Sell securities short, except to the extent that the Fund
contemporaneously owns or has the right to acquire at no additional cost
securities identical to those sold short;
(6) Purchase securities on margin provided that the Fund may obtain such
short-term credits as may be necessary for the clearance of purchases and
sales of securities, except that the Fund may make margin deposits in
connection with futures contracts subject to investment policy (6) below;
(7) Borrow money in excess of 33 1/3% of the Fund's total assets (including
the amount borrowed), less all liabilities and indebtedness (other than
borrowing). The restriction shall not prevent the Fund from entering into
reverse repurchase agreements and engaging in "roll" transactions, provided
that reverse repurchase agreements, "roll" transactions and any other
transactions constituting borrowing by the Fund may not exceed one-third of
the Fund's total assets. In the event that the asset coverage for the Fund's
borrowings fall below 300%, the Fund, as the case may be, will reduce, within
three days (excluding Sundays and holidays), the amount of its borrowings in
order to provide for 300% asset coverage. Transactions involving options,
futures contracts, options on futures contracts and forward currency
contracts, and collateral arrangements relating thereto will not be deemed to
be borrowings;
(8) Mortgage, pledge or hypothecate any of its assets, provided that this
restriction shall not apply to the transfer of securities in connection with
any permissible borrowing; or
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Statement of Additional Information Page 41
<PAGE> 45
- --------------------------------------------------------------------------------
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G.T. GLOBAL VARIABLE INVESTMENT FUNDS
(9) Invest in interests in oil, gas or other mineral exploration or
development programs.
For purposes of the Fund's concentration policy contained in limitation (1)
above, the Fund intends to comply with the SEC staff position that securities
issued or guaranteed as to principal and interest by any single foreign
government or any supranational organizations in the aggregate are considered to
be securities of issuers in the same industry.
The following investment policies of the Fund, which are not fundamental
policies and may be changed by action of the Company's Board of Trustees,
without shareholder or investor approval, are that the Fund will not:
(1) Invest in companies for the purpose of exercising control or management;
(2) Invest more than 15% of its net assets in illiquid securities;
(3) Invest in securities of an issuer if the investment would cause the Fund
to own more than 10% of any class of securities of any one issuer;
(4) Invest more than 5% of its total assets in securities of companies having,
together with predecessors, a record of less than three years of continuous
operation;
(5) Purchase or retain the securities of any issuer, if those individual
officers and Trustees of the Company, the Fund or the Fund's investment
adviser, or distributor, each owning beneficially more than 1/2 of 1% of the
securities of such issuer, together own more than 5% of the securities of such
issuer; or
(6) Enter into a futures contract, an option on a futures contract, or an
option on foreign currency traded on a CFTC-regulated exchange, in each case
other than for bona fide hedging purposes (as defined by the CFTC), if the
aggregate initial margin and premiums required to establish all of those
positions (excluding the amount by which options are "in-the-money") exceeds
5% of the liquidation value of a Fund's portfolio, after taking into account
unrealized profits and unrealized losses on any contracts the Fund has entered
into.
MONEY MARKET FUND
Fundamental Investment Limitations.
The Fund may not:
(1) Purchase common stocks, preferred stocks, warrants or other equity
securities;
(2) Issue senior securities;
(3) Pledge, mortgage or hypothecate its assets except to secure borrowings as
disclosed in the Funds' Prospectus;
(4) Sell securities short, purchase securities on margin, or engage in option
transactions;
(5) Underwrite the sale of securities of other issuers;
(6) Purchase or sell real estate interests, commodities or commodity contracts
or oil and gas investments;
(7) Make loans, except: (i) the purchase of debt securities in accordance with
the Fund's objectives and policies shall not be considered making loans, and
(ii) pursuant to contracts providing for the compensation of service provided
by compensating balances;
(8) Purchase the securities issued by other investment companies, except as
they may be acquired as part of a merger, consolidation or acquisition of
assets; and
(9) Invest more than 25% of the value of the Fund's assets in securities of
issuers in any one industry, except that the Fund is permitted
to invest without such limitation in U.S. government-backed obligations.
An additional investment policy of the Fund, which is not a fundamental policy
and may be changed by a vote of the Company's Board of Trustees, without
shareholder approval to the extent consistent with regulatory requirements
provides that the Fund may not invest more than 10% of its net assets in
illiquid securities.
For purposes of the Fund's concentration policy contained in limitation (9),
above, the Fund intends to comply with the SEC staff position that securities
issued or guaranteed as to principal and interest by any single foreign
government or any supranational organizations in the aggregate are considered to
be securities of issuers in the same industry.
ALL FUNDS
If a percentage restriction is adhered to at the time of investment, a later
increase or decrease in percentage resulting from a change in values or assets
will not constitute a violation of that restriction.
All of the Funds have the following investment policies, which may be changed by
the Company's
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<PAGE> 46
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G.T. GLOBAL VARIABLE INVESTMENT FUNDS
Board of Trustees without shareholder or investor approval:
No Fund may:
(1) Hold assets of any issuers, at the end of any calendar quarter (or within
30 days thereafter), to the extent such holdings would cause the Fund to fail
to comply with the diversification requirements for segregated asset accounts
used to fund variable annuity contracts imposed by Section 817(h) of the Code
and the Treasury regulations issued thereunder; or
(2) Except under unusual circumstances, purchase securities issued by
investment companies unless they are issued by companies that follow a policy
of investment primarily in the capital markets of a single foreign entity.
Policies that are designated as operating policies may be changed only upon
approval by the Board of Trustees and following appropriate notice to
shareholders.
Investors should refer to the Funds' Prospectus for further information with
respect to the Funds' respective investment objectives, which may not be changed
without shareholder approval, and other investment policies, techniques and
limitations, which may be changed without shareholder approval.
- --------------------------------------------------------------------------------
EXECUTION OF PORTFOLIO TRANSACTIONS
- --------------------------------------------------------------------------------
Subject to policies established by each Company's Board of Trustees, G.T.
Capital is responsible for the execution of the Funds' securities transactions
and the selection of broker/dealers who execute such transactions on behalf of
the Funds. In executing securities transactions, G.T. Capital seeks the best net
results for each Fund, taking into account such factors as the price (including
the applicable brokerage commission or dealer spread), size of the order,
difficulty of execution and operational facilities of the firm involved. While
G.T. Capital generally seeks reasonably
competitive commission rates and spreads, payment of the lowest commission or
spread is not necessarily consistent with the best net results. While the Funds
may engage in soft dollar arrangements for research services, as described
below, the Funds have no obligation to deal with any broker or dealer or group
of brokers or dealers in the execution of securities transactions.
Consistent with the interests of the Funds, G.T. Capital may select brokers on
the basis of the research and brokerage services they provide to G.T. Capital
for its use in managing the Funds and its other advisory accounts. Such services
may include furnishing analyses, reports and information concerning issuers,
industries, securities, geographic regions, economic factors and trends,
portfolio strategy, and performance of accounts; and effecting securities
transactions and performing functions incidental thereto (such as clearance and
settlement). Research and brokerage services received from such brokers are in
addition to, and not in lieu of, the services required to be performed by G.T.
Capital under the Management Contract (defined below). A commission paid to such
brokers may be higher than that which another qualified broker would have
charged for effecting the same transaction, provided that G.T. Capital
determines in good faith that such commission is reasonable in terms either of
that particular transaction or the overall responsibility of G.T. Capital to the
Funds and its other clients and that the total commissions paid by each Fund
will be reasonable in relation to the benefits received by the Funds over the
long term. Research services may also be received from dealers who execute Fund
transactions.
The securities generally are traded on a "net" basis with a dealer acting as
principal for its own account without a stated commission, although the price of
the security usually includes a profit to the dealer. U.S. and foreign
government securities and money market instruments generally are traded in the
OTC markets. In underwritten offerings, securities usually are purchased at a
fixed price which includes an amount of compensation to the underwriter. On
occasion, securities may be purchased directly from an issuer, in which case no
commissions or discounts are paid. Broker/dealers may receive commissions on
futures, currency and options transactions.
G.T. Capital may allocate brokerage transactions to broker/dealers who have
entered into
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Statement of Additional Information Page 43
<PAGE> 47
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G.T. GLOBAL VARIABLE INVESTMENT FUNDS
arrangements under which the broker/dealer allocates a portion of the
commissions paid by the Funds toward payment of the Funds' expenses, such as
transfer and custodian fees.
Investment decisions for each Fund and for other investment accounts managed by
G.T. Capital are made independently of each other in light of differing
conditions. However, the same investment decision occasionally may be made for
two or more of such accounts, including one or more Funds. In such cases
simultaneous transactions may occur. Purchases or sales are then allocated as to
price or amount in a manner deemed fair and equitable to all accounts involved.
While in some cases this practice could have a detrimental effect upon the price
or value of the security as far as a Fund is concerned, in other cases G.T.
Capital believes that coordination and the ability to participate in volume
transactions will be beneficial to the Funds.
Under a policy adopted by each Company's Board of Trustees, and subject to the
policy of obtaining the best net results, G.T. Capital may consider a
broker/dealer's sale of the shares of the Funds, and the other G.T. Global
Mutual Funds in selecting brokers and dealers for the execution of securities
transactions. This policy does not imply a commitment to execute securities
transactions through all broker/dealers that sell shares of such funds.
Each Fund contemplates purchasing most foreign equity securities in OTC markets
or stock exchanges located in the countries in which the respective principal
offices of the issuers of the various securities are located if that is the best
available market. The fixed commissions paid in connection with most such
foreign stock transactions generally are higher than negotiated commissions on
U.S. transactions. There generally is less government supervision and regulation
of foreign stock exchanges and brokers than in the United States. Foreign
security settlements may in some instances be subject to delays and related
administrative uncertainties.
Foreign equity securities may be held by a Fund in the form of ADRs, ADSs, EDRs,
CDRs or securities convertible into foreign equity securities. ADRs, ADSs, EDRs
and CDRs may be listed on stock exchanges, or traded in the OTC markets in the
United States or Europe, as the case may be. ADRs, like other securities traded
in the United States, will be subject to negotiated commission rates. The
foreign and domestic debt securities and money market instruments in which the
Funds may invest are generally traded in the OTC markets.
The Funds contemplate that, consistent with the policy of obtaining the best net
results, brokerage transactions may be conducted through certain companies that
are members of the BIL G.T. Group. Each Company's Board of Trustees has adopted
procedures in conformity with Rule 17e-1 under the 1940 Act to ensure that all
brokerage commissions paid to such affiliates
are reasonable and fair in the context of the
market in which they are operating. Any such transactions will be effected and
related compensation paid only in accordance with applicable SEC regulations.
The aggregate brokerage commission paid
by the Funds (except the International Fund and Emerging Markets Fund for the
fiscal year ended December 31, 1994 and for the International Fund and Emerging
Markets Fund the fiscal period July 5, 1994 (commencement of operations) through
December 31, 1994 were:
<TABLE>
<CAPTION>
AGGREGATE
BROKERAGE
G.T. GLOBAL: COMMISSIONS
----------- -----------
<S> <C>
Variable America Fund..................... $ 12,879
Variable Europe Fund...................... 14,294
Variable New Pacific Fund................. 46,394
Variable International Fund............... 9,920
Money Market Fund......................... 0
Variable Growth & Income Fund............. 13,389
Variable Strategic Income Fund............ 0
Variable Global Government Income Fund.... 0
Variable U.S. Government Income Fund...... 0
Variable Latin America Fund............... 113,444
Variable Emerging Markets Fund............ 33,112
</TABLE>
SECURITIES TRADING AND TURNOVER
The Funds engage in securities trading when G.T. Capital has concluded that the
sale of a security owned by a Fund and/or the purchase of another security of
better value can enhance principal and/or increase income. A security
may be sold to avoid any prospective decline in
market value, or a security may be purchased in anticipation of a market rise.
Consistent with a Fund's investment objective(s), a security also may be sold
and a comparable security purchased coincidentally in order to take advantage of
what is believed to be a disparity in the normal yield and price relationship
between the two securities.
- --------------------------------------------------------------------------------
----------------------------------------------------
Statement of Additional Information Page 44
<PAGE> 48
- --------------------------------------------------------------------------------
------------------------------------------------
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
Although the Funds generally do not intend to trade for short-term profits, the
securities held by a Fund will be sold whenever G.T. Capital believes it is
appropriate to do so, without regard to the length of time a particular security
may have been held, except when doing so could violate the Short-Short
Limitation described below in "Taxes -- General."
No Fund will consider portfolio turnover to be a limiting factor in the purchase
or sale of portfolio securities. A 100% turnover rate would occur if the lesser
of the value of purchases or sales of portfolio securities for a Fund for a year
(excluding purchases of U.S. Treasury and other securities with a maturity at
the date of purchase of one year or less) was equal to 100% of the average
monthly value of the securities (excluding short-term investments) held by that
Fund during such year. Higher turnover involves correspondingly greater
brokerage commissions and other transaction costs that a Fund will bear
directly.
The portfolio turnover rates for the Funds (except the Telecommunications Fund)
for the fiscal period February 10, 1993 (commencement of operations) to December
31, 1993, such turnover rate for the Telecommunications Fund for the period
October 18, 1993 (commencement of operations) through December 31, 1993, the
portfolio turnover rates for the Funds (except the International Fund and the
Emerging Markets Fund) for the fiscal year ended December 31, 1994, and such
turnover rates for the International Fund and the Emerging Markets Fund for the
fiscal period July 5, 1994 (commencement of operations) through December 31,
1994, were as follows:
<TABLE>
<CAPTION>
FEBRUARY 10, 1993 OCTOBER 18, 1993 JULY 5, 1994
(COMMENCEMENT (COMMENCEMENT (COMMENCEMENT
OF OPERATIONS) OF OPERATIONS) YEAR ENDED OF OPERATIONS)
G.T. GLOBAL: TO DECEMBER 31, 1993 TO DECEMBER 31, 1993 DECEMBER 31, 1994 TO DECEMBER 31, 1994
- ------------------------------- --------------------- --------------------- ----------------- ---------------------
<S> <C> <C> <C> <C>
America Fund................... 831% N/A 139% N/A
Europe Fund.................... 27% N/A 61% N/A
New Pacific Fund............... 15% N/A 30% N/A
International Fund............. N/A N/A N/A 17%
Money Market Fund.............. N/A N/A N/A N/A
Growth and Income Fund......... 17% N/A 53% N/A
Strategic Income Fund.......... 245% N/A 313% N/A
Global Government Income
Fund......................... 298% N/A 350% N/A
U.S. Government Income Fund.... 81% N/A 34% N/A
Latin America Fund............. 78% N/A 185% N/A
Telecommunications Fund........ N/A 20% 81% N/A
Emerging Markets Fund.......... N/A N/A N/A 117%
</TABLE>
- --------------------------------------------------------------------------------
TRUSTEES AND EXECUTIVE OFFICERS
- --------------------------------------------------------------------------------
The Trustees and Executive Officers of each Company are listed below:
<TABLE>
<CAPTION>
NAME, POSITION(S) WITH EACH COMPANY
AND PRINCIPAL OCCUPATIONS AND BUSINESS EXPERIENCE FOR PAST 5
THE FUNDS AND ADDRESS YEARS
- ----------------------------------- -----------------------------------------------------------
<S> <C>
David A. Minella, 42* Director of BIL G.T. Group Limited (holding company of the
Trustee, Chairman of the Board various international G.T. companies) since 1990; Director
and President and President of G.T. Global Financial Services, Inc.
50 California Street ("G.T. Global") since 1987; and Director and President of
San Francisco, CA 94111 G.T. Global Investor Services, Inc. ("G.T. Services") since
1990. Mr. Minella also is a director or trustee of each of
the other investment companies registered under the 1940
Act that is managed or administered by G.T. Capital.
</TABLE>
- --------------------------------------------------------------------------------
----------------------------------------------------
Statement of Additional Information Page 45
<PAGE> 49
- --------------------------------------------------------------------------------
------------------------------------------------
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
<TABLE>
<CAPTION>
NAME, POSITION(S) WITH EACH COMPANY
AND PRINCIPAL OCCUPATIONS AND BUSINESS EXPERIENCE FOR PAST 5
THE FUNDS AND ADDRESS YEARS
- ----------------------------------- -----------------------------------------------------------
<S> <C>
C. Derek Anderson, 53 Chairman, Anderson Capital Management, Inc. from 1988 to
Trustee present; Chairman, Plantagenet Holdings, Ltd. from 1991 to
220 Sansome Street present; Director, Munsingwear, Inc.; Director, American
Suite 400 Heritage Group Inc.; Director, T.L. Higgins Inc. and
San Francisco, CA 94104 various other companies. Mr. Anderson also is a director or
trustee of each of the other investment companies
registered under the 1940 Act that is managed or
administered by G.T. Capital.
Frank S. Bayley, 55 A Partner of Baker & McKenzie (a law firm), and serves as
Trustee Director and Chairman of C.D. Stimson Company (a private
2 Embarcadero Center investment company); Trustee, Seattle Art Museum. Mr.
Suite 2400 Bayley also is a director or trustee of each of the other
San Francisco, CA 94111 investment companies registered under the 1940 Act that is
managed or administered by G.T. Capital.
Arthur C. Patterson, 51 Managing Partner of Accel Partner (a venture capital firm),
Trustee Mr. Patterson also serves as a director of various
One Embarcadero Center computing and software companies. Mr. Patterson also is a
Suite 202 director or trustee of each of the other investment
San Francisco, CA 94111 companies registered under the 1940 Act that is managed or
administered by G.T. Capital.
Ruth H. Quigley, 60 Private investor. From 1984 to 1986, Miss Quigley was
Trustee President of Quigley Friedlander & Co., Inc. (a financial
1055 California Street advisory services firm). Miss Quigley also is a director or
San Francisco, CA 94108 trustee of each of the other investment companies
registered under the 1940 Act that is managed or
administered by G.T. Capital.
F. Christian Wignall, 39 Senior Vice President, Chief Investment Officer and a
Vice President and Chief Director of G.T. Capital since 1987, and Chairman of the
Investment Officer Investment Policy Committee of the affiliated international
50 California Street G.T. companies since 1990. Prior to joining G.T. Capital,
San Francisco, CA 94111 Mr. Wignall was Managing Director of G.T. Management
(Japan) Ltd.
Gary Kreps, 40 Vice President and Chief Investment Officer -- Global Fixed
Vice President and Chief Income of G.T. Capital since 1992. Prior to joining G.T.
Investment Officer -- Global Capital, Mr. Kreps was Senior Vice President of the Putnam
Fixed Income Companies.
50 California Street
San Francisco, CA 94111
James R. Tufts, 37 Vice President -- Finance of G.T. Capital and G.T. Global
Vice President and Principal since 1987; Vice President -- Finance of G.T. Services
Financial Officer since 1990; and a Director of G.T. Capital, G.T. Global and
50 California Street G.T. Services since 1991.
San Francisco, CA 94111
Kenneth W. Chancey, 49 Vice President of G.T. Capital and G.T. Global since 1992.
Vice President and Principal From 1989 to 1992, Mr. Chancey was Vice President of Putnam
Accounting Officer Fiduciary Trust Company.
50 California Street
San Francisco, CA 94111
Helge K. Lee, 48 Senior Vice President, General Counsel and Secretary of
Vice President and Secretary G.T. Capital, G.T. Global and G.T. Services since May,
50 California Street 1994. Mr. Lee was the Senior Vice President, General
San Francisco, CA 94111 Counsel and Secretary of Strong/Corneliuson Management,
Inc. and Secretary of each of the Strong Funds from
October, 1991 through May, 1994. For more than five years
prior to October, 1991, he was a shareholder in the law
firm of Godfrey & Kahn, S.C., Milwaukee, Wisconsin.
</TABLE>
- --------------------------------------------------------------------------------
----------------------------------------------------
Statement of Additional Information Page 46
<PAGE> 50
- --------------------------------------------------------------------------------
------------------------------------------------
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
<TABLE>
<CAPTION>
NAME, POSITION(S) WITH EACH COMPANY
AND PRINCIPAL OCCUPATIONS AND BUSINESS EXPERIENCE FOR PAST 5
THE FUNDS AND ADDRESS YEARS
- ----------------------------------- -----------------------------------------------------------
<S> <C>
Peter R. Guarino, 36 Assistant General Counsel of G.T. Capital, G.T. Global and
Assistant Secretary G.T. Services since 1991. From 1989 to 1991, Mr. Guarino
50 California Street was an attorney at The Dreyfus Corporation. Prior thereto,
San Francisco, CA 94111 he was associated with Colonial Management Associates, Inc.
</TABLE>
- ---------------
* Mr. Minella is an "interested person" of the Company as defined by the 1940
Act due to his affiliation with the G.T. companies.
The Board of Trustees of each Company has a Nominating and Audit Committee,
comprised of Miss Quigley and Messrs. Anderson, Bayley and Patterson, which is
responsible for nominating persons to serve as Trustees, reviewing audits of the
Company and its Funds and recommending firms to serve as independent auditors of
the Company. Each of the Trustees and Officers of each Company is also a
Director and Officer of G.T. Investment Funds, Inc., G.T. Investment Portfolios,
Inc. and G.T. Global Developing Markets Fund, Inc. and a Trustee and Officer of
G.T. Global Growth Series, G.T. Greater Europe Fund, Global High Income
Portfolio, and Global Investment Portfolio, which also are registered investment
companies managed by G.T. Capital. Each Trustee and Officer serves in total as a
Director and or Trustee and Officer, respectively, of 9 registered investment
companies and 38 series funds managed or administered by G.T. Capital.
Each Company pays each Trustee who is not a director, officer or employee of
G.T. Capital or any affiliated company $5,000 per annum and reimburses travel
and other expenses incurred in connection with attending Board meetings. Other
Trustees and officers receive no compensation or expense reimbursements from the
Company. For the fiscal year ended December 31, 1994, the Companies paid
aggregate Trustees' fees and expenses of $24,374. Such amount was divided
equally among the four Trustees who are not directors, officers or employees of
G.T. Capital or any affiliated company. Mr. Anderson, Mr. Bayley, Mr. Patterson
and Ms. Quigley, who are not directors, officers or employees of G.T. Capital or
any affiliated company, each received total compensation of $86,260.80,
$91,278.72, $74,492.00 and $78,665.19, respectively, from the 38 G.T. Funds for
which he or she serves as a Director or Trustee for the calendar year ended
December 31, 1994. Fees and expenses disbursed to the Trustees contained no
accrued or payable pension, or retirement benefits. As of the date of this
Statement of Additional Information, the officers and Trustees and their
families as a group do not own beneficially or of record any of the outstanding
shares of any Fund.
- --------------------------------------------------------------------------------
MANAGEMENT
- --------------------------------------------------------------------------------
INVESTMENT MANAGEMENT AND
ADMINISTRATION SERVICES
G.T. Capital serves as each Fund's investment manager and administrator under an
Investment Management and Administration Contract (individually, a "Management
Contract;" collectively, the "Management Contracts") between that Fund and G.T.
Capital. As investment manager, G.T. Capital makes all investment decisions for
each Fund and administers each Fund's affairs. G.T. Capital also serves as the
Company's administrator under an Administration Contract ("Administration
Contract") between each Company and G.T. Capital. As administrator, G.T.
Capital, among other things, furnishes the services and pays the compensation
and travel expenses of persons who perform the executive, administrative,
clerical and bookkeeping functions of the Company, and provides suitable office
space, and necessary small office equipment and utilities.
Each Management Contract has an initial two-year term from the date of
commencement of operations. Each Management Contract may be renewed for
additional one-year terms thereafter, provided that any such renewal has been
specifically approved at least annually by: (i) that Fund's Board of Trustees,
or by the vote of a majority of that Fund's outstanding voting securities (as
defined in the 1940 Act), and (ii) a majority of Trustees who are not parties to
that
- --------------------------------------------------------------------------------
----------------------------------------------------
Statement of Additional Information Page 47
<PAGE> 51
- --------------------------------------------------------------------------------
------------------------------------------------
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
Management Contract or "interested persons" of any such party (as defined in the
1940 Act), cast in person at a meeting called for the purpose of voting on such
approval. Each Management Contract was approved by the Board of Trustees of the
respective Funds most recently on June 15, 1994, and by G.T. Capital as the
initial shareholder of each Fund on January 13, 1993. The Management Contract
for the Telecommunications Fund was approved by G.T. Capital as the initial
shareholder on October 15, 1993. The Management Contract for the International
Fund and the Emerging Markets Fund was approved by the Board of Trustees on June
15, 1994 and by G.T. Capital as the initial shareholder on June 15, 1994. The
Management Contracts for the Infrastructure Fund, and Natural Resources Fund
were approved by G.T. Capital as the initial shareholder on January 24, 1995.
Either the Fund or G.T. Capital may terminate a Management Contract without
penalty upon sixty (60) days' written notice to the other party. Each Management
Contract terminates automatically in the event of its assignment (as defined in
the 1940 Act).
With respect to any Fund, either the Company or G.T. Capital may terminate the
Administration Contract without penalty upon sixty (60) days' written notice to
the other party. The Administration Contract terminates automatically in the
event of its assignment (as defined in the 1940 Act).
The amounts of investment management and administration fees paid by each Fund
(except International Fund and Emerging Markets Fund) to G.T. Capital for the
fiscal year ended December 31, 1994, and such fees paid to G.T. Capital by
International Fund and Emerging Markets Fund for the period July 5, 1994
(commencement of operations) to December 31, 1994, were as follows:
<TABLE>
<CAPTION>
INVESTMENT
MANAGEMENT REIMBURSEMENT
G.T. GLOBAL: FEES AMOUNT
- --------------------- ---------- -------------
<S> <C> <C>
Variable America
Fund................ $ 51,664 $ 0
Variable Europe
Fund................ 125,533 0
Variable New Pacific
Fund................ 155,724 0
Variable
International
Fund................ 6,985 4,627
Money Market Fund.... 52,363 0
Variable Strategic
Income Fund......... 174,302 0
Variable Global
Government Income
Fund................ $ 69,318 $ 0
Variable U.S.
Government Income
Fund................ 12,663 6,479
Variable Latin
America Fund........ 203,425 0
Variable Emerging
Markets Fund........ 20,347 20,347
Variable
Telecommunications
Fund................ 239,566 0
Variable Growth &
Income Fund......... 210,934 0
</TABLE>
In addition to payment of the investment management and administration fees, the
Funds paid other operating expenses and received reimbursement pursuant to
undertakings in effect. The amount of such expenses and reimbursements for the
Funds (except International Fund and Emerging Markets Fund) for the fiscal year
ended December 31, 1994, and for the International Fund and Emerging Markets
Fund for the period July 5, 1994 (commencement of operations) through December
31, 1994, were as follows:
<TABLE>
<CAPTION>
OTHER
EXPENSES REIMBURSEMENT
G.T. GLOBAL: PAID AMOUNT
- ----------------------- -------- -------------
<S> <C> <C>
Variable America
Fund.................. $ 89,223 $70,882
Variable Europe Fund... 83,548 49,678
Variable New Pacific
Fund.................. 93,370 51,141
Variable International
Fund.................. 15,531 15,531
Money Market Fund...... 73,413 47,231
Variable Strategic
Income Fund........... 92,973 34,872
Variable Global
Government Income
Fund.................. 86,210 63,070
Variable U.S.
Government Income
Fund.................. 65,435 65,140
Variable Latin America
Fund.................. 118,753 63,441
Variable Emerging
Markets Fund.......... 22,391 22,391
Variable
Telecommunications
Fund.................. 116,804 44,272
Variable Growth &
Income Fund........... 102,726 47,986
</TABLE>
TRANSFER AGENCY SERVICES
G.T. Services ("Transfer Agent") performs shareholder servicing, reporting and
general transfer agent functions for the Funds. For these services, the Transfer
Agent receives a fee of
- --------------------------------------------------------------------------------
----------------------------------------------------
Statement of Additional Information Page 48
<PAGE> 52
- --------------------------------------------------------------------------------
------------------------------------------------
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
$125 per month from each Fund. The Transfer Agent also is reimbursed by the
Funds for its
out-of-pocket expenses for such items as postage, forms, telephone charges,
stationery and office supplies.
EXPENSES OF THE FUNDS
As described in the Funds' Prospectus, each Fund pays all of its respective
expenses not assumed by other parties. The allocation of general Company
expenses and expenses shared by the Funds with one another, are allocated on a
basis deemed fair and equitable, which may be based on the relative net assets
of the Funds or the nature of the services performed and relative applicability
to each Fund. Expenditures, including costs incurred in connection with the
purchase or sale of securities, which are capitalized in accordance with
generally accepted accounting principles applicable to investment companies, are
accounted for as capital items and not as expenses. The ratio of each Fund's
expenses to its relative net assets can be expected to be higher than the
expense ratios of funds investing
solely in domestic securities, since the cost of maintaining the custody of
foreign securities and the rate of investment management fees paid
by each Fund generally are higher than the comparable expenses of such other
funds.
- --------------------------------------------------------------------------------
VALUATION OF SHARES
- --------------------------------------------------------------------------------
As described in the Funds' Prospectus, each Fund's net asset value per share is
determined each day on which the New York Stock Exchange Inc. ("NYSE") is open
for business ("Business Day") as of the close of regular trading on the NYSE
(currently 4:00 p.m. Eastern Time unless weather, equipment failure or other
factors contribute to an earlier closing time). Currently, the NYSE is closed on
weekends and on certain days relating to the following holidays: New Year's Day,
Presidents' Day, Good Friday, Memorial Day, July 4th, Labor Day, Thanksgiving
Day and Christmas Day.
The portfolio securities of the Funds, and other assets of the Funds, other than
those of the Money Market are valued as follows:
Equity securities including ADRs, ADSs and EDRs, which are traded on stock
exchanges, are valued at the last sale price on the exchange 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 G.T. Capital to be the primary market.
Securities traded in the OTC market are valued at the last available bid price
prior to the time of valuation. Securities and other assets for which market
quotations are not readily available (including restricted securities which are
subject to limitations as to their sale) are valued at fair value as determined
in good faith by or under the direction of the relevant Company's Board of
Trustees. Trading in securities on European and Far Eastern securities exchanges
and OTC markets normally is completed well before the close of regular trading
on the NYSE.
Long-term debt obligations are valued at the mean of representative quoted bid
and asked prices for such securities or, if such prices are not available, at
prices for securities of comparable maturity, quality and type; however, when
G.T. Capital deems it appropriate, prices obtained for the day of valuation from
a bond pricing service will be used. Short-term debt investments are amortized
to maturity based on their cost, adjusted for foreign exchange translation,
provided such valuations represent fair value.
Options on indices, securities and currencies purchased by the Funds are valued
at their last bid price in the case of listed options or at the average of the
last bid prices obtained from dealers in the case of OTC options. When market
quotations for futures and options on futures held by a Fund are readily
available, those positions will be valued based upon such quotations.
The valuation procedures applied in any specific instance are likely to vary
from case to case. However, consideration generally is given to the financial
position of the issuer and other fundamental analytical data relating to the
investment and to the nature of the restrictions
- --------------------------------------------------------------------------------
----------------------------------------------------
Statement of Additional Information Page 49
<PAGE> 53
- --------------------------------------------------------------------------------
------------------------------------------------
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
on disposition of the securities (including any registration expenses that might
be borne by a Fund in connection with such disposition). In addition, specific
factors generally are considered, such as the cost of the investment, the market
value of any unrestricted securities of the same class (both at the time of
purchase and at the time of valuation), the size of the holding, the prices of
any recent transactions or offers with respect to such securities and any
available analysts' reports regarding the issuer.
The fair value of any other assets is added to the value of all securities
positions to arrive at the value of a Fund's total assets. A Fund's liabilities,
including accruals for expenses, are deducted from its total assets. Once the
total value of a Fund's net assets is so determined, that value is then divided
by the total number of shares outstanding (excluding treasury shares), and the
result, rounded to the nearer cent, is the net asset value per share.
Any assets or liabilities initially expressed in terms of foreign currencies are
translated into U.S. dollars at the official exchange rate or, at the mean of
the current bid and asked prices of such currencies against the U.S. dollar last
quoted by a major bank that is a regular participant in the foreign exchange
market or on the basis of a pricing service that takes into account the quotes
provided by a number of such major banks. If none of these alternatives are
available or none are deemed to provide a suitable methodology for converting a
foreign currency into U.S. dollars, the relevant Company's Board of Trustees, in
good faith, will establish a conversion rate for such currency.
Trading in foreign securities may not take place on all days on which the NYSE
is open. Further, trading takes place in Japanese markets on certain Saturdays
and in various foreign markets on days on which the NYSE is not open,
consequently, the calculation of the Funds' respective net asset values may not
take place contemporaneously with the determination of the prices of securities
held by the respective Funds. Events affecting the values of such securities
that occur between the time their prices are determined and the close of regular
trading on the NYSE will not be reflected in the respective Funds' net asset
values unless G.T. Capital, under the supervision of the relevant Company's
Board of Trustees, determines that the particular
event would materially affect net asset value.
As a result, a Fund's net asset value may be significantly affected by such
trading on days when a shareholder cannot purchase or redeem shares of the Fund.
A Fund may declare a suspension of the determination of net asset value during
the periods when it may suspend redemption privileges.
The Board of Trustees of G.T. Global Variable Investment Series has determined
in good faith that the net asset value of each share of the Money Market Fund
will remain constant at $1.00 and, although no assurance can be given that it
will be able to do so on a continuing basis, the Money Market Fund will, as
described
below, employ specific investment policies and procedures to accomplish this
result. The Money Market Fund values its portfolio securities using the
amortized cost method. The amortized cost method involves valuing a security at
its cost and thereafter accruing any discount or premium at a constant rate to
maturity. Although this method provides certainty in valuation, it may result in
periods during which the value of the Money Market Fund's securities, as
determined by amortized cost, is higher or lower than the price the Money Market
Fund would receive if it sold the securities. During periods of declining
interest rates, the daily yield on the Money Market Fund computed as described
above may tend to be higher than a like computation made by a similar fund with
identical investments utilizing a method of valuation based upon market prices
and estimates of market prices for all of its securities. Thus, if the Money
Market Fund's use of amortized cost resulted in a lower aggregate value on a
particular day, a prospective investor in the Money Market Fund would be able to
obtain a somewhat higher yield than would result from investment in a similar
fund utilizing solely market values, and existing Money Market Fund shareholders
would receive less investment income. The converse would apply in a period of
rising interest rates.
In connection with the Money Market Fund's policy of valuing its securities
using the amortized cost method, the Fund adheres to certain conditions,
including maintaining a dollar-weighted average maturity of 90 days or less and
purchasing only securities having remaining maturities of 13 months or less. The
Board of Trustees of G.T. Global Variable Investment Series also has established
procedures designed to stabilize, to the extent reasonably possible, the
- --------------------------------------------------------------------------------
----------------------------------------------------
Statement of Additional Information Page 50
<PAGE> 54
- --------------------------------------------------------------------------------
------------------------------------------------
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
Money Market Fund's net asset value per share at $1.00. Such procedures include
review of securities holdings by the Board of Trustees, at such intervals as it
may deem appropriate, to determine whether the Money Market Fund's net asset
value calculated by using available market quotations deviates from the net
asset value calculated by using the amortized cost method and, if so, whether
such deviation may result in material dilution or may be otherwise unfair to
existing investors. In the event the Board of Trustees of G.T. Global Variable
Investment Series determines that such a deviation exists, the Board has agreed
to take such corrective action as it deems necessary and appropriate, which
action might include selling securities prior to maturity to realize capital
gains or losses or to shorten average maturity, withholding income, or
establishing a net asset value by using available market quotations or market
equivalents.
- --------------------------------------------------------------------------------
INFORMATION RELATING TO SALES
AND REDEMPTIONS
- --------------------------------------------------------------------------------
Each Company is a funding vehicle for VA Contracts offered by the separate
accounts of the Participating Insurance Companies. Individual VA Contract
holders are not the shareholders of a Fund. Rather, each Participating Insurance
Company and its separate accounts are the shareholders (the "shareholders"). The
offering is without a sales charge and is made at each Fund's net asset value
per share, which is determined in the manner set forth above under "Valuation of
Shares."
G.T. Global Financial Services, Inc. pays any distribution expenses and costs
(that is, those arising from any activity which is primarily intended to result
in the sale of shares issued by the Companies), including expenses and costs
attributable to the Companies, which are related to the printing and
distributing of prospectuses to prospective owners of the VA Contracts.
Each Company redeems all full and fractional shares of its Funds at the net
asset value per share applicable to each of its Funds. See "Valuation of Shares"
above.
Payment upon redemption is made in cash and ordinarily will occur within seven
days of receipt of a proper notice of redemption. The right to redeem shares or
to receive payment with respect to any redemption of shares of any Fund may only
be suspended: (1) for any period during which trading on the NYSE is restricted
or such Exchange is closed, other than customary weekend and holiday closing;
(2) for any period during which an emergency exists as a result of which
disposal of securities or determination of the net asset value of that Fund is
not reasonably practicable; or (3) for such other periods as the SEC may by
order permit for the protection of shareholders of that Fund.
- --------------------------------------------------------------------------------
TAXES
- --------------------------------------------------------------------------------
Shares of the Funds are offered only to Participating Insurance Company Separate
Accounts that fund certain variable contracts. See the applicable VA Contract
prospectus for a discussion of the special taxation of insurance companies with
respect to such accounts and of the VA Contract holders.
Each Fund is treated as a separate corporation for federal income tax purposes.
In order to continue to qualify for treatment as a regulated investment company
("RIC") under the Code, each Fund must distribute to its shareholders for each
taxable year at least 90% of its investment company taxable income (consisting
generally of net investment income, net short-term capital gain, and net gains
from certain foreign currency transactions) and must meet several additional
requirements. With respect to each Fund, these requirements include the
following: (1) the Fund must derive at least 90% of its gross income each
taxable year from dividends, interest, payments
- --------------------------------------------------------------------------------
----------------------------------------------------
Statement of Additional Information Page 51
<PAGE> 55
- --------------------------------------------------------------------------------
------------------------------------------------
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
with respect to securities loans, and gains from the sale or other disposition
of securities or foreign currencies, or other income (including gains from
options, Futures, or Forward Contracts) derived with respect to its business
of investing in securities or those currencies ("Income Requirement"); (2) the
Fund must derive less than 30% of its gross income each taxable year from the
sale or other disposition of securities, or any of the following, that were held
for less than three months -- options, Futures, or Forward Contracts (other than
those on foreign currencies), or foreign currencies (or options, Futures, or
Forward Contracts thereon) that are not directly related to the Fund's principal
business of investing in securities (or options and Futures with respect to
securities) ("Short-Short Limitation"); (3) at the close of each quarter of the
Fund's taxable year, at least 50% of the value of its total assets must be
represented by cash and cash items, U.S. government securities, securities of
other RICs, and other securities, with these other securities limited, with
respect to any one issuer, to an amount that does not exceed 5% of the value of
the Fund's total assets and that does not represent more than 10% of the
issuer's outstanding voting securities; and (4) at the close of each quarter of
the Fund's taxable year, not more than 25% of the value of its total assets may
be invested in securities (other than U.S. government securities or the
securities of other RICs) of any one issuer.
As noted in the Funds' Prospectus, each Fund intends to continue to comply with
the diversification requirements imposed by section 817(h) of the Code and the
regulations thereunder. These requirements, which are in addition to the
diversification requirements mentioned above, place certain limitations on the
proportion of each Fund's assets that may be represented by any single
investment (which includes all securities of the same issuer). For these
purposes, each U.S. government agency or instrumentality is treated as a
separate issuer, while a particular foreign government and its agencies,
instrumentalities, and political subdivisions all are considered the same
issuer.
Dividends and other distributions declared by a Fund in, and payable to
shareholders of record as of a date in, October, November, or December
of any year will be deemed to have been paid by
the Fund and received by the shareholders on December 31 of that year if the
distributions are paid by the Fund during the following January.
Dividends and interest received by a Fund may be subject to income, withholding,
or other taxes imposed by foreign countries that would reduce the yield on its
securities. Tax conventions between certain countries and the United States may
reduce or eliminate these foreign taxes, however, and many foreign countries do
not impose taxes on capital gains with respect to investments by foreign
investors.
Each Fund (other than the Money Market Fund and the America Fund) may invest in
the stock
of "passive foreign investment companies" ("PFICs"). A PFIC is a foreign
corporation that, in general, meets either of the following tests: (1) at least
75% of its gross income is passive
or (2) an average of at least 50% of its assets produce, or are held for the
production of, passive income. Under certain circumstances, a Fund will be
subject to federal income tax on a portion of any "excess distribution" received
on the stock of a PFIC or of any gain from disposition of the stock
(collectively "PFIC income"), plus interest thereon, even if the Fund
distributes the PFIC income as a taxable dividend to its shareholders. The
balance of the PFIC income will be included in the Fund's investment company
taxable income and, accordingly, will not be taxable to it to the extent that
income is distributed to its shareholders.
If a Fund invests in a PFIC and elects to treat the PFIC as a "qualified
electing fund" ("QEF"), then in lieu of the foregoing tax and interest
obligation, the Fund will be required to include in income each year its pro
rata share of the QEF's annual ordinary earnings and net capital gain (the
excess of net long-term capital gain over net short-term capital loss) -- which
would have to be distributed because of the distribution requirements described
above -- even if those earnings and gain were not received by the Fund. In most
instances, it will be very difficult, if not impossible, to make this election
because of certain requirements thereof.
Three bills passed by Congress in 1991 and
1992 and vetoed by President Bush would have substantially modified the taxation
of U.S. shareholders of foreign corporations, including eliminating the
provisions described above dealing with PFICs and replacing them (and other
provisions) with a regulatory scheme
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G.T. GLOBAL VARIABLE INVESTMENT FUNDS
involving entities called "passive foreign corporations." The "Tax
Simplification and Technical Corrections Bill of 1993," approved in November
1993 by the House Ways and Means Committee, contains the same modifications.
It is unclear at this time whether, and in what
form, the proposed modifications may be enacted
into law.
Proposed regulations have been published pursuant to which open-end RICs, such
as the Funds, would be entitled to elect to "mark-to-market" their stock in
certain PFICs. "Marking-to-market," in this context, means recognizing as gain
for each taxable year the excess, as of the end of that year, of the fair market
value of such a PFIC's stock over the adjusted basis in that stock (including
mark-to-market gain for each prior year for which an election was in effect).
OPTIONS, FUTURES, AND FOREIGN CURRENCY TRANSACTIONS
The use of hedging strategies, such as entering into Forward Contracts and
selling (writing)
and purchasing options and Futures, involves complex rules that will determine
for federal income tax purposes the character and timing of recognition of the
gains and losses a Fund realizes in connection therewith. Income from the
disposition of foreign currencies (except certain gains therefrom that may be
excluded by future regulations), and income from transactions in options,
Futures, and Forward Contracts derived by a Fund with respect to its business of
investing in securities or foreign currencies, will qualify
as permissible income under the Income Requirement. However, income from the
disposition of options and Futures (other than those on foreign currencies) will
be subject to the Short-Short Limitation if they are held for less than three
months. Income from the disposition of foreign currencies, and options, Futures,
and Forward Contracts on foreign currencies, that are not directly related to a
Fund's principal business of investing in securities (or options and Futures
with respect thereto) also will be subject to the Short-Short Limitation if they
are held for less than three months.
If a Fund satisfies certain requirements, any increase in value of a position
that is part of a "designated hedge" will be offset by any decrease in value
(whether realized or not) of the offsetting hedging position during the period
of the hedge for purposes of determining whether the Fund satisfies the
Short-Short Limitation. Thus, only the net gain (if any) from the designated
hedge will be included in gross income for purposes of that limitation. Each
Fund, when it engages in hedging transactions, will consider whether it should
seek to qualify for this treatment for its hedging transactions. To the extent a
Fund does not qualify for this treatment, it may be forced to defer the closing
out of certain options, Futures, and Forward Contracts beyond the time when it
otherwise would be advantageous to do so, in order for the Fund to continue to
qualify as a RIC.
Futures and Forward Contracts that are subject to section 1256 of the Code
(other than Forward Contracts that are part of a "mixed straddle") ("Section
1256 Contracts") and that are held by a Fund at the end of its taxable year
generally will be deemed to have been sold at market value for federal income
tax purposes. Sixty percent of any net gain or loss recognized on these deemed
sales, and 60% of any net realized gain or loss from any actual sales of Section
1256 Contracts, will be treated as long-term capital gain or loss, and the
balance will be treated as short-term capital gain or loss. Section 988 of the
Code also may apply
to Forward Contracts and options on foreign currencies. Under section 988, each
foreign currency gain or loss generally is computed separately and treated as
ordinary income or
loss. In the case of overlap between sections 1256
and 988, special provisions determine the
character and timing of any income gain, or loss.
Each Fund attempts to monitor section 988 transactions to minimize any adverse
tax impact.
The foregoing is a general and abbreviated summary of certain federal income tax
considerations affecting each Fund and the separate accounts. No attempt is made
to present a complete explanation of the federal tax treatment of the Funds'
activities, and this discussion is not intended as a substitute for careful tax
planning. Accordingly, potential investors are urged to consult their own tax
advisers for more detailed information and for information regarding any state,
local, or foreign taxes applicable to the Funds and to dividends and other
distributions therefrom.
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<PAGE> 57
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G.T. GLOBAL VARIABLE INVESTMENT FUNDS
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ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
BIL GT GROUP
Other subsidiaries of the BIL GT Group include the Bank in Liechtenstein AG, an
international financial services institution founded in 1920, with over $17
billion in assets under administration and principal offices in Vaduz,
Liechtenstein, Bank in Liechtenstein (Frankfurt) GmbH, and Bilfinanz und
Verwaltung AG located in Zurich, Switzerland. In total, BIL GT Group encompasses
over $43 billion in assets under management and administration.
CUSTODIAN
State Street Bank and Trust Company
("State Street"), 225 Franklin Street, Boston, Massachusetts 02110, acts as
custodian of the Funds' assets. State Street is authorized to establish and has
established individual
accounts in foreign currencies and to cause
securities of the Funds to be held in such
accounts outside the United States in the custody
of non-U.S. banks.
INDEPENDENT ACCOUNTANTS
The Companies' and the Funds' independent accountants are Coopers & Lybrand
L.L.P., One Post Office Square, Boston, Massachusetts 02109. Coopers & Lybrand
L.L.P. conducts an annual
audit of each Fund, assists in the preparation
of the Funds' federal and state income tax
returns and consults with the Companies and
the Funds as to matters of accounting,
regulatory filings, and federal and state income
taxation.
The audited financial statements of each Company and each Fund included in this
Statement of Additional Information have been examined by Coopers & Lybrand
L.L.P., as stated in its opinion appearing herein, and are included in reliance
upon such opinion given upon the authority of said firm as experts in accounting
and auditing.
USE OF NAME
G.T. Capital has granted each Company the right to use the "G.T." name and has
reserved the right to withdraw its consent to the use of such name by either
Company and/or any of the Funds at any time, or to grant the use of such name to
any other company.
SHAREHOLDER LIABILITY
Under certain circumstances, a shareholder of
a Fund may be held personally liable for the obligations of the Fund. Each
Company's Declaration of Trust provides that shareholders shall not be subject
to any personal liability for the acts or obligations of a Fund or the Company
and that every written agreement, obligation or other undertaking made or issued
by a Fund or the Company shall contain a provision to the effect that
shareholders are not personally liable thereunder. Each Declaration of Trust
provides for indemnification out of the Company's assets under certain
circumstances, and further provides that the Company shall, upon request, assume
the defense of any act or obligation of a Fund or the Company and that the Fund
in which the shareholder holds shares will indemnify the shareholder for all
legal and other expenses incurred therewith. Thus, the risk of any shareholder
incurring financial loss beyond his or her investment, on account of this
theoretical shareholder liability, is limited to circumstances in which the Fund
or the Company itself would be unable to meet its obligations.
- --------------------------------------------------------------------------------
INVESTMENT RESULTS
- --------------------------------------------------------------------------------
The Funds' "Standardized Return", as referred to in the Funds' Prospectus (see
"Other Information -- Performance Information" in the Prospectus), is calculated
as follows: Standardized Return ("T") is computed by using the value at the end
of the period ("EV") of a hypothetical initial investment of $1,000 ("P") over a
period of years ("n") according to the following
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Statement of Additional Information Page 54
<PAGE> 58
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------------------------------------------------
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
formula as required by the SEC: P(1+T)n = EV. The following assumptions will be
reflected in computations made in accordance with this formula: (1) reinvestment
of dividends and
other distributions at net asset value on the reinvestment date determined by
the Board of Trustees; and (2) a complete redemption at the end of any period
illustrated. The Standardized Return quotation does not reflect the charges
deducted from the Participating Insurance Companies' separate accounts. See the
VA Contract prospectus. If these charges were deducted to reflect the effective
Standardized Return to the VA Contract owner, that Standardized Return would be
lower than the Standardized Returns quoted.
"Non-Standardized Return," as referred to in the Funds' Prospectus, is
calculated for a specified period of time by assuming the investment of $1,000
in Fund shares and further assuming the reinvestment of all dividends and other
distributions made to Fund shareholders in additional Fund shares at their net
asset value. Percentage rates of return are then calculated by comparing this
assumed initial investment to the value of the hypothetical account at the end
of the period for which the Non-Standardized Return is quoted. The
Non-Standardized Return quotation does not reflect the charges deducted from the
Participating Insurance Companies' separate accounts. See the VA Contract
prospectus. If these charges were deducted, the Non-Standardized Return
quotation would be lower than those stated. Non-Standardized Returns may be
quoted for the same or different time periods for which Standardized Returns are
quoted.
As discussed in the Prospectus, each Fund may quote Non-Standardized Total
Returns that do not reflect the effect of sales charges. Non-Standardized
Returns may be quoted for the same or different time periods for which
Standardized Returns are quoted.
The Non-Standardized Returns for each Fund (except the Telecommunications Fund)
for the fiscal year ended December 31, 1994, and from inception on February 10,
1993 to December 31, 1994, quoted as average annual total return, were as
follows:
<TABLE>
<S> <C>
Variable America Fund
-- Year ended December 31, 1994.... 18.88%
-- From inception on February 10,
1993 to December 31, 1994....... 17.84%
Variable Europe Fund
-- Year ended December 31, 1994.... -.59%
-- From inception on February 10,
1993 to December 31, 1994....... 13.50%
Variable New Pacific Fund*
-- Year ended December 31, 1994.... -12.47%
-- From inception on February 10,
1993 to December 31, 1994....... 8.78%
Variable Growth and Income Fund
-- Year ended December 31, 1994.... -2.85%
-- From inception on February 10,
1993 to December 31, 1994....... 7.38%
Variable Strategic Income Fund
-- Year ended December 31, 1994.... -17.09%
-- From inception on February 10,
1993 to December 31, 1994....... 3.00%
Variable Global Government Income
Fund
-- Year ended December 31, 1994.... -8.70%
-- From inception on February 10,
1993 to December 31, 1994....... -.13%
Variable U.S. Government Income Fund
-- Year ended December 31, 1994.... -6.27%
-- From inception on February 10,
1993 to December 31, 1994....... -.15%
Variable Latin America Fund
-- Year ended December 31, 1994.... 9.14%
-- From inception on February 10,
1993 to December 31, 1994....... 28.61%
Money Market Fund
-- Year ended December 31, 1994.... 3.48%
-- From inception on February 10,
1993 to December 31, 1994....... 3.20%
- ------------
*Formerly, G.T. Global: Variable
Pacific Fund
</TABLE>
The Non-Standardized Returns for the Telecommunications Fund for the fiscal year
ended December 31, 1994, and from inception on October 18, 1993 to December 31,
1994, quoted as average annual total return, were 7.15% and 13.70%,
respectively.
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G.T. GLOBAL VARIABLE INVESTMENT FUNDS
The Non-Standardized Returns of each Fund, except the Telecommunications Fund,
the International Fund and the Emerging Markets Fund, quoted as aggregate total
returns, for the period February 10, 1993 (commencement of operations) through
December 31, 1994, were as follows:
<TABLE>
<CAPTION>
AGGREGATE
G.T. GLOBAL: RETURN
----------- ---------
<S> <C>
Variable America Fund............. 36.32%
Variable Europe Fund.............. 26.99
Variable New Pacific Fund*........ 17.22
Variable Growth & Income Fund..... 14.39
Variable Strategic Income Fund.... 5.75
Variable Global Government
Income.......................... -.25
Fund Variable U.S. Government
Income Fund..................... -.29
Variable Latin America Fund....... 60.80
Money Market Fund................. 6.13
</TABLE>
- ------------
*Formerly, Variable Pacific Fund
The Non-Standardized Return for the Telecommunications Fund quoted as aggregate
total returns for the period October 18, 1993 (commencement of operations)
through December 31, 1994, was 16.70%.
The Non-Standardized Returns for the International Fund and the Emerging Markets
Fund, quoted as aggregate total return for the period July 5, 1994 (commencement
of operations) through December 31, 1994, were -5.81 and .12%, respectively.
Each Fund's investment results will vary from time to time depending upon market
conditions, the composition of the Fund's portfolio and operating expenses of a
Fund, so that current
or past yield or total return should not be considered representations of what
an investment in a Fund may earn in any future period. These factors and
possible differences in the methods used in calculating investment results
should be considered when comparing a Fund's investment results with those
published for other investment companies and other investment vehicles. A Fund's
results also should be considered relative to the risks associated with such
Fund's investment objective and policies.
Current yield ("YIELD") is computed by dividing the difference between dividends
and interest earned during a one-month period ("a") and expenses accrued for the
period (net of reimbursements) ("b") by the product of the average daily number
of shares outstanding during the period that were entitled to receive dividends
("c") and the maximum offering price per share on the last day of the period
("d") according to the following formula as required by the SEC:
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- -
a-b1
YIELD = 2 cd + 1 6 - 1
( )
- -
</TABLE>
Performance figures for a Fund will only be advertised if comparable performance
figures
for the corresponding division of the separate account are included in the
advertisement. Each Fund's investment results will vary from time
to time depending upon market conditions, the composition of the Fund's
portfolio and operating expenses of a Fund, so that current
or past yield or total return should not be considered representations of what
an investment in a Fund may earn in any future period. These factors and
possible differences in the methods used in calculating investment results
should be considered when comparing a Fund's investment results with those
published for other investment companies and other investment vehicles whose
shares are offered to insurance company separate accounts. A Fund's results also
should be considered relative to the risks associated with such Fund's
investment objectives and policies.
The Money Market Fund may, from time to
time, provide yield information or comparisons of its yield to various averages
including data from Lipper Analytical Services, Inc., Bank Rate MonitorTM,
IBC/Donaghue's Money Fund Report, Money Magazine, and other industry
publications (to the extent they apply to investment companies whose shares are
offered
to insurance company separate accounts, in advertisements or in reports
furnished to current or prospective shareholders).
The Money Market Fund calculates its yield for its shares daily, based upon the
seven days ending on the day of the calculation, called the "base period." The
yield is computed by determining the net change in the value of a hypothetical
account with a balance of one share at the beginning of the base period, with
the net change, excluding capital changes, but including the value of any
additional shares purchased with dividends earned from the original one share
and all dividends declared on the original and any purchased shares; dividing
the net change in the
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G.T. GLOBAL VARIABLE INVESTMENT FUNDS
account's value by the value of the account at the beginning of the base period
to determine the base period return; and multiplying the base period return by
( 365/7). The Money Market Fund's effective yield is computed by compounding the
unannualized base period return by adding 1 to the base period return; raising
the sum to the 365/7th power; and subtracting 1 from the result.
For the seven-day period ended December 31, 1994, the Fund's share yield was
5.07% and effective yield was 5.20% which reflects .09% of expenses reimbursed
pursuant to undertakings in effect. See "Management" in the Prospectus.
The seven-day and effective yields are calculated
as follows:
<TABLE>
<S> <C>
Assumptions:
Value of hypothetical pre-
existing account with
exactly one share at the
beginning of the period:... $1.000000000
Value of same account*
(excluding capital changes)
at the end of the seven-day
period ending December 31,
1994:...................... 1.000972434
</TABLE>
- ------------
* Value includes additional shares acquired with dividends paid on the original
shares.
<TABLE>
<S> <C>
Calculation:
Ending account value:......... $1.000972434
Less beginning account
value:..................... $1.000000000
Net change in account
value:..................... $ .000972434
Seven-day yield = $.000972434X 365/7
= 5.07%
Effective yield**
= [1 + .000972434] 365/7 - 1 = 5.20%
</TABLE>
- ------------
** The effective yield assumes a year's compounding of the seven-day yield.
The Money Market Fund's investment results may also be calculated for longer
periods in accordance with the following method: by subtracting (a) the net
asset value of one share at the beginning of the period, from (b) the net asset
value of all shares an investor would own at the end of the period for the share
held at the beginning of the period (assuming reinvestment of all dividends and
distributions) and dividing
by (c) the net asset value per share at the beginning of the period. The
resulting percentage indicates the positive or negative rate of return that an
investor would have earned from the reinvested dividends and distributions and
any changes in share price during the period. These performance quotations do
not reflect the charges deducted from the Participating Insurance Companies'
separate accounts. See the VA Contract prospectus. If these charges were
deducted, such quotations would be lower than those calculated for the Money
Market Fund.
The performance figures for the Money Market Fund will only be advertised if
comparable performance figures for the corresponding division of the separate
account are included
in the advertisement. The Money Market
Fund's investment results will vary from time to
time depending upon market conditions, the composition of the Fund's portfolio
and operating expenses of the Fund, so that any yield figure should not be
considered representative
of what an investment in the Fund may earn in
any future period. These factors and possible differences in calculation methods
should be considered when comparing the Fund's investment results with those
published for other investment companies and other investment vehicles whose
shares are offered to insurance company separate accounts. Investment results
also should be considered relative to the risks associated with the investment
objective and policies.
IMPORTANT POINTS TO NOTE ABOUT THE FOLLOWING WORLD FINANCIAL AND ECONOMIC DATA
The following information is based on sources believes to be reliable, but which
may be subject to revision and which has not been independently verified by
either Company or G.T. Global. The authors and publishers of such material are
not to be considered as "experts" under the Securities Act of 1933, on account
of the inclusion of such information herein.
A portion of the performance figures for each market includes the positive or
negative effects
of the currency exchange rates effective at December 31 of each year between the
U.S. dollar and currency of the foreign market
(e.g. Japanese Yen, German Deutschemark, Hong Kong Dollar). A foreign currency
which has strengthened or weakened against the U.S. dollar will positively or
negatively affect the reported returns, as the case may be.
G.T. Global believes that this information may
be useful to investors considering whether and
to what extent to diversify their investments through the purchase of mutual
funds investing in securities on a global basis. However, this data is not a
representation of the past performance of
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G.T. GLOBAL VARIABLE INVESTMENT FUNDS
any of these Funds, nor is it a prediction of such performance. The performance
of the Funds will differ from the historical performance of the indices
represented above. The performance of indices does not take expenses into
account, while each Fund incurs expenses in its operations, which will reduce
performance. Each Fund is actively managed, i.e., G.T. Capital, as each Fund's
investment manager, actively purchases and sells securities in seeking each
Fund's investment objective. Moreover, each Fund may invest a portion of its
assets in corporate bonds, while the above data relates only to government
bonds. Each of these factors will cause the performance of each Fund to differ
from the indices shown above.
The Funds, from time to time, may be compared with the following to the extent
they apply to investment companies whose shares are offered to insurance company
separate accounts:
(1) The Salomon Brothers Non-U.S. Dollars Indices, which are measures of the
total return performance of high quality non-U.S. dollar denominated
securities in major sectors of the worldwide bond markets.
(2) The Lehman Brothers Long Treasury Bond Index, which is a measure of the
total return on all ten-year and longer U.S. treasuries with a base year of
1980 = $1,000.
(3) The Consumer Price Index, which is a measure of the average change in
prices over time in a fixed market basket of goods and services (e.g., food,
clothing, shelter, fuels, transportation fares, charges for doctors' and
dentists' services, prescription medicines, and other goods and services that
people buy for day-to-day living). There is inflation risk which does not
affect a security's value but its purchasing power; the risk of changing price
levels in the economy that affects security prices or the price of goods and
services.
(4) Data, mutual fund and variable account rankings and comparisons published
or prepared by Lipper Analytical Data Services, Inc. ("Lipper"),
CDA/Wiesenberger Investment Company Services ("CDA/ Wiesenberger"),
Morningstar, Inc. ("Morningstar"), Financial Planning Resources Inc.,
publisher of a compilation of data regarding variable accounts ("VARDS")
and/or other companies that rank or compare mutual funds or variable annuity
account divisions by overall performance, investment objectives, assets,
expense levels, periods of existence and/or other factors. In this regard,
each Fund may be compared to the Fund's "peer group" as defined by Lipper,
CDA/ Wiesenberger, Morningstar, VARDS and/or other firms, as applicable, or to
specific funds or groups of funds within or without such peer group. Lipper
generally ranks funds on the basis of total return, assuming reinvestment of
distributions, but does not take sales charges or redemption fees into
consideration, and is prepared without regard to tax consequences. In addition
to the mutual fund rankings, the Fund's performance may be compared to mutual
fund performance indices prepared by Lipper. Morningstar is a mutual fund
rating service that also rates mutual funds on the basis of risk-adjusted
performance. Morningstar ratings are calculated from a fund's three, five and
ten year average annual returns with appropriate fee adjustments and a risk
factor that reflects fund performance relative to the three-month U.S.
Treasury bill monthly returns. Ten percent of the fund in an investment
category receive five stars and 22.5% receive four stars. The ratings are
subject to change each month.
(5) Bear Stearns Foreign Bond Index, which provides simple average returns for
individual countries and GNP-weighted index, beginning in 1975. The returns
are broken down by local market and currency.
(6) Ibbottson Associates International Bond Index, which provides a detailed
breakdown of local market and currency returns since 1960.
(7) Standard & Poor's 500 Composite Stock Price Index which is a widely
recognized
index composed of the capitalization-weighted average of the price of 500 of
the largest publicly traded stocks in the United States.
(8) Salomon Brothers Broad Investment Grade Index which is a widely used index
composed of U.S. domestic government, corporate and mortgage-backed fixed
income securities.
(9) Dow Jones Industrial Average.
(10) CNBC/Financial News Composite Index.
(11) Morgan Stanley Capital International World Indices, including, among
others, the Morgan Stanley Capital International Europe,
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G.T. GLOBAL VARIABLE INVESTMENT FUNDS
Australia, Far East Index ("EAFE Index"). The EAFE Index is an unmanaged index
of more than 1,000 companies of Europe, Australia and the Far East.
(12) Salomon Brothers World Government Bond Index and Salomon Brothers World
Government Bond Index-Non-U.S. are each
a widely used index composed of world government bonds.
(13) The World Bank Publication of Trends in Developing Countries ("TIDE").
TIDE provides brief reports on most of the World Bank's borrowing members. The
World Development Report is published annually and looks at global and
regional economic trends and their implications for the developing economies.
(14) Salomon Brothers Global Telecommunications Index is composed of
telecommunications companies in the developing and emerging countries.
(15) Datastream and Worldscope each is
an on-line database retrieval service for information including, but not
limited to, international financial and economic data.
(16) International Financial Statistics, which is produced by the
International Monetary Fund.
(17) Various publications and annual reports such as the World Development
Report, produced by the World Bank and its affiliates.
(18) Various publications from the International Bank for Reconstruction and
Development.
(19) Various publications including, but not limited to ratings agencies such
as Moody's Investors Services, Fitch Investors Service, Inc., Standard &
Poor's Ratings Group.
(20) Wilshire Associates which is an on-line database for international
financial and economic data including performance measure for a wide range of
securities.
(21) Bank Rate National Monitor Index, which an average of the quoted rates
for 100 leading banks and thrifts in ten U.S. cities.
(22) International Finance Corporation Emerging Markets Data Base which
provides detailed statistics on stock and bond markets in developing
countries.
(23) Various publications from the Organization for Economic Corporation and
Development.
To the extent that they apply to investment companies whose shares are offered
to insurance company separate accounts, indices, economic and financial data
prepared by the research departments of such financial organizations as Salomon
Brothers, Inc., Lehman Brothers, Merrill Lynch, Pierce, Fenner & Smith, Inc.,
J.P. Morgan, Morgan Stanley, Smith Barney, S.G. Warburg, Jardine Flemming,
Barings Securities, The Bank for International Settlements, Asian Development
Bank, Bloomberg, L.P., and Ibbottson Associates may be used, as well as
information reported by the Federal Reserve and the respective Central Banks of
various nations. In addition, G.T. Global may use performance rankings, ratings
and commentary reported periodically in national financial publications,
including but not limited to Money Magazine, Smart Money, Global Finance,
EuroMoney, Financial World, Forbes, Fortune, Business Week, Latin Finance, The
Wall Street Journal, Emerging Markets Weekly, Kiplinger's Guide To Personal
Finance, Barron's, The Financial Times, USA Today, The New York Times, Far
Eastern Economic Review, The Economist and Investors Business Digest. Each Fund
may compare its performance to that of other compilations or indices of
comparable quality to those listed above and other indices which may be
developed and made available in the future.
From time to time, each Fund and G.T. Global may refer to the number of
contractholders or the dollar amount of each Fund's assets under management in
advertising materials.
From time to time, each Fund and G.T. Global may refer to the total amount of
assets under BIL GT Group management, or the total amount of assets under
custody with the BIL GT Group, in advertising materials.
G.T. Global believes each Fund is an appropriate investment for long-term
investment goals including, but not limited to funding retirement, paying for
education or purchasing a house. G.T. Global may provide information designed to
help individuals understand their investment goals and explore various financial
strategies. For example, G.T. Global may describe general principles of
investing, such as asset allocation, diversification and risk tolerance. Each
Fund does not represent a complete investment program and the investors should
consider each Fund as
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G.T. GLOBAL VARIABLE INVESTMENT FUNDS
appropriate for a portion of their overall investment portfolio with regard to
their long-term investment goals. There is no assurance that any such
information will lead to achieving these goals or guarantee future results.
From time to time, G.T. Global may refer to or advertise the names of companies,
or their products although there can be no assurance that any G.T. Global
Variable Investment Fund may own the securities of these companies.
Advertising and sales literature for the Contract may discuss the financial
ratings of any of the Participating Insurance Companies as compiled by
independent agencies. These independent agencies rate insurance companies'
overall financial strength, ability to meet contractual obligations, ability to
discharge senior policyholder obligations and claims, overall claims-paying
ability and other financial measures related to long-term solvency and
liquidity. The independent agencies which may be quoted include, but are not
limited to:
- A.M. Best Company
- Moody's Investors Service
- Standard & Poor's Insurance Rating Services
- Duff & Phelps, Incorporated
Ratings descriptions are relevant only to the insurance company and do not apply
to variable annuities or the underlying accounts which are subject to market
risk and whose value will fluctuate with market conditions.
In addition, advertising and sales literature for the Contracts may discuss the
assets of any of the Participating Insurance Companies, including a breakdown of
annuity assets under management, as well as the number of years the company has
been involved in the annuity marketplace.
Ibbotson Associates of Chicago, Illinois (Ibbotson) provides historical returns
of the capital markets in the United States, including common stocks, small
capitalization stocks, long-term corporate bonds, intermediate-term government
bonds, long-term government bonds, Treasury bills, the U.S. rate of inflation
(based on the CPI), and combinations of various capital markets. The performance
of these capital markets are based on the returns of different indices.
G.T. Global Variable Investment Funds may use the performance of these capital
markets in order to demonstrate general risk-versus-reward investment scenarios.
Performance comparisons may also include the value of a hypothetical investment
in any of these capital markets. The risks associated with the security types in
any capital market may or may not correspond directly to those of the funds.
Ibbotson calculates total returns in the same method as the funds. The funds may
also compare performance to that of other compilations or indices that may be
developed and made available in the future.
Each Fund may quote various measures of volatility and benchmark correlation in
advertising. In addition, each Fund may compare these measures to those of other
funds. Measures of volatility seek to compare each Fund's historical share price
fluctuations or total returns compared to those of a benchmark. All measures of
volatility and correlation are calculated using averages of historical data.
Each Fund may describe in its sales material and advertisements how an investor
may invest in the G.T. Global Variable Investment Funds through various
retirement accounts and plans that offer deferral of income taxes on investment
earnings and may also enable an investor to make pre-tax contributions. Because
of their advantages, these retirement accounts and plans may produce returns
superior to comparable non-retirement investments. The Funds may also discuss
these accounts and plans which include:
SEP-IRAS AND SALARY-REDUCTION SEP-IRAS: Simplified Employee Pension (SEP) plans
and salary-reduction SEPs provide self-employed individuals (and any eligible
employees) with benefits similar to Keogh-type plans or 401(k) plans, but with
fewer administrative requirements and therefore potential lower annual
administration expenses.
403(B)(7) CUSTODIAL ACCOUNTS: Employees of public schools and most other
not-for-profit organizations can make pre-tax salary reduction contributions to
these accounts.
PROFIT SHARING (INCLUDING 401(K)) AND MONEY PURCHASE PENSION PLANS: Corporations
can sponsor these qualified defined contribution plans for their employees. A
401(k) plan, a type of profit sharing plan, additionally permit the eligible,
participating employees to make pre-tax salary reduction contributions to the
plan (up to certain limitations).
G.T. Global may from time to time in its sales materials and advertising discuss
the risks inherent in investing. The major types of
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G.T. GLOBAL VARIABLE INVESTMENT FUNDS
investment risks are market risk, industry risk, credit risk, interest risk and
inflation risk. Risk represents the possibility that you may lose some or all of
your investment over a period of time. A basic tenet of investing is the greater
the potential reward, the greater the risk.
From time to time, the G.T. Global Variable Investment Funds and G.T. Global
will quote information including but not limited to data regarding: individual
countries, regions, world stock exchanges, and economic and demographic
statistics from sources G.T. Global deems reliable including the economic and
financial data of the referenced financial organizations such as:
1) Stock market capitalization: Morgan Stanley Capital International World
Indices, International Finance Corporation and Datastream.
2) Stock market trading volume: Morgan Stanley Capital International World
Indices, International Finance Corporation.
3) The number of listed companies: International Finance Corporation, G.T.
Guide to World Equity Markets, Salomon Brothers, Inc, S.G. Warburg and Barings
Securities.
4) Wage rates: U.S. Department of Labor, Bureau of Labor Statistics and Morgan
Stanley Capital International World Indices.
5) International industry performance: Morgan Stanley Capital International
World Indices, Wilshire Associates and Salomon Brothers, Inc.
6) Stock market performance: Morgan Stanley Capital International World
Indices, International Finance Corporation and Datastream.
7) The Consumer Price Index and inflation rate: The World Bank, Datastream and
International Finance Corporation.
8) Gross Domestic Product (GDP): Datastream and The World Bank.
9) GDP growth rate: International Finance Corporation, The World Bank and
Datastream.
10) Population: The World Bank, Datastream and United Nations.
11) Average annual growth rate (%) of population: The World Bank, Datastream
and United Nations.
12) Age distribution within populations: Organization for Economic Cooperation
and Development and United Nations.
13) Total exports and imports by year: International Finance Corporation, The
World Bank and Datastream.
14) Top three companies by country or market: International Finance
Corporation, G.T. Guide to World Equity Markets, Salomon Brothers Inc, S.G.
Warburg and Barings Securities.
15) Foreign direct investments to developing countries: The World Bank and
Datastream.
From time to time, G.T. Global may include in its advertisement and sales
material information about privatization which is an economic process involving
the sale of state-owned companies to the private sector.
In advertising and sales materials, G.T. Global may make reference to or discuss
its products, services and accomplishments. Among these accomplishments are that
in 1983 G.T. Global provided assistance to the government of Hong Kong in
linking its currency to the U.S. dollar, and that in 1987 Japan's Ministry of
Finance licensed G.T. Management (Japan) Ltd. as one of the first foreign
discretionary investment managers for Japanese investors. Such accomplishments,
however, should not be viewed as an endorsement of G.T. Global by the government
of Hong Kong, Japan's Ministry of Finance or any other government or government
agency. Nor do any such accomplishments of G.T. Global provide any assurance
that the G.T. Global Variable Investment Funds' investment objectives will be
achieved.
THE G.T. ADVANTAGE
G.T. Capital has developed a unique team approach to its global money management
which we call the G.T. Advantage. G.T. Capital's money management style combines
the best of the
"top-down" and "bottom-up" investment manager strategies. The top-down approach
is implemented by G.T. Capital's Investment Policy Committee which sets broad
guidelines for asset allocation and currency management based on G.T. Capital's
own macroeconomic forecasts
and research from our worldwide offices. The bottom-up approach utilizes
regional teams of individual portfolio managers to implement the committee's
guidelines by selecting local
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G.T. GLOBAL VARIABLE INVESTMENT FUNDS
securities that offer both strong income and/or growth potential.
EQUITY MARKET DIVERSIFICATION
As indicated by the following table, a globally diversified equity portfolio for
the ten year period ended December 31, 1994, resulted in greater return and
reduced risk (as measured by price volatility) relative to a portfolio
consisting solely of U.S. equities. The following chart was prepared by G.T.
Capital. It uses the Morgan Stanley Capital International EAFE Index as a
"proxy" for the non-North America investment universe ("Non-U.S.") and the
Standard & Poor's 500 Index as a "proxy" for the universe of U.S. stocks
("U.S."). All dividends and distributions were assumed to be reinvested. The
time period shown was generally a period of increasing market prices for global
equity securities.
EQUITY MARKET DIVERSIFICATION
10 YEARS ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
AVERAGE ANNUAL
PORTFOLIO STANDARD TOTAL
% NON-U.S./% U.S. DEVIATION(%) RETURN(%)
- ----------------- ------------ --------------
<S> <C> <C>
100/0 19.35 17.89
90/10 18.15 17.59
80/20 17.06 17.27
70/30 16.11 16.95
60/40 15.32 16.61
50/50 14.73 16.27
40/60 14.35 15.92
30/70 14.20 15.56
20/80 14.29 15.19
10/90 14.61 14.81
0/100 15.16 14.42
</TABLE>
Source: Morgan Stanley Capital International (MSCI) Europe, Australia, Far East
(EAFE) Index vs. MSCI U.S. Index, December 31, 1994. Prepared by G.T. Capital
Management, Inc.
Standard deviation of returns is a statistical measure of the degree to which a
value tends to vary from its average annual mean. In general, greater risk must
be assumed to generate greater returns. This data may not correspond to the
actual performance of any of the G.T. Global Variable Investment Funds. The bar
chart below shows the yield to maturity, as of December 31, 1994 (including
future interest payments and principal repayment at par for 10-year government
bonds, as priced by Salomon Brothers, Inc.). This data is based on U.S. dollar
values for the period shown. The actual yield will differ depending on whether
the bonds are held to maturity and on exchange rates at the time of maturity.
Historical yields are not necessarily indicative of future yields nor will they
correspond to the yields of the Funds. Yields to maturity over longer periods
have fluctuated greatly.
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G.T. GLOBAL VARIABLE INVESTMENT FUNDS
GOVERNMENT BONDS
YEAR-END YIELDS TO MATURITY
<TABLE>
<CAPTION>
U.S. CANADA GERMANY JAPAN U.K. SWITZ. NETH. FRANCE
----- ------ ------- ----- ----- ----- ----- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1994....................................... 7.82 9.14 7.62 4.57 8.71 5.22 7.75 8.27
1993....................................... 6.35 6.61 5.54 3.18 6.39 4.06 5.56 5.60
1992....................................... 6.67 7.95 7.27 4.70 8.16 5.85 7.29 8.09
1991....................................... 6.70 8.26 7.92 5.51 9.80 6.30 8.33 8.40
1990....................................... 8.09 10.27 8.70 6.53 10.93 6.37 8.98 10.00
1989....................................... 7.90 9.63 7.27 5.57 10.58 5.67 7.59 8.93
1988....................................... 9.19 10.17 6.54 4.70 10.07 4.11 6.46 8.43
1987....................................... 8.86 10.09 6.56 4.90 9.65 3.74 6.74 9.82
1986....................................... 7.23 8.75 6.05 5.30 10.54 4.32 6.25 8.87
1985....................................... 9.01 9.63 6.28 6.18 10.96 4.46 6.81 10.10
1984....................................... 11.52 11.58 7.00 6.76 11.16 4.65 7.72 12.70
<CAPTION>
AUSTL.
-----
-----
<S> <C>
1994....................................... 9.99
1993....................................... 6.68
1992....................................... 8.95
1991....................................... 9.35
1990....................................... 12.04
1989....................................... 12.93
1988....................................... 12.85
1987....................................... 12.84
1986....................................... 13.27
1985....................................... 14.86
1984....................................... 13.50
</TABLE>
The following charts show total returns as of December 31 for the years 1985
through 1994, on bonds issued by various governments. All returns are calculated
in U.S. dollars and include reinvestment of gross yields, and do not assure
deduction of any withholding taxes. These charts were prepared by G.T. Capital
based on Salomon Brothers, Inc. indexes of government bonds with remaining
maturities of at least one year. The time periods shown were generally a period
of decreasing interest rates and increasing market prices for global fixed
income securities.
GOVERNMENT BONDS
ANNUAL TOTAL RETURNS
<TABLE>
<CAPTION>
AUSTRALIA BELGIUM CANADA FRANCE GERMANY ITALY JAPAN U.K. USA
-------- ------- ------ ------ ------- ------- ------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1994......... 6.88% 12.22% -9.86% 4.37% 9.98% 4.57% 8.88% -1.54% -3.36%
1993......... 15.66% 4.00% 12.01% 13.15% 6.70% 11.08% 27.58% 19.53% 10.69%
1992......... -0.26% 7.64% -0.42% 4.27% 5.94% -13.88% 10.84% -4.12% 7.21%
1991......... 23.49% 10.89% 21.59% 12.51% 9.75% 13.24% 22.46% 12.65% 15.30%
1990......... 16.24% na 7.69% 23.52% 15.36% na 7.83% 30.88% 8.62%
1989......... 5.62% na 16.23% 9.14% 6.35% na -14.26% -3.91% 14.40%
1988......... 28.80% na 19.41% 1.63% -7.12% na 3.04% 2.44% 7.07%
1987......... 28.99% na 10.00% 26.58% 29.38% na 38.12% 46.61% 1.93%
1986......... 16.64% na 15.72% 34.09% 37.17% na 40.09% 14.77% 15.73%
1985......... -12.06% na 14.80% 50.51% 43.02% na 36.85% 40.18% 20.94%
10 Year Average Annualized Returns from 12/84-12/94
12.28% na 10.32% 17.10% 14.81% na 16.88% 14.47% 9.64%
</TABLE>
Source: Salomon Brothers, Inc. Countries identified as "na" were not part of the
Salomon Brothers World Government Bond Index during the years indicated.
From time to time, each Fund and G.T. Global may quote data for stock market
trading volume and number of listed companies for various countries, from
information provided by the International Finance Corporation (IFC).
Further, from time to time, each Fund and G.T. Global may also quote information
similar to that described above, including such data from established markets
from, but not limited to, other sources such as S.G. Warburg, Salomon Brothers,
Inc and Datastream.
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G.T. GLOBAL VARIABLE INVESTMENT FUNDS
Each Fund and G.T. Global, from time to time, may quote information on stock
market capitalization and may show the performance of certain national stock
markets. The table below, prepared by G.T. Capital, includes performance data
through December 31, 1994, relating to the various nations' stock markets as
measured by Morgan Stanley Capital International World Stock Market indices. The
results assume reinvestment of all dividends and are reported in U.S. dollars
after currency translation at reported December 31, 1994 exchange rates. The
performance of the stock markets shown does not reflect expenses and will not
correspond to the performance of the Funds, which are actively managed and incur
expenses.
MORGAN STANLEY CAPITAL INTERNATIONAL
INTERNATIONAL INDICES 12/31/94 (US$, GROSS DIVIDENDS REINVESTED)
<TABLE>
<CAPTION>
MARKET ANNUALIZED RETURNS (%)
CAPITALIZATION ----------------------------------------
(US$ BN)+ 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------------- ------ ------- ------- --------
<S> <C> <C> <C> <C> <C>
International Indices
THE WORLD................................... 7,592.9 5.58 7.42 4.24 15.51
NORTH AMERICA............................... 2,918.2 1.73 6.07 8.52 13.94
EAFE........................................ 4,661.8 8.06 8.19 1.82 17.89
EUROPE 14................................... 2,084.1 2.66 8.46 6.98 18.99
NORDIC COUNTRIES............................ 156.2 20.57 11.62 5.06 19.79
PACIFIC..................................... 2,577.6 13.03 7.93 -1.62 17.06
FAR EAST.................................... 2,436.8 13.45 7.78 -2.07 17.22
Free Indices
THE WORLD FREE.............................. 7,602.4 5.57 7.43 4.27
EAFE FREE................................... 4,671.3 -4.17 7.57 1.78
EUROPE 14 FREE.............................. 2,080.5 -3.09 8.28 7.11
EUROPE 14 FREE EX UK........................ -0.57 10.02 6.44
NORDIC COUNTRIES FREE....................... 152.6 4.91 12.16 6.51
PACIFIC FREE................................ 2,590.9 -5.04 7.06 -1.76
PACIFIC FREE EX JAPAN....................... -18.65 14.34 14.00
FAR EAST FREE............................... -4.81 6.91 -2.18
Special Areas
THE WORLD EX USA............................ 7.64 7.93 1.76 17.13
EAFE + CANADA............................... 7.65 7.89 1.76 17.29
KOKUSAI (WORLD EX JAPAN).................... 0.55 7.85 8.35 15.51
EASEA (EAFE EX JAPAN)....................... -0.77 9.83 8.05 18.98
PACIFIC EX JAPAN............................ -13.99 18.42 15.31 18.80
THE WORLD EX THE UK......................... 6.48 7.63 3.82 15.21
EAFE EX THE UK.............................. 10.22 8.74 0.70 17.97
EUROPE 14 EX THE UK......................... 1,351.6 5.27 10.22 6.08 19.87
THE WORLD EX AUSTRALIA...................... 5.57 7.39 4.19 15.51
National Indices
AUSTRALIA................................... 122.8 6.48 9.48 8.37 15.98
AUSTRIA..................................... 17.5 -6.05 2.74 0.40 23.31
BELGIUM..................................... 48.5 9.43 10.92 7.23 24.90
CANADA...................................... 168.1 -2.43 0.76 0.12 8.17
DENMARK..................................... 34.4 4.25 0.09 3.17 17.17
FINLAND..................................... 25.9 52.47 34.70 6.81
FINLAND FREE................................ 25.9 52.47 33.65 7.77
FRANCE...................................... 275.0 -4.70 6.20 4.23 20.83
GERMANY..................................... 290.1 5.11 8.95 5.09 18.73
GREECE...................................... 7.6 -0.78 -0.81 8.05
HONG KONG................................... 154.1 -28.90 26.79 27.18 26.50
IRELAND..................................... 12.1 14.50 8.71 3.71
ITALY....................................... 98.5 12.13 4.52 -1.54 17.14
JAPAN....................................... 2,121.1 21.62 6.36 -3.43 16.86
MALAYSIA.................................... 105.3 -19.94 25.57 13.86
NETHERLANDS................................. 163.9 12.66 16.74 13.18 22.05
NEW ZEALAND................................. 18.1 10.27 23.39 7.57
</TABLE>
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G.T. GLOBAL VARIABLE INVESTMENT FUNDS
<TABLE>
<CAPTION>
MARKET ANNUALIZED RETURNS (%)
CAPITALIZATION ----------------------------------------
(US$ BN)+ 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------------- ------ ------- ------- --------
<S> <C> <C> <C> <C> <C>
NORWAY...................................... 18.5 24.07 11.39 3.49 16.03
NORWAY FREE................................. 14.8 27.41 13.14 4.78
PORTUGAL.................................... 8.5 11.95 8.01 -3.48
SINGAPORE................................... 56.3 6.68 23.95 16.02 16.50
SINGAPORE FREE.............................. 69.5 5.81 24.23 18.65
SPAIN....................................... 80.0 -3.93 -0.08 0.37 20.05
SWEDEN...................................... 77.4 18.80 12.22 5.37 21.43
SWEDEN FREE................................. 77.4 18.80 15.40 7.70
SWITZERLAND................................. 210.0 4.18 21.77 14.81 21.32
SWITZERLAND FREE............................ 210.0 4.18 21.97 14.85
UNITED KINGDOM.............................. 732.6 -1.63 5.65 8.58 17.73
USA......................................... 2,750.1 2.00 6.42 9.16 14.36
EAFE (GDP WEIGHTED)......................... 8.21 9.65 3.97 19.91
Emerging Markets
EMG (EMERGING MARKETS GLOBAL)............... 840.4 -1.07 20.41 9.52
EMG FAR EAST................................ 469.4 1.05 21.99 2.43
EMG LATIN AMERICA........................... 281.0 -3.69 19.73 32.62
EMF (EMERGING MARKETS FREE)................. 594.2 -7.32 21.76 20.89
EMF FAR EAST................................ 235.5 -13.97 26.90 13.12
EMF LATIN AMERICA........................... 268.7 0.64 20.66 32.23
INDIA....................................... 55.2 9.93
INDONESIA................................... 22.1 -25.92 14.98 -2.15
KOREA....................................... 121.5 23.67 18.17 0.26
MALAYSIA.................................... 105.3 -19.94 25.57 13.86
PAKISTAN.................................... 6.9 -7.09 0.00 0.00
PHILIPPINES................................. 20.9 0.80 47.51 21.44
PHILIPPINES FREE............................ 13.2 -7.88 41.69 23.46
SRI LANKA................................... 1.3 -3.03
TAIWAN...................................... 129.0 20.78 19.40 -2.98
THAILAND.................................... 70.6 -9.03 35.86 17.47
ARGENTINA................................... 24.2 -23.63 -9.39 28.67
BRAZIL...................................... 94.8 65.73 46.49 26.87
CHILE....................................... 38.8 44.76 34.06 46.83
COLOMBIA.................................... 7.3 21.30
MEXICO...................................... 108.4 -43.39 2.94 29.69
MEXICO FREE................................. 96.7 -40.55 3.53 32.47
PERU........................................ 4.3 45.42
VENEZUELA................................... 3.0 -34.14
VENEZUELA FREE.............................. 2.4 -14.55
GREECE...................................... 7.6 -0.78 -0.81 8.05
ISRAEL...................................... 13.2
ISRAEL -- DOMESTIC.......................... 10.9
ISRAEL -- NON DOMESTIC...................... 2.3
JORDAN...................................... 1.2 -8.70 15.66 10.60
PORTUGAL.................................... 8.5 11.95 8.01 -3.48
TURKEY...................................... 9.3 -50.49 -4.23 -7.47
COMBINED FAR EAST FREE...................... 2,580.2 12.07 8.44 -1.68
COMBINED FAR EAST EX JAPAN.................. 679.8 -7.40 24.17 9.17
COMB FAR EAST FREE EX JAPAN................. 459.2 -17.48 26.91 20.14
EAFE AND EMG................................ 5,396.8 6.42 8.79 2.22
EAFE AND EMF................................ 5,150.7 5.91 8.39 2.25
ALL-COUNTRY WORLD INDEX..................... 8,344.7 3.85 7.50 4.21
</TABLE>
+ Market capitalization is not a measure of investment performance. Accordingly,
the above market capitalization figures are not intended to illustrate
investment performance in any individual developing market. Although the
period December 31, 1984 to December 31, 1994 was one of growing market
capitalization throughout the world, market capitalization in certain emerging
markets encountered periods of volatility rather than a steadily increasing
trend.
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G.T. GLOBAL VARIABLE INVESTMENT FUNDS
The Fund and G.T. Global may also quote information similar to that shown above
from other sources, but not limited to, the International Finance Corporation
(IFC), S.G. Warburg, Salomon Brothers, Wilshire Associates, Inc. and Datastream.
MORGAN STANLEY CAPITAL INTERNATIONAL
INTERNATIONAL INDUSTRY INDICES DECEMBER 31, 1994 (US$ WITHOUT DIVIDENDS)
<TABLE>
<CAPTION>
MARKET ANNUALIZED RETURNS (%)
CAPITALIZATION ----------------------------------------
(US$ BN) 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------------- ------ ------- ------- --------
<S> <C> <C> <C> <C> <C>
Energy
ENERGY SOURCES............................... 447.6 5.40 4.05 2.35 10.72
UTILITIES -- ELECTRICAL & GAS................ 412.8 -11.94 -0.05 -1.03 9.88
Sector............................................ 860.4
Materials
BUILDING MATERIALS & COMPONENTS.............. 107.9 -4.87 5.17 -1.34 13.68
CHEMICALS.................................... 303.5 15.59 7.33 2.47 14.06
FOREST PRODUCTS & PAPER...................... 111.2 9.97 5.74 0.96 10.76
METALS -- NON FERROUS........................ 92.1 12.77 9.54 1.49 10.42
METALS -- STEEL.............................. 109.8 26.99 6.24 -7.78 13.56
MISC. MATERIALS & COMMODITIES................ 73.1 9.52 6.97 -0.72 12.00
Sector............................................ 797.6
Capital Equipment
AEROSPACE & MILITARY TECHNOLOGY.............. 59.1 6.34 8.97 6.06 7.13
CONSTRUCTION & HOUSING....................... 103.1 2.36 -5.42 -9.33 16.82
DATA PROCESSING & REPRODUCTION............... 107.0 22.96 -0.53 -3.43 -1.20
ELECTRICAL & ELECTRONICS..................... 264.9 3.77 7.35 2.80 11.80
ELECTRONIC COMPONENTS & INSTRUMENTS.......... 177.2 15.59 7.33 2.47 14.06
ENERGY EQUIPMENT & SERVICES.................. 20.7 -13.03 -3.86 -3.90 3.21
INDUSTRIAL COMPONENTS........................ 126.7 16.11 14.02 2.49 12.22
MACHINERY & ENGINEERING...................... 177.8 18.97 9.29 0.32 14.45
Sector............................................ 1036.5
Consumer Goods
APPLIANCES & HOUSEHOLD DURABLES.............. 136.5 18.11 10.40 0.39 11.20
AUTOMOBILES.................................. 233.7...... 12.06 15.36 2.61 12.27
BEVERAGES & TOBACCO.......................... 260.5 4.93 -1.30 6.57 18.26
FOOD & HOUSEHOLD PRODUCTS.................... 277.8 5.12 2.10 4.68 17.21
HEALTH & PERSONAL CARE....................... 517.4 9.54 -0.91 8.69 17.09
RECREATION, OTHER CONSUMER
GOODS...................................... 93.5 9.20 4.78 1.49 9.86
TEXTILES & APPAREL........................... 30.9 5.21 -3.29 -5.32 11.12
Sector............................................ 1550.3
Services
BROADCASTING & PUBLISHING.................... 143.4 0.80 13.97 5.08 13.77
BUSINESS & PUBLIC SERVICES................... 267.2 9.71 10.04 5.61 13.82
LEISURE & TOURISM............................ 114.3 -2.56 11.13 3.04 15.59
MERCHANDISING................................ 389.4 -2.54 2.66 5.45 15.15
TELECOMMUNICATIONS........................... 375.5 -5.99 5.72 3.36 11.47
TRANSPORTATION -- AIRLINES................... 50.1 4.61 0.86 -3.68 10.67
TRANSPORTATION -- ROAD & RAIL................ 103.8 -0.70 3.59 -4.67 12.25
TRANSPORTATION -- SHIPPING................... 36.5 7.17 4.04 -4.12 15.00
WHOLESALE & INTERNATIONAL TRADE.............. 66.0 35.10 9.31 -3.01 14.63
Sector............................................ 1546.2
</TABLE>
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G.T. GLOBAL VARIABLE INVESTMENT FUNDS
<TABLE>
<CAPTION>
MARKET ANNUALIZED RETURNS (%)
CAPITALIZATION ----------------------------------------
(US$ BN) 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------------- ------ ------- ------- --------
<S> <C> <C> <C> <C> <C>
Finance
BANKING...................................... 1008.9 0.71 4.63 -0.66 15.28
FINANCIAL SERVICES........................... 181.9 8.01 5.29 -2.93 13.77
INSURANCE.................................... 282.9 -2.55 5.06 1.34 13.21
REAL ESTATE.................................. 110.6 -20.78 6.62 0.21 15.36
Sector............................................ 1584.3
Multi Industry
MULTI-INDUSTRY............................... 237.6 -6.75 7.70 4.66 11.80
Sector............................................ 237.6
Gold Mines
GOLD MINES 37.8 -11.16 14.07 0.20 2.37
Sector............................................ 37.8
</TABLE>
The Fund(s) and G.T. Global may also quote information from, but not limited to,
the International Finance Corporation (IFC), S.G. Warburg, Salomon Brothers,
World Scope, Bloomberg, Datastream and Wilshire Associates, Inc.
- --------------------------------------------------------------------------------
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Statement of Additional Information Page 67
<PAGE> 71
- --------------------------------------------------------------------------------
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G.T. GLOBAL VARIABLE INVESTMENT FUNDS
From time to time, each Fund and G.T. Global may quote information on the top
companies listed on an exchange or index for countries around the world such as,
but not limited to, those listed below.
Further, from time to time, G.T. Global and each Fund will quote information
similar to that described below from sources other than G.T. Capital Management
Inc. such as, but not limited to, S.G. Warburg, Morgan Stanley Capital
International, Wilshire Associates, Inc. and World Scope. There can be no
assurance that any of the G.T. Global Mutual Funds will own or continue to own
the securities of the companies listed below.
THREE LARGEST COMPANIES
<TABLE>
<S> <C>
MEXICO Telmex
Banacci
Tlevisa
CHILE Telefonos
Endesa
Enersis
ARGENTINA VPF
Telefonica de Argentina
Telecom Arg. Stet-France Telecom.
BRAZIL Telebras
Electrobras
Petrobras
JAPAN Mitsubishi Bank
Industrial Bank of Japan
Toyota Motor
HONG KONG HSBC Holdings plc
Hong Kong Telecommunications
Sun Hung Kai Properties
SOUTH KOREA KEPCO
POSCO
Samsung Electronics
TAIWAN Cathjay Life Insurance Co. Ltd.
Hua Nan Commercial Bank
First Commercial Bank
SINGAPORE Singapore Telecom Ltd.
OCBC Bank Ltd.
Singapore Airlines Ltd.
MALAYSIA TNB
Telekom
Resorts
THAILAND Telecomasia
Bangkok Bank
Shinawatra
INDONESIA Barito Pacific Timber
Astra Int'l Inc.
H M Sampoerna
PHILIPPINES San Miguel Corp. (A & B)
Philippine Long Distance
Telephone Co.
Ayala Corp. (A & B)
AUSTRALIA BHP
News Corporation
National Australia Bank
NEW ZEALAND Telecom Corporation of
New Zealand Ltd.
Carter Holt Harvey Ltd.
Fletcher Challenge Ltd. --
Ordinary Division
UNITED KINGDOM British Telecommunications
HSBC Holdings
Shell Transport & Trading Co.
(The)
GERMANY Allians AG Holding N-AKT
Siemens AG
Deutsche Bank AG
FRANCE Alcatel Alsthom
Elf Aquitaine
Eaux (Cie Gie des)
NETHERLANDS Royal Dutch
Unilever Cert.
Internationale Nederlanden Groep
SPAIN Endesa
Telefonica
Bayer AG
ITALY Generali Assicurazioni
Sip
Stet
SWITZERLAND Roche
Nestle
UBS
SWEDEN Astra
Ericsson
ASEA
DENMARK Novo Nordisk B
Den Danske Bank
Sophus Berendsen
NORWAY Norsk Hydro
Hafslund Nycomed
Kvaerner
FINLAND Nokia Corporation
Repola Ltd.
Kymmene Corporation
U.S. (NYSE) Exxon Corp
General Electric Co.
Coca Cola Co.
CANADA General Motors
Mobil Corporation
Ford Motor Co.
</TABLE>
Source: The G.T. Guide to World Equity Markets 1994-1995. Euromoney Publications
Plc, 1994.
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Statement of Additional Information Page 68
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------------------------------------------------
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
WAGE RATES
From time to time the Fund and G.T. Global may quote data on wage rates for, but
not limited to, the following countries:
US$ PER HOUR
<TABLE>
<S> <C>
Germany............................................................... $25.56
Switzerland........................................................... $22.66
Japan................................................................. $19.20
Sweden................................................................ $17.91
U.S................................................................... $16.79
Canada................................................................ $16.36
France................................................................ $16.31
Italy................................................................. $15.97
UK.................................................................... $12.82
Australia............................................................. $12.25
Spain................................................................. $11.53
New Zealand........................................................... $ 8.01
Singapore............................................................. $ 5.38
South Korea........................................................... $ 5.37
Taiwan................................................................ $ 5.23
Asian NIE's........................................................... $ 5.15
Portugal.............................................................. $ 4.60
Hong Kong............................................................. $ 4.31
Mexico................................................................ $ 2.65
</TABLE>
Source: U.S. Department of Labor, Bureau of Labor Statistics, International
Comparison of Hourly Compensation Costs for Production Workers in Manufacturing,
1993, Report 873, June 1994.
G.T. Global and each Fund may also quote information similar to that shown above
from other sources such as, but not limited to, Morgan Stanley, S.G. Warburg and
the U.S. Department of Labor.
From time to time, each Fund and G.T. Global may quote and compare real GDP
growth rates of emerging and established countries.
REAL GDP GROWTH RATES (ANNUAL PERCENT CHANGE)
<TABLE>
<CAPTION>
ESTABLISHED EMERGING
COUNTRIES COUNTRIES
---------- ---------
<S> <C> <C>
1994.................................................... 3.0% 6.3%
1993.................................................... 1.2% 6.1%
1992.................................................... 1.6% 5.9%
1991.................................................... 0.6% 4.4%
1990.................................................... 2.4% 3.7%
1989.................................................... 3.3% 4.0%
1988.................................................... 4.4% 5.3%
1987.................................................... 3.2% 5.7%
1986.................................................... 2.9% 5.0%
</TABLE>
Source: International Monetary Fund, May 1995, World Economic Outlook, May 1995.
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Statement of Additional Information Page 69
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G.T. GLOBAL VARIABLE INVESTMENT FUNDS
From time to time, each Fund and G.T. Global may quote the most currently
available data for GDP, GDP Growth, Population, Per Capita GDP, Total Exports,
Total Imports and Inflation Rates for, but not limited to, the following
countries:
<TABLE>
<CAPTION>
GDP GDP GROWTH POPULATION TOTAL EXPORTS TOTAL IMPORTS INFLATION
(US$ MILLIONS) RATE (%) (MILLIONS) (US$ MILLIONS) (US$ MILLIONS) RATE (%)
-------------- ---------- ---------- -------------- -------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Hong Kong............. 77,828 5.5 5.8 30,251 123,427 8.5
China................. 506,075 13.1 1,162.2 84,940 80,585 13.0
South Korea........... 296,136 5.3 43.7 76,394 81,413 4.8
Taiwan................ na 5.7 na 88,337 70,071 2.9
Singapore............. 46,025 9.8 2.8 63,386 72,067 2.4
Malaysia.............. 57,568 7.4 18.6 40,705 38,361 3.6
Indonesia............. 126,364 6.5 184.3 33,815 27,280 9.7
Thailand.............. 110,337 7.8 58.0 32,473 40,466 3.3
Philippines........... 52,462 1.8 64.3 9,790 15,465 7.6
India................. 214,598 4.1 883.6 19,795 22,530 9.9
Pakistan.............. 41,904 5.1 119.3 7,264 9,360 8.7
Australia............. 294,760 3.0 17.5 38,045 42,140 1.1
New Zealand........... 41,304 3.7 3.4 9,338 9,200 1.6
Japan................. 3,670,979 0.1 124.5 339,492 230,975 1.3
Brazil................ 360,405 5.0 153.9 35,956 23,115 2,103.3
Mexico................ 329,011 0.4 85.0 27,166 47,877 9.8
Argentina............. na 6.0 33.1 12,235 14,864 10.6
Venezuela............. 61,137 -1.0 20.2 13,997 12,222 38.7
Chile................. 41,203 6.0 13.6 9,646 9,456 12.7
Portugal.............. 79,547 -0.8 9.8 18,541 30,482 6.8
Turkey................ 99,696...... 6.8 58.5 14,715 22,871 65.5
Poland................ 83,823 4.0 38.4 13,324 15,309 35.3
Hungary............... 35,218 -1.6 10.3 10,700 11,078 22.5
Greece................ 67,278 na 10.3 9,842 23,407 14.0
United Kingdom........ 903,126 1.9 57.8 190,481 221,658 3.4
France................ 1,319,883 -0.7 57.4 231,452 238,299 2.1
Netherlands........... 320,290 3.0 15.2 139,919 134,376 1.5
Spain................. 574,844 -1.0 39.1 64,302 99,473 4.3
Italy................. 1,222,962 -7.0 57.8 178,349 184,510 4.4
Switzerland........... 241,406 -0.7 6.9 65,616 65,603 2.3
Sweden................ 220,834 -1.7 8.7 55,933 49,849 2.9
Norway................ 112,906 1.8 4.3 35,178 25,897 2.4
Finland............... 93,869 -2.6 5.0 23,515 20,741 1.2
Denmark............... 123,546 0.3 5.2 39,570 33,601 1.2
United States......... 5,920,199 3.0 255.4 420,812 551,591 3.0
</TABLE>
Sources: 1992 GDP, mid-1992 population, 1992 exports and 1992 imports, The World
Development Report 1994, The World Bank, June 1994, 1993 GDP Growth Rate and
1993 Inflation Rate, World Economic Outlook -- October 1994, International
Monetary Fund, October 1994.
G.T. Global and each Fund may also quote the information from other sources such
as, but not limited to, International Financial Statistics, an IMF publication,
and Trends in Developing Economies, a World Bank publication.
Further, the Funds in their advertising and sales material sent to prospective
investors may refer to the increasing importance of an investment strategy which
includes global investments, the potential benefits of tax-deferral and
diversification through the purchase of a financial product which invests in
mutual funds that invest in securities on a global basis and may indicate that
potential investors may consider diversifying their investment portfolios in
order to seek protection of the value of their assets against inflation.
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Statement of Additional Information Page 70
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------------------------------------------------
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
From time to time, each Fund and G.T. Global may quote data for stock market
trading volume and number of listed companies for various countries, from
information provided by the International Finance Corporation (IFC).
NUMBER OF LISTED COMPANIES AND TRADING VOLUME
<TABLE>
<CAPTION>
NUMBER ANNUAL
OF LISTED TRADING VOLUME
COMPANIES (US$ MILLIONS)
--------- ---------------
<S> <C> <C>
Canada............................ 1,124 142,222
U.S............................... 7,607 3,507,223
Argentina......................... 180 10,339
Brazil............................ 550 57,409
Chile............................. 263 2,797
Columbia.......................... 89 732
Mexico............................ 190 62,454
Venezuela......................... 93 1,874
Korea............................. 693 211,710
Philippines....................... 180 6,785
Taiwan............................ 183 43,395
India............................. 6,800 21,879
Indonesia......................... 174 9,158
Malaysia.......................... 410 153,661
Pakistan.......................... 653 1,844
Hong Kong......................... 450 131,550
Singapore......................... 178 81,623
Japan............................. 2,155 954,341
Australia......................... 1,070 67,711
New Zealand....................... 136 6,785
Greece............................ 143 2,713
Jordan............................ 101 1,377
Nigeria........................... 174 10
Portugal.......................... 183 4,835
Turkey............................ 152 23,242
UK................................ 1,646 423,526
France............................ 472 174,283
Germany........................... 426 302,985
</TABLE>
Source: Emerging Stock Markets Factbook 1994, International Finance Corporation
(IFC), June 1994.
In addition, the G.T. Global: Variable Strategic Income Fund, from time to time,
may quote yields and total returns of representative debt instruments from the
following emerging market countries in its advertising and sales literature:
<TABLE>
<S> <C> <C>
Argentina Hungary Poland
Brazil India Russia
Chile Malaysia South Korea
China Mexico Thailand
Ecuador Morocco Turkey
Finland Nigeria Venezuela
Greece Portugal
</TABLE>
G.T. believes that before emerging market countries with high debt levels can
attract substantial amounts of foreign capital, they must put their financial
houses in order. Some emerging markets governments have implemented debt
restructuring programs. From time to time, each Fund may include in its
advertising and sales material information on emerging market countries' debt
restructuring activities.
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Statement of Additional Information Page 71
<PAGE> 75
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G.T. GLOBAL VARIABLE INVESTMENT FUNDS
COUNTRIES CURRENTLY RESTRUCTURING UNDER THE BRADY PLAN:
<TABLE>
<CAPTION>
FIRST BOND
ISSUANCE
--------------
<S> <C>
Mexico............................ March 1990
Costa Rica........................ May 1990
Venezuela......................... December 1990
Nigeria........................... January 1992
Philippines....................... December 1992
Argentina......................... April 1993
Brazil............................ April 1994
Poland............................ October 1994
Ecuador........................... In progress
Peru.............................. In progress
Panama............................ In progress
</TABLE>
Source: G.T. Capital Management, Inc., October 1994.
The following table indicates that from April 1, 1990 to February 1, 1995, a
portfolio of global government bonds further diversified to include Brady Bonds
issued by governments in developing countries was shown to have reduced
volatility while increasing returns. In producing the following table, the
Salomon Brothers Brady Bond Index was used as a "proxy" for the universe of
Brady Bonds and the Salomon Brothers World Government Bond Index was used as a
"proxy" for the universe of global government bonds. All distributions and
interest payments were deemed to reinvested in the appropriate index on a
monthly basis.
Salomon Brothers Brady Bond Index vs. Salomon World Government Bond Index April
1, 1990 -- February 1, 1995.
DIVERSIFICATION EFFECTS OF THE BRADY BOND INDEX, 1 APRIL 1990-1 FEBRUARY, 1995
<TABLE>
<CAPTION>
ANNUAL
PORTFOLIO* RETURN (%) VOLATILITY
--------------------------- ---------- ---------
<S> <C> <C>
100% BBI/ 0% WGBI.............................................. 16.80 13.71
90% BBI/ 10% WGBI.............................................. 16.25 12.41
80% BBI/ 20% WGBI.............................................. 15.71 11.14
70% BBI/ 30% WGBI.............................................. 15.17 9.92
60% BBI/ 40% WGBI.............................................. 14.63 8.76
50% BBI/ 50% WGBI.............................................. 14.09 7.70
40% BBI/ 60% WGBI.............................................. 13.55 6.78
30% BBI/ 70% WGBI.............................................. 13.01 6.07
20% BBI/ 80% WGBI.............................................. 12.47 5.64
10% BBI/ 90% WGBI.............................................. 11.93 5.57
0% BBI/100% WGBI.............................................. 11.38 5.86
</TABLE>
* BBI=Salomon Brothers Brady Bond Index. WGBI=Salomon Brothers World Government
Bond Index.
Source: Salomon Brothers, Inc. Brady Bonds are denominated in U.S. dollars and
therefore involve no currency risk relative to the dollar; results would have
been different with respect to non-dollar denominated emerging market debt.
Charts prepared by G.T. Capital Management, Inc.
- --------------------------------------------------------------------------------
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G.T. GLOBAL VARIABLE INVESTMENT FUNDS
ECONOMIC DEVELOPMENT IN EMERGING MARKETS
G.T. has identified six phases to track the progress of developing economies.
In addition, G.T. focuses on the transitions between each phase:
Between Phases 1 & 2, Stabilization: Developing nations recognize the need for
economic reform and launch initiatives to stabilize their economies. Typical
measures might include initiating monetary reforms to contain inflation,
controlling government spending, and addressing external trade imbalances.
Between Phases 2 & 3, Renovation: Economic development gathers momentum as the
governments of developing nations take further steps to increase productivity
and external competitiveness. Typical reforms include easing market regulations,
privatizing state-owned industries, lowering trade barriers and reforming the
national tax structure.
Between Phases 3 & 4, New Construction: As economic reforms take hold,
infrastructure improvements are needed to facilitate and support long-term
growth. The construction and upgrading of highways and airports, communications
and utility systems generally require financing in the form of public debt.
Similarly, as the private sector develops, bolstered by new privatizations,
corporate debt securities typically are issued to finance business expansion.
EMERGING MARKET TRADING
The annual trading volume of debt securities from developing economies according
to Salomon Brothers, Inc. has grown from $90 billion in 1990, to $150 billion in
1991, to $400 billion in 1992 and was estimated to be $1,200 billion at the end
of 1993 and $1.5 trillion at the end of 1994, respectively.
INFORMATION ABOUT CURRENT GLOBAL ECONOMIC CONDITIONS
G.T. believes that there is a current worldwide trend toward disinflation which
can provide a superior environment for global bond investing. As of December 31,
1993, ISI Group (for years 1963-1992) and Bloomberg L.P. (1993) reports that the
average inflation rates of the U.S., Japan, Germany the UK, France and Canada
are approaching their lowest levels since 1963 (the low during this time period
was reported in 1986). We believe that the current disinflationary environment
should eventually lead to lower interest rates globally and could provide the
potential for capital appreciation.
- --------------------------------------------------------------------------------
DESCRIPTION OF DEBT RATINGS
- --------------------------------------------------------------------------------
DESCRIPTION OF COMMERCIAL PAPER RATINGS
Moody's Investors Service, Inc. ("Moody's") employs the designations "Prime-1,"
and "Prime-2" to indicate commercial paper having the highest capacity for
timely repayment. Issuers rated Prime-1 (for supporting institutions) have a
superior ability for repayment of short-term debt obligations. Prime-1 repayment
capacity normally will be evidenced by many of the following characteristics:
leading market positions in well-established industries; high rates of return on
funds employed; conservative capitalization structures with moderate reliance on
debt and ample asset protections; broad margins in earnings coverage of fixed
financial charges and high internal cash generation; and well-established access
to a range of financial markets and assured sources of alternate liquidity.
Issuers rated Prime-2 (for supporting institutions) have a strong ability for
repayment of short-term debt obligations. This normally will be evidenced by
many of the characteristics cited above, but to a lesser degree. Earnings trends
and coverage ratios, while sound, may be more subject to variation.
Capitalization characteristics, while
still appropriate, may be more affected by external conditions. Ample alternate
liquidity is maintained.
Ratings by Standard & Poor's Ratings Group ("S&P")of commercial paper are graded
into four categories ranging from "A-1" for the highest quality obligations to
"D" for the lowest.
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G.T. GLOBAL VARIABLE INVESTMENT FUNDS
A-1 -- This highest category indicates that the degree of safety regarding
timely payment is strong. Those issues determined to possess extremely strong
safety characteristics will be denoted with a plus sign (+) designation. A-2 --
Capacity for timely payments on issues with this designation is satisfactory.
However, the relative degree of safety is not as high as for issues designated
"A-1."
DESCRIPTION OF BOND RATINGS
Moody's rates the debt securities issued by various entities from "Aaa" to "C."
Investment Grade Ratings are the first four categories.
AAA -- Best quality. These securities carry the smallest degree of investment
risk and are generally referred to as "gilt edged." Interest payments are
protected by a large or exceptionally stable margin and principal is secure.
While the various protective elements are likely to change, such changes as
can be visualized are most unlikely to impair the fundamentally strong
position of such issues.
AA -- High quality by all standards. Together with the Aaa group they comprise
what are generally known as high grade bonds. They are rated lower than the
best bonds because margins of protection may not be as large as in Aaa
securities or fluctuation of protective elements may be of greater amplitude
or there may be other elements present which make the long-term risk appear
somewhat larger than the Aaa securities.
A -- Upper-medium-grade obligations. These bonds possess many favorable
investment attributes. Factors giving security to principal and interest are
considered adequate, but elements may be present which suggest a
susceptibility to impairment sometime in the future.
BAA -- Medium-grade obligations (i.e., they are neither highly protected nor
poorly secured). Interest payments and principal security appear adequate for
the present but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such bonds lack
outstanding investment characteristics and, in fact, have speculative
characteristics as well.
BA -- Have speculative elements and their future cannot be considered to be
well-assured. Often the protection of interest and principal payments may be
very moderate and thereby not well safeguarded during both good and bad times
over the future. Uncertainty of position characterizes bonds in this class.
B -- Generally lack characteristics of the desirable investment. Assurance of
interest and principal payments or of maintenance of other terms of the
contract over any long period of time may be small.
CAA -- Poor standing. Such issues may be in default or there may be present
elements of danger with respect to principal or interest.
CA -- Speculative in a high degree. Such issues are often in default or have
other marked shortcomings.
C -- Lowest rated class of bonds. Issues so rated can be regarded as having
extremely poor prospects of ever attaining any real investment standing.
ABSENCE OF RATING: Where no rating has been assigned or where a rating has been
suspended or withdrawn, it may be for reasons unrelated to the quality of the
issue.
Should no rating be assigned, the reason may be one of the following:
1. An application for rating was not received or accepted.
2. The issue or issuer belongs to a group of securities or companies that are
not rated as a matter of policy.
3. There is a lack of essential data pertaining to the issue or issuer.
4. The issue was privately placed, in which case the rating is not published
in Moody's publications.
Suspension or withdrawal may occur if new and material circumstances arise, the
effects of which preclude satisfactory analysis; if there is no longer available
reasonable up-to-date data to permit a judgement to be formed; if a bond is
called for redemption; or for other reasons.
Note: Moody's applies numerical modifiers 1, 2 and 3 in each generic rating
classification from Aa to B in its corporate bond rating system.
The modifier 1 indicates that the security ranks in the higher end of its
generic rating category; the modifier 2 indicates a mid-range ranking; and the
modifier 3 indicates that the issue ranks in the lower end of its generic rating
category.
S&P rates the securities debt of various entities in categories ranging from
"AAA" to "D"
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Statement of Additional Information Page 74
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G.T. GLOBAL VARIABLE INVESTMENT FUNDS
according to quality. Investment grade ratings are the first four categories:
AAA -- Highest rating. Capacity to pay interest and repay principal is
extremely strong.
AA -- Very strong capacity to pay interest and repay principal and differs
from AAA issues only in a small degree.
A -- Has a strong capacity to pay interest and repay principal, although it is
somewhat more susceptible to the adverse effects of changes in circumstances
and economic conditions than debt in higher rated categories.
BBB -- Regarded as having adequate capacity to pay interest and repay
principal. Whereas
it normally exhibits adequate protection parameters, adverse economic
conditions or changing circumstances are more likely to lead to a weakened
capacity to pay interest and repay principal for debt in this category than in
higher rated categories.
BB, B, CCC, CC, C -- Debt rated "BB," "B," "CCC," "CC," and "C" is regarded, on
balance, as predominantly speculative with respect to capacity to pay interest
and repay principal in accordance with the terms of the obligation. "BB"
indicates the lowest degree of speculation and "C" the highest degree of
speculation. While such debt will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposure to adverse conditions.
BB -- Has less near-term vulnerability to default than other speculative
issues. However, it faces major ongoing uncertainties or exposure to adverse
business, financial or economic conditions which could lead to inadequate
capacity to meet timely interest and principal payments. The "BB" rating
category is also used for debt subordinated to senior debt that is assigned an
actual or implied "BBB-" rating.
B -- Has a greater vulnerability to default but currently has the capacity to
meet interest payments and principal repayments. Adverse business, financial
or economic conditions will likely impair capacity or willingness to pay
interest and repay principal. The "B" rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied "BB" or
"BB-" rating.
CCC -- Has a currently identifiable vulnerability to default and is dependent
upon favorable business, financial, and economic conditions to meet timely
payment of interest and repayment of principal. In the event of adverse
business, financial or economic conditions, it is not likely to have the
capacity to pay interest and repay principal. The
"CCC" rating category is also used for debt subordinated to senior debt that
is assigned an actual or implied "B"or "B-" rating.
CC -- Typically applied to debt subordinated to senior debt that is assigned
an actual or implied "CCC" rating.
C -- Typically applied to debt subordinated to senior debt which is assigned
an actual or implied "CCC-" debt rating. The "C" rating may be used to cover a
situation where a bankruptcy petition has been filed, but debt service
payments are continued.
C1 -- This rating is reserved for income bonds on which no interest is being
paid.
D -- In payment default. The "D" rating category is used when interest
payments or principal payments are not made on the date due even if the
applicable grace period has
not expired, unless S&P believes that such payments will be made during such
grace period. The "D" rating also will be used upon the filing of a bankruptcy
petition if debt service payments are jeopardized.
NOTE RATINGS
S&P: The SP-1 rating denotes a very strong or strong capacity to pay principal
and interest. Those issues determined to possess overwhelming safety
characteristics will be given a plus (+) designation.
The SP-2 rating denotes a satisfactory capacity to pay principal and interest.
Moody's: The MIG 1 designation denotes best quality. There is present strong
protection by established cash flows, superior liquidity support or demonstrated
broad-based access to the market for refinancing.
The MIG 2 designation denotes high quality. Margins of protection are ample
although not as large as in the preceding group.
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G.T. GLOBAL VARIABLE INVESTMENT FUNDS
The following is a list of government credit ratings of sovereign issuers for
some of the world's governments. Sovereign issuer credit is rated by Standard &
Poor's Ratings Group and Moody's Investors Service, Inc. The ratings are as of
June 15, 1995 and June 30, 1995, respectively, and are subject to change by the
rating agencies. Ratings may not directly correspond to the ratings of
securities issued in the countries shown. See "Appendix" for a description of
the ratings.
ESTABLISHED ECONOMIES:
CURRENT GOVERNMENT CREDIT RATINGS
<TABLE>
<CAPTION>
MOODY'S STANDARD & POOR'S
------- -----------------
<S> <C> <C>
U.S. Aaa AAA
Austria Aaa AAA
France Aaa AAA
Germany Aaa AAA
Japan Aaa AAA
Netherlands Aaa AAA
Switzerland Aaa AAA
UK Aaa AAA
Norway Aa1 AAA
Canada Aa2 AA+
Sweden Aa3 AA+
Belgium Aa1 AA+
Denmark Aa1 AA+
Australia Aa2 AA
Italy A1 AA
Ireland Aa2 AA
New Zealand Aa2 AA
</TABLE>
DEVELOPING ECONOMIES:
CURRENT GOVERNMENT CREDIT RATINGS
<TABLE>
<CAPTION>
MOODY'S STANDARD & POOR'S
-------- -----------------
<S> <C> <C>
Finland Aa2 AA-
Portugal A1 AA-
South Korea A1 AA-
Thailand A2 A
Malaysia A1 A+
Singapore Aa2 AAA
Turkey Baa3 B+
China A3 BBB
Chile Baa1 BBB+
Greece Baa3 BBB-
Colombia Ba1 BBB-
Hungary Ba1 BB+
Venezuela Ba2 B+
India Ba3 BB+
Mexico Ba2 BB
Philippines Ba2 BB
Argentina B1 BB-
Brazil B1 B
Poland Baa3 BB
South Africa Baa3 BB
</TABLE>
- --------------------------------------------------------------------------------
----------------------------------------------------
Statement of Additional Information Page 76
<PAGE> 80
- --------------------------------------------------------------------------------
------------------------------------------------
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
APPENDIX
- --------------------------------------------------------------------------------
The Fund and G.T. Capital believe that certain political and market factors
merit an investor's consideration of a telecommunications investment. In
analyzing the telecommunications industry, G.T. Capital has identified four
areas that it expects will create investment opportunities. G.T. Capital
believes that deregulation of companies in the industry, which will allow
competition to promote greater efficiencies, privatization of state-owned
telecommunications businesses, development of infrastructure in underdeveloped
countries and upgrading of services in other countries, and emergence of
technologies that will enhance productivity and reduce costs in the
telecommunications industry, will lead to growth in the sector. Of course, there
is no certainty that these factors will produce the anticipated results. The
following chart provides information on the key emerging trends, as identified
by G.T. Capital, occurring in the telecommunications industry in some of the
world's countries.
LOGO
<TABLE>
<S> <C>
____________________________________________________________________________________
Infrastructure
Argentina Brazil Canada China France Germany Hong Kong Italy Japan Malaysia
X X X X X
Mexico New Zealand Philippines Spain Sweden United Kingdom United States
X X X
____________________________________________________________________________________
Privatization
Argentina Brazil Canada China France Germany Hong Kong Italy Japan Malaysia
X X X X X X
Mexico New Zealand Philippines Spain Sweden United Kingdom United States
X X X X
____________________________________________________________________________________
Deregulation
Argentina Brazil Canada China France Germany Hong Kong Italy Japan Malaysia
X X X X X X X X X
Mexico New Zealand Philippines Spain Sweden United Kingdom United States
X X X X X X
____________________________________________________________________________________
New Technologies
Argentina Brazil Canada China France Germany Hong Kong Italy Japan Malaysia
X X X X X
Mexico New Zealand Philippines Spain Sweden United Kingdom United States
X X X
____________________________________________________________________________________
</TABLE>
Source: G.T. Capital Management, Inc., December 31, 1994.
- --------------------------------------------------------------------------------
----------------------------------------------------
Statement of Additional Information Page 77
<PAGE> 81
- --------------------------------------------------------------------------------
------------------------------------------------
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
Moreover, according to G.T. Capital, the telecommunications industry
historically has proven to be a relatively non-cyclical industry that provides
goods and services to the public in periods of economic weakness as well as
economic strength. G.T. Capital believes that the emerging economies around the
world lack access to basic telephone service. The following chart illustrates
the need for basic telephone service outside the United States.
<TABLE>
<CAPTION>
TELEPHONE LINES/
1,000 PERSONS
----------------------------
<S> <C>
U.S.................................................. 545
Switzerland.......................................... 587
Sweden............................................... 683
Denmark.............................................. 566
Norway............................................... 503
France............................................... 495
Germany.............................................. 483
Finland.............................................. 535
Netherlands.......................................... 464
Italy................................................ 388
U.K.................................................. 442
Spain................................................ 323
Portugal............................................. 241
Greece............................................... 391
Hungary.............................................. 96
Turkey............................................... 123
Poland............................................... 86
Japan................................................ 441
Australia............................................ 456
Singapore............................................ 385
Hong Kong............................................ 434
New Zealand.......................................... 437
South Korea.......................................... 310
Malaysia............................................. 89
Thailand............................................. 24
Philippines.......................................... 10
Indonesia............................................ 6
Argentina............................................ 96
Mexico............................................... 66
Chile................................................ 65
Brazil............................................... 63
</TABLE>
Source: The World Development Report 1994, The World Bank, June
1994.
DEREGULATION IN THE UNITED STATES
The United States has been the bellwether for deregulation of the telephone
industry. The divestiture of the Bell System from American Telephone and
Telegraph has produced new competing companies in the United States. Such U.S.
market-driven competition has, for example, led to lower costs for consumers
which in turn led to greater consumer usage and to higher industrywide revenues.
G.T. Capital expects this scenario to continue to benefit such companies in the
U.S. and similarly to be realized by the established telecommunications
companies in established economies, although no assurances can be made in this
regard. The above information on the deregulation of long distance and
international telephone service carriers in the United States is based on a
study from a source that indicated the study would not be updated in the near
future. It is believed by G.T. Global, however, that although the study has not
been updated, G.T. Global believes the trend continues to be accurate.
- --------------------------------------------------------------------------------
----------------------------------------------------
Statement of Additional Information Page 78
<PAGE> 82
- --------------------------------------------------------------------------------
------------------------------------------------
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
DEREGULATION OF U.S. LONG DISTANCE SERVICE
A CHRONOLOGY
<TABLE>
<S> <C>
---------------
Higher Industry
- --------------------------- Revenues
Growing Demand for ---------------
Telecommunications Services ------------ ----------- -------------- ---------------
- ---------------------------
Deregulation Increased Lower Prices Greater Usage
- --------------------------- Competition for Consumers
Extensive Regulation ------------- ----------- ------------- ---------------
and Lack of Competition
- --------------------------
</TABLE>
Source: G.T. Capital Management, Inc.
INTERNATIONAL TELEPHONE SERVICE --
FALLING PRICES AND RISING USAGE LEADS TO HIGHER REVENUE
<TABLE>
<CAPTION>
REVENUE ($ MILLIONS) PRICE PER MINUTE
-------------------- ----------------
<S> <C> <C>
1975......... $ 576 $ 2.25
1976......... $ 679 $ 2.22
1977......... $ 807 $ 2.20
1978......... $ 977 $ 2.12
1979......... $ 1,122 $ 1.78
1980......... $ 2,097 $ 1.34
1981......... $ 2,239 $ 1.21
1982......... $ 2,382 $ 1.09
1983......... $ 2,876 $ 1.09
1984......... $ 3,197 $ 1.05
1985......... $ 3,487 $ 1.03
1986......... $ 4,004 $ 0.99
1987......... $ 4,750 $ 1.02
1988......... $ 5,800 $ 1.06
1989......... $ 6,901 $ 1.07
1990......... $ 8,042 $ 1.06
1991......... $ 9,096 $ 1.01
1992......... $ 10,179 $ 1.00
</TABLE>
While the price per minute of international telephone service has fallen, usage
has increased, driving total revenue for international telephone service upward.
Source: 1975 to 1979, Trends in the International Communications Industry,
1975-1990, Federal Communications Commission (FCC), October 4, 1991; 1980 to
1992, Trends in the International Communications Industry, Federal
Communications Commission (FCC), March 1994. From 1975 to 1979, the FCC report
classified calls between the continental U.S. and Hawaii and Puerto Rico as
overseas calls. This information is reflected in the data for that time period.
- --------------------------------------------------------------------------------
----------------------------------------------------
Statement of Additional Information Page 79
<PAGE> 83
- --------------------------------------------------------------------------------
------------------------------------------------
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
G.T. GLOBAL: VARIABLE INFRASTRUCTURE FUND
The following table describes that in some Asian countries the demand for energy
is growing faster than the economy.
<TABLE>
<CAPTION>
ELECTRICITY
GDP GROWTH CONSUMPTION
RATE (%) GROWTH RATE (%)
---------- ---------------
<S> <C> <C>
China............ 9.3 8.7
Korea............ 8.9 11.7
Thailand......... 8.4 12.3
Taiwan........... 8.1 8.5
Singapore........ 6.5 8.4
Hong Kong........ 6.5 8.9
Malaysia......... 6.2 12.3
Indonesia........ 5.8 15.7
Pakistan......... 5.4 10.2
India............ 5.2 11.0
Sri Lanka........ 4.0 7.4
Philippines...... 0.6 4.6
</TABLE>
Source: Jardine Fleming, Asian Power Review, April 1994. Data from 1983-1992.
The following chart shows that some emerging market countries have doubled the
number of kilometers of paved roads in twenty years.
<TABLE>
<S> <C> <C> <C> <C>
South Korea 847
Indonesia 453
Thailand 313
Pakistan 250
Brazil 219
Turkey 140
India 134
Singapore 128
</TABLE>
- --------------------------------------------------------------------------------
----------------------------------------------------
Statement of Additional Information Page 80
<PAGE> 84
- --------------------------------------------------------------------------------
------------------------------------------------
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The audited financial statements of the Funds, except G.T. Global: Variable
International Fund and G.T. Global: Variable Emerging Markets Fund, as of
December 31, 1994, and for their fiscal years then-ended, the audited financial
statements of G.T. Global: Variable International Fund and G.T. Global: Variable
Emerging Markets Fund for the period July 5, 1994 (commencement of operations)
through December 31, 1994, the audited financial statement of G.T. Global:
Variable Infrastructure Fund and G.T. Global: Variable Natural Resources Fund as
of January 20, 1995, and the unaudited financial statements of G.T. Global:
Variable Infrastructure Fund and G.T. Global: Variable Natural Resources Fund
for the period January 31, 1995 (commencement of operations) through June 30,
1995 appear on the following pages.
- --------------------------------------------------------------------------------
----------------------------------------------------
Statement of Additional Information Page 81
<PAGE> 85
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
REPORT OF
INDEPENDENT ACCOUNTANTS
================================================================================
ANNUAL REPORT
To the Shareholders and Boards of Trustees of the G.T. Global Variable
Investment Trust comprised of the following Funds: G.T. Global: Variable
Strategic Income Fund, G.T. Global: Variable Global Government Income Fund, G.T.
Global: Variable U.S. Government Income Fund, G.T. Global: Variable Latin
America Fund, G.T. Global: Variable Growth & Income Fund, G.T. Global: Variable
Telecommunications Fund, G.T. Global: Variable Emerging Markets Fund; and G.T.
Global Variable Investment Series comprised of the following Funds: G.T. Global:
Variable America Fund, G.T. Global: Variable New Pacific Fund, G.T. Global:
Variable Europe Fund, G.T. Global: Money Market Fund and G.T. Global:Variable
International Fund (collectively, "the Funds"):
We have audited the accompanying statements of assets and liabilities of the
Funds, including the portfolios of investments, as of December 31, 1994, and the
related statements of operations for the year then ended, and the statements of
changes in net assets and financial highlights for each of the periods indicated
herein. These financial statements and financial highlights are the
responsibility of the Funds' management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1994 by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Funds as of December 31, 1994, the results of their operations for the year then
ended, and the changes in their net assets and the financial highlights for each
of the periods indicated herein, in conformity with generally accepted
accounting principles.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
February 10, 1995
F-1
<PAGE> 86
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
G.T. GLOBAL: VARIABLE STRATEGIC INCOME FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1994
================================================================================
<TABLE>
<CAPTION>
PRINCIPAL % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT MARKET VALUE ASSETS(A)
- ------------------------ -------- --------- ------------ ---------
<S> <C> <C> <C> <C>
GOVERNMENT & GOVERNMENT AGENCY OBLIGATIONS (73.9%)
ARGENTINA (5.9%)
Republic of Argentina:
Discount Bond, 7.125% due 3/31/23 (b) ............................. USD 1,950,000 $ 1,189,500 5.0
Par Bond, 4.25% due 3/31/23 (c) ................................... USD 300,000 126,750 0.5
BOCON Pro 1, 3.16% due 4/1/07 (b) ................................. ARS 250,000 85,821 0.4
AUSTRALIA (4.8%)
Australian Government, 12% due 7/15/99 .............................. AUD 1,350,000 1,122,085 4.8
AUSTRIA (2.5%)
Republic of Austria, 7.00%, due 9/20/99 ............................. ATS 6,350,000 575,023 2.5
BRAZIL (5.0%)
Federal Republic of Brazil, C Bond, 4% due 4/15/14 (b) .............. USD 2,407,200 1,158,465 5.0
BULGARIA (2.5%)
Bulgaria:
Discount Bond Series A, 6.0625% due 7/28/24 144A (b)(d) ........... USD 950,000 439,375 1.9
Past Due Interest, 6.0625% due 7/28/11 (b)(d) ..................... USD 329,186 139,288 0.6
FRANCE (2.3%)
France O.A.T., 7.5%, due 4/25/05 .................................... FRF 3,000,000 531,342 2.3
GERMANY (3.8%)
Deutschland Republic, 6.25% due 1/4/24 .............................. DEM 1,720,000 900,426 3.8
GREECE (2.6%)
Greece Government, 9.75% due 11/28/99 ............................... USD 600,000 597,000 2.6
ITALY (3.0%)
BTPS, 8.5% due 1/1/99 ............................................... ITL 1,250,000,000 692,996 3.0
MEXICO (6.0%)
United Mexican States, Discount Bond:
Series A, 6.6875% due 12/31/19 (b)(e) ............................. USD 1,000,000 734,375 3.1
Series B, 6.9375% due 12/31/19 (b)(e) ............................. USD 750,000 550,781 2.4
Cetes due 1/11/96, effective yield 14.46% ......................... MXN 723,180 126,959 0.5
NEW ZEALAND (5.2%)
New Zealand Government, 8% due 7/15/98 .............................. NZD 2,000,000 1,239,923 5.2
NIGERIA (2.5%)
Central Bank of Nigeria, Par Bond, 5.5% due 11/15/20 (c)(e) ......... USD 1,500,000 588,750 2.5
NORWAY (2.4%)
Norwegian Government, 9.00% due 1/31/99 ............................. NOK 3,660,000 565,868 2.4
PHILIPPINES (2.5%)
Republic of the Philippines:
Par Bond Series B, 5.75% due 12/1/17 (c) .......................... USD 550,000 341,000 1.5
Debt Conversion Bond Series B, 7.25% due 12/1/09 (b) .............. USD 250,000 225,625 1.0
POLAND (4.3%)
Poland, Past Due Interest Bond, 3.25% due 10/27/14 144A (c)(d) ...... USD 1,173,000 526,384 2.3
Poland, Discount Bond, 6.8125% due 10/27/24 144A (b)(d) ............. USD 635,000 457,994 2.0
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-2
<PAGE> 87
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
G.T. GLOBAL: VARIABLE STRATEGIC INCOME FUND
<TABLE>
<CAPTION>
PRINCIPAL % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT MARKET VALUE ASSETS (A)
- ------------------------ -------- ---------- ------------ ---------
<S> <C> <C> <C> <C>
SPAIN (2.8%)
Spanish Government, 12.25% due 3/25/00 ............................... ESP 84,500,000 $ 653,036 2.8
UNITED STATES (13.3%)
U.S. Treasury Notes:
7.75% due 11/30/99 ................................................. USD 2,890,000 2,878,711 12.3
7.75% due 12/31/99 ................................................. USD 240,000 239,175 1.0
VENEZUELA (2.5%)
Republic of Venezuela, Par Bond Series A, 6.75% due 3/31/20 (e) ...... USD 1,250,000 576,563 2.5
----------- -----
Total Government & Government Obligations (cost $18,266,622) ............. 17,263,215 73.9
----------- -----
SOVEREIGN DEBT (5.9%)
MOROCCO (4.7%)
Kingdom of Morocco, Tranche A Loan Agreement, 5.9375% due 1/1/09(b) .. USD 1,660,000 1,099,750 4.7
RUSSIA (1.2%)
Vnesheconombank Loan Agreement (f)(g) ................................ USD 1,000,000 278,125 1.2
----------- -----
Total Sovereign Debt (cost $1,782,485) ................................... 1,377,875 5.9
----------- -----
SUPRANATIONAL (5.0%)
World Bank, 4.5% due 6/20/00 (cost $1,187,625) ......................... JPY 115,000,000 1,172,524 5.0
----------- -----
Total Fixed Income Investments (cost $21,236,732) ........................ 19,813,614 84.8
----------- -----
OPTION (0.0%)
Canadian Dollar Call Option, Strike 1.3407, expires 3/31/95
(cost $38,760)(g) .................................................... USD 2,400,000 1,680 --
REPURCHASE AGREEMENT (9.8%)
Dated December 30, 1994 with State Street Bank & Trust Company,
due January 3, 1995, for an effective yield of 5.25% collateralized
by $1,665,000 U.S. Treasury Bond, 12% due 8/15/2013. (Market
value $2,293,040, including accrued interest.)(cost $2,287,667) ....... 2,287,667 9.8
----------- -----
Total Investments (cost $23,563,159)* .................................... 22,102,961 94.6
Other Assets and Liabilities ............................................. 1,264,455 5.4
----------- -----
Net Assets ............................................................... $23,367,416 100.0
=========== =====
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $23,367,416.
(b) The coupon rate shown on floating rate notes represents the rate at period
end.
(c) The coupon rate shown on step-up coupon bonds represents the rate at period
end.
(d) 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.
(e) Issued with detachable warrants or value recovery rights. The current market
value of each warrant or right is zero.
(f) Underlying loan agreement currently in default.
(g) Non-income producing security.
* For Federal income tax purposes, cost is $23,875,550 and appreciation
(depreciation) of securities is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 129,719
Unrealized depreciation: (1,902,308)
------------
Net unrealized depreciation: $ (1,772,589)
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-3
<PAGE> 88
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
G.T. GLOBAL: VARIABLE STRATEGIC INCOME FUND
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
DECEMBER 31, 1994
<TABLE>
<CAPTION>
UNREALIZED
MARKET VALUE CONTRACT DELIVERY APPRECIATION
(U.S. DOLLARS) PRICE DATE (DEPRECIATION)
-------------- ----------- --------- --------------
CONTRACTS TO SELL:
- ------------------
<S> <C> <C> <C> <C>
Australian Dollars................................................ 77,495 1.32619 20-Jan-95 $ (2,091)
Austrian Schillings............................................... 594,915 10.98550 28-Feb-95 (5,502)
Deutsche Marks.................................................... 1,066,167 1.55138 31-Jan-95 (2,598)
Deutsche Marks.................................................... 974,789 1.56970 31-Jan-95 (13,724)
Deutsche Marks.................................................... 1,068,099 1.53160 20-Mar-95 9,206
Deutsche Marks.................................................... 649,562 1.55300 01-Jun-95 (5,647)
Italian Lira...................................................... 719,106 1652.43000 27-Feb-95 (11,058)
New Zealand Dollars............................................... 1,239,142 1.63666 01-Feb-95 (53,802)
New Zealand Dollars............................................... 43,434 1.63345 01-Feb-95 (1,804)
Norwegian Kroner.................................................. 601,241 6.83750 28-Feb-95 (7,457)
Spanish Pesetas................................................... 1,102,207 130.06000 21-Feb-95 12,663
--------- --------
Total Contracts to Sell (Receivable amount $8,054,343)............ 8,136,157 (81,814)
--------- --------
The Value of Contracts to Sell as a Percentage of Net Assets
is 34.8%.
Contracts to Buy:
- -----------------
Australian Dollars................................................ 131,742 1.36054 20-Jan-95 6,792
Danish Kroner..................................................... 1,224,809 6.15610 14-Feb-95 15,439
Deutsche Marks.................................................... 1,176,014 1.55385 31-Jan-95 4,730
Deutsche Marks.................................................... 1,227,787 1.55950 01-Feb-95 9,448
Deutsche Marks.................................................... 614,966 1.54500 20-Mar-95 79
French Francs..................................................... 536,748 5.41740 21-Feb-95 7,897
Indonesian Rupiahs................................................ 234,414 2240.00000 03-Apr-95 4,414
New Zealand Dollars............................................... 584,759 1.56448 07-Feb-95 (643)
Pounds Sterling................................................... 964,610 0.64135 13-Jan-95 4,143
Spanish Pesetas................................................... 350,122 132.82000 21-Feb-95 3,337
--------- --------
Total Contracts to Buy (Payable amount $6,990,335)................ 7,045,971 55,636
--------- --------
The Value of Contracts to Buy as a Percentage of Net Assets
is 30.2%.
Total Open Forward Foreign Currency Contracts, Net........... $(26,178)
========
</TABLE>
- ---------------
See Note 1 of the financial statements.
The accompanying notes are an integral part of the financial statements.
F-4
<PAGE> 89
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
G.T. GLOBAL: VARIABLE GLOBAL GOVERNMENT INCOME FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1994
================================================================================
<TABLE>
<CAPTION>
PRINCIPAL % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT MARKET VALUE ASSETS (A)
- ------------------------ -------- --------- ------------ ----------
<S> <C> <C> <C> <C>
GOVERNMENT & GOVERNMENT AGENCY OBLIGATIONS (79.2%)
AUSTRALIA (9.3%)
Australian Government, 7% due 4/15/00....................... AUD 800,000 $ 544,176 5.6
New South Wales Treasury Corporation, 12% due 12/1/01....... AUD 425,000 355,418 3.7
CANADA (4.6%)
Canadian Government, 7.75% due 9/1/99....................... CAD 650,000 441,738 4.6
DENMARK (4.4%)
Denmark Bullet, 9% due 11/15/00............................. DKK 2,585,000 425,130 4.4
FINLAND (4.6%)
Finnish Government, 11% due 1/15/99......................... FIM 2,000,000 447,380 4.6
FRANCE (9.3%)
France O.A.T., 5.5% due 4/25/04............................. FRF 3,000,000 464,313 4.8
Societe National Chemins de France, 9.375% due 3/12/01...... ECU 345,000 438,071 4.5
GERMANY (13.8%)
Treuhandanstalt, 6.25% due 3/4/04........................... DEM 1,185,000 695,146 7.2
Deutschland Republic, 6.75% due 7/15/04..................... DEM 810,000 491,795 5.1
German Unity Fund, 8% due 1/21/02........................... DEM 220,000 144,356 1.5
ITALY (5.0%)
BTPS, 8.5% due 4/1/99....................................... ITL 875,000,000 481,102 5.0
NEW ZEALAND (4.8%)
New Zealand Government, 8% due 7/15/98...................... NZD 742,000 459,652 4.8
SPAIN (4.6%)
Spanish Government, 7.4% due 7/30/99........................ ESP 68,200,000 443,520 4.6
UNITED KINGDOM (9.4%)
Treasury, 6% due 8/10/99.................................... GBP 645,000 909,020 9.4
UNITED STATES (9.4%)
U.S. Treasury Note, 7.75% due 11/30/99...................... USD 908,000 904,877 9.4
--------- ----
Total Government & Government Agency Obligations
(cost $7,771,760)............................................. 7,645,694 79.2
--------- ----
SUPRANATIONAL BONDS (9.4%)
European Investment Bank, 4.625% due 2/26/03.................. JPY 45,000,000 452,599 4.8
Japan Development Bank, 6.5% due 9/20/01...................... JPY 40,000,000 447,766 4.6
--------- ----
Total Supranational Bonds (cost $888,359)....................... 900,365 9.4
--------- ----
Total Fixed Income Investments (cost $8,660,119)................ 8,546,059 88.6
--------- ----
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-5
<PAGE> 90
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
G.T. GLOBAL: VARIABLE GLOBAL GOVERNMENT INCOME FUND
<TABLE>
<CAPTION>
% OF NET
SHORT TERM INVESTMENTS MARKET VALUE ASSETS (A)
- ---------------------- ------------ ----------
<S> <C> <C>
REPURCHASE AGREEMENT (8.1%)
Dated December 30, 1994 with State Street Bank & Trust Company, due
January 3, 1995, for an effective yield of 5.25% collateralized by
$570,000 U.S. Treasury Bond, 12% due 8/15/13. (Market value
$785,005, including accrued interest.)(cost $784,229)............................. $ 784,229 8.1
---------- -----
Total Investments (cost $9,444,348)*................................................. 9,330,288 96.7
Other Assets and Liabilities......................................................... 323,315 3.3
---------- -----
Net Assets........................................................................... $9,653,603 100.0
========== =====
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $9,653,603.
* For Federal income tax purposes, cost is $9,444,348 and appreciation
(depreciation) of securities is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 83,928
Unrealized depreciation: (197,988)
----------
Net unrealized depreciation: $ (114,060)
==========
</TABLE>
================================================================================
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
DECEMBER 31, 1994
<TABLE>
<CAPTION>
UNREALIZED
MARKET VALUE CONTRACT DELIVERY APPRECIATION
(U.S. DOLLARS) PRICE DATE (DEPRECIATION)
<S> <C> <C> <C> <C>
CONTRACTS TO SELL:
- ------------------
Australian Dollars....................................................... 259,408 1.35388 06-Feb-95 $(11,973)
Australian Dollars....................................................... 212,947 1.33174 06-Feb-95 (6,449)
Australian Dollars....................................................... 19,359 1.31527 06-Feb-95 (351)
Canadian Dollars......................................................... 382,833 1.40480 22-Feb-95 (572)
Canadian Dollars......................................................... 60,597 1.40230 22-Feb-95 18
Danish Kroner............................................................ 419,511 6.01070 14-Feb-95 4,732
Deutsche Marks........................................................... 369,147 1.56770 31-Mar-95 (5,557)
European Currency Units.................................................. 919,568 0.82433 09-Jan-95 (9,743)
Finnish Marks............................................................ 444,069 4.53160 31-Jan-95 19,343
Italian Lira............................................................. 241,534 1625.07853 02-Feb-95 (120)
Italian Lira............................................................. 239,702 1652.42999 27-Feb-95 (3,686)
Pounds Sterling.......................................................... 443,157 0.64185 13-Jan-95 (2,243)
Spanish Pesetas.......................................................... 456,086 130.06000 21-Feb-95 5,240
--------- -------
Total Contracts to Sell (Receivable amount $4,456,557)................... 4,467,918 (11,361)
--------- -------
The Value of Contracts to Sell as a Percentage of Net Assets is 46.3%.
CONTRACTS TO BUY:
- ------------------
Australian Dollars....................................................... 104,538 1.29144 06-Feb-95 3
Danish Kroner............................................................ 245,126 6.14260 14-Feb-95 2,558
Danish Kroner............................................................ 231,143 6.15620 14-Feb-95 2,917
European Currency Units.................................................. 501,165 0.83072 09-Jan-95 9,120
Japanese Yen............................................................. 36,396 99.60000 28-Feb-95 252
New Zealand Dollars...................................................... 255,395 1.59515 07-Feb-95 4,635
--------- -------
Total Contracts to Buy (Payable amount $1,354,278)....................... 1,373,763 19,485
--------- -------
The Value of Contracts to Buy as a Percentage of Net Assets is 14.2%.
Total Open Forward Foreign Currency Contracts, Net................... $ 8,124
=======
</TABLE>
- ---------------
See Note 1 of the financial statements.
F-6
<PAGE> 91
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
G.T. GLOBAL: VARIABLE U.S. GOVERNMENT INCOME FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1994
================================================================================
<TABLE>
<CAPTION>
PRINCIPAL % OF NET
FIXED INCOME INVESTMENTS AMOUNT MARKET VALUE ASSETS (A)
- ------------------------ --------- ------------ ----------
<S> <C> <C> <C>
GOVERNMENT & GOVERNMENT AGENCY OBLIGATIONS (78.9%)
U.S. Treasury Notes:....................................................... -- $ -- 55.4
7.25% due 5/15/04........................................................ 520,000 499,525 --
6.75% due 6/30/99........................................................ 480,000 460,500 --
7.75% due 12/31/99....................................................... 378,000 376,701 --
Federal National Mortgage Association:..................................... -- -- 7.5
7.85% due 9/10/98........................................................ 100,000 99,292 --
6.8% due 1/10/03......................................................... 90,000 83,109 --
Federal Home Loan Bank, 5.01% due 11/23/98................................. 200,000 180,210 7.5
Financial Assistance Corporation, 9.375% due 7/21/03....................... 75,000 80,571 3.3
Federal Farm Credit Bank, 5.79% due 3/1/99................................. 70,000 64,300 2.7
Federal Home Loan Mortgage Corporation, 6.185% due 11/26/03................ 70,000 60,145 2.5
---------- -----
Total Government & Government Agency Obligations
(cost $1,997,375).......................................................... 1,904,353 78.9
---------- -----
SUPRANATIONAL BONDS (11.6%)
Asia Development Bank, 8% due 4/30/01...................................... 200,000 198,420 8.2
International Bank for Reconciliation & Development,
5.25% due 9/16/03........................................................ 100,000 82,284 3.4
---------- -----
Total Supranational Bonds (cost $295,584).................................... 280,704 11.6
---------- -----
SHORT-TERM INVESTMENTS (38.8%)
TREASURY BILLS (17.6%)
U.S. Treasury Bills due 1/5/95, effective yield 1% (cost $424,953)......... 425,000 424,953 17.6
REPURCHASE AGREEMENT (21.2%)
Dated December 30, 1994 with State Street Bank & Trust Company, due
January 3, 1995, for an effective yield of 5.25% collateralized by
$375,000 U.S. Treasury Bond, 12% due 8/15/13. (Market value
$516,450, including accrued interest.)(cost $ 511,149)..................... 511,149 21.2
---------- -----
Total Short-Term Investments (cost $936,102)................................. 936,102 38.8
---------- -----
Total Investments (cost $3,229,061)*......................................... 3,121,159 129.3
Other Assets and Liabilities................................................. (706,414) (29.3)
---------- -----
Net Assets................................................................... $2,414,745 100.0
========== =====
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $2,414,745.
* For Federal income tax purposes, cost is $3,229,061 and appreciation
(depreciation) of securities is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 0
Unrealized depreciation: (107,902)
----------
Net unrealized depreciation: $ (107,902)
==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-7
<PAGE> 92
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
G.T. GLOBAL: VARIABLE LATIN AMERICA FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1994
================================================================================
<TABLE>
<CAPTION>
% OF NET
EQUITY INVESTMENTS COUNTRY SHARES MARKET VALUE ASSETS (A)
- ------------------ ------- ----------- ------------ ----------
<S> <C> <C> <C> <C>
SERVICES (18.0%)
Ceteco CVA (c).................................................... NETH 33,000 $ 825,285 3.1
Retailers-Other
Mesbla S.A. (Preferred) (c)....................................... BRZL 3,339,000 599,915 2.3
Retailers-Other
Casa Anglo S.A. (Preferred) (c)................................... BRZL 2,528,810 597,827 2.2
Retailers-Other
Compania Peruana de Telefonos "B" (c)............................. PERU 474,000 556,114 2.1
Telephone Networks
Grupo Elektra, S.A. de C.V. "CPO" (c)............................. MEX 73,000 537,340 2.0
Retailers-Other
Sears Roebuck de Mexico, S.A. de C.V. "B1" (c).................... MEX 66,000 415,052 1.6
Retailers-Other
Telefonos de Mexico, S.A. de C.V. "L" ADR (b)..................... MEX 10,000 410,000 1.5
Telephone Networks
Telecomunicacoes Brasileiras S.A. - Telebras:..................... BRZL -- -- 1.4
Telephone Networks
Preferred....................................................... -- 8,160,000 365,560 --
Preferred New (c)............................................... -- 252,135 10,166 --
Gran Cadena de Almacenes Colombianos 144A ADR (b)(d).............. COL 20,000 320,000 1.2
Retailers-Other
Grupo Marti S.A................................................... MEX 218,000 160,915 0.6
Retailers-Apparel
---------
4,798,174
---------
CONSUMER NON-DURABLES (17.9%)
Panamerican Beverages, Inc. "A" (b)............................... MEX 24,800 784,300 3.0
Beverages-Non alcoholic
Fomento Economico Mexicano, S.A. de C.V. (Femsa) "B".............. MEX 252,000 661,955 2.5
Beverages-Alcoholic
Tectoy Industria Brinquedos (Preferred) (c)....................... BRZL 600,040,000 624,155 2.3
Toys
Industrias J B Duarte S.A. (Preferred)............................ BRZL 215,600,000 578,501 2.2
Food
Buenos Aires Embotelladora, S.A. (BAESA) 144A ADR (b)(d).......... ARG 15,100 486,975 1.8
Beverages-Non alcoholic
Grupo Embotellador de Mexico, S.A. de C.V. 144A GDR (b)(c)(d)..... MEX 30,000 431,250 1.6
Beverages-Non alcoholic
Grupo Herdez S.A. Series A........................................ MEX 812,500 402,062 1.5
Food
San Juan:......................................................... PERU -- -- 1.8
Beverages-Alcoholic
Common.......................................................... -- 128,804 250,879 --
Class T......................................................... -- 122,439 248,581 --
Ekco S.A. Series CP (c)........................................... MEX 656,000 151,489 0.6
Household Products
Inversiones Aledo (c)............................................. VENZ 463,268 95,379 0.4
Food
Industrias Chocolate Lacta S.A. (Preferred)....................... BRZL 43,000 50,827 0.2
Food
---------
4,766,353
---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-8
<PAGE> 93
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
G.T. GLOBAL: VARIABLE LATIN AMERICA FUND
<TABLE>
<CAPTION>
% OF NET
EQUITY INVESTMENTS COUNTRY SHARES MARKET VALUE ASSETS (A)
- ------------------ ------- ----------- ------------ ----------
<S> <C> <C> <C> <C>
MATERIALS/BASIC INDUSTRIES (17.3%)
Caemi Mineracao E Metal (Preferred) (c)............................... BRZL 4,300,000 $ 701,418 2.6
Metals-Steel
Estrada S.A........................................................... ARG 93,000 638,507 2.4
Paper/Packaging
Venezolana de Prerreducidos Caroni C.A. - Venprecar 144A GDR(b)(d).... VENZ 100,000 625,000 2.4
Metals-Steel
Grupo Fernandez Editores BCP (c)...................................... MEX 501,000 551,616 2.1
Paper/Packaging
La Cemento Nacional 144A GDR (b)(c)(d)................................ ECDR 1,300 510,141 1.9
Cement
Cia de Minas Buenaventura "C" (c)..................................... PERU 60,000 285,976 1.1
Gold
Acos Villares S.A. (Preferred) (c).................................... BRZL 1,060,000 269,448 1.0
Metals-Steel
Ttolmex S.A. de C.V. Series B2........................................ MEX 30,000 259,794 1.0
Cement
Empaques Ponderosa, S.A. de C.V. "B".................................. MEX 100,000 257,732 1.0
Paper/Packaging
Crisoba A............................................................. MEX 50,000 255,670 1.0
Paper/Packaging
Corporacion Cementera Argentina S.A. (Corcemar) (c)................... ARG 32,500 213,433 0.8
Cement
---------
4,568,735
---------
FINANCE (17.1%)
Uniao Bancos Brasileiros - Unibanco (Preferred "A") (c)............... BRZL 33,282,000 986,658 3.7
Banks-Money Center
Banco Bradesco de Investimento S.A. (Preferred) (c)................... BRZL 92,381,950 786,229 3.0
Banks-Money Center
First Financial Caribbean Corporation (b)............................. US 52,600 592,800 2.2
Other Financial
Banco Nacional S.A. (Preferred)....................................... BRZL 23,096,000 586,955 2.2
Banks-Money Center
Banco Mercantil do Sao Paulo S.A. (Preferred)......................... BRZL 5,738,000 515,470 1.9
Banks-Regional
Grupo Financiero Bancrecer, S.A. de C.V. "B".......................... MEX 429,810 372,207 1.4
Banks-Regional
Interbanc (c)......................................................... PERU 243,655 367,381 1.4
Banks-Money Center
Grupo Financiero Bancomer, S.A. de C.V. "C"........................... MEX 620,000 345,155 1.3
Banks-Money Center
---------
4,552,855
---------
CONSUMER DURABLES (10.8%)
Brasinca Industrial S.A. (Preferred) (c).............................. BRZL 822,500 729,167 2.7
Auto Parts
Iochpe Maxion (Preferred) (c)......................................... BRZL 693,000 483,298 1.8
Auto Parts
Continental 2001 S.A. (Preferred)..................................... BRZL 17,448,000 470,230 1.8
Appliances & Household Durables
Capco Automotive Products Corporation 144A (b)(c)(d).................. BRZL 35,000 420,000 1.6
Auto Parts
Brasmotor S.A. (Preferred) (c)........................................ BRZL 1,000,000 405,437 1.5
Appliances & Household Durables
Refripar (Preferred).................................................. BRZL 109,412,063 362,120 1.4
Appliances & Household Durables
---------
2,870,252
---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-9
<PAGE> 94
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
G.T. GLOBAL: VARIABLE LATIN AMERICA FUND
<TABLE>
<CAPTION>
% OF NET
EQUITY INVESTMENTS COUNTRY SHARES MARKET VALUE ASSETS (A)
- ------------------ ------- ------- ------------ ----------
<S> <C> <C> <C> <C>
CAPITAL GOODS (3.5%)
John Deere S.A. de C.V. Series A........................................ MEX 183,000 $ 606,730 2.3
Machinery & Engineering
Grupo Tribasa, S.A. de C.V. Sponsored ADR (b)(c)........................ MEX 20,000 332,500 1.2
Construction
-----------
939,230
-----------
MULTI-INDUSTRY/CONGLOMERATE (2.7%)
Grupo Carso, S.A. de C.V. "A1" (c)...................................... MEX 53,000 398,866 1.5
Conglomerate
Grupo Industrial Alfa, S.A. de C.V. "A"................................. MEX 21,000 207,835 0.8
Conglomerate
Consolidada Carabobo "B"................................................ VENZ 894,000 118,324 0.4
Miscellaneous
-----------
725,025
-----------
ENERGY (0.9%)
Industrias Ventane...................................................... VENZ 474,725 142,418 0.5
Gas Production & Distribution
C.A. La Electricidad de Caracas......................................... VENZ 64,774 92,589 0.3
Electrical & Gas Utilities
Centrais Electricas Brasileiras S.A. - Electrobras (Preferred).......... BRZL 70,347 24,447 0.1
Electrical & Gas Utilities
-----------
259,454
----------- -----
Total Equity Investments (cost $24,529,226)............................... 23,480,078 88.2
----------- -----
SHORT-TERM INVESTMENTS
REPURCHASE AGREEMENT (11.1%)
Dated December 30, 1994, with State Street Bank and Trust Company,
due January 3, 1995, for an effective yield of 5.25% collateralized
by $2,155,000 U.S. Treasury Bond, 12.0% due 08/15/13. (Market value
$2,967,868 including accrued interest.) (cost $2,960,863).............. 2,960,863 11.1
----------- -----
Total Investments (cost $27,490,089)*..................................... 26,440,941 99.3
Other Assets and Liabilities.............................................. 190,395 0.7
----------- -----
Net Assets................................................................ $26,631,336 100.0
=========== =====
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $26,631,336.
(b) U.S. currency denominated.
(c) Non-income producing security.
(d) 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.
Abbreviations:
ADR-American Depository Receipt
GDR-Global Depository Receipt
* For Federal income tax purposes, cost is $27,605,663 and appreciation
(depreciation) of securities is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 2,682,375
Unrealized depreciation: (3,847,097)
-----------
Net unrealized depreciation: $ (1,164,722)
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-10
<PAGE> 95
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
G.T. GLOBAL: VARIABLE LATIN AMERICA FUND
The Fund's Portfolio of Investments at December 31, 1994 was concentrated in the
following countries:
<TABLE>
<CAPTION>
PERCENTAGE OF NET ASSETS (A)
----------------------------
SHORT-TERM
COUNTRY EQUITY & OTHER TOTAL
------- ------ ---------- -----
<S> <C> <C> <C>
Argentina 5.0 5.0
Brazil 35.9 35.9
Columbia 1.2 1.2
Ecuador 1.9 1.9
Mexico 28.5 28.5
Netherlands 3.1 3.1
Peru 6.4 6.4
United States 2.2 11.8 14.0
Venezuela 4.0 4.0
---- ---- -----
Total 88.2 11.8 100.0
==== ==== =====
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $26,631,336.
The accompanying notes are an integral part of the financial statements.
F-11
<PAGE> 96
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
G.T. GLOBAL: VARIABLE GROWTH & INCOME FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1994
================================================================================
<TABLE>
<CAPTION>
% OF NET
EQUITY INVESTMENTS COUNTRY SHARES MARKET VALUE ASSETS (A)
- ------------------ ------- ------ ------------ ----------
<S> <C> <C> <C> <C>
FINANCE (14.1%)
National Australian Bank Ltd.................... AUSL 64,300 $ 514,719 2.0
Banks-Money Center
Swiss Bank Corp. (Bearer) (b)................... SWTZ 971 268,630 1.1
Banks-Money Center
CS Holdings (Bearer)............................ SWTZ 565 241,804 0.9
Banks-Money Center
Union Bank of Switzerland (Bearer) (b).......... SWTZ 253 209,979 0.8
Banks-Money Center
Aegon N.V....................................... NETH 3,025 193,486 0.8
Insurance-Life
International Nederlande Group N.V.............. NETH 3,995 188,769 0.7
Other Financial
Fortis Amev N.V................................. NETH 4,423 187,839 0.7
Other Financial
Generale de Banque S.A.......................... BEL 644 164,089 0.6
Banks-Money Center
ABN-AMRO Holding N.V.:.......................... NETH -- -- 0.6
Banks-Regional................................
Common........................................ -- 4,498 156,292 --
Conv. Preferred 6% until 10/31/03 -- 55 1,832 --
Ayala Land, Inc. "B"............................ PHIL 75,000 117,769 0.5
Real Estate
Commercial Union PLC............................ UK 13,382 106,243 0.4
Insurance-Multi-Line
S.G. Warburg Group PLC.......................... UK 9,300 100,777 0.4
Other Financial
National Westminster Bank PLC................... UK 12,000 96,398 0.4
Banks-Money Center
Dresdner Bank, AG............................... GER 330 86,724 0.3
Banks-Money Center
MAI PLC:........................................ UK -- -- 0.3
Other Financial
Common........................................ -- 12,400 43,689 --
Conv. Preferred 5.9% until 8/1/00............. -- 31,196 42,989 --
Banco Popular Espanol S.A. (Reg.)............... SPN 710 84,466 0.3
Banks-Money Center
Hopewell Holdings (b)........................... HK 94,000 77,761 0.3
Real Estate
M & G Group PLC................................. UK 5,000 76,495 0.3
Investment Management
Banco de Santander S.A.......................... SPN 1,915 73,368 0.3
Banks-Regional
Kredietbank N.V................................. BEL 315 66,092 0.3
Banks-Regional
Henderson Investment Ltd........................ HK 94,000 61,966 0.2
Real Estate
Sparebanken (NOR) (Union Bank of Norway)........ NOR 3,000 58,589 0.2
Banks-Regional
Sun Hung Kai Properties Ltd..................... HK 9,400 56,134 0.2
Real Estate
Gerrard & National Holdings PLC................. UK 7,080 53,660 0.2
Securities Broker
Societe Generale................................ FR 475 49,906 0.2
Banks-Money Center
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-12
<PAGE> 97
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
G.T. GLOBAL: VARIABLE GROWTH & INCOME FUND
<TABLE>
<CAPTION>
% OF NET
EQUITY INVESTMENTS COUNTRY SHARES MARKET VALUE ASSETS (A)
- ------------------ ------ ------ ------------ ----------
<S> <C> <C> <C> <C>
General Accident Fire and Life Assurance Corp. PLC....... UK 5,700 $ 45,343 0.2
Insurance-Property-Casualty
Sedgwick Group PLC....................................... UK 17,000 40,464 0.2
Insurance-Multi-Line
Lloyds Abbey Life PLC.................................... UK 7,000 36,502 0.1
Insurance-Life
Amoy Properties Ltd...................................... HK 39,000 35,287 0.1
Real Estate
Compagnie Financiere de Paribas S.A...................... FR 524 34,838 0.1
Other Financial
Compagnie UAP............................................ FR 1,316 33,963 0.1
Insurance-Multi-Line
Commerzbank, AG.......................................... GER 130 27,617 0.1
Banks-Money Center
Realty Development Corp. Ltd. "A"........................ HK 10,000 25,851 0.1
Real Estate
IKB Deutsche Industriebank, AG:.......................... GER -- -- 0.1
Banks-Regional
Common................................................. -- 100 16,982 --
Common (New) until 10/95 (b)........................... -- 22 3,615 --
---------
3,680,927
---------
ENERGY (11.1%)
Penn West Petroleum Ltd. (b)............................. CAN 100,000 418,955 1.7
Oil
Elektrowatt, AG.......................................... SWTZ 1,442 381,301 1.5
Electrical & Gas Utilities
Electrabel............................................... BEL 1,720 308,399 1.2
Electrical & Gas Utilities
Royal Dutch Petroleum Co................................. NETH 2,400 261,381 1.0
Oil
Reunies Electrobel & Tractebel S.A....................... BEL 763 230,652 0.9
Electrical & Gas Utilities
Mobil Corp............................................... US 2,400 202,200 0.8
Oil
Elf Aquitaine............................................ FR 2,720 191,488 0.8
Oil
Veba, AG................................................. GER 540 188,287 0.7
Energy Sources
RWE, AG.................................................. GER 480 134,668 0.5
Electrical & Gas Utilities
Grupe Bruxelles Lambert S.A.............................. BEL 1,067 126,201 0.5
Oil
Exxon Corp............................................... US 1,700 103,275 0.4
Oil
British Gas PLC.......................................... UK 21,000 102,599 0.4
Gas Production & Distribution
Pacific Gas & Electric Co................................ US 2,950 71,906 0.3
Electrical & Gas Utilities
Shell Transport & Trading Co. PLC........................ UK 6,530 71,476 0.3
Oil
Union Electrica Fenosa S.A............................... SPN 5,000 20,829 0.1
Electrical & Gas Utilities
Iberdrola S.A............................................ SPN 2,000 12,345 --
Electrical & Gas Utilities
Chevron Corp............................................. US 160 7,140 --
Oil
---------
2,833,102
---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-13
<PAGE> 98
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
G.T. GLOBAL: VARIABLE GROWTH & INCOME FUND
<TABLE>
<CAPTION>
% OF NET
EQUITY INVESTMENTS COUNTRY SHARES MARKET VALUE ASSETS (A)
- ------------------ ------- ------ ------------ ----------
<S> <C> <C> <C> <C>
SERVICES (9.0%)
Telecom Corp. of New Zealand Ltd:........................... NZ -- $ -- 2.2
Telephone Networks
Common (NZ registered).................................... -- 149,200 487,207 --
Common (AUSL registered).................................. -- 16,960 55,911 --
AT&T Corp................................................... US 5,500 276,375 1.1
Telephone-Long Distance
Koninklijke PTT Nederland N.V............................... NETH 5,915 199,394 0.8
Telephone Networks
Dun & Bradstreet Corp....................................... US 3,300 181,500 0.7
Broadcasting & Publishing
J.C. Penney Company, Inc.................................... US 4,020 179,393 0.7
Retailers-Other
McGraw Hill, Inc............................................ US 2,490 166,519 0.7
Broadcasting & Publishing
Tele Danmark AS-B........................................... DEN 2,570 130,603 0.5
Telephone Networks
TNT Ltd. Conv. Preferred 8% until 5/31/97................... AUSL 67,000 119,531 0.5
Transportation-Road & Rail
Thorn EMI PLC............................................... UK 5,500 89,399 0.4
Leisure & Tourism
Granada Group PLC 7.5% Conv. Preferred until 4/30/03........ UK 23,482 66,556 0.3
Broadcasting & Publishing
British Telecommunications PLC.............................. UK 10,146 59,977 0.2
Telephone Networks
Cathay Pacific Airways...................................... HK 36,000 52,349 0.2
Transportation-Airlines
Stet Societal Finanziaria Telefonica S.P.A. 144A (c)........ ITLY 16,000 47,195 0.2
Telephone Networks
Dairy Farm International Holdings Ltd....................... HK 36,000 38,622 0.2
Retailers-Food
Sime Darby (Hong Kong) Ltd.................................. HK 28,000 31,125 0.1
Wholesale & International Trade
AirTouch Communications, Inc. (b)........................... US 900 26,213 0.1
Wireless Communications
Pacific Telesis Group....................................... US 900 25,650 0.1
Telephone-Regional/Local
Telecom Italia S.P.A........................................ ITLY 4,500 11,719 --
Telephone Networks
Mandarin Oriental Hotel Group............................... HK 10,000 11,698 --
Leisure & Tourism
---------
2,256,936
---------
MATERIALS/BASIC INDUSTRIES (8.1%)
Broken Hill Proprietary Co. Ltd............................. AUSL 39,927 607,019 2.4
Misc. Materials & Commodities
Amcor Ltd................................................... AUSL 56,200 406,286 1.6
Paper/Packaging
Solvay SA-A................................................. BEL 691 329,306 1.3
Chemicals
Akzo Nobel N.V.............................................. NETH 2,345 270,795 1.1
Chemicals
Monsanto Co................................................. US 3,300 232,650 0.9
Chemicals
WHX Corp. Conv. Preferred 6.5% until 12/31/49 (b)........... US 2,500 118,750 0.5
Metals-Steel
NOVA Corp................................................... CAN 6,000 55,623 0.2
Chemicals
BASF AG..................................................... GER 100 20,630 0.1
Chemicals
---------
2,041,059
---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-14
<PAGE> 99
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
G.T. GLOBAL: VARIABLE GROWTH & INCOME FUND
<TABLE>
<CAPTION>
% OF NET
EQUITY INVESTMENTS COUNTRY SHARES MARKET VALUE ASSETS (A)
- ------------------ ------- ------- ------------ ----------
<S> <C> <C> <C> <C>
CAPITAL GOODS (5.2%)
General Electric Co., PLC..................... UK 51,900 $ 224,309 0.9
Aerospace/Defense
Mannesmann, AG................................ GER 770 209,815 0.8
Machinery & Engineering
CSF Thomson (b)............................... FR 6,550 196,028 0.8
Aerospace/Defense
Alcatel Alsthom............................... FR 1,790 152,868 0.6
Telecom Equipment
Siemens, AG................................... GER 357 149,605 0.6
Telecom Equipment
Lockheed Corp................................. US 1,550 112,569 0.4
Aerospace/Defense
Rolls-Royce PLC............................... UK 35,900 101,190 0.4
Aerospace/Defense
BICC PLC...................................... UK 17,200 96,962 0.4
Electrical Plant/Equipment
Trafalgar House PLC:.......................... UK -- -- 0.3
Machinery & Engineering
Conv. Preferred 6% until 12/31/49........... -- 44,800 68,049 --
Common (b).................................. -- 5,500 6,632 --
-----------
1,318,027
-----------
CONSUMER NON-DURABLES (2.5%)
Noble China Corp. (b)......................... CAN 100,000 463,524 1.9
Beverages-Alcoholic
Booker PLC.................................... UK 13,800 86,439 0.3
Food
Bass PLC...................................... UK 6,600 53,174 0.2
Beverages-Alcoholic
Associated British Foods Group................ UK 4,200 37,225 0.1
Food
Burns, Philp & Co. Ltd........................ AUSL 2,050 4,850 --
Food
-----------
645,212
-----------
HEALTH CARE (2.1%)
Bristol-Myers Squibb Co....................... US 4,700 272,013 1.1
Pharmaceuticals
Bayer, AG..................................... GER 1,110 260,173 1.0
Pharmaceuticals
-----------
532,186
-----------
CONSUMER DURABLES (1.0%)
GKN PLC....................................... UK 28,600 263,115 1.0
Auto Parts
CONGLOMERATE (0.2%)
Hutchison Whampoa Ltd......................... HK 13,000 52,595 0.2
Conglomerate
-----------
Total Equity Investments (cost $13,916,378)..... 13,623,159 53.3
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-15
<PAGE> 100
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
G.T. GLOBAL: VARIABLE GROWTH & INCOME FUND
<TABLE>
<CAPTION>
PRINCIPAL % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT MARKET VALUE ASSETS (A)
- ------------------------ -------- --------- ------------ ----------
<S> <C> <C> <C> <C>
GOVERNMENT & GOVERNMENT AGENCY OBLIGATIONS (25.9%)
AUSTRALIA (1.1%)
Australian Government Bond 9% due 9/15/04............................ AUD 400,000 $ 290,459 1.1
FRANCE (1.3%)
France OAT Bond 6.75% due 10/25/04................................... FRF 1,900,000 320,326 1.3
GERMANY (10.0%)
Deutschland Republic Bonds:.......................................... DEM -- -- 8.8
6.75% due 4/22/03.................................................. -- 2,500,000 1,527,733 --
6% due 6/20/16..................................................... -- 850,000 439,599 --
9% due 10/20/00.................................................... -- 400,000 275,405 --
Treuhandanstalt Bond 6.375% due 7/1/99............................... DEM 500,000 311,229 1.2
ITALY (6.6%)
Italy Government Bond 5.125% due 7/29/03............................. JPY 100,000,000 1,034,907 4.0
BTPS Bond 8.5% due 1/1/99............................................ ITLY 1,200,000,000 665,276 2.6
SPAIN (0.6%)
Spanish Government Bond 10.25% due 11/30/98.......................... ESP 20,000,000 145,602 0.6
SWEDEN (1.1%)
Sweden Government Bond 11% due 1/21/99............................... SEK 2,000,000 274,288 1.1
UNITED KINGDOM (2.0%)
Conversion Bonds:.................................................... GBP -- -- 2.0
9% due 7/12/11..................................................... -- 220,000 356,346 --
9.5% due 4/18/05................................................... -- 100,000 164,129 --
UNITED STATES (3.2%)
United States Treasury:.............................................. USD -- -- 3.2
Note 7.25% due 5/15/04............................................. -- 500,000 480,000 --
Note 8.5% due 11/15/00............................................. -- 200,000 206,313 --
Bond 8.125% due 5/15/21............................................ -- 130,000 132,234 --
---------- ----
Total Government & Government Agency Obligations (cost $6,751,618)....... 6,623,846 25.9
---------- ----
CORPORATE BONDS (5.3%)
GERMANY (2.2%)
Siemens Capital Corp. Bond 8% due 6/24/02 (Issued with warrants)..... USD 180,000 240,300 0.9
Commerzbank Genus Conv. Bond 7% due 12/31/00......................... DEM 187,000 169,649 0.7
Deutsche Bank, AG Bond 9% due 12/31/02 (Issued with warrants)........ DEM 175,000 159,666 0.6
Commerzbank, AG Bond VRN 8.0% due 6/1/07............................. DEM 1,000 653 --
IKB Deutsche Industriebank Bond 6.45% due 3/31/06.................... DEM 1,500 843 --
SWITZERLAND (0.1%)
Elektrowatt, AG Conv. Bond 3% due 4/29/04........................... CHF 28,000 17,600 0.1
UNITED KINGDOM (3.0%)
Daily Mail & General Trust:......................................... GBP -- -- 1.1
Conv. Bond 5.75% due 9/26/03...................................... -- 86,000 147,463 --
Conv. Bond 8.75% due 9/27/05...................................... -- 56,000 141,184 --
Land Securities:.................................................... GBP -- -- 0.8
Conv. Bond 9.375% due 7/31/04..................................... -- 105,000 177,576 --
Conv. Bond 7% due 9/30/08......................................... -- 10,000 15,659 --
S.G. Warburg Group PLC Conv. Bond 6.5% due 8/4/08................... GBP 90,000 136,001 0.5
Elf Enterprises Finance PLC Conv. Bond 8.75% due 6/27/06............ GBP 65,000 100,895 0.4
Reckitt & Colman Capital Conv. Bond 9.5% due 3/31/05................ GBP 22,000 48,058 0.2
---------- ----
Total Corporate Bonds (cost $1,402,291).................................. 1,355,547 5.3
---------- ----
Total Fixed Income Investments (cost $8,153,909)......................... 7,979,393 31.2
---------- ----
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-16
<PAGE> 101
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
G.T. GLOBAL: VARIABLE GROWTH & INCOME FUND
<TABLE>
<CAPTION>
NO. OF % OF NET
WARRANTS (0.0%) COUNTRY WARRANTS MARKET VALUE ASSETS (A)
- --------------- ------- -------- ------------ ---------
<S> <C> <C> <C> <C>
Electrowatt, AG expires 4/28/97 (b) . . . . . . . . . . . . . . . . . . SWTZ 140 $ 1,872 --
Electrical & Gas Utilities
Commerzbank, AG expires 12/10/99 (b) . . . . . . . . . . . . . . . . . . GER 6 105 --
Banks-Money Center
Groupe Bruxelles Lambert S.A. expires 12/20/98 (b) . . . . . . . . . . . BEL 51 641 --
Oil
Henderson Investment Ltd. expires 1/26/96 (b) . . . . . . . . . . . . . HK 9,400 95 --
Real Estate
----------- ----
Total Warrants (cost $0) . . . . . . . . . . . . . . . . . . . . . . . . . 2,713 --
----------- ----
REPURCHASE AGREEMENT (14.0%)
Dated December 30, 1994 with State Street Bank & Trust Company, due
January 3, 1995, for an effective yield of 5.25% collateralized by
$3,595,000 U.S. Treasury Note 6.875% due 10/31/96. (Market value
$3,591,270, including accrued interest.) (cost $3,589,047) . . . . . 3,589,047 14.0
----------- ----
Total Investments (cost $25,659,334)* . . . . . . . . . . . . . . . . . . 25,194,312 98.5
Other Assets and Liabilities . . . . . . . . . . . . . . . . . . . . . . . 385,926 1.5
----------- ----
Total Net Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $25,580,238 100.0
=========== =====
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $25,580,238.
(b) Non-income producing security.
(c) 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.
* For Federal income tax purposes, cost is $25,690,691 and appreciation
(depreciation) of securities is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 733,574
Unrealized depreciation: (1,229,953)
-----------
Net unrealized depreciation: $ (496,379)
===========
</TABLE>
================================================================================
The Fund's Portfolio of Investments at December 31, 1994 was concentrated in
the following countries:
<TABLE>
<CAPTION>
PERCENTAGE OF NET ASSETS (A)
SHORT-TERM
COUNTRY EQUITY FIXED INCOME & OTHER TOTAL
------- ------ ------------ ---------- -----
<S> <C> <C> <C> <C>
Australia............. 6.5 1.1 7.6
Belgium............... 4.8 4.8
Canada................ 3.8 3.8
Denmark............... 0.5 0.5
France................ 2.6 1.3 3.9
Germany............... 4.2 12.2 16.4
Hong Kong............. 1.6 1.6
Italy................. 0.2 6.6 6.8
Netherlands........... 5.7 5.7
New Zealand........... 2.2 2.2
Norway................ 0.2 0.2
Philippines........... 0.5 0.5
Spain................. 0.7 0.6 1.3
Sweden................ 1.1 1.1
Switzerland........... 4.3 0.1 4.4
United Kingdom........ 7.7 5.0 12.7
United States......... 7.8 3.2 15.5 26.5
---- ---- ---- -----
Total................. 53.3 31.2 15.5 100.0
==== ==== ==== =====
</TABLE>
- ---------------
(a) Percentages indicated are based on net assets of $25,580,238.
The accompanying notes are an integral part of the financial statements.
F-17
<PAGE> 102
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
G.T. GLOBAL: VARIABLE GROWTH & INCOME FUND
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
DECEMBER 31, 1994
<TABLE>
<CAPTION>
UNREALIZED
MARKET VALUE CONTRACT DELIVERY APPRECIATION
CONTRACTS TO SELL: (U.S. DOLLARS) PRICE DATE (DEPRECIATION)
-------------- -------- --------- --------------
<S> <C> <C> <C> <C>
Contracts to Sell:
Deutsche Marks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,169,704 1.49493 03-Feb-95 $ 41,053
Deutsche Marks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,326,483 1.56900 03-Feb-95 (32,028)
French Francs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 603,188 5.12720 03-Feb-95 24,835
--------- --------
Total Contracts to Sell (Receivable amount $4,133,235) . . . . . . . . . 4,099,375 33,860
--------- --------
The Value of Contracts to Sell as a Percentage of Net Assets is 16.0%.
CONTRACTS TO BUY:
Deutsche Marks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 555,771 1.53030 03-Feb-95 (6,210)
French Francs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 292,228 5.26400 03-Feb-95 (4,125)
--------- --------
Total Contracts to Buy (Payable amount $858,334) . . . . . . . . . . . . 847,999 (10,335)
--------- --------
The Value of Contracts to Buy as a Percentage of Net Assets is 3.3%.
Total Open Forward Foreign Currency Contracts, Net . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 23,525
========
</TABLE>
- -----------------
See Note 1 of the financial statements.
The accompanying notes are an integral part of the financial statements.
F-18
<PAGE> 103
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
G.T. GLOBAL: VARIABLE TELECOMMUNICATIONS FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1994
================================================================================
<TABLE>
<CAPTION>
% OF NET
EQUITY INVESTMENTS COUNTRY SHARES MARKET VALUE ASSETS (a)
- ------------------ ------- ---------- ------------ ----------
<S> <C> <C> <C> <C>
TECHNOLOGY (27.8%)
Nokia AB Preferred ADR (b)........................... FIN 23,000 $ 1,725,000 4.8
Telecom Equipment
Broadband Technologies Inc. (c)...................... US 50,000 1,525,000 4.2
Telecom Equipment
U.S. Robotics Inc. (c)............................... US 35,000 1,513,750 4.2
Telecom Equipment
Cisco Systems, Inc. (c).............................. US 38,000 1,334,750 3.7
Networking
Glenayre Technologies Inc. (c)....................... US 18,000 1,039,500 2.9
Telecom Equipment
Motorola Inc......................................... US 14,600 844,975 2.3
Telecom Equipment
Benefon OY (c)...................................... FIN 2,500 818,979 2.3
Telecom Equipment
Newbridge Networks Corp. (b)(c)...................... CAN 19,000 726,750 2.0
Telecom Equipment
Champion Technology Holdings......................... HK 1,889,849 393,286 1.1
Telecom Equipment
Teledata Communications Ltd. (c)..................... US 22,800 108,300 0.3
Telecom Equipment
------------
10,030,290
------------
TELEPHONE NETWORKS (25.7%)
Stet Di Risp......................................... ITLY 757,000 1,796,152 5.0
Telefonica de Espana ADR (b)......................... SPN 50,000 1,756,250 4.9
Compania de Telefonos de Chile S.A. ADR (b).......... CHLE 13,000 1,023,750 2.8
Telecomunicacoes Brasileiras S.A. - Telebras:........ BRZL -- -- 2.6
Preferred.......................................... -- 20,500,000 918,381 --
Preferred New (c).................................. -- 376,150 15,166 --
Telecom Corp. of New Zealand ADR (b)................ NZ 15,800 811,725 2.2
Tele Danmark A.S. ADR (b)(c)......................... DEN 31,000 790,500 2.2
British Telecom PLC ADR (b).......................... UK 13,100 787,638 2.2
Koninklijke PTT Nederland N.V........................ NETH 22,000 741,616 2.1
Telecom Argentina S.A. Class B....................... ARG 80,000 390,050 1.1
Matav (e)............................................ HGRY 1,000 221,043 0.6
------------
9,252,271
------------
WIRELESS COMMUNICATIONS (14.0%)
Centennial Cellular Corp. Class A (c)................ US 71,500 1,215,500 3.4
PriCellular Corp. Class A (c)........................ US 100,000 975,000 2.7
Paging Network Inc. (c).............................. US 25,000 850,000 2.4
Telephone and Data Systems Inc....................... US 15,200 701,100 1.9
DDI Corp............................................. JPN 60 518,333 1.4
Star Paging International Holdings Ltd. (d).......... HK 1,450,000 449,816 1.2
Grupo Iusacell S.A. Series "D" ADR (b)(c)............ MEX 22,000 342,320 1.0
------------
5,052,069
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-19
<PAGE> 104
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
G.T. GLOBAL: VARIABLE TELECOMMUNICATIONS FUND
<TABLE>
<CAPTION>
% OF NET
EQUITY INVESTMENTS COUNTRY SHARES MARKET VALUE ASSETS (a)
- ------------------ ------- ---------- ------------ ----------
<S> <C> <C> <C> <C>
TELEPHONE - LONG DISTANCE (11.9%)
IDB Communications Group Inc. (c)........................... US 210,000 $ 1,929,375 5.4
Call-Net Enterprises Inc. Class B (c)....................... CAN 233,000 913,856 2.5
PT Indonesia Satellite (Indosat) ADR (b)(c)................. INDO 20,000 715,000 2.0
MCI Communications Corp..................................... US 23,400 429,975 1.2
Philippine Long Distance Telephone Company ADR (b).......... PHIL 5,000 275,625 0.8
------------
4,263,831
------------
SERVICES (7.6%)
Cellstar Corporation (c).................................... US 55,000 1,244,375 3.5
Wholesale & International Trade...........................
Century Telephone Enterprises............................... US 25,500 752,250 2.1
Telephone-Regional/Local..................................
Southwestern Bell Corp...................................... US 9,360 377,910 1.0
Telephone-Regional/Local..................................
IntelCom Group, Inc. (c).................................... US 25,000 331,250 0.9
Telephone-Regional/Local..................................
Audiovox Corp. Class A (c).................................. US 6,000 46,500 0.1
Wholesale & International Trade
------------
2,752,285
------------
CAPITAL GOODS (5.1%)
Mannesmann AG............................................... GER 6,740 1,836,560 5.1
Machinery & Engineering
CABLE TELEVISION (2.9%)
Tele-Communications Inc. Class A (c)........................ US 35,000 761,250 2.1
Associated Group Inc.:...................................... US -- -- 0.8
Class A (c)............................................... -- 6,500 152,750 --
Class B (c)............................................... -- 6,500 152,750 --
------------
1,066,750
------------
CONSUMER DURABLES (0.1%)
Three Five Systems Inc. (c)................................. US 500 18,188 0.1
Consumer Electronics......................................
BEVERAGES - ALCOHOLIC (0.0%)
Bavaria (c)................................................. COL 3,000 11,731 --
------------
Total Equity Investments (cost $32,543,536)................... 34,283,975 95.1
------------
NO. OF
WARRANTS (0.0%) WARRANTS
----------
Star Paging International Holdings Ltd. expires 1996 (c).... HK 200,000 5,945 --
Wireless Communications ------------
Total Warrants (cost $0)..................................... 5,945 --
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-20
<PAGE> 105
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
G.T. GLOBAL: VARIABLE TELECOMMUNICATIONS FUND
<TABLE>
<CAPTION>
% OF NET
MARKET VALUE ASSETS (A)
------------ ----------
<S> <C> <C>
SHORT-TERM INVESTMENTS (9.2%)
REPURCHASE AGREEMENT
Dated December 30, 1994, with State Street Bank & Trust Company, due
January 3, 1995, for an effective yield of 5.25% collateralized
by $3,305,000 United States Treasury Notes, 6.875% due 10/31/96.
(Market value $3,301,571 including accrued interest.)
(cost $3,299,962)........................................................ $ 3,299,962 9.2
------------ -----
Total Investments (cost $35,843,498)*....................................... 37,589,882 104.3
Other Assets and Liabilities................................................ (1,561,355) (4.3)
------------ -----
Net Assets.................................................................. $36,028,527 100.0
============ =====
</TABLE>
- ------------------
(a) Percentages indicated are based on net assets of $36,028,527.
(b) U.S. currency-denominated.
(c) Non-income producing security.
(d) Issued with detachable warrants. The current market value of each
warrant is zero.
(e) Restricted securities - At December 31, 1994, the fund owned the
following restricted security constituting 0.6% of net assets which may
not be publicly sold without registration under the Securities Act of
1933. (Note 1). Additional information on the restricted security is as
follows:
<TABLE>
<CAPTION>
MARKET
VALUE
ACQUISITION ACQUISITION PER SHARE
DESCRIPTION DATE SHARES COST AT 12/31/94
----------- ----------- ------ ----------- -----------
<S> <C> <C> <C> <C>
Matav............................................................... 7/20/94 1,000 $247,819 $221.04
</TABLE>
Abbreviation:
ADR-American Depository Receipt
* For Federal income tax purposes, cost is $35,875,603 and appreciation
(depreciation) of securities is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $3,882,570
Unrealized depreciation: (2,168,291)
----------
Net unrealized appreciation: $1,714,279
==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-21
<PAGE> 106
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
G.T. GLOBAL: VARIABLE TELECOMMUNICATIONS FUND
The Fund's Portfolio of Investments at December 31, 1994, was concentrated in
the following countries:
<TABLE>
<CAPTION>
PERCENTAGE OF NET ASSETS (a)
------------------------------------
SHORT-TERM
COUNTRY EQUITY & OTHER TOTAL
------- ------ ---------- -----
<S> <C> <C> <C>
Argentina...................................... 1.1 1.1
Brazil......................................... 2.6 2.6
Canada......................................... 4.5 4.5
Chile.......................................... 2.8 2.8
Denmark........................................ 2.2 2.2
Finland........................................ 7.1 7.1
Germany........................................ 5.1 5.1
Hong Kong...................................... 2.3 2.3
Hungary........................................ 0.6 0.6
Indonesia...................................... 2.0 2.0
Italy.......................................... 5.0 5.0
Japan.......................................... 1.4 1.4
Mexico......................................... 1.0 1.0
Netherlands.................................... 2.1 2.1
New Zealand.................................... 2.2 2.2
Philippines.................................... 0.8 0.8
Spain.......................................... 4.9 4.9
United Kingdom................................. 2.2 2.2
United States.................................. 45.2 4.9 50.1
---- --- -----
Total.......................................... 95.1 4.9 100.0
==== === =====
</TABLE>
- ------------------
(a) Percentages indicated are based on net assets of $36,028,527.
================================================================================
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
DECEMBER 31, 1994
<TABLE>
<CAPTION>
UNREALIZED
MARKET VALUE CONTRACT DELIVERY APPRECIATED
(U.S. DOLLARS) PRICE DATE (DEPRECIATION)
-------------- -------- -------- --------------
<S> <C> <C> <C> <C>
CONTRACTS TO SELL:
Deutsche Marks......................................................... 1,874,111 1.49493 03-Feb-95 $65,776
Deutsche Marks......................................................... 1,744,863 1.56900 03-Feb-95 (24,021)
------------
Total Contracts to Sell (Receivable amount $3,660,729)................. 3,618,974 41,755
------------
The Value of Contracts to Sell as a Percentage of Net Assets is 10.0%.
CONTRACTS TO BUY:
Deutsche Marks......................................................... 995,218 1.53030 03-feb-95 (11,121)
------------ -------
Total Contracts to Buy (Payable amount $1,006,339)..................... 995,218 (11,121)
------------ -------
The Value of Contracts to Buy as a Percentage of Net Assets is 2.8%.
Total Open Forward Foreign Currency Contracts, Net................. $30,634
=======
</TABLE>
- ------------------
See Note 1 of the financial statements.
The accompanying notes are an integral part of the financial statements.
F-22
<PAGE> 107
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
G.T. GLOBAL: VARIABLE EMERGING MARKETS FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1994
<TABLE>
<CAPTION>
% OF NET
EQUITY INVESTMENTS COUNTRY SHARES MARKET VALUE ASSETS (A)
- ------------------ ------- ----------- ------------ ----------
<S> <C> <C> <C> <C>
CONSUMER NON-DURABLES (19.6%)
Cervecerias Backus & Johnston "T" . . . . . . . . . . . . . . . . . . PERU 200,000 $ 456,460 6.3
Beverages-Alcoholic
Embotelladora Lima S.A. (c) . . . . . . . . . . . . . . . . . . . . . PERU 52,000 320,770 4.4
Beverages-Non alcoholic
Panamerican Beverages, Inc. "A" (b) . . . . . . . . . . . . . . . . . MEX 9,600 303,600 4.2
Beverages-Non alcoholic
Tectoy Industria Brinquedos (Preferred) (c) . . . . . . . . . . . . . BRZL 253,900,000 264,104 3.6
Toys
Hellenic Biscuit Co. (c) . . . . . . . . . . . . . . . . . . . . . . . GREC 5,650 42,039 0.6
Food
Compania Cervecerias Unidas S.A. ADR (b) . . . . . . . . . . . . . . . CHLE 1,504 37,788 0.5
Beverages-Alcoholic
-----------
1,424,761
-----------
FINANCE (16.1%)
Banco Latino Americano de Exportaciones, S.A. (b) . . . . . . . . . . PAN 11,600 362,500 5.0
Banks-Regional
Ayala Land, Inc. "B" . . . . . . . . . . . . . . . . . . . . . . . . . PHIL 222,000 348,595 4.8
Real Estate
Peregrine Investment Holdings Limited . . . . . . . . . . . . . . . . HK 205,000 241,130 3.3
Investment Management
Grupo Financiero Bancomer, S.A. de C.V. "C" . . . . . . . . . . . . . MEX 215,000 119,691 1.6
Banks-Regional
Turkiye Garanti Bankasi A.S. . . . . . . . . . . . . . . . . . . . . . TRKY 249,000 63,382 0.9
Banks-Regional
Bangkok Bank Public Co. Ltd. (Foreign) . . . . . . . . . . . . . . . . THAI 3,200 34,174 0.5
Banks-Regional
-----------
1,169,472
-----------
SERVICES (15.5%)
Grupo Televisa, S.A. de C.V. 144A GDR (b)(d) . . . . . . . . . . . . . MEX 9,000 285,750 3.9
Broadcasting & Publishing
PT Indonesia Satellite (Indosat) ADR (b)(c) . . . . . . . . . . . . . INDO 7,500 268,125 3.7
Telephone Networks
Telefonos de Mexico, S.A. de C.V. "L" ADR (b) . . . . . . . . . . . . MEX 6,000 246,000 3.4
Telephone Networks
Saha Pathanapibul (Foreign) . . . . . . . . . . . . . . . . . . . . . THAI 55,100 144,913 2.0
Wholesale & International Trade
Telecomunicacoes Brasileiras S.A. - Telebras Sponsored ADR (b) . . . . BRZL 1,950 87,019 1.2
Telephone Networks
Pacific Basin Bulk Shipping - Units (b) . . . . . . . . . . . . . . . HK 5,000 66,250 0.9
Transportation-Shipping
Compania de Telefonos de Chile S.A. ADR (b) . . . . . . . . . . . . . CHLE 350 27,563 0.4
Telephone Networks
-----------
1,125,620
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-23
<PAGE> 108
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
G.T. GLOBAL: VARIABLE EMERGING MARKETS FUND
<TABLE>
<CAPTION>
% OF NET
EQUITY INVESTMENTS COUNTRY SHARES MARKET VALUE ASSETS (A)
- ------------------ ------- ------ ------------ ----------
<S> <C> <C> <C> <C>
MATERIALS/BASIC INDUSTRIES (12.0%)
Hylsamex 144A ADR (b)(c)(d) . . . . . . . . . . . . . . . . . . . . . MEX 14,100 $ 237,938 3.3
Metals-Steel
NTS Steel Groups Co. Ltd. (Foreign) . . . . . . . . . . . . . . . . . THAI 98,000 214,784 3.0
Metals-Steel
Caemi Mineracao E Metal (Preferred) (c) . . . . . . . . . . . . . . . BRZL 1,150,000 187,589 2.6
Metals-Ferrous
Venezolana de Pulpa Y Papel 144A GDR (b)(d) . . . . . . . . . . . . . VENZ 56,000 164,500 2.2
Forest Products
Kartonsan Karton Sanayi (c) . . . . . . . . . . . . . . . . . . . . . TRKY 73,000 35,078 0.5
Forest Products
Indo Gulf Fertilizers 144A GDR (d) . . . . . . . . . . . . . . . . . . IND 7,500 21,375 0.3
Chemicals
TPI Polene Company Ltd. (Foreign) . . . . . . . . . . . . . . . . . . THAI 925 8,257 0.1
Chemicals
-----------
869,521
-----------
MULTI-INDUSTRY (6.5%)
Aboitiz Equity Ventures Inc. 144A GDR (b)(c)(d) . . . . . . . . . . . PHIL 1,104,000 260,033 3.6
Conglomerate
Mirgor 144A GDR (b)(c)(d) . . . . . . . . . . . . . . . . . . . . . . ARG 28,000 157,500 2.2
Auto Parts
Cesk En Zavody (b)(c)(d) . . . . . . . . . . . . . . . . . . . . . . . CZCH 1,000 48,693 0.7
Miscellaneous
-----------
466,226
-----------
ENERGY (3.0%)
Companhia Energetica de Minas Gerais (CEMIG) 144A ADR (b)(c)(d) . . . BRZL 8,200 193,823 2.7
Electrical & Gas Utilities
Czech Power Company GDR (b)(c) . . . . . . . . . . . . . . . . . . . . CZCH 500 23,000 0.3
Electrical & Gas Utilities
-----------
216,823
-----------
COUNTRY FUNDS (2.0%)
Harvard Investment Co. Growth Fund (c) . . . . . . . . . . . . . . . . CZCH 4,833 93,268 1.3
Country Funds
Harvard Investment Co. Dividend Fund (c) . . . . . . . . . . . . . . . CZCH 2,500 50,125 0.7
Country Funds
-----------
143,393
-----------
CONSUMER DURABLES (1.9%)
Consorcio Grupo Dina, S.A. de C.V. ADR (b) . . . . . . . . . . . . . . MEX 12,500 118,750 1.6
Automobiles
Tofas Turk Otomobil Fabrikasi 144A GDR (b)(d) . . . . . . . . . . . . TRKY 5,700 24,567 0.3
Automobiles
-----------
143,317
-----------
CAPITAL GOODS (1.8%)
Netas Telekomunik: . . . . . . . . . . . . . . . . . . . . . . . . . . TRKY -- -- 1.1
Telecom Equipment
New (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 142,500 45,341 --
Common (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 114,000 36,273 --
Tadiran Ltd. (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . ISRL 2,400 50,100 0.7
Telecom Equipment
-----------
131,714
----------- ----
Total Equity Investments(cost $6,201,823) . . . . . . . . . . . . . . . 5,690,847 78.4
----------- ----
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-24
<PAGE> 109
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
G.T. GLOBAL: VARIABLE EMERGING MARKETS FUND
<TABLE>
<CAPTION>
PRINCIPAL % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT MARKET VALUE ASSETS (A)
- ------------------------ -------- --------- ------------ ----------
<S> <C> <C> <C> <C>
GOVERNMENT OBLIGATION (1.6%)
Republic of Venezuela, Debt Conversion Bond, 7.6875%
due 12/18/07 (b)(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . USD 250,000 $ 113,594 1.6
----------- -----
Total Fixed Income Investments (cost $123,871) . . . . . . . . . . . . . . . . . 113,594 1.6
----------- -----
SHORT-TERM INVESTMENTS
REPURCHASE AGREEMENT (21.6%)
Dated December 30, 1994 with State Street Bank & Trust Company, due
January 3, 1995, for an effective yield of 5.25% collateralized by
$1,150,000 United States Treasury Bond, 12.0% due 08/15/13.
(Market Value $1,583,781, including accrued interest.) (cost $1,577,460) . . 1,577,460 21.6
----------- -----
Total Investments (cost $7,903,154)* . . . . . . . . . . . . . . . . . . . . . . 7,381,901 101.6
Other Assets and Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . (115,276) (1.6)
----------- -----
Net Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,266,625 100.0
=========== =====
</TABLE>
- -----------------
(a) Percentages indicated are based on net assets of $7,266,625.
(b) U.S. currency denominated.
(c) Non-income producing security.
(d) 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.
(e) The coupon rate shown on floating rate note represents the rate at period
end.
Abbreviations:
ADR - American Depository Receipt
GDR - Global Depository Receipt
* For Federal income tax purposes, cost is $7,903,154 and appreciation
(depreciation) of securities is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 267,271)
Unrealized depreciation: (788,524)
----------
Net unrealized depreciation: $ (521,253)
==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-25
<PAGE> 110
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
G.T. GLOBAL: VARIABLE EMERGING MARKETS FUND
The Fund's Portfolio of Investments at December 31, 1994 was concentrated in
the following countries:
<TABLE>
<CAPTION>
PERCENTAGE OF NET ASSETS (A)
---------------------------------------------
SHORT-TERM
COUNTRY EQUITY FIXED INCOME & OTHER TOTAL
------- ------ ------------ ---------- -----
<S> <C> <C> <C> <C>
Argentina . . . . . . 2.2 2.2
Brazil . . . . . . . . 10.1 10.1
Chile . . . . . . . . 0.9 0.9
Czech Republic . . . . 3.0 3.0
Greece . . . . . . . . 0.6 0.6
Hong Kong . . . . . . 4.2 4.2
India . . . . . . . . 0.3 0.3
Indonesia . . . . . . 3.7 3.7
Israel . . . . . . . . 0.7 0.7
Mexico . . . . . . . . 18.0 18.0
Panama . . . . . . . . 5.0 5.0
Peru . . . . . . . . . 10.7 10.7
Philippines . . . . . 8.4 8.4
Thailand . . . . . . . 5.6 5.6
Turkey . . . . . . . . 2.8 2.8
United States . . . . 20.0 20.0
Venezuela . . . . . . 2.2 1.6 3.8
---- --- ---- -----
Total . . . . . . . . 78.4 1.6 20.0 100.0
==== === ==== =====
</TABLE>
(a) Percentages indicated are based on net assets of $7,266,625.
The accompanying notes are an integral part of the financial statements.
F-26
<PAGE> 111
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
G.T. GLOBAL: VARIABLE AMERICA FUND
PORTFOLIO OF INVESTMENTS
December 31, 1994
<TABLE>
<CAPTION>
% OF NET
EQUITY INVESTMENTS SHARES MARKET VALUE ASSETS (A)
- ------------------ ------ ------------ ----------
<S> <C> <C> <C>
TECHNOLOGY (20.8%)
Seagate Technology (b) . . . . . . . . . . . . . . . . . . . . . . . . 18,000 $ 432,000 2.8
Computers & Peripherals
Lattice Semiconductor Corp. (b) . . . . . . . . . . . . . . . . . . . 24,700 413,725 2.7
Semiconductors
Applied Materials Inc. (b) . . . . . . . . . . . . . . . . . . . . . . 9,600 405,600 2.7
Semiconductors
BMC Software (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,600 375,375 2.5
Software
Cirrus Logic Inc. (b) . . . . . . . . . . . . . . . . . . . . . . . . 15,800 355,500 2.3
Semiconductors
Integrated Device Technology Inc. (b) . . . . . . . . . . . . . . . . 11,500 339,250 2.2
Semiconductors
Cisco Systems Inc. (b) . . . . . . . . . . . . . . . . . . . . . . . . 8,900 312,613 2.0
Networking
Dallas Semiconductor Corp. (b) . . . . . . . . . . . . . . . . . . . . 16,400 272,650 1.8
Semiconductors
S3 Incorporated (b) . . . . . . . . . . . . . . . . . . . . . . . . . 13,100 206,325 1.4
Semiconductors
Excalibur Technology Corp. (b)(c) . . . . . . . . . . . . . . . . . . 11,000 63,250 0.4
Software
---------
3,176,288
---------
SERVICES (9.7%)
Proffitt's Inc. (b) . . . . . . . . . . . . . . . . . . . . . . . . . 13,100 291,475 1.9
Retailers-Other
United Video Satellite Group Inc. Class A (b) . . . . . . . . . . . . 10,600 254,400 1.7
Cable Television
Savoy Pictures Entertainment Inc. (b) . . . . . . . . . . . . . . . . 37,200 241,800 1.6
Leisure & Tourism
Equity Inns Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,700 238,700 1.5
Leisure & Tourism
Rio Hotel and Casino Inc. (b) . . . . . . . . . . . . . . . . . . . . 16,200 196,425 1.3
Leisure & Tourism
Friedman's Inc. Class A (b) . . . . . . . . . . . . . . . . . . . . . 10,400 179,400 1.2
Retailers-Other
The Buckle Inc. (b) . . . . . . . . . . . . . . . . . . . . . . . . . 7,600 81,700 0.5
Retailers-Apparel
---------
1,483,900
---------
FINANCE (9.2%)
Leader Financial Corp. (b) . . . . . . . . . . . . . . . . . . . . . . 17,600 363,000 2.4
Savings & Loan
Advanta Corporation Class B . . . . . . . . . . . . . . . . . . . . . 13,200 333,300 2.2
Consumer Finance
Mid-America Apartment Communities Inc. . . . . . . . . . . . . . . . . 8,000 214,000 1.4
Real Estate
Signet Banking Corp. . . . . . . . . . . . . . . . . . . . . . . . . . 7,100 203,238 1.3
Banks-Regional
Trans Financial Bancorp Inc. . . . . . . . . . . . . . . . . . . . . . 10,100 131,300 0.9
Savings & Loan
RFS Hotel Investors Inc. . . . . . . . . . . . . . . . . . . . . . . 8,500 124,313 0.8
Real Estate
Capitol American Financial Corp. . . . . . . . . . . . . . . . . . . . 1,400 32,200 0.2
Insurance-Multi-Line
---------
1,401,351
---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-27
<PAGE> 112
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
G.T. GLOBAL: VARIABLE AMERICA FUND
<TABLE>
<CAPTION>
% OF NET
EQUITY INVESTMENTS SHARES MARKET VALUE ASSETS (A)
- ------------------ ------ ------------ ----------
<S> <C> <C> <C>
CONSUMER NON-DURABLES (7.9%)
Haggar Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,400 $ 464,600 3.0
Textiles & Apparel
Premark International Inc. . . . . . . . . . . . . . . . . . . . . . . . . . 8,100 362,601 2.4
Household Products
Drypers Corp. (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,300 191,250 1.3
Personal Care/Cosmetics
Varsity Spirit Corp. (b) . . . . . . . . . . . . . . . . . . . . . . . . . . 9,900 180,675 1.2
Textiles & Apparel
-----------
1,199,126
-----------
CONSUMER DURABLES (5.3%)
Eaton Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,900 440,474 2.9
Auto Parts
Syratech Corp. (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,500 192,938 1.3
Appliances & Household Durables
Lifetime Hoan Corp. (b) . . . . . . . . . . . . . . . . . . . . . . . . . . 14,300 168,025 1.1
Appliances & Household Durables
-----------
801,437
-----------
HEALTH CARE (4.3%)
Health Systems International Inc. Class A (b) . . . . . . . . . . . . . . . 12,900 391,838 2.6
Health Care Services
Nellcor Inc. (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,300 108,900 0.7
Medical Technology & Supplies
Abaxis Inc. (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34,000 106,250 0.7
Medical Technology & Supplies
Grancare Inc. (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,400 42,000 0.3
Health Care Services
-----------
648,988
-----------
CAPITAL GOODS (0.7%)
OfficeMax Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,100 108,650 0.7
Office Equipment
----------- ----
Total Equity Investments (cost $8,338,044) . . . . . . . . . . . . . . . . . . 8,819,740 57.9
----------- ----
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-28
<PAGE> 113
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
G.T. GLOBAL: VARIABLE AMERICA FUND
<TABLE>
<CAPTION>
PRINCIPAL % OF NET
SHORT-TERM INVESTMENTS AMOUNT MARKET VALUE ASSETS (A)
- ---------------------- --------- ------------ ----------
<S> <C> <C> <C>
TREASURY BILLS (26.2%)
United States Treasury Bill due 1/5/95 . . . . . . . . . . . . . . . . . . . . 4,000,000 $ 3,999,556 26.2
Government/Agency (cost $3,999,556)
Repurchase Agreement (20.1%)
Dated December 30, 1994, with State Street Bank and Trust
Company due January 3, 1995, for an effective yield of 5.25%
collateralized by $2,235,000 United States Treasury Bond, 12.0%
due 08/15/13.(Market Value $3,078,044, including accrued interest.)
(cost $3,073,896) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,073,896 20.1
----------- -----
Total Short-Term Investments (cost $7,073,452) . . . . . . . . . . . . . . . . . 7,073,452 46.3
----------- -----
Total Investments (cost $15,411,496)* . . . . . . . . . . . . . . . . . . . . . 15,893,192 104.2
Other Assets and Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . (635,926) (4.2)
----------- -----
Net Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $15,257,266 100.0
=========== =====
</TABLE>
- -----------------
(a) Percentages indicated are based on net assets $15,257,266.
(b) Non-income producing security.
(c) The following is a restricted security bought from a private placement
and is subject to restriction from public resale:
<TABLE>
<CAPTION>
MARKET VALUE
ACQUISTION PER SHARE AT
DATE SHARES COST 12/31/94
---------- ------ ------------ ------------
<S> <C> <C> <C> <C>
Excalibur Technology Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4/19/94 11,000 $88,000 $5.75
</TABLE>
* For Federal income tax purposes, cost is $15,425,837 and appreciation
(depreciation) of securities is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $957,949
Unrealized depreciation: (490,594)
--------
Net unrealized appreciation: $467,355
========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-29
<PAGE> 114
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
G.T. GLOBAL: VARIABLE NEW PACIFIC FUND
PORTFOLIO OF INVESTMENTS
December 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
% OF NET
EQUITY INVESTMENTS COUNTRY SHARES MARKET VALUE ASSETS (A)
- ------------------ ------- ------ ------------ ----------
<S> <C> <C> <C> <C>
FINANCE (18.8%)
Phatra Thanakit Co. Ltd. (Foreign)...................... THAI 67,500 $ 521,817 2.7
Investment Management
Ayala Land, Inc. "B".................................... PHIL 250,000 392,562 2.0
Real Estate
Development & Commercial Bank Bhd....................... MAL 150,000 364,420 1.9
Banks-Money Center
Bangkok Bank Public Co. Ltd.(Foreign)................... THAI 30,000 320,383 1.6
Banks-Money Center
Development Bank of Singapore (Foreign)................. SING 30,000 309,066 1.6
Banks-Money Center
Westpac Banking Corporation Ltd.:....................... AUSL -- -- 1.4
Banks-Money Center
Common................................................ -- 76,747 258,959 --
6.5% Conv. Preferred until 6/30/98.................... -- 2,800 15,529 --
Siam Commercial Bank Public Co. Ltd. (Foreign).......... THAI 25,000 229,129 1.2
Banks-Money Center
Public Finance Berhad (Foreign)......................... MAL 120,000 199,373 1.0
Banks-Money Center
PT Lippo Bank (Foreign)................................. INDO 120,000 185,708 1.0
Banks-Money Center
Kay Hian James Capel Holdings Ltd. (Foreign)............ SING 144,000 181,978 0.9
Securities Broker
Siam City Bank Ltd. (Foreign)........................... THAI 140,000 178,522 0.9
Banks-Money Center
Bank of East Asia, Ltd.................................. HK 31,801 127,015 0.7
Banks-Money Center
Hang Seng Bank.......................................... HK 16,030 114,996 0.6
Banks-Money Center
HSBC Holdings PLC....................................... HK 10,000 107,930 0.6
Banks-Money Center
PT Bank Bali (Foreign).................................. INDO 40,000 92,854 0.5
Banks-Money Center
Cheung Kong (Holdings) Ltd.............................. HK 10,000 40,716 0.2
Real Estate
------------
3,640,957
------------
MATERIALS/BASIC INDUSTRY (15.9%)
Broken Hill Proprietary Company Ltd..................... AUSL 33,606 510,398 2.6
Misc. Materials & Commodities
TPI Polene Company Ltd. (Foreign) (c)................... THAI 55,375 494,282 2.5
Chemicals
PT Barito Pacific Timber (Foreign) (c).................. INDO 245,000 387,517 2.0
Forest Products
Western Mining Corporation Holdings Limited............. AUSL 66,000 382,935 2.0
Metals-Non-Ferrous
Carter Holt Harvey Limited.............................. NZ 150,000 307,338 1.6
Forest Products
Siam Cement Co. Ltd. (Foreign).......................... THAI 5,000 299,661 1.5
Cement
Amcor Ltd............................................... AUSL 40,000 289,172 1.5
Paper/Packaging
Royal Ceramic Industry Company, Ltd. (Local)............ THAI 100,000 127,515 0.7
Building Materials & Components
Normandy Poseidon Ltd................................... AUSL 86,794 126,569 0.7
Gold
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-30
<PAGE> 115
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
G.T. GLOBAL: VARIABLE NEW PACIFIC FUND
<TABLE>
<CAPTION>
% OF NET
EQUITY INVESTMENTS COUNTRY SHARES MARKET VALUE ASSETS (A)
- ------------------ ------- ------ ------------ ----------
<S> <C> <C> <C> <C>
PT Ekadharma Tape Industries............................ INDO 66,000 $ 105,143 0.5
Chemicals
Hong Leong Industries Bhd............................... MAL 12,000 62,069 0.3
Building Materials & Components
------------
3,092,599
------------
SERVICES (15.3%)
Mandarin Oriental Hotel Group........................... HK 370,000 432,818 2.2
Leisure & Tourism
International Container Terminal Services (ICTS) (c).... PHIL 350,000 282,025 1.5
Transportation-Shipping
Overseas Union Enterprises Ltd.......................... SING 40,000 226,648 1.1
Leisure & Tourism
News Corporation Ltd.:.................................. AUSL -- -- 1.2
Broadcasting & Publishing
Common................................................ -- 40,078 156,992 --
Preferred............................................. -- 20,039 69,014 --
PT Modern Photo Film Company............................ INDO 50,000 211,652 1.1
Retailers-Other
Matichon Newspaper Group (Foreign) (c).................. THAI 30,000 193,664 1.0
Broadcasting & Publishing
Apollo Enterprises Ltd.................................. SING 200,000 189,560 1.0
Leisure & Tourism
Telekom Malaysia Bhd. (c)............................... MAL 25,000 169,475 0.9
Telephone Networks
Telecom Corporation of New Zealand Ltd.................. NZ 48,000 156,742 0.8
Telephone Networks
AAPC Limited............................................ AUSL 235,500 138,830 0.7
Leisure & Tourism
Ito-Yokado Co. Ltd...................................... JPN 2,000 107,082 0.6
Retailers-Other
Shimamura Co. Ltd....................................... JPN 2,000 100,452 0.5
Retailers-Apparel
Autobacs Seven.......................................... JPN 800 95,630 0.5
Retailers-Other
Ten Allied Co........................................... JPN 3,000 84,380 0.4
Restaurants
Philippine Long Distance Telephone Company ADR (b)...... PHIL 1,500 82,688 0.4
Telephone-Long Distance
Marui Co., Ltd.......................................... JPN 4,000 73,129 0.4
Retailers-Other
Hankyu Department Store................................. JPN 4,000 51,431 0.3
Retailers-Other
Asatsu.................................................. JPN 1,000 49,021 0.2
Business & Public Services
Malaysian Airlines System Bhd. (c)...................... MAL 16,000 47,962 0.2
Transportation-Airlines
Thai Airways International Ltd.......................... THAI 17,000 36,920 0.2
Transportation-Airlines
High Fashion International (c).......................... HK 170,000 22,853 0.1
Retailers-Apparel
------------
2,978,968
------------
CONSUMER DURABLES (11.2%)
Samsung Electronics Co.:................................ KOR -- -- 1.9
Consumer Electronics
144A GDR (b)(c)(d).................................... -- 7,000 350,000 --
New GDR (b)(c)(d)..................................... -- 290 14,500 --
Johnson Electric Holdings (c)........................... HK 140,000 321,205 1.7
Auto Parts
Edaran Otomobil Nasional Bhd............................ MAL 40,000 304,075 1.6
Automobiles
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-31
<PAGE> 116
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
G.T. GLOBAL: VARIABLE NEW PACIFIC FUND
<TABLE>
<CAPTION>
% OF NET
EQUITY INVESTMENTS COUNTRY SHARES MARKET VALUE ASSETS (A)
- ------------------ ------- ------ ------------ ----------
<S> <C> <C> <C> <C>
PT Astra International (Foreign)........................... INDO 118,800 $ 227,110 1.2
Automobiles
Diversified Resources Bhd. (c)............................. MAL 100,000 225,313 1.2
Automobiles
Hyundai Motor Co. 144A GDR (b)(c)(d)....................... KOR 12,000 225,000 1.1
Automobiles
Futuris Corporation Ltd.................................... AUSL 200,000 172,200 0.9
Auto Parts
GP Batteries International Ltd. (b)........................ SING 48,000 132,000 0.7
Consumer Electronics
Mr Max..................................................... JPN 3,300 85,193 0.4
Appliances & Household Durables
Tokai Rubber Industries.................................... JPN 2,000 33,752 0.2
Auto Parts
Singer Thailand Ltd.:...................................... THAI -- -- 0.2
Appliances & Household Durables
Foreign.................................................. -- 3,500 29,847 --
Local.................................................... -- 1,500 12,791 --
Jardine International Motor Holdings Ltd................... HK 20,000 21,069 0.1
Automobiles
------------
2,154,055
------------
COUNTRY FUNDS (5.9%)
India Growth Fund, Inc. (b)................................ IND 25,000 481,250 2.5
Korea Fund, Inc. (b)....................................... KOR 20,565 467,854 2.4
Taiwan Fund, Inc. (b)...................................... TWN 4,000 115,500 0.6
R.O.C. Taiwan Fund (b)..................................... TWN 7,000 83,125 0.4
------------
1,147,729
------------
CAPITAL GOODS (5.3%)
E.R.G. Australia Limited (c)............................... AUSL 200,000 333,540 1.7
Electrical Plant/Equipment
United Engineers (Malaysia) Ltd............................ MAL 42,000 207,367 1.1
Construction
International Engineering Public Company Ltd. (Foreign).... THAI 24,000 202,750 1.0
Telecom Equipment
Uniphone Telecommunications Bhd............................ MAL 80,000 154,859 0.8
Telecom Equipment
PT United Tractors (Local)................................. INDO 50,000 106,964 0.6
Machinery & Engineering
Mitsubishi Heavy Industries Ltd............................ JPN 3,000 22,903 0.1
Machinery & Engineering
------------
1,028,383
------------
TECHNOLOGY (4.6%)
Hosiden Electronics........................................ JPN 20,000 429,935 2.2
Computers & Peripherals
Varitronix International Ltd............................... HK 250,000 355,458 1.8
Computers & Peripherals
Kyocera Corporation........................................ JPN 1,000 74,234 0.4
Semiconductors
Tokyo Electron Ltd......................................... JPN 1,000 31,140 0.2
Semiconductors
------------
890,767
------------
MULTI-INDUSTRY/CONGLOMERATE (4.3%)
First Pacific Company Ltd.................................. HK 570,000 416,274 2.2
Conglomerate
Straits Steamship Land Ltd................................. SING 120,000 412,088 2.1
Conglomerate
------------
828,362
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-32
<PAGE> 117
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
G.T. GLOBAL: VARIABLE NEW PACIFIC FUND
<TABLE>
<CAPTION>
% OF NET
EQUITY INVESTMENTS COUNTRY SHARES MARKET VALUE ASSETS (A)
- ------------------ ------- ------ ------------ ----------
<S> <C> <C> <C> <C>
CONSUMER NON-DURABLES (2.6%)
Seafresh Industry (c)....................................... THAI 35,000 $ 181,311 0.9
Food
Reliance Industries Ltd. 144A GDR (b)(c)(d)................. IND 8,000 156,000 0.8
Textiles & Apparel
Sega Enterprises............................................ JPN 1,000 57,760 0.3
Toys
Magnum Corporation Bhd...................................... MAL 30,000 53,840 0.3
Recreation
Sri Charoen Industries Ltd.................................. THAI 6,000 31,560 0.2
Household Products
Essex International Company Ltd. (c)........................ THAI 10,000 27,296 0.1
Other Consumer Goods
------------
507,767
------------
ENERGY (2.0%)
Oil Search Ltd.............................................. AUSL 560,000 403,971 2.0
Oil
HEALTH CARE (1.6%)
PT Dankos Laboratories (Foreign) (c)........................ INDO 46,500 240,225 1.2
Pharmaceuticals
Sankyo Co. Ltd.............................................. JPN 2,000 49,824 0.3
Pharmaceuticals
SRL Inc..................................................... JPN 1,000 18,081 0.1
Health Care Services
------------
308,130
------------ ----
Total Equity Investments (cost $17,764,239) 16,981,688 87.5
------------ ----
PRINCIPAL
FIXED INCOME INVESTMENTS CURRENCY AMOUNT
-------- ---------
CORPORATE BONDS (2.0%)
ACER Inc., Conv. Bond 4% due 6/10/21........................ USD 80,000 192,400 1.0
Taiwanese Corporate Bond
Daewoo Corp., Conv. Bond, 0% due 12/31/04................... USD 265,000 191,463 1.0
Korean Corporate Bond
United Engineers (Malaysia) Ltd., Convertible
Unsecured Loan Stock, 4%
until 5/22/99............................................ MYR 21,000 8,969 --
Malaysian Corporate Bond
------------ ----
Total Fixed Income Investments (cost $396,821)............. 392,832 2.0
------------ ----
NO. OF
RIGHTS/
COUNTRY WARRANTS
------- --------
RIGHTS (0.0%)
Development & Commercial Bank Bhd. expires 1/12/95 (c)...... MAL 37,500 0 --
Banks-Money Center
------------ ----
Total Rights (cost $0)........................................ 0 --
------------ ----
Warrants (0.1%)
Uniphone Telecommunications Bhd. expires 9/7/99 (c)......... MAL 20,000 13,402 0.1
Telecom Technology ------------ ---
Total Warrants (cost $4,556).................................. 13,402 0.1
------------ ---
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-33
<PAGE> 118
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
G.T. GLOBAL: VARIABLE NEW PACIFIC FUND
<TABLE>
<CAPTION>
% OF NET
SHORT-TERM INVESTMENTS MARKET VALUE ASSETS (A)
- ---------------------- ------------ ----------
REPURCHASE AGREEMENT (9.8%)
<S> <C> <C>
Dated December 30, 1994, with State Street Bank and Trust Company, due
January 3, 1995, for an effective yield of 5.25% collateralized by
$1,380,000 U.S. Treasury Bond, 12.0% due 08/15/13. (Market value
$1,900,538 including accrued interest.)
(Cost $1,895,553).............................................................. $ 1,895,553 9.8
----------- -----
Total Investments (cost $20,061,169)*............................................. 19,283,475 99.4
Other Assets and Liabilities...................................................... 107,756 0.6
----------- -----
Net Assets........................................................................ $19,391,231 100.0
=========== =====
</TABLE>
- ------------------
(a) Percentages indicated are based on net assets of $19,391,231.
(b) U.S. currency denominated.
(c) Non-income producing security
(d) 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.
Abbreviations:
ADR-American Depository Receipt
GDR-Global Depository Receipt
* For Federal income tax purposes, cost is $20,061,169 and appreciation
(depreciation) of securities is as follows:
Unrealized appreciation: $ 1,303,594
Unrealized depreciation: (2,081,288)
------------
Net unrealized depreciation: $ (777,694)
============
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at December 31, 1994 was concentrated in
the following countries:
<TABLE>
<CAPTION>
PERCENTAGE OF NET ASSETS (A)
------------------------------------------------------
FIXED RIGHTS & SHORT-TERM
COUNTRY EQUITY INCOME WARRANTS & OTHER TOTAL
------- ------ ------ -------- ---------- -----
<S> <C> <C> <C> <C> <C>
Australia 14.7 14.7
Hong Kong 10.2 10.2
India 3.3 3.3
Indonesia 8.1 8.1
Japan 7.1 7.1
Korea 5.4 1.0 6.4
Malaysia 9.3 0.0 0.1 9.4
New Zealand 2.4 2.4
Philippines 3.9 3.9
Singapore 7.4 7.4
Taiwan 1.0 1.0 2.0
Thailand 14.7 14.7
United States 10.4 10.4
---- --- --- ---- -----
Total 87.5 2.0 0.1 10.4 100.0
==== === === ==== =====
</TABLE>
- ------------------------
(a) Percentages indicated are based on net assets of $19,391,231.
The accompanying notes are an integral part of the financial statements.
F-34
<PAGE> 119
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
G.T. GLOBAL: VARIABLE EUROPE FUND
PORTFOLIO OF INVESTMENTS
December 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
% OF NET
EQUITY INVESTMENTS COUNTRY SHARES MARKET VALUE ASSETS (A)
- ------------------ ------- ------ ------------ ----------
<S> <C> <C> <C> <C>
FINANCE (18.8%)
Anglo-Irish Bank Corporation PLC UK 500,000 $ 422,80 2.8
Banks-Money Center
Cetelem Group FR 1,700 304,055 2.0
Consumer Finance
Cardif S.A. FR 2,000 264,444 1.8
Insurance-Multi-Line
Banco de Santander S.A. SPN 6,000 229,875 1.5
Banks-Money Center
Skandinaviska Enskilda Banken "A" Free (b) SWDN 40,000 228,885 1.5
Banks-Money Center
Deutsche Bank AG GER 400 185,962 1.2
Banks-Money Center
Baloise Holding Ltd. (Registered) SWTZ 100 181,888 1.2
Insurance-Multi-Line
CS Holdings (Bearer) SWTZ 400 171,188 1.1
Banks-Money Center
Lloyds Bank PLC UK 15,000 129,776 0.9
Banks-Money Center
Assicurazioni Generali S.P.A. ITLY 5,500 129,482 0.9
Insurance-Multi-Line
Perpetual PLC UK 7,000 125,509 0.8
Investment Management
M & G Group PLC UK 7,400 113,213 0.8
Investment Management
Istituto Mobiliare Italiano S.P.A. ADR (c) ITLY 6,000 110,250 0.7
Banks-Money Center
National Westminster Bank PLC UK 11,500 92,382 0.6
Banks-Money Center
Axa FR 1,776 82,289 0.5
Insurance-Multi-Line
Aegon N.V. NETH 1,029 65,817 0.4
Insurance-Life
Unitas Bank Ltd. "A" (b) FIN 14,000 36,098 0.2
Banks-Money Center
-----------
2,873,913
-----------
SERVICES (15.6%)
British Airport Authority PLC UK 40,000 296,273 2.0
Transportation-Airlines
Ecco Travail Temporaire S.A. FR 5,000 279,989 1.9
Business & Public Services
Marieberg Tidnings AB-A Free SWDN 10,000 226,193 1.5
Broadcasting & Publishing
Euro RSCG Worldwide, S.A. FR 2,028 208,896 1.4
Broadcasting & Publishing
Telecom Italia S.P.A. (b) ITLY 80,000 208,331 1.4
Telephone Networks
Granada Group PLC UK 25,168 201,785 1.3
Leisure & Tourism
Stet Societa' Finanziaria Telfonica S.P.A. ITLY 60,000 176,982 1.2
Telephone Networks
Macintosh N.V. NETH 6,250 160,266 1.1
Retailers-Other
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-35
<PAGE> 120
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
G.T. GLOBAL: VARIABLE EUROPE FUND
<TABLE>
<CAPTION>
% OF NET
EQUITY INVESTMENTS COUNTRY SHARES MARKET VALUE ASSETS (A)
- ------------------ ------- ------ ------------ ----------
<S> <C> <C> <C> <C>
Telefonica de Espana SPN 12,000 $ 141,847 1.0
Telephone Networks
S.I.T.A. FR 1,000 129,787 0.9
Business & Public Services
Bremer Vulkan Verbund AG (b) GER 1,500 91,141 0.6
Transportation-Shipping
National Express Group PLC UK 20,000 89,884 0.6
Transportation-Road & Rail
Hagemeyer N.V. NETH 898 73,221 0.5
Wholesale & International Trade
Elsevier N.V. NETH 3,000 31,290 0.2
Broadcasting & Publishing
-----------
2,315,885
-----------
CAPITAL GOODS (14.4%)
Allgon AB-A Free SWDN 25,200 475,004 3.2
Telecom Equipment
Nokia AB: FIN -- -- 2.6
Telecom Equipment
Preferred Free -- 2,000 295,044 --
Common -- 600 88,513 --
Bilfinger & Berger Bau AG GER 565 288,209 1.9
Machinery & Engineering
General Electric PLC UK 60,000 259,317 1.7
Aerospace/Defense
Costain Group PLC (b) UK 500,000 168,337 1.1
Construction
Weir Group PLC UK 37,971 167,677 1.1
Machinery & Engineering
Siebe PLC UK 19,000 165,424 1.1
Industrial Components
Mannesmann AG GER 503 137,061 0.9
Machinery & Engineering
Alcatel Alsthom FR 1,326 113,242 0.8
Telecom Equipment
-----------
2,157,828
-----------
MATERIALS/BASIC INDUSTRY (13.4%)
Hoechst AG GER 2,000 435,204 2.9
Chemicals
RTZ Corporation PLC (Registered) (b) UK 19,000 246,351 1.6
Metals-Non-Ferrous
British Steel PLC UK 100,000 241,152 1.6
Metals-Steel
Burgo (Cartiere) S.P.A. (b) ITLY 35,999 238,809 1.6
Forest Products
Montedison S.P.A. (b) ITLY 300,000 226,412 1.5
Chemicals
Meyer International PLC UK 40,000 223,614 1.5
Building Materials & Components
Outokumpu OY "A" (b) FIN 12,000 220,649 1.5
Metals-Non-Ferrous
Repola OY FIN 10,000 180,704 1.2
Forest Products
-----------
2,012,895
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-36
<PAGE> 121
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
G.T. GLOBAL: VARIABLE EUROPE FUND
<TABLE>
<CAPTION>
% OF NET
EQUITY INVESTMENTS COUNTRY SHARES MARKET VALUE ASSETS (A)
- ------------------ ------- ------ ------------ ----------
<S> <C> <C> <C> <C>
CONSUMER DURABLES (9.1%)
Merloni Elettrodomestici S.P.A...................................... ITLY 80,000 $306,078 2.0
Appliances & Household Durables
Volvo AB-B Free..................................................... SWDN 15,000 282,741 1.9
Automobiles
Lucas Industries PLC................................................ UK 80,000 258,064 1.7
Auto Parts
Volkswagen AG....................................................... GER 800 220,056 1.5
Automobiles
C.H.A. Chemie Holding AG............................................ GER 600 126,997 0.9
Appliances & Household Durables
Mayflower Corporation PLC........................................... UK 150,000 119,793 0.8
Auto Parts
Bellway PLC........................................................ UK 15,200 47,604 0.3
Housing
----------
1,361,333
----------
ENERGY (4.1%)
British Petroleum Company PLC....................................... UK 45,000 299,836 2.0
Oil
BBC Brown Boveri AG (Bearer)........................................ SWTZ 300 258,387 1.7
Energy Equipment & Services
Motor-Columbus Ltd. (b)............................................. SWTZ 40 56,859 0.4
Electrical & Gas Utilities
----------
615,082
----------
CONSUMER NON-DURABLES (3.9%)
Polygram............................................................ NETH 7,000 325,516 2.2
Recreation
Viscofan Industria Navarra de
Envolturas Celulosicas S.A......................................... SPN 12,000 182,440 1.2
Food
Parmalat Finanziaria S.P.A.......................................... ITLY 65,000 68,189 0.5
Food
----------
576,145
----------
MULTI-INDUSTRY/MISC. (3.7%)
Hanson PLC.......................................................... UK 83,000 300,235 2.0
Conglomerate
Fitzwilton PLC...................................................... IRL 250,000 156,592 1.0
Conglomerate
Wassall PLC......................................................... UK 25,000 111,181 0.7
Conglomerate
----------
568,008
----------
HEALTH CARE (3.4%)
Sulzer AG (Registered).............................................. SWTZ 200 138,479 0.9
Medical Technology & Supplies
Zeneca Group PLC.................................................... UK 10,000 137,567 0.9
Pharmaceuticals
Astra AB-A Free..................................................... SWDN 5,000 129,253 0.9
Pharmaceuticals
Bayer AG............................................................ GER 450 105,476 0.7
Pharmaceuticals
----------
510,775
---------- ----
Total Equity Investments (cost $12,993,102) 12,991,864 86.5
---------- ----
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-37
<PAGE> 122
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
G.T. GLOBAL: VARIABLE EUROPE FUND
<TABLE>
<CAPTION>
% OF NET
EQUITY INVESTMENTS COUNTRY SHARES MARKET VALUE ASSETS (A)
- ------------------ ------- ------ ------------ ----------
<S> <C> <C> <C> <C>
Parmalat Finanziaria expires 7/16/99 (b)............................ ITLY 4,000 $3,156 --
Food
Burgo (Cartiere) S.P.A. expires 12/31/95 (b)........................ ITLY 13,798 2,197 --
Forest Products
Baloise Holding Ltd. expires 8/30/95 (b)............................ SWTZ 100 879 --
Insurance-Multi-Line
Interdiscount Holding expires 11/15/96 (b).......................... SWTZ 500 726 --
Retailers-Other
Swiss Reinsurance Co. "B" expires 6/30/95 (b)...................... SWTZ 1 12 --
Insurance-Multi-Line
----------- ----
Total Warrants (cost $0)............................................... 6,970 --
----------- ----
SHORT-TERM INVESTMENTS
REPURCHASE AGREEMENT (7.9%)
Dated December 30, 1994, with State Street Bank
and Trust Company due January 3, 1995, for an
effective yield of 5.25% collateralized by
$865,000 U.S. Treasury Bond, 12% due 08/15/13
(Market value $1,191,279 including accrued
interest)(cost $1,186,346)......................................... 1,186,346 7.9
----------- ----
Total Investments (cost $14,179,448)*.................................. 14,185,180 94.4
Other Assets and Liabilities........................................... 835,307 5.6
----------- ----
Net Assets............................................................. $15,020,487 100.0
=========== =====
</TABLE>
(a) Percentages indicated are based on net assets of $15,020,487.
(b) Non-income producing security.
(c) U.S. currency denominated.
* For Federal income tax purposes, cost is $14,179,448 and appreciation
(depreciation) of securities is as follows:
Unrealized appreciation: $ 999,102
Unrealized depreciation: (993,370)
---------
Net unrealized appreciation: $ 5,732
=========
================================================================================
The Fund's Portfolio of Investments at December 31, 1994 was concentrated in the
following countries:
<TABLE>
<CAPTION>
PERCENTAGE OF NET ASSETS (A)
-------------------------------------------------
RIGHTS & SHORT-TERM
COUNTRY EQUITY WARRANTS & OTHER TOTAL
------- ------ -------- ---------- -----
<S> <C> <C> <C>
Finland........................ 5.5 5.5
France......................... 9.3 9.3
Germany........................ 10.6 10.6
Ireland........................ 1.0 1.0
Italy.......................... 9.8 0.0 9.8
Netherlands.................... 4.4 4.4
Spain.......................... 3.7 3.7
Sweden......................... 9.0 9.0
Switzerland.................... 5.3 0.0 5.3
United Kingdom................. 27.9 27.9
United States.................. 13.5 13.5
---- --- ---- -----
Total.......................... 86.5 0.0 13.5 100.0
==== === ==== =====
</TABLE>
(a) Percentages indicated are based on net assets of $15,020,487.
The accompanying notes are an integral part of the financial statements.
F-38
<PAGE> 123
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
G.T. GLOBAL: VARIABLE EUROPE FUND
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
DECEMBER 31, 1994
<TABLE>
<CAPTION>
Unrealized
Market Value Contract Delivery Appreciation
(U.S. Dollars) Price Date (Depreciation)
-------------- -------- --------- --------------
<S> <C> <C> <C> <C>
CONTRACTS TO SELL:
Deutsche Marks 1,925,811 1.49493 03-Feb-95 $ 67,590
French Francs 1,620,366 5.12720 03-Feb-95 66,715
--------- --------
Total Contracts to Sell (Receivable amount $3,680,482) 3,546,177 134,305
--------- --------
The Value of Contracts to Sell as a Percentage of Net Assets is 23.6%.
CONTRACTS TO BUY:
Deutsche Marks 924,131 1.53030 03-Feb-95 (10,327)
French Francs 820,486 5.26400 03-Feb-95 (11,580)
--------- --------
Total Contracts to Buy (Payable amount $1,766,524) 1,744,617 (21,907)
The Value of Contracts to Buy as a Percentage of Net Assets is 11.6%.
Total Open Forward Foreign Currency Contracts, Net $112,398
========
</TABLE>
See Note 1 of the financial statements.
The accompanying notes are an integral part of the financial statements.
F-39
<PAGE> 124
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
G.T. GLOBAL: MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1994
<TABLE>
<CAPTION>
MATURITY PRINCIPAL % OF NET
SHORT-TERM INVESTMENTS YIELD DATE AMOUNT MARKET VALUE ASSETS (A)
- ---------------------- ----- --------- --------- ------------ ----------
<S> <C> <C> <C> <C> <C>
COMMERCIAL PAPER-DISCOUNTED (68.7%)
Pitney Bowes Inc................................................ 5.320% 03-Jan-95 $ 500,000 $ 499,852 2.6
Banc One Corp................................................... 5.480% 03-Jan-95 600,000 599,817 3.1
Toronto Dominion Holdings....................................... 5.200% 05-Jan-95 500,000 499,711 2.5
Dupont & Company................................................ 5.640% 05-Jan-95 600,000 599,624 3.1
AT&T Corp....................................................... 5.900% 05-Jan-95 100,000 99,934 0.5
Shell Oil Co.................................................... 5.600% 06-Jan-95 600,000 599,533 3.1
Bellsouth Capital Funding Corp.................................. 6.000% 06-Jan-95 600,000 599,500 3.1
Ameritech Corp.................................................. 5.850% 09-Jan-95 700,000 699,090 3.6
Ford Motor Credit Co............................................ 6.000% 09-Jan-95 600,000 599,200 3.1
Atlantic Richfield Co........................................... 5.400% 11-Jan-95 600,000 599,100 3.1
AIG Funding Inc................................................. 5.950% 11-Jan-95 700,000 698,843 3.6
Banc One Corp................................................... 5.970% 17-Jan-95 250,000 249,337 1.3
Bank of Nova Scotia............................................. 5.300% 17-Jan-95 500,000 498,822 2.6
Proctor & Gamble Co............................................. 5.850% 17-Jan-95 160,000 159,584 0.8
Proctor & Gamble Co............................................. 5.900% 19-Jan-95 600,000 598,230 3.1
Emerson Electric Co............................................. 5.850% 20-Jan-95 100,000 99,691 0.5
General Electric Capital Corp................................... 5.950% 20-Jan-95 500,000 498,430 2.5
Motorola Inc.................................................... 5.900% 23-Jan-95 700,000 697,476 3.6
Metlife Funding Inc............................................. 5.900% 26-Jan-95 600,000 597,542 3.1
Emerson Electric Co............................................. 5.900% 01-Feb-95 700,000 696,444 3.6
Philip Morris Companies Inc..................................... 5.850% 01-Feb-95 750,000 746,222 3.8
Hanson Finance.................................................. 5.630% 02-Feb-95 600,000 596,997 3.0
AT&T Corp....................................................... 5.830% 13-Feb-95 700,000 695,126 3.6
Pitney Bowes Inc................................................ 5.950% 13-Feb-95 265,000 263,117 1.3
General Electric Capital Corp................................... 5.870% 14-Feb-95 200,000 198,565 1.0
Dresdner U.S. Finance Inc....................................... 6.080% 21-Feb-95 700,000 693,971 3.5
----------- -----
Total Discounted Commercial Paper (amortized cost $13,383,758)..... 13,383,758 68.7
----------- -----
TREASURY BILLS (5.1%)
United States Treasury Bill..................................... 4.650% 09-Feb-95 1,000,000 994,962 5.1
----------- -----
Total Treasury Bills (amortized cost $994,962)..................... 994,962 5.1
----------- -----
CORPORATE BONDS (3.8%)
Toyota Motor Credit Corp........................................ 5.750% 15-Jun-95 750,000 746,684 3.8
----------- -----
Total Corporate Bonds (amortized cost $746,684).................... 746,684 3.8
----------- -----
MEDIUM TERM NOTES-FLOATING RATE (2.6%)
PHH Corp........................................................ 5.840% 19-Oct-95 500,000 500,000 2.6
----------- -----
Total Medium Term Notes (amortized cost $500,000).................. 500,000 2.6
----------- -----
REPURCHASE AGREEMENT (20.1%)
Dated December 30, 1994, with State Street Bank & Trust
Company, due January 3, 1995, for an effective yield of 5.25%
collateralized by $3,920,000 Federal Home Loan Mortgage
Corporation Notes, 7.3379% due 1/15/99. (Market value
$3,914,570, including accrued interest)(cost $3,908,140)....... 3,908,140 20.1
----------- -----
Total Short Term Investments (cost $19,533,544)*................... 19,533,544 100.3
Other Assets and Liabilities....................................... (59,822) (0.3)
----------- -----
Net Assets......................................................... $19,473,722 100.0
=========== =====
</TABLE>
(a) Percentages indicated are based on net assets of $19,473,722.
* For Federal income tax purposes, cost is $19,533,544.
The accompanying notes are an integral part of the financial statements.
F-40
<PAGE> 125
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
G.T. GLOBAL: VARIABLE INTERNATIONAL FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1994
<TABLE>
<CAPTION>
% OF NET
EQUITY INVESTMENTS COUNTRY SHARES MARKET VALUE ASSETS (A)
- ------------------ ------- ------ ------------ ----------
<S> <C> <C> <C> <C>
MATERIALS/BASIC INDUSTRY (19.3%)
Carter Holt Harvey Limited.......................................... NZ 30,000 $ 61,466 2.8
Forest Products
European Vinyls Corp. Intl. NV(c)................................... NETH 1,100 48,744 2.2
Misc. Materials & Commodities
Western Mining Corporation Holdings Limited......................... AUSL 8,000 46,416 2.1
Metals-Non-Ferrous
Inco Ltd. (b)....................................................... CAN 1,600 45,800 2.1
Metals-Non-Ferrous
TPI Polene Company Ltd. (Foreign) (c)............................... THAI 5,000 44,630 2.0
Chemicals
Hoechst AG.......................................................... GER 200 43,520 2.0
Chemicals
Outokumpu OY "A" (c)................................................ FIN 2,000 36,775 1.6
Metals-Non-Ferrous
British Steel PLC................................................... UK 11,000 26,527 1.2
Metals-Steel
NTS Steel Groups Co. Ltd. (Foreign)................................. THAI 12,000 26,300 1.2
Metals-Steel
Montedison S.P.A. (c)............................................... ITLY 30,000 22,641 1.0
Chemicals
Ttolmex S.A. de C.V. Series B2...................................... MEX 1,500 12,990 0.6
Building Materials & Components
Compania Siderurgica Nacional - CSN 144A ADR (b)(c)(d).............. BRZL 300 10,219 0.5
Metals-Steel
--------
426,028
--------
CONSUMER DURABLES (15.1%)
Merloni Elettrodomestici S.P.A...................................... ITLY 14,000 53,564 2.4
Appliances & Household Durables
Edaran Otomobil Nasional Bhd........................................ MAL 7,000 53,213 2.4
Automobiles
Suzuki Motor Co. Ltd................................................ JPN 4,000 47,012 2.1
Automobiles
Hyundai Motor Co. 144A GDR (b)(c)(d)................................ KOR 1,700 31,875 1.4
Automobiles
Lucas Industries PLC................................................ UK 8,900 28,710 1.3
Auto Parts
PSA Peugeot Citroen S.A. (c)........................................ FR 200 27,418 1.2
Automobiles
Samsung Electronics Co. 144A GDR (b)(c)(d).......................... KOR 500 25,000 1.1
Consumer Electronics
Electrolux AB-B Free (c)............................................ SWDN 380 19,288 0.9
Appliances & Household Durables
Volvo AB-B Free..................................................... SWDN 950 17,907 0.8
Automobiles
Futuris Corporation Ltd............................................. AUSL 19,566 16,846 0.8
Auto Parts
Bridgestone Corp.................................................... JPN 1,000 15,671 0.7
Auto Parts
--------
336,504
--------
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-41
<PAGE> 126
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
G.T. GLOBAL: VARIABLE INTERNATIONAL FUND
<TABLE>
<CAPTION>
% OF NET
EQUITY INVESTMENTS COUNTRY SHARES MARKET VALUE ASSETS (A)
- ------------------ ------- ------ ------------ ----------
<S> <C> <C> <C> <C>
SERVICES (13.6%)
Marco Polo Developments Ltd......................................... SING 40,000 $ 57,143 2.6
Leisure & Tourism
British Airport Authority PLC....................................... UK 7,000 51,848 2.3
Transportation-Airlines
MacIntosh N.V....................................................... NETH 2,000 51,285 2.3
Retailers-Other
Shimachu............................................................ JPN 1,000 36,062 1.6
Retailers-Other
Mitsui O.S.K. Lines Ltd.(c)......................................... JPN 9,000 34,174 1.5
Transportation-Shipping
Compass Group PLC................................................... UK 6,000 31,663 1.4
Restaurants
Telecomunicacoes Brasileiras S.A. - Telebras Sponsored ADR (b)...... BRZL 409 18,302 0.8
Telephone Networks
Telecom Italia Di Risp.............................................. ITLY 7,900 15,771 0.7
Telephone Networks
Aoyama Trading...................................................... JPN 400 9,121 0.4
Retailers-Apparel
--------
305,369
--------
FINANCE (10.1%)
Ayala Land, Inc. "B"................................................ PHIL 29,000 45,537 2.0
Real Estate
Bangkok Bank Public Co. Ltd.(Foreign)............................... THAI 4,000 42,718 2.0
Banks-Money Center
Anglo-Irish Bank Corporation PLC.................................... IRL 43,000 36,361 1.6
Banks-Money Center
Kim Eng Holdings (c)................................................ SING 24,000 25,055 1.1
Securities Broker
Barclays PLC........................................................ UK 2,200 21,049 0.9
Banks-Money Center
Banco de Santander S.A.............................................. SPN 460 17,624 0.8
Banks-Regional
S.G. Warburg Group PLC.............................................. UK 1,600 17,338 0.8
Other Financial
Grupo Financiero Banamex Accival, S.A. de C.V. "C".................. MEX 4,500 13,639 0.6
Banks-Regional
Cetelem Group....................................................... FR 40 7,154 0.3
Consumer Finance
--------
226,475
--------
ENERGY (7.4%)
Norsk Hydro AS ADR (b).............................................. NOR 1,200 46,950 2.1
Electrical & Gas Utilities
British Petroleum Company PLC....................................... UK 7,000 46,641 2.1
Oil
BBC Brown Boveri AG (Bearer)........................................ SWTZ 50 43,065 1.9
Energy Equipment & Services
Oil Search Ltd. (c)................................................. AUSL 40,000 28,855 1.3
Oil
--------
165,511
--------
CONSUMER NON-DURABLES (7.1%)
Hoya Corp........................................................... JPN 2,000 53,440 2.4
Other Consumer Goods
Polygram............................................................ NETH 1,000 46,502 2.1
Recreation
Reliance Industries Ltd. 144A GDR (b)(c)(d)......................... IND 1,800 35,100 1.6
Textiles & Apparel
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-42
<PAGE> 127
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
G.T. GLOBAL: VARIABLE INTERNATIONAL FUND
<TABLE>
<CAPTION>
% OF NET
EQUITY INVESTMENTS COUNTRY SHARES MARKET VALUE ASSETS (A)
- ------------------ ------- ------ ------------ ----------
<S> <C> <C> <C> <C>
Viscofan Industria Navarra de Envolturas Celulosicas S.A............ SPN 1,400 $ 21,285 1.0
Food
----------
156,327
----------
CAPITAL GOODS (6.9%)
Alcatel Alsthom..................................................... FR 500 42,701 1.9
Telecom Equipment
Bilfinger & Berger Bau AG........................................... GER 70 35,707 1.6
Machinery & Engineering
Costain Group PLC (c)............................................... UK 100,000 33,667 1.5
Construction
Allgon AB-B Free.................................................... SWDN 1,300 24,504 1.1
Telecom Equipment
Canon Inc........................................................... JPN 1,000 16,976 0.8
Office Equipment
----------
153,555
----------
TECHNOLOGY (4.3%)
Kyocera Corporation................................................. JPN 1,000 74,234 3.3
Semiconductors
Hosiden Electronics................................................. JPN 1,000 21,497 1.0
Computers & Peripherals
----------
95,731
----------
CONGLOMERATE (3.8%)
Valmet Corporation "A" (c).......................................... FIN 1,800 34,277 1.5
Conglomerate
Wassall PLC......................................................... UK 4,200 18,678 0.8
Conglomerate
BTR PLC............................................................. UK 4,000 18,415 0.8
Conglomerate
Grupo Carso, S.A. de C.V. "A1" (c).................................. MEX 2,000 15,052 0.7
Conglomerate
----------
86,422
---------- -----
Total Equity Investments (cost $2,088,832) 1,951,922 87.6
---------- -----
SHORT-TERM INVESTMENTS
REPURCHASE AGREEMENT (10.9%)
Dated December 30, 1994, with State Street Bank and Trust
Company, due January 3, 1995, for an effective yield of
5.25% collateralized by $180,000 U.S. Treasury Bond,
12.0% due 08/15/13. (Market value $247,896 including
accrued interest.)(Cost $243,071).................................. 243,071 10.9
---------- -----
Total Investments (cost $2,331,903)*................................... 2,194,993 98.5
Other Assets and Liabilities........................................... 33,927 1.5
---------- -----
Net Assets............................................................. $2,228,920 100.0
========== =====
</TABLE>
(a) Percentages indicated are based on net assets of $2,228,920.
(b) U.S. currency denominated.
(c) Non-income producing security.
(d) 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.
Abbreviations:
ADR - American Depository Receipt
GDR - Global Depository Receipt
* For Federal income tax purposes, cost is $2,335,259 and appreciation
(depreciation) of securities is as follows:
Unrealized appreciation: $ 32,495
Unrealized depreciation: (172,761)
Net unrealized depreciation: $(140,266)
The accompanying notes are an integral part of the financial statements.
F-43
<PAGE> 128
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
G.T. GLOBAL: VARIABLE INTERNATIONAL FUND
The Fund's Portfolio of Investments at December 31, 1994 was concentrated in the
following countries:
<TABLE>
<CAPTION>
PERCENTAGE OF NET ASSETS (A)
-------------------------------
SHORT-TERM
COUNTRY EQUITY & OTHER TOTAL
------- ------ ---------- -----
<S> <C> <C> <C>
Australia................. 4.2 4.2
Brazil.................... 1.3 1.3
Canada.................... 2.1 2.1
Finland................... 3.1 3.1
France.................... 3.4 3.4
Germany................... 3.6 3.6
India..................... 1.6 1.6
Ireland................... 1.6 1.6
Italy..................... 4.1 4.1
Japan..................... 13.8 13.8
Korea..................... 2.5 2.5
Malaysia.................. 2.4 2.4
Mexico.................... 1.9 1.9
Netherlands............... 6.6 6.6
Norway.................... 2.1 2.1
New Zealand............... 2.8 2.8
Philippines............... 2.0 2.0
Singapore................. 3.7 3.7
Spain..................... 1.8 1.8
Sweden.................... 2.8 2.8
Switzerland............... 1.9 1.9
Thailand.................. 5.2 5.2
United Kingdom............ 13.1 13.1
United States............. 12.4 12.4
---- ---- -----
Total..................... 87.6 12.4 100.0
==== ==== =====
</TABLE>
- ----------------
(a) Percentages indicated are based on net assets of $2,228,920.
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
DECEMBER 31, 1994
<TABLE>
<CAPTION>
Unrealized
Market Value Contract Delivery Appreciation
(U.S. Dollars) Price Date (Depreciation)
-------------- -------- -------- --------------
<S> <C> <C> <C> <C>
CONTRACTS TO SELL:
Deutsche Marks...................................................... 77,549 1.49493 03-Feb-95 $2,722
Deutsche Marks...................................................... 38,775 1.56900 03-Feb-95 (534)
French Francs....................................................... 78,677 5.12720 03-Feb-95 3,239
Japanese Yen........................................................ 54,493 96.15999 10-Feb-95 1,664
------- ------
Total Contracts to Sell (Receivable amount $256,585)................ 249,494 7,091
------- -----
The Value of Contracts to Sell as a Percentage of Net Assets is 11.2%.
CONTRACTS TO BUY:
Deutsche Marks...................................................... 38,775 1.53030 03-Feb-95 (433)
French Francs....................................................... 37,465 5.26400 03-Feb-95 (529)
------- ------
Total Contracts to Buy (Payable amount $77,202)..................... 76,240 (962)
------- ------
The Value of Contracts to Buy as a Percentage of Net Assets is 3.4%.
Total Open Forward Foreign Currency Contracts, Net........................................................ $6,129
------
</TABLE>
- ----------------
See Note 1 of the financial statements.
The accompanying notes are an integral part of the financial statements.
F-44
<PAGE> 129
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
STATEMENTS OF ASSETS
AND LIABILITIES
DECEMBER 31, 1994
================================================================================
<TABLE>
<CAPTION>
G.T. GLOBAL:
-----------------------------------------------------------------
VARIABLE VARIABLE GLOBAL VARIABLE U.S. VARIABLE
STRATEGIC GOVERNMENT GOVERNMENT LATIN AMERICA
INCOME FUND INCOME FUND INCOME FUND FUND
----------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Assets:
Investments in securities: (Note 1)
At identified cost......................................... $21,275,492 $ 8,660,119 $2,717,912 $24,529,226
=========== =========== ========== ===========
At value................................................... $19,815,294 $ 8,546,059 $2,610,010 $23,480,078
Repurchase Agreement, at value and cost (Note 1)........... 2,287,667 784,229 511,149 2,960,863
Cash and foreign currency.................................. 30,989 53,103 660 443,496
Receivable for Fund shares sold............................ 407,056 -- -- 9,531,788
Receivable for securities sold............................. 527,859 871,894 -- 4,709
Receivable for forward foreign currency contracts --
closed (Note 1).......................................... 125,004 -- -- --
Receivable for open forward foreign currency contracts,
net (Note 1)............................................. -- 8,124 -- --
Dividends and dividend tax reclaims receivable............. -- -- -- 89,522
Interest and interest tax reclaims receivable.............. 641,714 318,831 36,797 --
Reimbursement from G.T. Capital Management, Inc. (Note 2).. 51,403 29,009 24,638 69,752
Unamortized deferred organizational expenses (Note 1)...... 19,527 19,527 19,527 19,527
Cash held as collateral for securities loaned (Note 1)..... -- -- -- 88,500
----------- ----------- ---------- -----------
Total assets............................................... 23,906,513 10,630,776 3,202,781 36,688,235
----------- ----------- ---------- -----------
Liabilities:
Payable for Fund shares repurchased........................ 210,795 1,254 161,346 720,780
Payable for securities purchased........................... 239,737 934,460 578,858 9,184,737
Payable for deferred organizational expenses (Note 1)...... 31,333 31,333 31,333 31,333
Payable for investment management and administration fees
(Note 2)................................................ 25,991 -- 15,872 29,943
Payable for forward foreign currency contracts-- closed
(Note 1)................................................ -- 1,797 -- --
Payable for open forward foreign currency contracts, net
(Note 1)................................................ 26,178 -- -- --
Distribution payable (Note 1).............................. -- -- -- --
Accrued expenses........................................... 5,063 8,329 627 1,606
Collateral for securities loaned (Note 1).................. -- -- -- 88,500
----------- ----------- ---------- -----------
Total liabilities.......................................... 539,097 977,173 788,036 10,056,899
----------- ----------- ---------- -----------
Net assets.................................................... $23,367,416 $ 9,653,603 $2,414,745 $26,631,336
=========== =========== ========== ===========
Net assets consist of:
Paid in capital (Note 4)................................... $28,463,511 $10,933,299 $2,595,187 $24,786,208
Accumulated net investment income (loss)................... -- -- -- 167,406
Accumulated net realized gain (loss) on investments,
options, and foreign currency transactions.............. (3,617,550) (1,169,229) (72,540) 2,726,005
Net unrealized appreciation (depreciation) of dividends and
dividend withholding tax reclaims receivable, interest
and interest withholding tax reclaims receivable,
securities purchased and sold and foreign currency
transactions............................................. (18,347) 3,593 -- 865
Net unrealized appreciation (depreciation) of investments
and options.............................................. (1,460,198) (114,060) (107,902) (1,049,148)
----------- ----------- ---------- -----------
Total -- representing net assets applicable to capital
shares outstanding...................................... $23,367,416 $ 9,653,603 $2,414,745 $26,631,336
=========== =========== ========== ===========
Shares outstanding............................................ 2,158,894 907,727 223,831 1,389,344
=========== =========== ========== ===========
Net asset value per share..................................... $ 10.82 $ 10.63 $ 10.79 $ 19.17
=========== =========== ========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-45
<PAGE> 130
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
STATEMENTS OF ASSETS
AND LIABILITIES
DECEMBER 31, 1994
================================================================================
<TABLE>
<CAPTION>
G.T. GLOBAL:
------------------------------------------------------------------
VARIABLE VARIABLE TELE- VARIABLE VARIABLE
GROWTH & COMMUNICATIONS EMERGING AMERICA
INCOME FUND FUND MARKETS FUND FUND
----------- -------------- ------------ -----------
<S> <C> <C> <C> <C>
Assets:
Investments in securities: (Note 1)
At identified cost......................................... $22,070,287 $32,543,536 $6,325,694 $12,337,600
=========== =========== ========== ===========
At value................................................... $21,605,265 $34,289,920 $5,804,441 $12,819,296
Repurchase Agreement, at value and cost (Note 1)........... 3,589,047 3,299,962 1,577,460 3,073,896
Cash and foreign currency.................................. 54,195 228,327 2,778 904
Receivable for Fund shares sold............................ 35,689 1,693,540 532,591 90,399
Receivable for securities sold............................. -- 5,787,681 152,000 2,222,166
Receivable for forward foreign currency contracts --
closed (Note 1).......................................... 244 104 -- --
Receivable for open forward foreign currency contracts,
net (Note 1)............................................. 23,525 30,634 -- --
Dividends and dividend tax reclaims receivable............. 70,464 42,281 7,354 44,294
Interest and interest tax reclaims receivable.............. 258,677 -- -- --
Reimbursement from G.T. Capital Management, Inc. (Note 2).. 47,648 32,652 21,465 42,840
Unamortized deferred organizational expenses (Note 1)...... 19,527 23,817 -- 19,527
Cash held as collateral for securities loaned (Note 1)..... 692,839 4,297,200 -- --
----------- ----------- ---------- -----------
Total assets............................................... 26,397,120 49,726,118 8,098,089 18,313,322
----------- ----------- ---------- -----------
Liabilities:
Payable for Fund shares repurchased........................ 51,234 1,586,199 563,611 79,356
Payable for securities purchased........................... 8,625 7,746,763 252,593 2,917,432
Payable for deferred organizational expenses (Note 1)...... 31,333 31,333 -- 31,333
Payable for investment management and administration fees
(Note 2)................................................ 32,851 -- 15,260 25,059
Payable for forward foreign currency contracts-- closed
(Note 1)................................................ -- -- -- --
Payable for open forward foreign currency contracts, net
(Note 1)................................................ -- -- -- --
Distribution payable (Note 1).............................. -- -- -- --
Accrued expenses........................................... -- 36,096 -- 2,876
Collateral for securities loaned (Note 1).................. 692,839 4,297,200 -- --
----------- ----------- ---------- -----------
Total liabilities.......................................... 816,882 13,697,591 831,464 3,056,056
----------- ----------- ---------- -----------
Net assets.................................................... $25,580,238 $36,028,527 $7,266,625 $15,257,266
=========== =========== ========== ===========
Net assets consist of:
Paid in capital (Note 4)................................... $26,206,655 $33,265,717 $7,868,021 $14,190,475
Accumulated net investment income (loss)................... 87,189 73,358 -- 126,208
Accumulated net realized gain (loss) on investments,
options, and foreign currency transactions.............. (275,236) 913,276 (79,949) 458,887
Net unrealized appreciation (depreciation) of dividends and
dividend withholding tax reclaims receivable, interest
and interest withholding tax reclaims receivable,
securities purchased and sold and foreign currency
transactions............................................. 26,652 29,792 (194) --
Net unrealized appreciation (depreciation) of investments
and options.............................................. (465,022) 1,746,384 (521,253) 481,696
----------- ----------- ---------- -----------
Total -- representing net assets applicable to capital
shares outstanding...................................... $25,580,238 $36,028,527 $7,266,625 $15,257,266
=========== =========== ========== ===========
Shares outstanding............................................ 1,969,940 2,576,382 611,354 965,210
=========== =========== ========== ===========
Net asset value per share..................................... $ 12.99 $ 13.98 $ 11.89 $ 15.81
=========== =========== ========== ===========
</TABLE>
<TABLE>
<CAPTION>
G.T. GLOBAL:
-------------------------------------------------------------
VARIABLE VARIABLE MONEY VARIABLE
NEW PACIFIC EUROPE MARKET INTERNATIONAL
FUND FUND FUND FUND
----------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Assets:
Investments in securities: (Note 1)
At identified cost......................................... $18,165,616 $12,993,102 $15,625,404 $2,088,832
=========== =========== =========== ==========
At value................................................... $17,387,922 $12,998,834 $15,625,404 $1,951,922
Repurchase Agreement, at value and cost (Note 1)........... 1,895,553 1,186,346 3,908,140 243,071
Cash and foreign currency.................................. 84,186 772,614 899 51,956
Receivable for Fund shares sold............................ 53,929 303,744 949,722 47,293
Receivable for securities sold............................. -- -- -- --
Receivable for forward foreign currency contracts --
closed (Note 1).......................................... -- 470 -- 35
Receivable for open forward foreign currency contracts,
net (Note 1)............................................. -- 112,398 -- 6,129
Dividends and dividend tax reclaims receivable............. 34,067 72,717 -- 2,492
Interest and interest tax reclaims receivable.............. 1,342 -- 7,642 144
Reimbursement from G.T. Capital Management, Inc. (Note 2).. 44,112 33,591 27,314 5,903
Unamortized deferred organizational expenses (Note 1)...... 19,527 19,527 19,527 --
Cash held as collateral for securities loaned (Note 1)..... 975,750 804,910 -- --
----------- ----------- ----------- ----------
Total assets............................................... 20,496,388 16,305,151 20,538,648 2,308,945
----------- ----------- ----------- ----------
Liabilities:
Payable for Fund shares repurchased........................ 70,613 429,390 947,287 25,569
Payable for securities purchased........................... -- -- -- 48,807
Payable for deferred organizational expenses (Note 1)...... 31,333 31,333 31,333 --
Payable for investment management and administration fees
(Note 2)................................................ 24,069 15,878 9,810 5,239
Payable for forward foreign currency contracts-- closed
(Note 1)................................................ -- -- -- --
Payable for open forward foreign currency contracts, net
(Note 1)................................................ -- -- -- --
Distribution payable (Note 1).............................. -- -- 72,799 --
Accrued expenses........................................... 3,392 3,153 3,697 410
Collateral for securities loaned (Note 1).................. 975,750 804,910 -- --
----------- ----------- ----------- ----------
Total liabilities.......................................... 1,105,157 1,284,664 1,064,926 80,025
----------- ----------- ----------- ----------
Net assets.................................................... $19,391,231 $15,020,487 $19,473,722 $2,228,920
=========== =========== =========== ==========
Net assets consist of:
Paid in capital (Note 4)................................... $20,522,348 $14,925,785 $19,473,722 $2,365,410
Accumulated net investment income (loss)................... 75,297 153,696 -- 1,440
Accumulated net realized gain (loss) on investments,
options, and foreign currency transactions.............. (428,066) (182,134) -- (7,154)
Net unrealized appreciation (depreciation) of dividends and
dividend withholding tax reclaims receivable, interest
and interest withholding tax reclaims receivable,
securities purchased and sold and foreign currency
transactions............................................. (654) 117,408 -- 6,134
Net unrealized appreciation (depreciation) of investments
and options.............................................. (777,694) 5,732 -- (136,910)
----------- ----------- ----------- ----------
Total -- representing net assets applicable to capital
shares outstanding...................................... $19,391,231 $15,020,487 $19,473,722 $2,228,920
=========== =========== =========== ==========
Shares outstanding............................................ 1,384,187 986,966 19,473,722 198,172
=========== =========== =========== ==========
Net asset value per share..................................... $ 14.01 $ 15.22 $ 1.00 $ 11.25
=========== =========== =========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-46
<PAGE> 131
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1994
================================================================================
<TABLE>
<CAPTION>
G.T. GLOBAL:
-------------------------------------------------------------------
VARIABLE VARIABLE GLOBAL VARIABLE U.S. VARIABLE
STRATEGIC GOVERNMENT GOVERNMENT LATIN AMERICA
INCOME FUND INCOME FUND INCOME FUND FUND
----------- --------------- ------------- -------------
<S> <C> <C> <C> <C>
Investment income (Note 1):
Interest................................................ $ 1,994,169 $ 729,392 $ 99,833 $ 36,194
Dividends............................................... -- -- -- 385,494
----------- ----------- --------- -----------
Total investment income*................................ 1,994,169 729,392 99,833 421,688
----------- ----------- --------- -----------
Expenses:
Investment management and administration fees (Note 2).. 174,302 69,318 12,663 203,425
Custodian fees (Note 1)................................. 28,330 21,532 831 57,050
Printing and postage expenses........................... 30,113 30,182 30,139 29,059
Professional fees....................................... 20,728 20,728 20,737 20,359
Registration fees....................................... 2,848 2,848 2,848 1,545
Trustees' fee and expenses (Note 2)..................... 2,493 2,493 2,493 2,493
Other expenses.......................................... 2,198 2,164 2,124 1,984
Amortization of organizational expenses (Note 1)........ 6,263 6,263 6,263 6,263
----------- ----------- --------- -----------
Total expenses.......................................... 267,275 155,528 78,098 322,178
----------- ----------- --------- -----------
Expenses reimbursed by G.T. Capital
Management, Inc. (Note 2)............................. (34,872) (63,070) (71,619) (63,441)
Other expense reductions (Notes 1 & 5).................. -- -- -- (4,456)
----------- ----------- --------- -----------
Total net expenses after reimbursement and reductions... 232,403 92,458 6,479 254,281
----------- ----------- --------- -----------
Net investment income...................................... 1,761,766 636,934 93,354 167,407
----------- ----------- --------- -----------
Net realized and unrealized gain (loss) on investments,
options and foreign currencies (Note 1):
Net realized gain (loss) on investments and options........ (3,345,918) (660,871) (71,665) 2,682,363
Net realized gain (loss) on foreign currency transactions.. (515,086) (626,861) -- 43,643
----------- ----------- --------- -----------
Net realized gain (loss) during the period................. (3,861,004) (1,287,732) (71,665) 2,726,006
----------- ----------- --------- -----------
Net change in unrealized appreciation (depreciation) of
dividends and dividend withholding tax reclaims
receivable, interest and interest withholding tax
reclaims receivable, securities purchased and sold, and
foreign currency transactions........................... (72,024) (15,202) (101,640) (1,004)
Net change in unrealized appreciation (depreciation)
of investments and options.............................. (1,980,697) (103,152) -- (2,572,849)
----------- ----------- --------- -----------
Net unrealized appreciation (depreciation) during the
period.................................................. (2,052,721) (118,354) (101,640) (2,573,853)
----------- ----------- --------- -----------
Net realized and unrealized gain (loss) on investments,
options and foreign currencies.......................... (5,913,725) (1,406,086) (173,305) 152,153
----------- ----------- --------- -----------
Net increase (decrease) in net assets resulting from
operations.............................................. $(4,151,959) $ (769,152) $ (79,951) $ 319,560
=========== =========== ========= ===========
* Net of foreign withholding taxes of..................... 1,225 -- -- 29,182
</TABLE>
** The Variable International and Variable Emerging Markets Funds did not
commence operations until July 5, 1994.
The accompanying notes are an integral part of the financial statements.
F-47
<PAGE> 132
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1994
================================================================================
<TABLE>
<CAPTION>
G.T. GLOBAL:
------------------------------------------------------------------
VARIABLE VARIABLE TELE- VARIABLE VARIABLE
GROWTH & COMMUNICATIONS EMERGING AMERICA
INCOME FUND FUND MARKETS FUND** FUND
------------ -------------- -------------- --------
<S> <C> <C> <C> <C>
Investment income (Note 1):
Interest................................................ $ 611,112 $ 113,660 $ 24,856 $120,610
Dividends............................................... 431,489 259,649 15,893 72,790
----------- ---------- --------- --------
Total investment income*................................ 1,042,601 373,309 40,749 193,400
----------- ---------- --------- --------
Expenses:
Investment management and administration fees (Note 2).. 210,934 239,566 20,347 51,664
Custodian fees (Note 1)................................. 38,955 53,962 6,205 24,432
Printing and postage expenses........................... 30,113 30,113 14,355 32,625
Professional fees....................................... 19,853 19,535 1,831 19,978
Registration fees....................................... 2,848 2,848 -- 1,555
Trustees' fee and expenses (Note 2)..................... 2,493 1,937 -- 2,493
Other expenses.......................................... 2,201 2,146 -- 1,877
Amortization of organizational expenses (Note 1)........ 6,263 6,263 -- 6,263
----------- ---------- --------- --------
Total expenses.......................................... 313,660 356,370 42,738 140,887
----------- ---------- --------- --------
Expenses reimbursed by G.T. Capital
Management, Inc. (Note 2)............................. (47,986) (44,272) (42,738) (70,882)
Other expense reductions (Notes 1 & 5).................. (2,007) (12,641) -- (2,813)
----------- ---------- --------- --------
Total net expenses after reimbursement and reductions... 263,667 299,457 -- 67,192
----------- ---------- --------- --------
Net investment income...................................... 778,934 73,852 40,749 126,208
----------- ---------- --------- --------
Net realized and unrealized gain (loss) on investments,
options and foreign currencies (Note 1):
Net realized gain (loss) on investments and options........ (139,512) 943,284 (42,408) 480,878
Net realized gain (loss) on foreign currency transactions.. (171,265) (30,007) (3,439) --
----------- ---------- --------- --------
Net realized gain (loss) during the period................. (310,777) 913,277 (45,847) 480,878
----------- ---------- --------- --------
Net change in unrealized appreciation (depreciation) of
dividends and dividend withholding tax reclaims
receivable, interest and interest withholding tax
reclaims receivable, securities purchased and sold, and
foreign currency transactions........................... (4,932) 29,242 (194) --
Net change in unrealized appreciation (depreciation)
of investments and options.............................. (1,038,064) 1,222,998 (521,253) 365,915
----------- ---------- --------- --------
Net unrealized appreciation (depreciation) during the
period.................................................. (1,042,996) 1,252,240 (521,447) 365,915
----------- ---------- --------- --------
Net realized and unrealized gain (loss) on investments,
options and foreign currencies.......................... (1,353,773) 2,165,517 (567,294) 846,793
----------- ---------- --------- --------
Net increase (decrease) in net assets resulting from
operations.............................................. $ (574,839) $2,239,369 $(526,545) $973,001
=========== ========== ========= ========
* Net of foreign withholding taxes of..................... 48,984 7,488 505 --
</TABLE>
<TABLE>
<CAPTION>
G.T. GLOBAL:
---------------------------------------------------------
VARIABLE VaRIABLE MONEY VARIABLE
NEW PACIFIC EUROPE MARKET INTERNATIONAL
FUND FUND FUND FUND**
----------- --------- -------- -------------
<S> <C> <C> <C> <C>
Investment income (Note 1):
Interest................................................ $ 91,513 $ 61,328 $466,149 $ 7,301
Dividends............................................... 232,914 281,711 -- 6,451
----------- --------- -------- ---------
Total investment income*................................ 324,427 343,039 466,149 13,752
----------- --------- -------- ---------
Expenses:
Investment management and administration fees (Note 2).. 155,724 125,533 52,363 6,985
Custodian fees (Note 1)................................. 28,012 18,463 7,636 2,612
Printing and postage expenses........................... 32,625 32,625 32,625 10,553
Professional fees....................................... 20,228 19,982 20,553 2,366
Registration fees....................................... 1,555 1,555 1,555 --
Trustees' fee and expenses (Note 2)..................... 2,493 2,493 2,493 --
Other expenses.......................................... 2,194 2,167 2,288 --
Amortization of organizational expenses (Note 1)........ 6,263 6,263 6,263 --
----------- --------- -------- ---------
Total expenses.......................................... 249,094 209,081 125,776 22,516
----------- --------- -------- ---------
Expenses reimbursed by G.T. Capital
Management, Inc. (Note 2)............................. (51,141) (49,678) (47,231) (20,158)
Other expense reductions (Notes 1 & 5).................. (3,298) (2,487) -- --
----------- --------- -------- ---------
Total net expenses after reimbursement and reductions... 194,655 156,916 78,545 2,358
----------- --------- -------- ---------
Net investment income...................................... 129,772 186,123 387,604 11,394
----------- --------- -------- ---------
Net realized and unrealized gain (loss) on investments,
options and foreign currencies (Note 1):
Net realized gain (loss) on investments and options........ (414,814) (125,959) -- (3,524)
Net realized gain (loss) on foreign currency transactions.. (26,623) (86,541) -- (3,630)
----------- --------- -------- ---------
Net realized gain (loss) during the period................. (441,437) (212,500) -- (7,154)
----------- --------- -------- ---------
Net change in unrealized appreciation (depreciation) of
dividends and dividend withholding tax reclaims
receivable, interest and interest withholding tax
reclaims receivable, securities purchased and sold, and
foreign currency transactions........................... (28,748) 101,790 -- 6,134
Net change in unrealized appreciation (depreciation)
of investments and options.............................. (1,706,578) (402,308) -- (136,910)
----------- --------- -------- ---------
Net unrealized appreciation (depreciation) during the
period.................................................. (1,735,326) (300,518) -- (130,776)
----------- --------- -------- ---------
Net realized and unrealized gain (loss) on investments,
options and foreign currencies.......................... (2,176,763) (513,018) -- (137,930)
----------- --------- -------- ---------
Net increase (decrease) in net assets resulting from
operations.............................................. $(2,046,991) $(326,895) $387,604 $(126,536)
=========== ========= ======== =========
* Net of foreign withholding taxes of..................... 29,063 50,252 -- 1,398
</TABLE>
** The Variable International and Variable Emerging Markets Funds did not
commence operations until July 5, 1994.
The accompanying notes are an integral part of the financial statements.
F-48
<PAGE> 133
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1994
================================================================================
<TABLE>
<CAPTION>
G.T. GLOBAL:
----------------------------------------------------------------
VARIABLE VaRIABLE GLOBAL VARIABLE U.S. VARIABLE
STRATEGIC GOVERNMENT GOVERNMENT LATIN AMERICA
INCOME FUND INCOME FUND INCOME FUND FUND
------------- --------------- ------------- -------------
<S> <C> <C> <C> <C>
Increase in net assets
Operations:
Net investment income........................................ $ 1,761,766 $ 636,934 $ 93,354 $ 167,407
Net realized gain (loss) on investments, options and
foreign currency transactions.............................. (3,861,004) (1,287,732) (71,665) 2,726,006
Net change in unrealized appreciation (depreciation) of
dividends and dividend withholding tax reclaims
receivable, interest and interest withholding tax
reclaims receivable, securities purchased and sold
and foreign currency transactions.......................... (72,024) (15,202) (101,640) (1,004)
Net change in unrealized appreciation (depreciation) of
investments and options.................................... (1,980,697) (103,152) -- (2,572,849)
------------ ----------- ----------- ------------
Net increase(decrease) in net assets resulting from
operations................................................. (4,151,959) (769,152) (79,951) 319,560
------------ ----------- ----------- ------------
Distributions to shareholders from: (Note 1)
Net investment income........................................ (1,533,744) (604,061) (94,526) (33,315)
Net realized gain on investments............................. (877,393) -- (9,966) (58,519)
In excess of net realized gain on investments................ -- -- -- --
Return of capital............................................ (93,845) (69,860) -- --
Capital share transactions: (Note 4)
Increase from capital shares sold and reinvested............. 26,867,913 11,332,658 4,795,207 37,598,809
Decrease from capital shares repurchased..................... (14,932,250) (6,371,492) (3,169,722) (19,435,079)
------------ ----------- ----------- ------------
Net increase from capital share transactions.................... 11,935,663 4,961,166 1,625,485 18,163,730
------------ ----------- ----------- ------------
Total increase (decrease) in net assets......................... 5,278,722 3,518,093 1,441,042 18,391,456
Net assets:
Beginning of period.......................................... 18,088,694 6,135,510 973,703 8,239,880
------------ ----------- ----------- ------------
End of period................................................ $ 23,367,416 $ 9,653,603 $ 2,414,745 $26,631,336
============ =========== =========== ============
</TABLE>
================================================================================
February 10, 1993 (commencement of operations) to December 31, 1993
================================================================================
<TABLE>
<CAPTION>
G.T. GLOBAL:
----------------------------------------------------------------
VARIABLE VARIABLE GLOBAL VARIABLE U.S. VARIABLE
STRATEGIC GOVERNMENT GOVERNMENT LATIN AMERICA
INCOME FUND INCOME FUND INCOME FUND FUND
------------- --------------- ------------- -------------
<S> <C> <C> <C> <C>
Increase in net assets
Operations:
Net investment income........................................ $ 313,063 $ 98,086 $ 25,825 $ 17,610
Net realized gain (loss) on investments, options and
foreign currency transactions.............................. 910,970 79,266 9,966 74,784
Net change in unrealized appreciation (depreciation) of
dividends and dividend witholding tax reclaims
receivable, interest and interest withholding tax
reclaims receivable, securities purchased and sold
and foreign currency transactions.......................... 55,253 (3,388) -- 1,869
Net change in unrealized appreciation (depreciation)
of investments, options and forward foreign currency
contracts.................................................. 518,923 11,275 (6,262) 1,523,701
------------ ----------- ----------- ------------
Net increase in net assets resulting from operations......... 1,798,209 185,239 29,529 1,617,964
------------ ----------- ----------- ------------
Distributions to shareholders from: (Note 1)
Net investment income........................................ (313,063) (92,235) (25,528) --
Sources other than net income................................ (18,144) -- -- --
Capital share transactions: (Note 4)
Increase from capital shares sold and reinvested............. 21,188,093 7,531,834 1,112,505 8,921,929
Decrease from capital shares repurchased..................... (4,586,401) (1,509,328) (162,803) (2,320,013)
------------ ----------- ----------- ------------
Net increase from capital share transactions.................... 16,601,692 6,022,506 949,702 6,601,916
------------ ----------- ----------- ------------
Total increase in net assets.................................... 18,068,694 6,115,510 953,703 8,219,880
Net assets:
Beginning of period.......................................... 20,000 20,000 20,000 20,000
------------ ----------- ----------- ------------
End of period................................................ $ 18,088,694 $ 6,135,510 $ 973,703 $ 8,239,880
============ =========== =========== ============
</TABLE>
* The Variable Telecommunications Fund did not commence operations until
October 18, 1993.
** The Variable International and Variable Emerging Markets Funds did not
commence operations until July 5, 1994.
The accompanying notes are an integral part of the financial statements.
F-49
<PAGE> 134
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1994
================================================================================
<TABLE>
<CAPTION>
G.T. GLOBAL:
-----------------------------------------------------------------
VARIABLE VARIABLE TELE- VARIABLE VARIABLE
GROWTH & COMMUNICATIONS EMERGING AMERICA
INCOME FUND FUND* MARKETS FUND** FUND
----------- -------------- -------------- -----------
<S> <C> <C> <C> <C>
Increase in net assets
Operations:
Net investment income........................................ $ 778,934 $ 73,852 $ 40,749 $ 126,208
Net realized gain (loss) on investments, options and
foreign currency transactions.............................. (310,777) 913,277 (45,847) 480,878
Net change in unrealized appreciation (depreciation) of
dividends and dividend withholding tax reclaims
receivable, interest and interest withholding tax
reclaims receivable, securities purchased and sold
and foreign currency transactions.......................... (4,932) 29,242 (194) --
Net change in unrealized appreciation (depreciation) of
investments and options.................................... (1,038,064) 1,222,998 (521,253) 365,915
----------- ------------ ----------- -----------
Net increase(decrease) in net assets resulting from
operations................................................. (574,839) 2,239,369 (526,545) 973,001
----------- ------------ ----------- -----------
Distributions to shareholders from: (Note 1)
Net investment income........................................ (644,305) (31,627) (40,749) (136,601)
Net realized gain on investments............................. -- -- -- --
In excess of net realized gain on investments................ -- -- (34,465) --
Return of capital............................................ -- -- -- --
Capital share transactions: (Note 4)
Increase from capital shares sold and reinvested............. 21,823,916 36,093,905 11,452,183 21,471,531
Decrease from capital shares repurchased..................... (6,701,077) (10,175,735) (3,583,799) (8,750,561)
----------- ------------ ----------- -----------
Net increase from capital share transactions.................... 15,122,839 25,918,170 7,868,384 12,720,970
----------- ------------ ----------- -----------
Total increase (decrease) in net assets......................... 13,903,695 28,125,912 7,266,625 13,557,370
Net assets:
Beginning of period.......................................... 11,676,543 7,902,615 -- 1,699,896
----------- ------------ ----------- -----------
End of period................................................ $25,580,238 $ 36,028,527 $ 7,266,625 $15,257,266
=========== ============ =========== ===========
</TABLE>
<TABLE>
<CAPTION>
G.T. GLOBAL:
--------------------------------------------------------------
VARIABLE VARIABLE MONEY VARIABLE
NEW PACIFIC EUROPE MARKET INTERNATIONAL
FUND FUND FUND FUND**
------------ ------------ ------------ -------------
<S> <C> <C> <C> <C>
Increase in net assets
Operations:
Net investment income........................................ $ 129,772 $ 186,123 $ 387,604 $ 11,394
Net realized gain (loss) on investments, options and
foreign currency transactions.............................. (441,437) (212,500) -- (7,154)
Net change in unrealized appreciation (depreciation) of
dividends and dividend withholding tax reclaims
receivable, interest and interest withholding tax
reclaims receivable, securities purchased and sold
and foreign currency transactions.......................... (28,748) 101,790 -- 6,134
Net change in unrealized appreciation (depreciation) of
investments and options.................................... (1,706,578) (402,308) -- (136,910)
------------ ------------ ------------ -----------
Net increase(decrease) in net assets resulting from
operations................................................. (2,046,991) (326,895) 387,604 (126,536)
------------ ------------ ------------ -----------
Distributions to shareholders from: (Note 1)
Net investment income........................................ (51,590) (1,710) (387,604) (9,954)
Net realized gain on investments............................. -- (12,542) -- --
In excess of net realized gain on investments................ -- -- -- --
Return of capital............................................ -- -- -- --
Capital share transactions: (Note 4)
Increase from capital shares sold and reinvested............. 40,348,942 21,078,341 75,875,884 4,426,908
Decrease from capital shares repurchased..................... (26,803,641) (11,126,870) (60,177,597) (2,061,498)
------------ ------------ ------------ -----------
Net increase from capital share transactions.................... 13,545,301 9,951,471 15,698,287 2,365,410
------------ ------------ ------------ -----------
Total increase (decrease) in net assets......................... 11,446,720 9,610,324 15,698,287 2,228,920
Net assets:
Beginning of period.......................................... 7,944,511 5,410,163 3,775,435 --
------------ ------------ ------------ -----------
End of period................................................ $ 19,391,231 $ 15,020,487 $ 19,473,722 $ 2,228,920
============ ============ ============ ===========
</TABLE>
================================================================================
February 10, 1993 (commencement of operations) to December 31, 1993
================================================================================
<TABLE>
<CAPTION>
G.T. GLOBAL:
-----------------------------------------------------------------
VARIABLE VARIABLE TELE- VARIABLE VARIABLE
GROWTH & COMMUNICATIONS EMERGING AMERICA
INCOME FUND FUND* MARKETS FUND** FUND
----------- -------------- -------------- -----------
<S> <C> <C> <C> <C>
Increase in net assets
Operations:
Net investment income........................................ $ 101,690 $ 21,870 $ -- $ 136,956
Net realized gain (loss) on investments, options and
foreign currency transactions.............................. (8,149) 8,906 -- (21,991)
Net change in unrealized appreciation (depreciation) of
dividends and dividend witholding tax reclaims
receivable, interest and interest withholding tax
reclaims receivable, securities purchased and sold
and foreign currency transactions.......................... 14,494 446 -- --
Net change in unrealized appreciation (depreciation)
of investments, options and forward foreign currency
contracts.................................................. 590,132 523,386 -- 115,781
----------- ------------ ----------- -----------
Net increase in net assets resulting from operations......... 698,167 554,608 -- 230,746
----------- ------------ ----------- -----------
Distributions to shareholders from: (Note 1)
Net investment income........................................ (101,690) -- -- --
Sources other than net income................................ (18,009) -- -- --
Capital share transactions: (Note 4)
Increase from capital shares sold and reinvested............. 13,957,675 8,265,911 -- 7,444,411
Decrease from capital shares repurchased..................... (2,879,600) (917,916) -- (6,000,261)
----------- ------------ ----------- -----------
Net increase from capital share transactions.................... 11,078,075 7,347,995 -- 1,444,150
----------- ------------ ----------- -----------
Total increase in net assets.................................... 11,656,543 7,902,603 -- 1,674,896
Net assets:
Beginning of period.......................................... 20,000 12 -- 25,000
----------- ------------ ----------- -----------
End of period................................................ $11,676,543 $ 7,902,615 $ -- $ 1,699,896
=========== ============ =========== ===========
</TABLE>
<TABLE>
<CAPTION>
G.T. GLOBAL:
--------------------------------------------------------------
VARIABLE VARIABLE MONEY VARIABLE
NEW PACIFIC EUROPE MARKET INTERNATIONAL
FUND FUND FUND FUND**
------------ ------------ ------------ -------------
<S> <C> <C> <C> <C>
Increase in net assets
Operations:
Net investment income........................................ $ 19,858 $ 17,188 $ 31,019 $ --
Net realized gain (loss) on investments, options and
foreign currency transactions.............................. (9,372) (10,891) -- --
Net change in unrealized appreciation (depreciation) of
dividends and dividend witholding tax reclaims
receivable, interest and interest withholding tax
reclaims receivable, securities purchased and sold
and foreign currency transactions.......................... (39) 3,610 -- --
Net change in unrealized appreciation (depreciation)
of investments, options and forward foreign currency
contracts.................................................. 957,018 420,048 -- --
------------ ------------ ------------ -----------
Net increase in net assets resulting from operations......... 967,465 429,955 31,019 --
------------ ------------ ------------ -----------
Distributions to shareholders from: (Note 1)
Net investment income........................................ -- -- (31,019) --
Sources other than net income................................ -- -- -- --
Capital share transactions: (Note 4)
Increase from capital shares sold and reinvested............. 9,333,887 6,793,906 8,884,059 --
Decrease from capital shares repurchased..................... (2,381,841) (1,838,698) (5,133,624) --
------------ ------------ ------------ -----------
Net increase from capital share transactions.................... 6,952,046 4,955,208 3,750,435 --
------------ ------------ ------------ -----------
Total increase in net assets.................................... 7,919,511 5,385,163 3,750,435 --
Net assets:
Beginning of period.......................................... 25,000 25,000 25,000 --
------------ ------------ ------------ -----------
End of period................................................ $ 7,944,511 $ 5,410,163 $ 3,775,435 $ --
============ ============ ============ ===========
</TABLE>
* The Variable Telecommunications Fund did not commence operations until
October 18, 1993.
** The Variable International and Variable Emerging Markets Funds did not
commence operations until July 5, 1994.
The accompanying notes are an integral part of the financial statements.
F-50
<PAGE> 135
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
FINANCIAL HIGHLIGHTS
DECEMBER 31, 1994
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>
G.T. GLOBAL:
-------------------------------------------------------------
VARIABLE VARIABLE GLOBAL VARIABLE U.S. VARIABLE
STRATEGIC GOVERNMENT GOVERNMENT LATIN AMERICA
INCOME FUND INCOME FUND INCOME FUND FUND
----------- --------------- ------------- -------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period . . . . . . . . . . . . . . . $ 14.57 $ 12.53 $ 12.23 $ 17.68
-------- ------- ------- --------
Net investment income (a) . . . . . . . . . . . . . . . . . . . 1.71 0.77 0.63 .11
Net realized and unrealized gain (loss) on investments . . . . . (4.17) (1.85) (1.39) 1.49
-------- ------- ------- --------
Net increase(decrease) resulting from operations . . . . . . . (2.46) (1.08) (0.76) 1.60
-------- ------- ------- --------
Distributions to shareholders from:
Net investment income . . . . . . . . . . . . . . . . . . . . . (0.79) (0.73) (0.62) (0.04)
Net realized gain on investments . . . . . . . . . . . . . . . . (0.45) -- (0.06) (0.07)
In excess of net realized gain on investments . . . . . . . . . -- -- -- --
Return of capital . . . . . . . . . . . . . . . . . . . . . . . (0.05) (0.09) -- --
-------- ------- ------- --------
Total distributions . . . . . . . . . . . . . . . . . . . . . (1.29) (0.82) (0.68) (0.11)
Net asset value, end of period . . . . . . . . . . . . . . . . . . $ 10.82 $ 10.63 $ 10.79 $ 19.17
======== ======= ======= ========
Total investment return (d) . . . . . . . . . . . . . . . . . . . . (17.09)% (8.70)% (6.27)% 9.14%
======== ======= ======= ========
Ratios and supplemental data:
Net assets, end of period (in 000's) . . . . . . . . . . . . . . . $ 23,367 $ 9,654 $ 2,415 $ 26,631
Ratio of net investment income to average net assets:
With reimbursement by G.T. Capital and expense reductions (a) . . 7.58% 6.89% 5.53% 0.82%
Without reimbursement by G.T. Capital and expense reductions . . 7.43% 6.21% 1.29% 0.49%
Ratio of expenses to average net assets:
With reimbursement by G.T. Capital and expense reductions (a) . . 1.00% 1.00% 0.38% 1.25%
Without reimbursement by G.T. Capital and expense reductions . . 1.15% 1.68% 4.63% 1.58%
Portfolio turnover . . . . . . . . . . . . . . . . . . . . . . . . 313% 350% 34% 185%
</TABLE>
February 10, 1993 (commencement of operations) to December 31, 1993
<TABLE>
<CAPTION>
G.T. GLOBAL:
-------------------------------------------------------------
VARIABLE VARIABLE GLOBAL VARIABLE U.S. VARIABLE
STRATEGIC GOVERNMENT GOVERNMENT LATIN AMERICA
INCOME FUND INCOME FUND INCOME FUND FUND
----------- --------------- ------------- -------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period . . . . . . . . . . . . $ 12.00 $ 12.00 $ 12.00 $ 12.00
-------- ------- ------- -------
Net investment income (b) . . . . . . . . . . . . . . . . 0.61 0.57 0.53 0.04
Net realized and unrealized gain on investments . . . . . 2.57 0.52 0.23 5.64
-------- ------- ------- -------
Net increase resulting from operations . . . . . . . 3.18 1.09 0.76 5.68
-------- ------- ------- -------
Distributions to shareholders from:
Net investment income . . . . . . . . . . . . . . . . . . (0.61) (0.56) (0.53) (0.00)
Sources other than net income . . . . . . . . . . . . . . (0.00) (0.00) (0.00) (0.00)
-------- ------- ------- -------
Total distributions . . . . . . . . . . . . . . . . (0.61) (0.56) (0.53) (0.00)
-------- ------- ------- -------
Net asset value, end of period . . . . . . . . . . . . . $ 14.57 $ 12.53 $ 12.23 $ 17.68
======== ======= ======= =======
Total investment return (d) . . . . . . . . . . . . . . 27.5% 9.5% 6.4% 47.3%
======== ======= ======= =======
Ratios and supplemental data:
Net assets, end of period (in 000's) . . . . . . . . . . $ 18,089 $ 6,136 $ 974 $ 8,240
Ratio of net investment income to average net assets:
With reimbursement by G.T. Capital (b) . . . . . . . 6.6% 6.1% 5.3% 1.0%
Without reimbursement by G.T. Capital . . . . . . . . 6.3% 5.5% 3.4% 0.4%
Without expenses assumed by G.T. Capital (c) . . . . . 5.2% 2.4% (6.9)% (2.5)%
Ratio of expenses to average net assets:
With reimbursement by G.T. Capital (b) . . . . . . . . 0.5% 0.5% 0.0% 0.7%
Without reimbursement by G.T. Capital . . . . . . . . 0.9% 1.1% 1.9% 1.3%
Without expenses assumed by G.T. Capital (c) . . . . . 1.9% 4.2% 12.3% 4.2%
Portfolio turnover . . . . . . . . . . . . . . . . . . . 245% 298% 81% 78%
</TABLE>
- -------------------
(a) Includes reimbursement by G.T. Capital Management, Inc. of Fund operating
expenses of $0.00 for the Money Market Fund, $0.07 for the Variable
Emerging Markets Fund, $0.28 for the Variable America Fund, $0.11 for the
Variable International Fund, $0.03 for the Variable New Pacific Fund,
$0.04 for the Variable Europe Fund, $0.04 for the Variable Latin America
Fund, $0.03 for the Variable Growth & Income Fund, $0.01 for the Variable
Telecommunications Fund, $0.04 for the Variable Strategic Income Fund,
$0.08 for the Variable Global Government Income Fund and $0.48 for the
Variable U.S. Government Income Fund (Note 2).
(b) Includes reimbursement by G.T. Capital Management, Inc. of Fund operating
expenses of $0.01 for the Money Market Fund, $0.10 for the Variable
America Fund, $0.03 for the Variable New Pacific Fund, $0.03 for the
Variable Europe Fund, $0.02 for the Variable Latin America Fund, $0.05
for the Variable Growth & Income Fund, $0.003 for the Variable
Telecommunications Fund, $0.03 for the Variable Strategic Income Fund,
$0.06 for the Variable Global Government Income Fund and $0.19 for the
Variable U.S. Government Income Fund (Note 2).
The accompanying notes are an integral part of the financial statements.
F-51
<PAGE> 136
<TABLE>
<CAPTION>
G.T. GLOBAL:
--------------------------------------------------------
VARIABLE VARIABLE TELE- VARIABLE VARIABLE
GROWTH & COMMUNICATIONS EMERGING AMERICA
INCOME FUND FUND MARKETS FUND** FUND
----------- -------------- -------------- --------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period . . . . . . . . . . . . . . . $ 13.77 $ 13.07 $ 12.00 $ 13.75
-------- -------- ------- --------
Net investment income (a) . . . . . . . . . . . . . . . . . . . 0.46 0.01 0.07 0.48
Net realized and unrealized gain (loss) on investments . . . . . (0.85) 0.92 (0.05) 2.08
-------- -------- ------- --------
Net increase(decrease) resulting from operations . . . . . . . (0.39) 0.93 0.02 2.56
-------- -------- ------- --------
Distributions to shareholders from:
Net investment income . . . . . . . . . . . . . . . . . . . . . (0.39) (0.02) (0.07) (0.50)
Net realized gain on investments . . . . . . . . . . . . . . . . -- -- -- --
In excess of net realized gain on investments . . . . . . . . . -- -- (0.06) --
Return of capital . . . . . . . . . . . . . . . . . . . . . . . -- -- -- --
-------- -------- ------- --------
Total distributions . . . . . . . . . . . . . . . . . . . . . (0.39) (0.02) (0.13) (0.50)
Net asset value, end of period . . . . . . . . . . . . . . . . . . $ 12.99 $ 13.98 $ 11.89 $ 15.81
======== ======== ======= ========
Total investment return (d) . . . . . . . . . . . . . . . . . . . . (2.85)% 7.15% 0.12% 18.88%
======== ======== ======= ========
Ratios and supplemental data:
Net assets, end of period (in 000's) . . . . . . . . . . . . . . . $ 25,580 $ 36,029 $ 7,267 $ 15,257
Ratio of net investment income to average net assets:
With reimbursement by G.T. Capital and expense reductions (a) . . 3.69% 0.31% 4.10% 1.83%
Without reimbursement by G.T. Capital and expense reductions . . 3.45% 0.07% (.20)% .76%
Ratio of expenses to average net assets:
With reimbursement by G.T. Capital and expense reductions (a) . . 1.25% 1.25% 0.00% 0.98%
Without reimbursement by G.T. Capital and expense reductions . . 1.49% 1.49% 4.30% 2.05%
Portfolio turnover . . . . . . . . . . . . . . . . . . . . . . . . 53% 81% 117% 139%
</TABLE>
<TABLE>
<CAPTION>
G.T. GLOBAL:
----------------------------------------------------
VARIABLE VARIABLE MONEY VARIABLE
NEW PACIFIC EUROPE MARKET INTERNATIONAL
FUND FUND FUND FUND**
----------- -------- ------ -------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period . . . . . . . . . . . . . . . $ 16.07 $ 15.33 $ 1.00 $ 12.00
-------- ------- -------- -------
Net investment income (a) . . . . . . . . . . . . . . . . . . . 0.08 0.16 0.03 0.06
Net realized and unrealized gain (loss) on investments . . . . . (2.08) (0.25) 0.00 (0.76)
-------- ------- -------- -------
Net increase(decrease) resulting from operations . . . . . . . (2.00) (0.09) 0.03 (0.70)
-------- ------- -------- -------
Distributions to shareholders from:
Net investment income . . . . . . . . . . . . . . . . . . . . . (0.06) -- (0.03) (0.05)
Net realized gain on investments . . . . . . . . . . . . . . . . -- (0.02) -- --
In excess of net realized gain on investments . . . . . . . . . -- -- -- --
Return of capital . . . . . . . . . . . . . . . . . . . . . . . -- -- --
-------- ------- -------- -------
Total distributions . . . . . . . . . . . . . . . . . . . . . (0.06) (0.02) (0.03) (0.05)
Net asset value, end of period . . . . . . . . . . . . . . . . . . $ 14.01 $ 15.22 $ 1.00 $ 11.25
======== ======= ======== =======
Total investment return (d) . . . . . . . . . . . . . . . . . . . . (12.47)% (0.59)% 3.48% (5.81)%
======== ======= ======== =======
Ratios and supplemental data:
Net assets, end of period (in 000's) . . . . . . . . . . . . . . . $ 19,391 $15,020 $ 19,474 $ 2,229
Ratio of net investment income to average net assets:
With reimbursement by G.T. Capital and expense reductions (a) . . 0.83% 1.48% 3.70% 3.33%
Without reimbursement by G.T. Capital and expense reductions . . 0.48% 1.07% 3.64% (2.56)%
Ratio of expenses to average net assets:
With reimbursement by G.T. Capital and expense reductions (a) . . 1.25% 1.25% 0.75% 0.69%
Without reimbursement by G.T. Capital and expense reductions . . 1.60% 1.66% 0.81% 6.58%
Portfolio turnover . . . . . . . . . . . . . . . . . . . . . . . . 30% 61% N/A 17%
</TABLE>
February 10, 1993 (commencement of operations) to December 31, 1993
<TABLE>
<CAPTION>
G.T. GLOBAL:
--------------------------------------------------------
VARIABLE VARIABLE TELE- VARIABLE VARIABLE
GROWTH & COMMUNICATIONS EMERGING AMERICA
INCOME FUND FUND MARKETS FUND** FUND
----------- -------------- -------------- --------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period . . . . . . . . . . . . $ 12.00 $ 12.00 $ -- $ 12.00
-------- ------- ------ -------
Net investment income (b) . . . . . . . . . . . . . . . . 0.31 0.04 -- 1.11
Net realized and unrealized gain on investments . . . . . 1.79 1.03 -- 0.64
-------- ------- ------ -------
Net increase resulting from operations . . . . . . . 2.10 1.07 -- 1.75
-------- ------- ------ -------
Distributions to shareholders from:
Net investment income . . . . . . . . . . . . . . . . . . (0.28) (0.00) -- (0.00)
Sources other than net income . . . . . . . . . . . . . . (0.05) (0.00) -- --
-------- ------- ------ -------
Total distributions . . . . . . . . . . . . . . . . (0.33) (0.00) -- (0.00)
-------- ------- ------ -------
Net asset value, end of period . . . . . . . . . . . . . $ 13.77 $ 13.07 $ -- $ 13.75
======== ======= ====== =======
Total investment return (d) . . . . . . . . . . . . . . 17.8% 8.9% --% 14.7%
======== ======= ====== =======
Ratios and supplemental data:
Net assets, end of period (in 000's) . . . . . . . . . . $ 11,677 $ 7,903 --% $ 1,700
Ratio of net investment income to average net assets:
With reimbursement by G.T. Capital (b) . . . . . . . 3.2% 2.5% --% 14.1%
Without reimbursement by G.T. Capital . . . . . . . . 2.7% 2.3% --% 12.8%
Without expenses assumed by G.T. Capital (c) . . . . . 1.1% 1.6% --% 7.6%
Ratio of expenses to average net assets:
With reimbursement by G.T. Capital (b) . . . . . . . . 0.6% 0.9% --% 0.0%
Without reimbursement by G.T. Capital . . . . . . . . 1.2% 1.1% --% 1.3%
Without expenses assumed by G.T. Capital (c) . . . . . 2.8% 1.8% --% 6.5%
Portfolio turnover . . . . . . . . . . . . . . . . . . . 17% 20% --% 831%
</TABLE>
<TABLE>
<CAPTION>
G.T. GLOBAL:
-----------------------------------------------------
VARIABLE VARIABLE MONEY VARIABLE
NEW PACIFIC EUROPE MARKET INTERNATIONAL
FUND FUND FUND FUND**
----------- -------- ------ -------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period . . . . . . . . . . . . $ 12.00 $ 12.00 $ 1.00 $ --
------- ------- ------- -----
Net investment income (b) . . . . . . . . . . . . . . . . 0.04 0.05 0.03 --
Net realized and unrealized gain on investments . . . . . 4.03 3.28 0.00 --
------- ------- ------- -----
Net increase resulting from operations . . . . . . . 4.07 3.33 0.03 --
------- ------- ------- -----
Distributions to shareholders from:
Net investment income . . . . . . . . . . . . . . . . . . (0.00) (0.00) (0.03) --
Sources other than net income . . . . . . . . . . . . . . -- -- -- --
------- ------- ------- -----
Total distributions . . . . . . . . . . . . . . . . (0.00) (0.00) (0.03) --
------- ------- ------- -----
Net asset value, end of period . . . . . . . . . . . . . $ 16.07 $ 15.33 $ 1.00 $ --
======= ======= ======= =====
Total investment return (d) . . . . . . . . . . . . . . 33.9% 27.8% 2.6% --%
======= ======= ======= =====
Ratios and supplemental data:
Net assets, end of period (in 000's) . . . . . . . . . . $ 7,945 $ 5,410 3,775
Ratio of net investment income to average net assets:
With reimbursement by G.T. Capital (b) . . . . . . . 0.9% 1.1% 2.9% --%
Without reimbursement by G.T. Capital . . . . . . . . 0.3% 0.4% 2.1% --%
Without expenses assumed by G.T. Capital (c) . . . . . (2.0)% (2.8)% (2.6)% --%
Ratio of expenses to average net assets:
With reimbursement by G.T. Capital (b) . . . . . . . . 0.6% 0.7% 0.2% --%
Without reimbursement by G.T. Capital . . . . . . . . 1.3% 1.4% 1.0% --%
Without expenses assumed by G.T. Capital (c) . . . . . 3.6% 4.6% 5.7% --%
Portfolio turnover . . . . . . . . . . . . . . . . . . . 15% 27% N/A --%
</TABLE>
- -------------------
(c) During the period ended December 31, 1993, G.T. Capital voluntarily
assumed certain expenses for the Funds (Note 2).
(d) Total returns do not include initial sales charges.
+ Not annualized
++ Annualized
* The Variable Telecommunications Fund did not commence operations until
October 18, 1993.
** The Variable International and Variable Emerging Markets Funds did not
commence operations until July 5, 1994.
The accompanying notes are an integral part of the financial statements.
F-52
<PAGE> 137
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
NOTES TO
FINANCIAL STATEMENTS
DECEMBER 31, 1994
================================================================================
1. SIGNIFICANT ACCOUNTING POLICIES
G.T. Global Variable Investment Series and G.T. Global Variable Investment Trust
("Companies") were organized as Massachusetts business trusts on May 26, 1992
and September 17, 1992, respectively. The Companies are registered under the
Investment Company Act of 1940 ("Act") as open-end management investment
companies. The G.T. Global Variable Investment Series operates as a series
company currently issuing five classes of shares of beneficial interest: G.T.
Global: Variable New Pacific Fund (formerly G.T. Global:Variable Pacific Fund),
G.T. Global: Variable Europe Fund, G.T. Global: Variable America Fund, G.T.
Global: Variable International Fund and G.T. Global: Money Market Fund. G.T.
Global Variable Investment Trust operates as a series company currently issuing
seven classes of shares of beneficial interest: G.T. Global: Variable Latin
America Fund, G.T. Global: Variable Growth & Income Fund, G.T. Global: Variable
Strategic Income Fund, G.T. Global: Variable Global Government Income Fund, G.T.
Global: Variable U.S. Government Income Fund, G.T. Global: Variable Emerging
Markets Fund and G.T. Global: Variable Telecommunications Fund. (The classes of
shares of beneficial interest for the two companies are referred to herein
collectively as the "Funds.") Each of the Funds is classified as a diversified
management investment company; except for G.T. Global: Variable Latin America
Fund, G.T. Global: Variable Growth & Income Fund, G.T. Global: Variable
Strategic Income Fund and G.T. Global: Variable Global Government Income Fund,
which are each registered as a non-diversified management investment company
under the Investment Company Act of 1940, as amended.
The following is a summary of significant accounting policies consistently
followed by the Funds in the preparation of the financial statements. The
policies are in conformity with generally accepted accounting principles.
(A) PORTFOLIO VALUATION
The Funds calculate the net asset value of and complete orders to purchase,
exchange or repurchase Fund shares on each business day, with the exception of
those days on which the New York Stock Exchange is closed.
Equity securities are valued at the last sales price on the exchange on which
such securities are traded, or, in the principal over-the-counter market in
which such securities are traded, as of the close of business on the day the
securities are being valued or, lacking any sales, at the last available bid
price. Securities traded in the over-the-counter market are valued at the last
available sales price in the over-the-counter market prior to valuation. In
cases where securities are traded on more than one exchange, the securities are
valued on the exchange determined by G.T. Capital, Inc. ("G.T. Capital") to be
the primary market.
Fixed income investments are valued at the mean of representative quoted bid and
ask prices for such investments or, if such prices are not available, at prices
for investments of comparative maturity, quality and type; however, when G.T.
Capital 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 fluctuations, 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 each of
the Companies' Board of Trustees.
Portfolio securities which are primarily traded on foreign exchanges are
generally valued at the preceding closing values of such securities on their
respective exchanges, and those values are then translated into U.S. dollars at
the current exchange rates, except that when an occurrence subsequent to the
time a value was so established is likely to have materially changed such value,
then the fair value of those securities will be determined by consideration of
other factors by or under the direction of the Companies' Board of Trustees.
(B) FOREIGN CURRENCY TRANSLATION
The accounting records of the Funds are maintained in U.S. dollars. The market
values of foreign securities, currency holdings, and other assets and
liabilities are recorded in the books and records of the Funds 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.
As of January 1, 1994, the Funds adopted Statement of Position 93-4: "Foreign
Currency Accounting and Financial Statement Presentation for Investment
Companies." As permitted under the SOP, the Funds do not isolate that portion of
the results of operations resulting from changes in foreign exchange rates on
investments from the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
F-53
<PAGE> 138
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
Reported net realized foreign exchange gains and losses arise from sales and
maturities of short-term securities, forward foreign currency contracts, sales
of foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the difference between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Funds' 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 fiscal
year end, resulting from changes in exchange rates.
(C) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by the Funds, it is the
Funds' 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 Funds
under each agreement at its maturity. G.T. Capital is responsible for
determining that the value of these underlying securities remains at least equal
to the resale price.
(D) FORWARD FOREIGN CURRENCY CONTRACTS
A forward foreign currency contract ("Forward") 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 fluctuates with changes in currency exchange rates. The
Forward is marked-to-market daily and the change in market value is recorded by
the Funds as an unrealized gain or loss. When the Forward is closed, the Funds
record 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. Forwards involve
market risk in excess of the amount shown in the Funds' "Statements of Assets
and Liabilities." The Funds could be exposed to risk if the counterparties are
unable to meet the terms of the contracts or if the value of the currency
changes unfavorably. The Funds may enter into Forwards in connection with
planned purchases or sales of securities or to hedge the value of portfolio
securities denominated in a particular currency.
(E) OPTION ACCOUNTING PRINCIPLES
When a 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 is the last sale price or, in the absence of a sale,
the last offering price. If an option expires on its stipulated expiration date
or if a 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. A Fund can write options only on a covered basis, which, for a call,
requires that the Fund hold the underlying securities and, for a put, requires
the Fund to set aside cash, U.S. government securities or other liquid, high
grade debt securities in an amount not less than the exercise price at all times
while the put option is outstanding. The Funds will use options in order to
manage their exposure to currency levels or interest rates.
The premium paid by a 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 a Fund has purchased expires on the stipulated
expiration date, the Fund would realize a loss in the amount of the cost of the
option. If a Fund enters into a closing sale transaction, the Fund would realize
a gain or loss, depending on whether proceeds from the closing sale transaction
are greater or less than the cost of the option. If a 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 a 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 a
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.
(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
F-54
<PAGE> 139
sold is determined on a first-in, first-out basis, unless otherwise specified.
Dividends are recorded on the ex-dividend date. Interest income is recorded on
the accrual basis. Where a high level of uncertainty exists as to its
collection, income is recorded net of all withholding tax with any rebate
recorded when received. A Fund may trade securities on other than normal
settlement terms. This may increase the risk if the other party to the
transaction fails to deliver and causes the Fund to subsequently invest at less
advantageous prices.
(H) DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders are recorded by the Fund on the ex-date. For the
Money Market Fund, dividends are declared daily and paid monthly from net
investment income. The Variable Strategic Income Fund, Variable Global
Government Income Fund and Variable U.S. Government Income Fund declare and pay
dividends from net investment income, if any, monthly. The Variable Growth &
Income Fund declares and pays dividends from net investment income, if any,
quarterly. The Variable Latin America Fund, Variable Telecommunications Fund,
Variable New Pacific Fund, Variable Europe Fund, Variable Emerging Markets Fund,
Variable International Fund and Variable America Fund declare and pay dividends
from net investment income, if any, annually. With respect to each Fund,
dividends from net realized capital gains, if any, are normally declared and
paid annually.
Income and capital gain distributions are determined in accordance with Federal
income tax regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments of
income and gains on various investment securities held by the Fund and timing
differences.
(I) TAXES
It is the policy of the Funds to continue to meet the requirements for
qualification as a "regulated investment company" under the Internal Revenue
Code of 1986, as amended ("Code"). It is also the intention of the Funds to make
distributions sufficient to avoid imposition of any excise tax under Section
4982 of the Code. Therefore, no provision has been made for Federal taxes on
income, capital gains, and unrealized appreciation of securities held, or for
excise tax on income and capital gains. The following funds have capital loss
carryforwards:
<TABLE>
<CAPTION>
CAPITAL LOSS EXPIRES IN
G.T. GLOBAL FUNDS CARRYFORWARD YEAR
- ----------------- ------------ ----------
<S> <C> <C>
Variable Strategic Income $3,286,925 2002
Variable Global
Government Income 1,196,724 2002
Variable U.S.
Government Income 71,665 2002
Variable Growth and Income 221,307 2002
Variable New Pacific Fund 415,778 2002
12,288 2001
Variable Europe Fund 69,767 2002
</TABLE>
(J) DEFERRED ORGANIZATIONAL EXPENSES
Costs incurred by G.T. Global Variable Investment Series and Trust in connection
with their organization, which aggregated $125,333 and $188,000, respectively,
are being amortized on a straight-line basis for a five year period. While G.T.
Capital has advanced certain of the Companies' organizational costs incurred to
date, the Companies may reimburse G.T. Capital for the amount of these advances.
In the event that G.T. Capital redeems any of the initial 2,083.333 shares of
each of the Variable New Pacific Fund, Variable Europe Fund and Variable America
Fund; or the initial 25,000 shares of the Money Market Fund; or the initial
1,666.667 shares of each of the Variable Strategic Income Fund, Variable
Government Income Fund, Variable U.S. Government Income Fund, Variable Latin
America Fund and the Variable Growth & Income Fund; or the initial 1.000 share
of the Variable Telecommunications Fund, within the five year amortization
period, the respective Fund's unamortized organizational expenses allocable to
the shares redeemed will be deducted from G.T. Capital's redemption proceeds.
(K) FOREIGN SECURITIES
There are certain additional considerations and risks associated with investing
in foreign securities and currency transactions that are not inherent with
investments of domestic origin. The Funds' investments in emerging market
countries may involve greater risks than investments in more developed markets
and the price of such investments may be volatile. These risks of investing in
foreign and emerging markets may include foreign currency exchange rate
fluctuations, perceived credit risk, adverse political and economic developments
and possible adverse foreign government intervention.
(L) INDEXED SECURITIES
The Funds 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.
(M) RESTRICTED SECURITIES
The Funds are permitted to invest in privately placed restricted securities.
These securities may be resold in transactions exempt from registration or to
the public if the securities are registered. Disposal of these securities may
involve time-consuming negotiations and expense, and prompt sale at an
acceptable price may be difficult. At the end of the period, restricted
securities (excluding 144A issues) are shown at the end of the Portfolio of
Investments.
F-55
<PAGE> 140
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
(N) Portfolio Securities Loaned
At December 31, 1994, stocks with an aggregate value listed below were on loan
to brokers. The loans were secured by cash collateral received by the Fund:
<TABLE>
<CAPTION>
DECEMBER 31, 1994 YEAR ENDED
---------------------------------
AGGREGATE VALUE DECEMBER 31, 1994
ON LOAN CASH COLLATERAL FEES RECEIVED
--------------- --------------- -----------------
<S> <C> <C> <C>
G.T. GLOBAL:
Variable Strategic Income Fund $ - $ - $ -
Variable Global Government Income Fund - - -
Variable U.S. Government Income Fund - - -
Variable Latin America Fund 80,387 88,500 345
Variable Growth & Income Fund 665,886 692,839 2,007
Variable Telecommunications Fund 4,110,350 4,297,200 6,653
Variable Emerging Markets Fund - - -
Variable America Fund - - -
Variable New Pacific Fund 943,057 975,750 2,539
Variable Europe Fund 782,538 804,910 2,487
Money Market Fund - - -
Variable International Fund - - -
</TABLE>
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 the loan. Fees received from
securities loaned were used to reduce the Funds' custodian fees.
2. Related Parties
G.T. Capital is the Funds' investment manager and administrator. For these
services, the Money Market Fund pays G.T. Capital an investment management and
administration fee at the annualized rate of 0.50% of that Fund's average daily
net assets. The Variable Strategic Income Fund, Variable Global Government
Income Fund, Variable U.S. Government Income Fund and Variable America Fund each
pays G.T. Capital an investment management and administration fee at the
annualized rate of 0.75% of the Fund's average daily net assets. The Variable
Growth & Income Fund, Variable Latin America Fund, Variable Telecommunications
Fund, Variable New Pacific Fund, Variable Emerging Markets Fund, Variable
International Fund and Variable Europe Fund each pays G.T. Capital an investment
management and administration fee at the annualized rate of 1.00% of its average
daily net assets. All fees are computed daily and paid monthly.
G.T. Capital has undertaken to limit the total operating expenses (exclusive of
brokerage commissions, interest, taxes and extraordinary items) of each of the
Variable New Pacific Fund, the Variable Europe Fund, the Variable Latin America
Fund, the Variable Telecommunications Fund, Variable Emerging Markets Fund,
Variable International and the Variable Growth & Income Fund to 1.25% of their
respective average daily net assets. In addition, G.T. Capital has undertaken to
limit the total operating expenses (exclusive of brokerage commissions,
interest, taxes and extraordinary items) of each of the Variable Strategic
Income Fund, the Variable Global Government Income Fund, the Variable U.S.
Government Income Fund, and the Variable America Fund to 1.00% of their
respective net assets. Likewise, G.T. Capital has undertaken to limit the total
operating expenses (exclusive of brokerage commissions, interest, taxes and
extraordinary items) of the Money Market Fund to .75% of its net assets. From
time to time, G.T. Capital in its sole discretion may waive its fees and/or
voluntarily assume certain Fund expenses.
All general expenses of the Companies and joint expenses of the Funds are
allocated among the Funds on a basis deemed fair and equitable.
G.T. Global Financial Services, Inc. ("G.T. Global"), an affiliate of G.T.
Capital, is the Funds' distributor. G.T. Global Investor Services, Inc. ("G.T.
Services"), an affiliate of G.T. Capital and G.T. Global, is the Funds' transfer
agent.
The Companies pay each of their Trustees who is not an employee, officer or
director of G.T. Capital, G.T. Global or G.T. Services $5,000 per year.
F-56
<PAGE> 141
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
3. PURCHASES AND SALES OF SECURITIES
The following summarizes purchases and sales of investment securities, other
than short-term investments, by Fund, for the year ended December 31, 1994:
<TABLE>
<CAPTION>
PURCHASES AND SALES OF SECURITIES
PURCHASES
------------------------------
U.S. GOVERNMENT OTHER ISSUES
--------------- ------------
<S> <C> <C>
G.T. GLOBAL:
Variable Strategic Income Fund $3,362,663 $63,765,625
Variable Global Government Income Fund 2,083,744 30,011,258
Variable U.S. Government Income Fund 1,707,588 199,086
Variable Latin America Fund -- 50,577,390
Variable Growth & Income Fund 4,455,845 22,476,411
Variable Telecommunications Fund -- 42,418,568
Variable Emerging Markets Fund -- 9,015,233
Variable America Fund -- 12,816,000
Variable New Pacific Fund -- 16,803,710
Variable Europe Fund -- 11,689,743
Money Market Fund -- --
Variable International Fund -- 2,226,280
</TABLE>
<TABLE>
<CAPTION>
SALES
------------------------------
U.S. GOVERNMENT OTHER ISSUES
--------------- ------------
<S> <C> <C>
G.T. GLOBAL:
Variable Strategic Income Fund $1,055,933 $59,483,128
Variable Global Government Income Fund 1,617,497 26,633,865
Variable U.S. Government Income Fund 423,764 --
Variable Latin America Fund -- 34,974,166
Variable Growth & Income Fund 3,950,583 9,503,970
Variable Telecommunications Fund -- 17,515,186
Variable Emerging Markets Fund -- 2,649,503
Variable America Fund -- 6,248,059
Variable New Pacific Fund -- 4,082,588
Variable Europe Fund -- 3,340,102
Money Market Fund -- --
Variable International Fund -- 133,924
</TABLE>
The Funds' written options activity for the year ended December 31, 1994, was as
follows:
G.T. GLOBAL: VARIABLE STRATEGIC INCOME FUND
COVERED CALL OPTIONS WRITTEN
<TABLE>
<CAPTION>
NUMBER OF
TRANSACTIONS PREMIUM
------------ -------
<S> <C> <C>
Options outstanding at December 31, 1993 -- --
Options written during the year ended December 31, 1994 8 $ 91,892
Options cancelled in closing purchase transactions (6) (72,649)
Options expired prior to exercise (2) (19,243)
Options exercised -- --
---- --------
Options outstanding at December 31, 1994 0 $ 0
==== ========
</TABLE>
G.T. GLOBAL: VARIABLE GLOBAL GOVERNMENT INCOME FUND
COVERED CALL OPTIONS WRITTEN
<TABLE>
<CAPTION>
NUMBER OF
TRANSACTIONS PREMIUM
------------ -------
<S> <C> <C>
Options outstanding at December 31, 1993 -- --
Options written during the year ended December 31, 1994 3 $ 20,456
Options cancelled in closing purchase transactions (2) (15,381)
Options expired prior to exercise (1) (5,075)
Options exercised -- --
---- --------
Options outstanding at December 31, 1994 0 $ 0
==== ========
</TABLE>
F-57
<PAGE> 142
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
4. CAPITAL SHARES
At December 31, 1994, there were an unlimited number of shares of beneficial
interest authorized, at no par value. Transactions in capital shares of the
Funds were as follows:
CAPITAL SHARE TRANSACTIONS
<TABLE>
<CAPTION>
FEBRUARY 10, 1993
(COMMENCEMENT OF
YEAR ENDED OPERATIONS)
DECEMBER 31, 1994 TO DECEMBER 31, 1993
----------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
--------- ----------- --------- -----------
<S> <C> <C> <C> <C>
G.T. GLOBAL: VARIABLE STRATEGIC INCOME FUND
Shares sold........................................................ 1,978,885 $24,363,028 1,555,580 $20,856,885
Shares issued in connection with reinvestment of distributions..... 217,861 2,504,885 24,301 331,208
---------- ----------- --------- -----------
2,196,746 26,867,913 1,579,881 21,188,093
Shares repurchased................................................. (1,279,651) (14,932,250) (339,749) (4,586,401)
---------- ----------- --------- -----------
Net increase....................................................... 917,095 $11,935,663 1,240,132 $16,601,692
========== =========== ========= ===========
G.T. GLOBAL: VARIABLE GLOBAL GOVERNMENT INCOME FUND
Shares sold........................................................ 929,187 $10,658,737 602,269 $ 7,439,598
Shares issued in connection with reinvestment of distributions..... 60,221 673,921 7,456 92,236
---------- ----------- --------- -----------
Shares repurchased................................................. (571,500) (6,371,492) (121,573) (1,509,328)
---------- ----------- --------- -----------
Net increase....................................................... 417,908 $ 4,961,166 488,152 $ 6,022,506
========== =========== ========= ===========
G.T. GLOBAL: VARIABLE U.S. GOVERNMENT INCOME FUND
Shares sold........................................................ 423,487 $ 4,690,715 89,129 $ 1,086,977
Shares issued in connection with reinvestment of distributions..... 9,399 104,492 2,058 25,528
---------- ----------- --------- -----------
432,886 4,795,207 91,187 1,112,505
Shares repurchased................................................. (288,661) (3,169,722) (13,248) (162,803)
---------- ----------- --------- -----------
Net increase....................................................... 144,225 $ 1,625,485 77,939 $ 949,702
========== =========== ========= ===========
G.T. GLOBAL: VARIABLE LATIN AMERICA FUND
Shares sold........................................................ 1,888,080 $37,506,975 627,159 $ 8,921,929
Shares issued in connection with reinvestment of distributions..... 5,690 91,834 -- --
---------- ----------- --------- -----------
1,893,770 37,598,809 627,159 8,921,929
Shares repurchased................................................. (970,532) (19,435,079) (162,720) (2,320,013)
---------- ----------- --------- -----------
Net increase....................................................... 923,238 $18,163,730 464,439 $ 6,601,916
========== =========== ========= ===========
G.T. GLOBAL: VARIABLE GROWTH & INCOME FUND
Shares sold........................................................ 1,577,747 $21,179,611 1,057,397 $13,837,976
Shares issued in connection with reinvestment of distributions..... 49,422 644,305 8,995 119,699
---------- ----------- --------- -----------
1,627,169 21,823,916 1,066,392 13,957,675
Shares repurchased................................................. (505,030) (6,701,077) (220,258) (2,879,600)
---------- ----------- --------- -----------
Net increase....................................................... 1,122,139 $15,122,839 846,134 $11,078,075
========== =========== ========= ===========
<CAPTION>
OCTOBER 18, 1993
(COMMENCEMENT OF
OPERATIONS)
TO DECEMBER 31, 1993
-----------------------
<S> <C> <C> <C> <C>
G.T. GLOBAL: VARIABLE TELECOMMUNICATIONS FUND
Shares sold........................................................ 2,738,401 $36,062,278 680,051 $ 8,265,911
Shares issued in connection with reinvestment of distributions..... 2,609 31,627 -- --
---------- ----------- --------- -----------
2,741,010 36,093,905 680,051 8,265,911
Shares repurchased................................................. (769,197) (10,175,735) (75,482) (917,916)
---------- ----------- --------- -----------
Net increase....................................................... 1,971,813 $25,918,170 604,569 $ 7,347,995
========== =========== ========= ===========
<CAPTION>
JULY 5, 1994
(COMMENCEMENT OF
OPERATIONS)
TO DECEMBER 31, 1994
------------------------
<S> <C> <C>
G.T. GLOBAL: VARIABLE EMERGING MARKETS FUND SHARES AMOUNT
---------- -----------
Shares sold........................................................ 880,133 $11,376,969
Shares issued in connection with reinvestment of distributions..... 5,988 75,214
---------- -----------
Shares repurchased................................................. (274,767) (3,583,799)
---------- -----------
Net increase....................................................... 611,354 $ 7,868,384
========== ===========
</TABLE>
F-58
<PAGE> 143
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
<TABLE>
<CAPTION>
FEBRUARY 10, 1993
(COMMENCEMENT OF
YEAR ENDED OPERATIONS)
DECEMBER 31, 1994 TO DECEMBER 31, 1993
------------------------- ----------------------
SHARES AMOUNT SHARES AMOUNT
----------- ----------- --------- ----------
<S> <C> <C> <C> <C>
G.T. GLOBAL: VARIABLE AMERICA FUND
Shares sold........................................................ 1,410,056 $21,334,929 573,519 $ 7,444,411
Shares issued in connection with reinvestment of distributions..... 9,566 136,602 -- --
----------- ----------- --------- -----------
1,419,622 21,471,531 573,519 7,444,411
Shares repurchased................................................. (578,009) (8,750,561) (452,005) (6,000,261)
----------- ----------- --------- -----------
Net increase....................................................... 841,613 $12,720,970 121,514 $ 1,444,150
=========== =========== ========= ===========
G.T. GLOBAL: VARIABLE NEW PACIFIC FUND
Shares sold........................................................ 2,682,038 $40,297,352 659,599 $ 9,333,887
Shares issued in connection with reinvestment of distributions..... 3,541 51,590 -- --
----------- ----------- --------- -----------
2,685,579 40,348,942 659,599 9,333,887
Shares repurchased................................................. (1,795,774) (26,803,641) (167,300) (2,381,841)
----------- ----------- --------- -----------
Net increase....................................................... 889,805 $13,545,301 492,299 $ 6,952,046
=========== =========== ========= ===========
G.T. GLOBAL: VARIABLE EUROPE FUND
Shares sold........................................................ 1,354,348 $21,064,089 482,062 $ 6,793,906
Shares issued in connection with reinvestment of distributions..... 927 14,252 -- --
----------- ----------- --------- -----------
1,355,275 21,078,341 482,062 6,793,906
Shares repurchased................................................. (721,304) (11,126,870) (131,150) (1,838,698)
----------- ----------- --------- -----------
Net increase....................................................... 633,971 $ 9,951,471 350,912 $ 4,955,208
=========== =========== ========= ===========
G.T. GLOBAL: MONEY MARKET FUND
Shares sold........................................................ 75,553,997 $75,553,997 8,864,007 $ 8,864,007
Shares issued in connection with reinvestment of distributions..... 321,887 321,887 20,052 20,052
----------- ----------- --------- -----------
75,875,884 75,875,884 8,884,059 8,884,059
Shares repurchased................................................. (60,177,597) (60,177,597) (5,133,624) (5,133,624)
----------- ----------- --------- -----------
Net increase....................................................... 15,698,287 $15,698,287 3,750,435 $ 3,750,435
=========== =========== ========= ===========
<CAPTION>
JULY 5, 1994
(COMMENCEMENT OF
OPERATIONS)
TO DECEMBER 31, 1994
------------------------
G.T. GLOBAL: VARIABLE INTERNATIONAL FUND SHARES AMOUNT
---------- -----------
<S> <C> <C>
Shares sold........................................................ 371,362 $ 4,416,954
Shares issued in connection with reinvestment of distributions..... 885 9,954
---------- -----------
372,247 $ 4,426,908
Shares repurchased................................................. (174,075) (2,061,498)
---------- -----------
Net increase....................................................... 198,172 $ 2,365,410
========== ===========
</TABLE>
5. EXPENSE REDUCTIONS
G.T. Capital has directed certain portfolio trades to brokers who paid a portion
of the Funds' expenses. For the year ended December 31, 1994, the Funds'
expenses were reduced by $13,671 under these arrangements.
F-59
<PAGE> 144
- --------------------------------------------------------------------------------
------------------------------------------------
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
REPORT OF
INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholder and Board of Trustees of G.T. Global Variable Investment
Trust:
We have audited the accompanying statement of assets and liabilities of G.T.
Global Variable Investment Trust (comprising, respectively, G.T. Global:
Variable Natural Resources Fund and G.T. Global: Variable Infrastructure Fund,
as of January 20, 1995. This financial statement is the responsibility of the
Funds' management. Our responsibility is to express an opinion on this financial
statement based on our audit.
We conducted our audit 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 statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. Our procedures included
confirmation of cash held by the custodian as of January 20, 1995. 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 audit provides a reasonable basis for our
opinion.
In our opinion, the statement of assets and liabilities referred to above
presents fairly, in all material respects, the financial position of each of the
aforementioned Funds as of January 20, 1995, in conformity with generally
accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
January 23, 1995
- --------------------------------------------------------------------------------
---------------------
F-60
<PAGE> 145
- --------------------------------------------------------------------------------
------------------------------------------------
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
STATEMENT OF ASSETS
AND LIABILITIES
January 20, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
G.T. GLOBAL:
------------------------------------
VARIABLE VARIABLE
NATURAL RESOURCES INFRASTRUCTURE
FUND FUND
----------------- --------------
<S> <C> <C>
ASSETS
Cash.......................................................... $ 100,000 $100,000
----------------- --------------
100,000 100,000
----------------- --------------
LIABILITIES
NET ASSETS, applicable to shares of beneficial interest, no par
value, issued and outstanding (Note 1)........................ $ 100,000 $100,000
============== ===========
SHARES OUTSTANDING.............................................. 8,333 8,333
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE.................. $ 12.00 $ 12.00
============== ===========
</TABLE>
The accompanying notes are an integral part of this financial statement.
- --------------------------------------------------------------------------------
---------------------
F-61
<PAGE> 146
- --------------------------------------------------------------------------------
------------------------------------------------
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
NOTES TO
STATEMENT OF ASSETS AND
LIABILITIES
January 20, 1995
- --------------------------------------------------------------------------------
NOTE 1.
The G.T. Global Variable Investment Trust ("Company") operates as a series
company comprised of nine separate funds: G.T. Global: Variable Latin American
Fund, G.T. Global: Variable Emerging Markets Fund, G.T. Global: Variable
Telecommunications Fund, G.T. Global: Variable Natural Resources Fund, G.T.
Global: Variable Infrastructure Fund, G.T. Global: Variable Growth & Income
Fund, G.T. Global: Variable Strategic Income Fund, G.T. Global: Variable Global
Government Income Fund and G.T. Global: Variable U.S. Government Income Fund
(each a "Fund," collectively the "Funds"). The Company is organized as a
Massachusetts business trust and is registered under the Investment Company Act
of 1940, as amended ("1940 Act"). G.T. Global: Variable U.S. Government Income
Fund, G.T. Global: Variable Emerging Markets Fund, G.T. Global: Variable
Telecommunications Fund, G.T. Global: Variable Natural Resources Fund, G.T.
Global: Variable Infrastructure Fund, is classified as a diversified open-end
management investment company. G.T. Global: Variable Latin America Fund, G.T.
Global: Variable Growth & Income Fund, G.T. Global: Variable Strategic Income
Fund and G.T. Global: Variable Global Government Income Fund are each classified
as a "non-diversified," open-end management investment company. The Company has
eight series of shares of beneficial interest outstanding, and each series
correspond to a Fund.
The G.T. Global: Variable Natural Resources Fund and G.T. Global: Variable
Infrastructure Fund have had no operations to date other than those relating to
the registration of its shares, and the sale and issuance of all of the
outstanding shares to G.T. Capital Management, Inc. ("G.T. Capital"), the Funds'
investment manager and administrator.
NOTE 2.
G.T. Capital serves as the investment manager and administrator of the Funds.
G.T. Global: Variable Latin America Fund, G.T. Global: Variable Emerging Markets
Fund, G.T. Global: Variable Telecommunications Fund, G.T. Global: Variable
Natural Resources Fund, G.T. Global: Variable Infrastructure Fund, and G.T.
Global: Variable Growth & Income Fund each pay G.T. Capital an investment
management and administration fee, calculated daily and paid monthly, at the
annualized rate of 1.00% of the Fund's average daily net assets. G.T. Global:
Variable Strategic Income Fund, G.T. Global: Variable Global Government Income
Fund and G.T. Global: U.S. Government Income Fund, each pay G.T. Capital an
investment management and administration fee, calculated daily and paid monthly,
at an annualized rate of 0.75% of the Fund's average daily net assets. G.T.
Global Financial Services, Inc. ("G.T. Global"), an affiliate of G.T. Capital,
is the Funds' distributor, G.T. Global Investor Services, Inc., an affiliate of
G.T. Capital and G.T. Global, is the Funds' transfer agent.
- --------------------------------------------------------------------------------
---------------------
F-62
<PAGE> 147
- --------------------------------------------------------------------------------
------------------------------------------------
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
G.T. GLOBAL: VARIABLE INFRASTRUCTURE FUND
PORTFOLIO OF INVESTMENTS
June 30, 1995 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
% of Net
Equity Investments Country Shares Market Value Assets*
- ------------------------------------------------------------ -------- --------- ------------ --------
<S> <C> <C> <C> <C>
Energy (25.0%)
- ----------------
ASEA AB "B" Free.......................................... SWDN 200 $ 17,002 3.0
Electrical & Gas Utilities
Korea Electric Power Corp. - ADR.......................... KOR 700 15,838 2.8
Electrical & Gas Utilities
Chilegener S.A. - ADR..................................... CHLE 500 15,812 2.7
Electrical & Gas Utilities
Empresa Nacional de Electridad S.A.- ADR.................. SPN 300 14,775 2.6
Electrical & Gas Utilities
Edison S.p.A.............................................. ITLY 3,200 14,285 2.5
Electrical & Gas Utilities
EVN Energie-Versorgung Niederoesterreich AG............... ASTRI 100 13,977 2.4
Electrical & Gas Utilities
Capex S.A................................................. ARG 1,700 13,179 2.3
Electrical & Gas Utilities
Companhia Energetica de Minas Gerais (Cemig) - ADR........ BRZL 589 11,633 2.0
Electrical & Gas Utilities
Enron Global Power & Pipelines L.L.C...................... US 400 9,500 1.7
Electrical & Gas Utilities
MetroGas S.A. - ADR....................................... ARG 700 6,038 1.0
Electrical & Gas Utilities
Compania Boliviana de Energia Electrica................... BOL 200 5,950 1.0
Electrical & Gas Utilities
Consolidated Electric Power Asia.......................... HK 2,000 4,640 0.8
Electrical & Gas Utilities
Powergen PLC - ADR........................................ UK 100 1,213 0.2
Electrical & Gas Utilities
------------
143,842
------------
Capital Goods (22.5%)
- -----------------------
Nokia AB Preferred - ADR.................................. FIN 400 23,850 4.1
Telecom Equipment
Mannesmann AG............................................. GER 60 18,336 3.2
Machinery & Engineering
Allgon AB "B" Free........................................ SWDN 700 16,658 2.9
Telecom Equipment
Caterpillar, Inc.......................................... US 200 12,850 2.2
Machinery & Engineering
United Engineers Ltd...................................... MAL 2,000 12,718 2.2
Construction
BroadBand Technologies, Inc............................... US 500 12,375 2.2
Telecom Equipment
Acme-Cleveland Corp....................................... US 500 11,812 2.1
Machine Tools
Fluor Corp................................................ US 200 10,400 1.8
Construction
Hopewell Holdings......................................... HK 5,000 4,233 0.7
Construction
E.R.G. Ltd................................................ AUSL 3,000 3,071 0.5
Electrical Plant/Equipment
AES China Generating Co., Ltd. "A"........................ HK 200 2,050 0.4
Electrical Plant/Equipment
Harbin Power Equipment Co., Ltd. - 144A................... CHNA 4,000 1,279 0.2
Electrical Plant/Equipment
------------
129,632
------------
Services (22.3%)
- -----------------
WorldCom, Inc............................................. US 600 16,200 2.8
Telephone - Long Distance
DDI Corp.................................................. JPN 2 16,049 2.8
Wireless Communications
Telefonica de Espana - ADR................................ SPN 400 15,500 2.7
Telephone Networks
PT Indonesia Satellite (Indosat) - ADR.................... INDO 400 15,300 2.7
Telephone - Long Distance
Philippine Long Distance Telephone Co. - ADR.............. PHIL 200 14,350 2.5
Telephone - Long Distance
Stet Di Risp.............................................. ITLY 5,800 12,893 2.2
Telephone Networks
RailTex, Inc.............................................. US 500 11,875 2.1
Transportation - Road & Rail
ABC Rail Products Corp.................................... US 500 11,500 2.0
Transportation - Road & Rail
International Container Terminal Services (ICTS).......... PHIL 7,025 4,892 0.9
Transportation - Shipping
Pakistan Telecommunications Co., Ltd. - 144A GDR.......... PAK 40 3,980 0.7
Telephone Networks
Philippino Telephone - New................................ PHIL 4,100 3,217 0.6
Wireless Communications
</TABLE>
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
---------------------
F-63
<PAGE> 148
- --------------------------------------------------------------------------------
------------------------------------------------
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
G.T. GLOBAL: VARIABLE INFRASTRUCTURE FUND
<TABLE>
<CAPTION>
% of Net
Equity Investments Country Shares Market Value Assets*
- ------------------------------------------------------------ -------- --------- ------------ --------
<S> <C> <C> <C> <C>
PST Vans, Inc............................................. US 300 $ 1,894 0.3
Transportation - Road & Rail
------------
127,650
------------
Materials/Basic Industries (16.6%)
- ------------------------------------
Giant Cement Holding, Inc................................. US 1,300 15,925 2.8
Cement
Lone Star Industries, Inc................................. US 600 12,900 2.2
Cement
Siam Cement Co., Ltd. - Foreign........................... THAI 200 12,774 2.2
Cement
PT Bakrie and Brothers.................................... INDO 4,000 12,219 2.1
Building Materials & Components
Grupo Simec, S.A. de C.V. - ADR........................... MEX 1,100 10,863 1.9
Metals - Steel
La Cementos Nacional, C.A. - 144A GDR..................... ECDR 40 9,200 1.6
Cement
Hylsamex, S.A. de C.V. - 144A ADR......................... MEX 500 9,000 1.6
Metals - Steel
Cementos Paz del Rio S.A. - 144A ADR...................... COL 400 6,600 1.1
Cement
PT Semen Cibinong - Foreign............................... INDO 2,000 6,289 1.1
Cement
------------
95,770
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
---------------------
F-64
<PAGE> 149
- --------------------------------------------------------------------------------
------------------------------------------------
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
G.T. GLOBAL: VARIABLE INFRASTRUCTURE FUND
<TABLE>
<CAPTION>
% of Net
Equity Investments Country Shares Market Value Assets*
- ------------------------------------------------------------ -------- --------- ------------ --------
<S> <C> <C> <C> <C>
Technology (6.4%)
- --------------------
Three-Five Systems, Inc................................... US 600 20,625 3.6
Telecom Technology
DSP Communications, Inc................................... US 700 14,525 2.5
Telecom Technology
PriCellular Corp. "A"..................................... US 200 1,850 0.3
Wireless Communications
------------
37,000
------------
Multi-Industry/Miscellaneous (2.0%)
- --------------------------------------
General Electric Co....................................... US 200 $ 11,275 2.0
------------
Conglomerate
------------ --------
Total Equity Investments (cost $518,496).................... 545,169 94.8
------------ --------
Short-Term Investments
- -------------------------
Repurchase Agreements (2.1%)
- ---------------------------------
United States (2.1%)
----------------------
Dated June 30, 1995 with State Street Bank and Trust
Company, due July 3, 1995, for an effective yield of
6.10% collateralized by $10,000 United States Treasury
Bond, 9.875% due 11/15/15 (market value of collateral is
$13,610, including accrued interest). (cost $12,002).... 12,002 2.1
------------ --------
Total Investments (cost $530,498)........................... 557,171 96.9
Other Assets and Liabilities................................ 18,062 3.1
------------ --------
Net Assets.................................................. $575,233 100.0
=========== ========
</TABLE>
- ------------------
<TABLE>
<C> <S>
* Percentages indicated are based on net assets of $575,233.
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.
For Federal income tax purposes, cost is $530,498 and appreciation (depreciation) is as follows:
Unrealized appreciation: $ 36,864
Unrealized depreciation: (10,191)
--------
Net unrealized appreciation: $ 26,673
========
</TABLE>
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
---------------------
F-65
<PAGE> 150
- --------------------------------------------------------------------------------
------------------------------------------------
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
G.T. GLOBAL: VARIABLE INFRASTRUCTURE FUND
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at June 30, 1995, was concentrated in the
following countries:
<TABLE>
<CAPTION>
Percentage of Net Assets*
-----------------------------
Short-Term
Country(Country Code/Currency Code) Equity & Other Total
------------------------------------------------------- ------ ---------- -----
<S> <C> <C> <C>
Argentina (ARG/ARS).................................... 3.3 3.3
Australia (AUSL/AUD)................................... 0.5 0.5
Austria (ASTRI/ATS).................................... 2.4 2.4
Bolivia (BOL/BOL)...................................... 1.0 1.0
Brazil (BRZL/BRL)...................................... 2.0 2.0
Chile (CHLE/CLP)....................................... 2.7 2.7
China (CHNA/RMB)....................................... 0.2 0.2
Colombia (COL/COP)..................................... 1.1 1.1
Ecuador (ECDR/ECS)..................................... 1.6 1.6
Finland (FIN/FIM)...................................... 4.1 4.1
Germany (GER/DEM)...................................... 3.2 3.2
Hong Kong (HK/HKD)..................................... 1.9 1.9
Indonesia (INDO/IDR)................................... 5.9 5.9
Italy (ITLY/ITL)....................................... 4.7 4.7
Japan (JPN/JPY)........................................ 2.8 2.8
Korea (KOR/KRW)........................................ 2.8 2.8
Malaysia (MAL/MYR)..................................... 2.2 2.2
Mexico (MEX/MXN)....................................... 3.5 3.5
Pakistan (PAK/PKR)..................................... 0.7 0.7
Philippines (PHIL/PHP)................................. 4.0 4.0
Spain (SPN/ESP)........................................ 5.3 5.3
Sweden (SWDN/SEK)...................................... 5.9 5.9
Thailand (THAI/THB).................................... 2.2 2.2
United Kingdom (UK/GBP)................................ 0.2 0.2
United States (US/USD)................................. 30.6 5.2 35.8
------ --- -----
Total.................................................. 94.8 5.2 100.0
===== ========= =====
</TABLE>
- ------------------
* Percentages indicated are based on net assets of $575,233.
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
---------------------
F-66
<PAGE> 151
- --------------------------------------------------------------------------------
------------------------------------------------
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
G.T. GLOBAL: VARIABLE NATURAL RESOURCES FUND
PORTFOLIO OF INVESTMENTS
June 30, 1995 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
% of Net
Equity Investments Country Shares Market Value Assets*
- ------------------------------------------------------------ -------- --------- ------------ --------
<S> <C> <C> <C> <C>
Materials/Basic Industries (48.0%)
- ------------------------------------
Agrium, Inc............................................... CAN 650 $ 22,008 3.8
Chemicals
Dow Chemical Co........................................... US 300 21,563 3.7
Chemicals
J&L Specialty Steel, Inc.................................. US 1,100 21,175 3.7
Metals - Steel
Cabot Corp................................................ US 400 21,100 3.7
Chemicals
Cytec Industries, Inc..................................... US 500 20,438 3.5
Chemicals
Rainy River Forest Products, Inc.......................... CAN 2,000 20,208 3.5
Forest Products
Mississippi Chemical Corp................................. US 1,000 19,938 3.5
Chemicals
Cambior, Inc.............................................. CAN 1,600 19,808 3.5
Gold
St Laurent Paperboard, Inc................................ CAN 1,300 19,526 3.4
Forest Products
Easco, Inc................................................ US 1,500 18,375 3.2
Misc. Materials & Components
Asarco, Inc............................................... US 430 13,115 2.3
Metals - Non-Ferrous
Reynolds Metals Co........................................ US 250 12,938 2.3
Metals - Non-Ferrous
Mo Och Domsjoe AB "B" Free................................ SWDN 200 11,541 2.0
Forest Products
Kimmene Oy................................................ FIN 300 9,346 1.6
Forest Products
Anglovaal Ltd. "N"........................................ SAFR 260 8,940 1.6
Metals - Non-Ferrous
Broken Hill Proprietary Co., Ltd.......................... AUSL 700 8,620 1.5
Misc. Materials & Components
Acacia Resources Ltd...................................... AUSL 4,000 7,053 1.2
Gold
------------
275,692
------------
Energy (35.5%)
- ----------------
Total Compagnie Francaise des Petroles S.A. - ADR......... FR 1,200 36,300 6.3
Oil
Repsol S.A. - ADR......................................... SPN 1,100 34,788 6.0
Oil
Shell Transport & Trading Co., PLC:....................... UK -- -- 4.0
Oil
ADR..................................................... -- 200 14,475 --
Common.................................................. -- 700 8,366 --
British Petroleum Co., PLC - ADR.......................... UK 250 21,406 3.7
Oil
Saga Petroleum AS "A"..................................... NOR 1,400 19,888 3.4
Oil
Anadarko Petroleum Corp................................... US 460 19,838 3.4
Oil
</TABLE>
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
---------------------
F-67
<PAGE> 152
- --------------------------------------------------------------------------------
------------------------------------------------
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
G.T. GLOBAL: VARIABLE NATURAL RESOURCES FUND
<TABLE>
<CAPTION>
% of Net
Equity Investments Country Shares Market Value Assets*
- ------------------------------------------------------------ -------- --------- ------------ --------
<S> <C> <C> <C> <C>
Mobil Corp................................................ US 200 $ 19,200 3.3
Oil
Norsk Hydro AS - ADR...................................... NOR 450 18,788 3.3
Oil
Northstar Energy Corp..................................... CAN 1,500 12,152 2.1
Gas Production & Distribution
------------
205,201
------------
Consumer Non-Durables (6.2%)
- ---------------------------------
IBP, Inc.................................................. US 500 21,750 3.8
Food
Pioneer Hi-Bred International, Inc........................ US 335 14,070 2.4
Food
------------
35,820
------------
Capital Goods (3.6%)
- ----------------------
Harnischfeger Industries, Inc............................. US 600 20,775 3.6
Machinery & Engineering
------------ --------
Total Equity Investments (cost $519,564).................... 537,488 93.3
------------ --------
Principal
Short-Term Investments Currency Amount
- ---------------------- -------- --------
Repurchase Agreement (21.4%)
- ---------------------------------
United States (21.4%)
-----------------------
Dated June 30, 1995 with State Street Bank and Trust
Company, due July 3, 1995, for an effective yield of
6.10% collateralized by $95,000 United States Treasury
Bond, 9.675% due 11/15/15 (market value of collateral
is $129,300, including accrued interest).
(cost $123,021)....................................... 123,021 21.4
Commercial Paper - Discounted (20.7%)
- ------------------------------------------
United States (20.7%)
-----------------------
Federal National Mortgage Association, effective yield
6.01% due 8/7/95 (cost $119,283)...................... USD 120,000 119,283 20.7
Treasury Bills (1.4%)
- ----------------------
Mexico (1.4%)
---------------
Mexican Tesobonos, effective yield 25.02% due 7/27/95
(cost $7,858)......................................... USD 8,000 7,858 1.4
------------ --------
Total Short-Term Investments (cost $250,162)................ 250,162 43.5
------------ --------
Total Investments (cost $769,726)........................... 787,650 136.8
Other Assets and Liabilities................................ (211,941) (36.8)
------------ --------
Net Assets.................................................. $ 575,709 100.0
=========== ========
</TABLE>
- ------------------
<TABLE>
<C> <S>
* Percentages indicated are based on net assets of $575,709.
Non-income producing security.
U.S. currency denominated.
For Federal income tax purposes, cost is $769,726 and appreciation (depreciation) is as follows:
Unrealized appreciation: $25,588
Unrealized depreciation: (7,664)
-------
Net unrealized appreciation: $17,924
=======
</TABLE>
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
---------------------
F-68
<PAGE> 153
- --------------------------------------------------------------------------------
------------------------------------------------
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
G.T. GLOBAL: VARIABLE NATURAL RESOURCES FUND
The Fund's Portfolio of Investments at June 30, 1995, was concentrated in the
following countries:
<TABLE>
<CAPTION>
Percentage of Net Assets*
---------------------------------------
Country(Country Code/Currency Code) Equity Short-Term Other Total
---------------------------------------------- ------ ----------- ----- -----
<S> <C> <C> <C> <C>
Australia (AUSL/AUD).......................... 2.7 2.7
Canada (CAN/CAD).............................. 16.3 16.3
Finland (FIN/FIM)............................. 1.6 1.6
France (FR/FRF)............................... 6.3 6.3
Mexico (MEX/MXN).............................. 1.4 1.4
Norway (NOR/NOK).............................. 6.7 6.7
South Africa (SAFR/ZAR)....................... 1.6 1.6
Spain (SPN/ESP)............................... 6.0 6.0
Sweden (SWDN/SEK)............................. 2.0 2.0
United Kingdom (UK/GBP)....................... 7.7 7.7
United States (US/USD)........................ 42.4 42.1 (36.8) 47.7
----- ----- -----
Total......................................... 93.3 43.5 (36.8) 100.0
===== ========== ===== =====
</TABLE>
- ------------------
* Percentages indicated are based on net assets of $575,709.
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
---------------------
F-69
<PAGE> 154
- --------------------------------------------------------------------------------
------------------------------------------------
G.T. GLOBAL: VARIABLE INVESTMENT FUND
G.T. GLOBAL: VARIABLE INFRASTRUCTURE FUND
STATEMENT OF ASSETS
AND LIABILITIES
June 30, 1995 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Assets:
Investments in securities (Note 1):
At identified cost................................................................ $518,496
=========
At value.......................................................................... $545,169
Repurchase agreement, at value and cost (Note 1).................................. 12,002
U.S. and foreign currencies....................................................... 189
Receivable for securities sold.................................................... 12,797
Receivable for Fund shares sold................................................... 6,034
Dividends and dividend tax reclaims receivable.................................... 1,037
Reimbursement from G.T. Capital Management, Inc. (Note 2)......................... 33,406
--------
Total assets...................................................................... 610,634
--------
Liabilities:
Payable for securities purchased.................................................. 3,998
Payable for investment management and administration fees (Note 2)................ 1,373
Payable for Trustees' fees and expenses (Note 2).................................. 1,167
Other accrued expenses............................................................ 28,863
--------
Total liabilities................................................................. 35,401
--------
Net assets.......................................................................... $575,233
=========
Net assets consist of:
Paid in capital (Note 4).......................................................... $535,922
Undistributed net investment income (loss)........................................ 3,137
Accumulated net realized gain (loss) on investments and foreign currency
transactions................................................................... 9,498
Net unrealized appreciation (depreciation) on translation of assets and
liabilities in foreign currencies.............................................. 3
Net unrealized appreciation (depreciation) of investments......................... 26,673
--------
Total -- representing net assets applicable to capital shares outstanding......... $575,233
=========
Shares outstanding.................................................................. 43,488
=========
Net asset value per share........................................................... $ 13.23
=========
</TABLE>
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
---------------------
F-70
<PAGE> 155
- --------------------------------------------------------------------------------
------------------------------------------------
G.T. GLOBAL: VARIABLE INVESTMENT FUND
G.T. GLOBAL: VARIABLE INFRASTRUCTURE FUND
STATEMENT OF OPERATIONS
January 31, 1995 (commencement of operations) to June 30, 1995 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income (Note 1):
Dividend income......................................................... $ 2,078
Interest income......................................................... 2,776
--------
Total investment income*................................................ 4,854
--------
Expenses:
Investment management and administration fees (Note 2).................. 1,373
Audit fees.............................................................. 7,500
Custodian and fund accounting fees...................................... 6,000
Trustees' fees and expenses (Note 2).................................... 1,500
Legal fees.............................................................. 2,250
Printing and postage expenses........................................... 15,000
Registration fees....................................................... 1,500
--------
Total expenses.......................................................... 35,123
--------
Expenses reimbursed by G.T. Capital Management, Inc. (Note 2)........ (33,406)
--------
Total net expenses after reimbursement and reductions................... 1,717
--------
Net investment income (loss).............................................. 3,137
--------
Net realized and unrealized gain (loss) on investments and foreign
currencies (Note 1):
Net realized gain (loss) on investments................................. $ 9,474
Net realized gain (loss) on foreign currency transactions............... 24
--------
Net realized gain (loss) during the period........................... 9,498
Net change in unrealized appreciation (depreciation) on translation of
assets and liabilities in foreign currencies......................... 3
Net change in unrealized appreciation (depreciation) of investments..... 26,673
--------
Net unrealized appreciation (depreciation) during the period......... 26,676
--------
Net realized and unrealized gain (loss) on investments and foreign
currencies.............................................................. 36,174
--------
Net increase (decrease) in net assets resulting from operations........... $ 39,311
=========
</TABLE>
- ------------------
* Net of foreign withholding taxes of $261
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
---------------------
F-71
<PAGE> 156
- --------------------------------------------------------------------------------
------------------------------------------------
G.T. GLOBAL: VARIABLE INVESTMENT FUND
G.T. GLOBAL: VARIABLE INFRASTRUCTURE FUND
STATEMENT OF CHANGES
IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
JANUARY 31, 1995
(COMMENCEMENT OF OPERATIONS)
TO JUNE 30, 1995 (UNAUDITED)
----------------------------
<S> <C>
Increase (Decrease) in net assets
Operations:
Net investment income............................................. $ 3,137
Net realized gain on investments and foreign currency
transactions................................................... 9,498
Net change in unrealized appreciation on translation of assets and
liabilities in foreign currencies.............................. 3
Net change in unrealized appreciation of investments.............. 26,673
-------------
Net increase in net assets resulting from operations.............. 39,311
Capital share transactions (Note 4):
Increase from capital shares sold and reinvested.................. 686,461
Decrease from capital shares repurchased.......................... (250,539)
-------------
Net increase from capital share transactions...................... 435,922
-------------
Total increase (decrease) in net assets............................. 475,233
Net assets:
Beginning of period............................................... 100,000
-------------
End of period..................................................... $ 575,233
========================
</TABLE>
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
---------------------
F-72
<PAGE> 157
- --------------------------------------------------------------------------------
------------------------------------------------
G.T. GLOBAL: VARIABLE INVESTMENT FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
G.T. GLOBAL:
----------------------------
VARIABLE INFRASTRUCTURE FUND
----------------------------
JANUARY 31, 1995
(COMMENCEMENT OF OPERATIONS)
TO JUNE 30, 1995 (UNAUDITED)
----------------------------
<S> <C>
Per Share Operating Performance:
Net asset value, beginning of period................................ $ 12.00
========================
Income from investment operations:
Net investment income (loss)...................................... 0.07(a)
Net realized and unrealized gain (loss) on investments............ 1.16
-----------
Net increase (decrease) from investment operations............. 1.23
-----------
Net asset value, end of period...................................... $ 13.23
========================
Total investment return+ (b)........................................ 10.25%
========================
Ratios and supplemental data:
Net assets, end of period (in 000's)................................ $ 575
Ratio of net investment income (loss) to average net assets:
With reimbursement by G.T. Capital and expense reductions
(Notes 2 & 5)++................................................ 2.28%
Without reimbursement by G.T. Capital and expense reductions++.... (22.04)%
Ratio of expenses to average net assets:
With reimbursement by G.T. Capital and expense reductions
(Notes 2 & 5)++................................................ 1.25%
Without reimbursement by G.T. Capital and expense reductions++.... 25.57%
Portfolio turnover rate++........................................... 90%
</TABLE>
- ------------------
<TABLE>
<C> <S>
+ Not annualized.
++ Annualized.
(a) Includes reimbursement by G.T. Capital Management, Inc. of Fund operating expenses of
$0.77.
(b) Total investment return does not include sales charges.
</TABLE>
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
---------------------
F-73
<PAGE> 158
- --------------------------------------------------------------------------------
------------------------------------------------
G.T. GLOBAL: VARIABLE INVESTMENT FUND
G.T. GLOBAL: VARIABLE NATURAL RESOURCES FUND
STATEMENT OF ASSETS
AND LIABILITIES
June 30, 1995 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Assets:
Investments in securities (Note 1):
At identified cost................................................................ $646,705
=========
At value.......................................................................... $664,629
Repurchase agreement, at value and cost (Note 1).................................. 123,021
U.S. and foreign currencies....................................................... 155
Receivable for Fund shares sold................................................... 300
Dividends and dividend tax reclaims receivable.................................... 877
Reimbursement from G.T. Capital Management, Inc. (Note 2)......................... 31,469
Other receivables................................................................. 37
--------
Total assets...................................................................... 820,488
--------
Liabilities:
Payable for securities purchased.................................................. 214,204
Payable for investment management and administration fees (Note 2)................ 945
Payable for Trustees' fees and expenses (Note 2).................................. 1,167
Other accrued expenses............................................................ 28,463
--------
Total liabilities................................................................. 244,779
--------
Net assets.......................................................................... $575,709
=========
Net assets consist of:
Paid in capital (Note 4).......................................................... $550,107
Undistributed net investment income (loss)........................................ 3,425
Accumulated net realized gain (loss) on investments and foreign currency
transactions................................................................... 4,306
Net unrealized appreciation (depreciation) on translation of assets and
liabilities in foreign currencies.............................................. (53)
Net unrealized appreciation (depreciation) of investments......................... 17,924
--------
Total -- representing net assets applicable to capital shares outstanding......... $575,709
=========
Shares outstanding.................................................................. 43,365
=========
Net asset value per share........................................................... $ 13.28
=========
</TABLE>
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
---------------------
F-74
<PAGE> 159
- --------------------------------------------------------------------------------
------------------------------------------------
G.T. GLOBAL: VARIABLE INVESTMENT FUND
G.T. GLOBAL: VARIABLE NATURAL RESOURCES FUND
STATEMENT OF OPERATIONS
January 31, 1995 (commencement of operations) to June 30, 1995 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment income (Note 1):
Dividend income......................................................... $ 1,893
Interest income......................................................... 2,667
--------
Total investment income*................................................ 4,560
--------
Expenses:
Investment management and administration fees (Note 2).................. 945
Audit fees.............................................................. 7,500
Custodian and fund accounting fees (Note 1)............................. 4,000
Trustees' fees and expenses (Note 2).................................... 1,500
Legal fees.............................................................. 2,250
Printing and postage expenses........................................... 15,000
Registration fees....................................................... 1,500
--------
Total expenses.......................................................... 32,695
--------
Expenses reimbursed by G.T. Capital Management, Inc. (Note 2)........ (31,469)
--------
Other expense reductions (Notes 1 & 5)............................... (91)
------- --------
Total net expenses after reimbursement and reductions................... 1,135
--------
Net investment income (loss).............................................. 3,425
--------
Net realized and unrealized gain (loss) on investments and foreign
currencies (Note 1):
Net realized gain (loss) on investments................................. $ 4,014
Net realized gain (loss) on foreign currency transactions............... 292
-------
Net realized gain (loss) during the period........................... 4,306
Net change in unrealized appreciation (depreciation) on translation of
assets and liabilities in foreign currencies......................... (53)
Net change in unrealized appreciation (depreciation) of investments..... 17,924
-------
Net unrealized appreciation (depreciation) during the period......... 17,871
--------
Net realized and unrealized gain (loss) on investments and foreign
currencies.............................................................. 22,177
--------
Net increase (decrease) in net assets resulting from operations........... $ 25,602
=========
</TABLE>
- ------------------
* Net of foreign withholding taxes of $200
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
---------------------
F-75
<PAGE> 160
- --------------------------------------------------------------------------------
------------------------------------------------
G.T. GLOBAL: VARIABLE INVESTMENT FUND
G.T. GLOBAL: VARIABLE NATURAL RESOURCES FUND
STATEMENT OF CHANGES
IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
JANUARY 31, 1995
(COMMENCEMENT OF OPERATIONS)
TO JUNE 30, 1995 (UNAUDITED)
----------------------------
<S> <C>
Increase (Decrease) in net assets
Operations:
Net investment income (loss)...................................... $ 3,425
Net realized gain (loss) on investments and foreign currency
transactions................................................... 4,306
Net change in unrealized appreciation (depreciation) on
translation of assets and liabilities in foreign currencies.... (53)
Net change in unrealized appreciation (depreciation) of
investments.................................................... 17,924
---------------
Net increase (decrease) in net assets resulting from operations... 25,602
Capital share transactions (Note 4):
Increase from capital shares sold................................. 1,167,198
Decrease from capital shares repurchased.......................... (717,091)
---------------
Net decrease from capital share transactions...................... 450,107
---------------
Total increase (decrease) in net assets............................. 475,709
Net assets:
Beginning of period............................................... 100,000
---------------
End of period..................................................... $ 575,709
========================
</TABLE>
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
---------------------
F-76
<PAGE> 161
- --------------------------------------------------------------------------------
------------------------------------------------
G.T. GLOBAL: VARIABLE INVESTMENT FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout each period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
G.T. GLOBAL:
----------------------------
VARIABLE NATURAL
RESOURCES FUND
----------------------------
JANUARY 31, 1995
(COMMENCEMENT OF OPERATIONS)
TO JUNE 30, 1995 (UNAUDITED)
----------------------------
<S> <C>
Per Share Operating Performance:
Net asset value, beginning of period................................ $ 12.00
Income from investment operations:
Net investment income (loss)...................................... 0.08(a)
Net realized and unrealized gain (loss) on investments............ 1.20
-----------
Net increase (decrease) from investment operations................ 1.28
-----------
Net asset value, end of period...................................... $ 13.28
========================
Total investment return+(b)......................................... 10.67%
========================
Ratios and supplemental data:
Net assets, end of period (in 000's)................................ $ 576
Ratio of net investment income (loss) to average net assets:
With reimbursement by G.T. Capital and expense reductions
(Notes 2 & 5)++................................................ 3.51%
Without reimbursement by G.T. Capital and expense reductions++.... (28.83)%
Ratio of expenses to average net assets:
With reimbursement by G.T. Capital and expense reductions
(Notes 2 & 5)++................................................ 1.16%
Without reimbursement by G.T. Capital and expense reductions++.... 33.50%
Portfolio turnover rate++........................................... 195%
</TABLE>
- ------------------
<TABLE>
<C> <S>
+ Not annualized.
++ Annualized.
(a) Includes reimbursement by G.T. Capital Management, Inc. of Fund operating expenses of
$0.73.
(b) Total investment return does not include sales charges.
</TABLE>
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
---------------------
F-77
<PAGE> 162
- --------------------------------------------------------------------------------
------------------------------------------------
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
NOTES TO
FINANCIAL STATEMENTS
JUNE 30, 1995 (UNAUDITED)
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
G.T. Global Variable Investment Series and G.T. Global Variable Investment Trust
("Companies") were organized as Massachusetts business trusts on May 26, 1992
and September 17, 1992, respectively. The Companies are registered under the
Investment Company Act of 1940, as amended ("1940 Act") as open-end management
investment companies. The G.T. Global Variable Investment Series operates as a
series company currently issuing five classes of shares of beneficial interest:
G.T. Global: Variable New Pacific Fund (formerly G.T. Global: Variable Pacific
Fund), G.T. Global: Variable Europe Fund, G.T. Global: Variable America Fund,
G.T. Global: Variable International Fund and G.T. Global: Money Market Fund.
G.T. Global Variable Investment Trust operates as a series company currently
issuing nine classes of shares of beneficial interest: G.T. Global: Variable
Latin America Fund, G.T. Global: Variable Growth & Income Fund, G.T. Global:
Variable Strategic Income Fund, G.T. Global: Variable Global Government Income
Fund, G.T. Global: Variable U.S. Government Income Fund, G.T. Global: Variable
Emerging Markets Fund, G.T. Global: Variable Telecommunications Fund, G.T.
Global: Variable Infrastructure Fund, and G.T. Global: Variable Natural
Resources Fund. (The classes of shares of beneficial interest for the two
companies are referred to herein collectively as the "Funds.") Each of the Funds
is classified as a diversified management investment company; except for G.T.
Global: Variable Latin America Fund, G.T. Global: Variable Growth & Income Fund,
G.T. Global: Variable Strategic Income Fund and G.T. Global: Variable Global
Government Income Fund, which are each registered as a non-diversified
management investment company under the 1940 Act.
The following is a summary of significant accounting policies consistently
followed by the Funds in the preparation of the financial statements. The
policies are in conformity with generally accepted accounting principles.
(A) PORTFOLIO VALUATION
The Funds calculate the net asset value of and complete orders to purchase,
exchange or repurchase Fund shares on each business day, with the exception of
those days on which the New York Stock Exchange is closed.
Equity securities are valued at the last sale price on the exchange on which
such securities are traded, or on the principal over-the-counter market in which
such securities are traded, as of the close of business on the day the
securities are being valued or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by G.T. Capital Management,
Inc. ("G.T. Capital") to be the primary market.
Fixed income investments are valued at the mean of representative quoted bid and
ask prices for such investments or, if such prices are not available, at prices
for investments of comparative maturity, quality and type; however, when G.T.
Capital 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 each of
the Companies' Board of Trustees.
Portfolio securities which are primarily traded on foreign exchanges are
generally valued at the preceding closing values of such securities on their
respective exchanges, and those values are then translated into U.S. dollars at
the current exchange rates, except that when an occurrence subsequent to the
time a value was so established is likely to have materially changed such value,
then the fair value of those securities will be determined by consideration of
other factors by or under the direction of the Companies' Board of Trustees.
- --------------------------------------------------------------------------------
---------
F-78
<PAGE> 163
- --------------------------------------------------------------------------------
------------------------------------------------
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
(B) FOREIGN CURRENCY TRANSLATION
The accounting records of the Funds are maintained in U.S. dollars. The market
values of foreign securities, currency holdings, and other assets and
liabilities are recorded in the books and records of the Funds 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 Funds do not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign exchange gains and losses arise from sales and
maturities of short-term securities, forward foreign currency contracts, sales
of foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the differences between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Funds' 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 period
end, resulting from changes in exchange rates.
(C) REPURCHASE AGREEMENTS
With respect to repurchase agreements entered into by the Funds, it is the
Funds' 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 Funds
under each agreement at its maturity. G.T. Capital is responsible for
determining that the value of these underlying securities remains at least equal
to the resale price.
(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 Funds as an unrealized gain or loss. When the
Forward Contract is closed, the Funds record a realized gain or loss equal to
the difference between the value at the time it was opened and the value at the
time it was closed. Forward Contracts involve market risk in excess of the
amounts shown in the Funds' "Statements of Assets and Liabilities." The Funds
could be exposed to risk if the counterparties are unable to meet the terms of
the contracts or if the value of the currency changes unfavorably. The Funds may
enter into Forward Contracts in connection with planned purchases or sales of
securities or to hedge against adverse fluctuations in exchange rates between
currencies.
(E) OPTION ACCOUNTING PRINCIPLES
When a Fund writes a call or put option, an amount equal to the premium received
is included in the Fund's "Statement of Assets and Liabilities" as an asset and
an equivalent liability. The amount of the liability is subsequently
marked-to-market to reflect the current market value of the option. The current
market value of an option listed on a traded exchange is valued at its last bid
price, or, in the case of an over-the-counter option, is valued at the average
of the last bid prices obtained from brokers. If an option expires on its
stipulated expiration date or if a 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. A Fund can write options only on a covered
basis, which, for a call, requires that the Fund hold the underlying securities
and, for a put, requires the Fund to set aside cash, U.S. government securities
or other liquid, high grade debt securities in an amount not less than the
exercise price or otherwise provide adequate cover at all times while the put
option is outstanding. The Funds may use options to manage their exposure to the
stock or bond markets and to fluctuations in currency values or interest rates.
The premium paid by a 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"
- --------------------------------------------------------------------------------
---------
F-79
<PAGE> 164
- --------------------------------------------------------------------------------
------------------------------------------------
G.T. GLOBAL VARIABLE INVESTMENT FUNDS
to reflect the current market value of the option. If an option which a Fund has
purchased expires on the stipulated expiration date, the Fund would realize a
loss in the amount of the cost of the option. If a Fund enters into a closing
sale transaction, the Fund would realize a gain or loss, depending on whether
proceeds from the closing sale transaction are greater or less than the cost of
the option. If a 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 a 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 a
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 Funds may use futures contracts to manage its exposure to the stock or 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 its collection, income is recorded net of all
withholding tax with any rebate recorded when received. A Fund may trade
securities on other than normal settlement terms. This may increase the risk if
the other party to the transaction fails to deliver and causes the Fund to
subsequently invest at less advantageous prices.
(H) DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders are recorded by the Fund on the ex-date. For the
Money Market Fund, dividends are declared daily and paid monthly from net
investment income. The Variable Strategic Income Fund, Variable Global
Government Income Fund and Variable U.S. Government Income Fund declare and pay
dividends from net investment income, if any, monthly. The Variable Growth &
Income Fund declares and pays dividends from net investment income, if any,
quarterly. The Variable Latin America Fund, Variable Telecommunications Fund,
Variable New Pacific Fund, Variable Europe Fund, Variable Emerging Markets Fund,
Variable International Fund, Variable America Fund, Variable Infrastructure
Fund, and Variable Natural Resources Fund declare and pay dividends from net
investment income, if any, annually. With respect to each Fund, dividends from
net realized capital gains, if any, are normally declared and paid annually.
Income and capital gain distributions are determined in accordance with Federal
income tax regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments of
income and gains on various investment securities held by the Fund and timing
differences.
(I) TAXES
It is the policy of the Funds to continue 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
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G.T. GLOBAL VARIABLE INVESTMENT FUNDS
intention of the Funds to make distributions sufficient to avoid imposition of
any excise tax under Section 4982 of the Code. Therefore, no provision has been
made for Federal taxes on income, capital gains, and unrealized appreciation of
securities held, or for excise tax on income and capital gains.
(J) DEFERRED ORGANIZATIONAL EXPENSES
Costs incurred by G.T. Global Variable Investment Series and Trust in connection
with their organization, which aggregated $125,333 and $188,000, respectively,
are being amortized on a straight-line basis for a five year period. While G.T.
Capital has advanced certain of the Companies' organizational costs incurred to
date, the Companies may reimburse G.T. Capital for the amount of these advances.
In the event that G.T. Capital redeems any of the initial 2,083.333 shares of
each of the Variable New Pacific Fund, Variable Europe Fund and Variable America
Fund; or the initial 25,000 shares of the Money Market Fund; or the initial
1,666.667 shares of each of the Variable Strategic Income Fund, Variable
Government Income Fund, Variable U.S. Government Income Fund, Variable Latin
America Fund and the Variable Growth & Income Fund; or the initial 1.000 share
of the Variable Telecommunications Fund, within the five year amortization
period, the respective Fund's unamortized organizational expenses allocable to
the shares redeemed will be deducted from G.T. Capital's redemption proceeds.
(K) 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 Funds' 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.
(L) INDEXED SECURITIES
The Funds 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.
(M) RESTRICTED SECURITIES
The Funds are 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.
(N) PORTFOLIO SECURITIES LOANED
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 the loan. There were no securities on
loan at June 30, 1995 for the Variable Infrastructure Fund and the Variable
Natural Resources Fund.
2. RELATED PARTIES
G.T. Capital is the Funds' investment manager and administrator. For these
services, the Money Market Fund pays G.T. Capital an investment management and
administration fee at the annualized rate of 0.50% of that Fund's average daily
net assets. The Variable Strategic Income Fund, Variable Global Government
Income Fund, Variable U.S. Government Income Fund and Variable America Fund each
pays G.T. Capital an investment management and administration fee at the
annualized rate of 0.75% of the Fund's average daily net assets. The Variable
Growth & Income Fund, Variable Latin America Fund, Variable Telecommunications
Fund, Variable New Pacific Fund, Variable Emerging Markets Fund, Variable
International Fund, Variable Europe Fund, Variable Infrastructure Fund, and
Variable Natural Resources Fund each pays G.T. Capital an investment management
and administration fee at the annualized rate of 1.00% of its average daily net
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G.T. GLOBAL VARIABLE INVESTMENT FUNDS
assets. All fees are computed daily and paid monthly.
G.T. Capital has undertaken to limit the total operating expenses (exclusive of
brokerage commissions, interest, taxes and extraordinary items) of each of the
Variable New Pacific Fund, the Variable Europe Fund, the Variable Latin America
Fund, the Variable Telecommunications Fund, Variable Emerging Markets Fund,
Variable International Fund, Variable Infrastructure Fund, Variable Natural
Resources Fund, and the Variable Growth & Income Fund to 1.25% of their
respective average daily net assets. In addition, G.T. Capital has undertaken to
limit the total operating expenses (exclusive of brokerage commissions,
interest, taxes and extraordinary items) of each of the Variable Strategic
Income Fund, the Variable Global Government Income Fund, the Variable U.S.
Government Income Fund, and the Variable America Fund to 1.00% of their
respective net assets. Likewise, G.T. Capital has undertaken to limit the total
operating expenses (exclusive of brokerage commissions, interest, taxes and
extraordinary items) of the Money Market Fund to .75% of its net assets. From
time to time, G.T. Capital in its sole discretion may waive its fees and/or
voluntarily assume certain Fund expenses.
All general expenses of the Companies and joint expenses of the Funds are
allocated among the Funds on a basis deemed fair and equitable.
G.T. Global Financial Services, Inc. ("G.T. Global"), an affiliate of G.T.
Capital, is the Funds' distributor. G.T. Global Investor Services, Inc. ("G.T.
Services"), an affiliate of G.T. Capital and G.T. Global, is the Funds' transfer
agent.
G.T. Global is the principal underwriter of the Variable Annuity Contracts.
Underwriting commissions retained by G.T. Global are as follows
<TABLE>
<CAPTION>
JANUARY 31,
1995
(COMMENCEMENT
OF
OPERATIONS) TO
G.T. GLOBAL JUNE 30, 1995
- --------------------------------------------
<S> <C>
Variable Infrastructure
Fund....................... $ 1,089
Variable Natural Resources
Fund....................... 294
</TABLE>
The Companies pay each of their Trustees who is not an employee, officer or
director of G.T. Capital, G.T. Global or G.T. Services $5,000 per year.
3. PURCHASES AND SALES OF SECURITIES
The following summarizes purchases and sales of investment securities, other
than short-term investments, by Fund, for the period ended June 30, 1995:
PURCHASES AND SALES OF SECURITIES
<TABLE>
<CAPTION>
PURCHASES
--------------------------------
G.T. GLOBAL: U.S. GOVERNMENT OTHER ISSUES
- ------------------------------------------------------------------ --------------- ------------
<S> <C> <C>
Variable Infrastructure Fund...................................... $ -- $602,516
Variable Natural Resources Fund................................... -- 666,042
</TABLE>
<TABLE>
<CAPTION>
SALES
--------------------------------
G.T. GLOBAL: U.S. GOVERNMENT OTHER ISSUES
- ------------------------------------------------------------------ --------------- ------------
<S> <C> <C>
Variable Infrastructure Fund...................................... $ -- $ 93,494
Variable Natural Resources Fund................................... -- 150,493
</TABLE>
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G.T. GLOBAL VARIABLE INVESTMENT FUNDS
4. CAPITAL SHARES
At June 30, 1995, there were an unlimited number of shares of beneficial
interest authorized, at no par value. Transactions in capital shares of the
Funds were as follows:
CAPITAL SHARE TRANSACTIONS
<TABLE>
<CAPTION>
JANUARY 31, 1995
(COMMENCEMENT OF
OPERATIONS) TO
JUNE 30, 1995
----------------------
SHARES AMOUNT
------- ----------
<S> <C> <C>
G.T. GLOBAL: VARIABLE INFRASTRUCTURE FUND
Shares sold............................................................ 55,201 $ 686,461
Shares repurchased..................................................... (20,046) (250,539)
---------- ------------
Net increase........................................................... 35,155 $ 435,922
========== ============
G.T. GLOBAL: VARIABLE NATURAL RESOURCES FUND
Shares sold............................................................ 92,103 $1,167,198
Shares repurchased..................................................... (57,071) (717,091)
---------- ------------
Net increase........................................................... 35,032 $ 450,107
========== ============
</TABLE>
5. EXPENSE REDUCTIONS
G.T. Capital has directed certain portfolio trades to brokers who paid a portion
of the Funds' expenses. For the period ended June 30, 1995, the Variable Natural
Resources Fund's expenses were reduced by $91 under these arrangements.
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