<PAGE>
GT GLOBAL
VARIABLE
INVESTMENT
FUNDS
PROSPECTUSES
<PAGE>
[LOGO]GT GLOBAL VARIABLE INVESTMENT FUNDS
PROSPECTUS -- APRIL 29, 1996, AS REVISED OCTOBER 31, 1996
- --------------------------------------------------------------------------------
The GT GLOBAL VARIABLE INVESTMENT FUNDS (individually, a "Fund," collectively,
the "Funds") are mutual funds that are offered for investment exclusively to
separate accounts that fund certain variable annuity contracts ("VA Contracts")
offered by certain life insurance companies ("Participating Insurance
Companies").
The Fund's investment manager, Chancellor LGT Asset Management, Inc. (the
"Manager") is part of Liechtenstein Global Trust, a provider of global asset
management and private banking products and services to individual and
institutional investors.
The GT Global Variable Investment Funds currently are:
/ / GT Global Variable New Pacific Fund
/ / GT Global Variable Europe Fund
/ / GT Global Variable Latin America Fund
/ / GT Global Variable America Fund
/ / GT Global Variable International Fund
/ / GT Global Variable Infrastructure Fund
/ / GT Global Variable Natural Resources Fund
/ / GT Global Variable Telecommunications Fund
/ / GT Global Variable Emerging Markets Fund
/ / GT Global Variable Growth & Income Fund
/ / GT Global Variable Global Government Income Fund
/ / GT Global Variable Strategic Income Fund
/ / GT Global Variable U.S. Government Income Fund
/ / GT Global Money Market Fund
EACH OF THE FOLLOWING FUNDS IS CLASSIFIED AS A "DIVERSIFIED" INVESTMENT COMPANY
UNDER THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED ("1940 ACT"): GT GLOBAL
VARIABLE NEW PACIFIC FUND ("NEW PACIFIC FUND"), GT GLOBAL VARIABLE EUROPE FUND
("EUROPE FUND"), GT GLOBAL VARIABLE AMERICA FUND ("AMERICA FUND"), GT GLOBAL
VARIABLE INFRASTRUCTURE FUND ("INFRASTRUCTURE FUND"), GT GLOBAL VARIABLE NATURAL
RESOURCES FUND ("NATURAL RESOURCES FUND"), GT GLOBAL VARIABLE TELECOMMUNICATIONS
FUND ("TELECOMMUNICATIONS FUND"), GT GLOBAL VARIABLE INTERNATIONAL FUND
("INTERNATIONAL FUND"), GT GLOBAL VARIABLE EMERGING MARKETS FUND ("EMERGING
MARKETS FUND"), GT GLOBAL VARIABLE U.S. GOVERNMENT INCOME FUND ("U.S. GOVERNMENT
INCOME FUND") AND GT GLOBAL MONEY MARKET FUND ("MONEY MARKET FUND"). EACH OF THE
FOLLOWING FUNDS IS CLASSIFIED AS A "NON-DIVERSIFIED" INVESTMENT COMPANY UNDER
THE 1940 ACT: GT GLOBAL VARIABLE LATIN AMERICA FUND ("LATIN AMERICA FUND"), GT
GLOBAL VARIABLE GROWTH & INCOME FUND ("GROWTH & INCOME FUND"), GT GLOBAL
VARIABLE STRATEGIC INCOME FUND ("STRATEGIC INCOME FUND") AND GT GLOBAL VARIABLE
GLOBAL GOVERNMENT INCOME FUND ("GLOBAL GOVERNMENT INCOME FUND").
THE STRATEGIC INCOME FUND MAY INVEST UP TO 50% OF ITS ASSETS IN LOWER RATED AND
COMPARABLE UNRATED DEBT SECURITIES WHOSE CREDIT QUALITY IS GENERALLY CONSIDERED
THE EQUIVALENT OF DEBT SECURITIES COMMONLY KNOWN AS "JUNK BONDS." INVESTMENTS OF
THIS TYPE ARE SUBJECT TO A GREATER RISK OF LOSS OF PRINCIPAL AND INTEREST.
INVESTORS SHOULD CAREFULLY CONSIDER THE RISKS ASSOCIATED WITH AN INVESTMENT IN
THE STRATEGIC INCOME FUND.
THIS PROSPECTUS CONCISELY SETS FORTH INFORMATION ABOUT THE FUNDS THAT AN
INVESTOR SHOULD KNOW BEFORE INVESTING THROUGH THE VA CONTRACTS. THIS PROSPECTUS,
IN ADDITION TO THE VA CONTRACTS PROSPECTUS, SHOULD BE READ CAREFULLY AND
RETAINED FOR FUTURE REFERENCE. A STATEMENT OF ADDITIONAL INFORMATION, DATED
APRIL 29, 1996, AS REVISED OCTOBER 31, 1996, HAS BEEN FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION (THE "SEC") AND IS INCORPORATED HEREIN BY REFERENCE. THE
STATEMENT OF ADDITIONAL INFORMATION, WHICH MAY BE AMENDED OR SUPPLEMENTED FROM
TIME TO TIME, IS AVAILABLE WITHOUT CHARGE BY WRITING TO THE FUNDS AT 50
CALIFORNIA STREET, 27TH FLOOR, SAN FRANCISCO, CALIFORNIA 94111, OR BY CALLING
(800) 824-1580.
[LOGO]
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED ON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
FUND SHARES ARE AVAILABLE AS A POOLED FUNDING VEHICLE FOR VARIABLE ANNUITY
CONTRACTS OFFERED BY PARTICIPATING INSURANCE COMPANIES. THIS PROSPECTUS
SHOULD BE ACCOMPANIED BY THE PROSPECTUS FOR SUCH CONTRACTS.
AN INVESTMENT IN THE GT GLOBAL MONEY MARKET FUND IS NEITHER INSURED NOR
GUARANTEED BY THE U.S. GOVERNMENT. THERE CAN BE NO ASSURANCE THAT THE GT
GLOBAL MONEY MARKET FUND WILL BE ABLE TO MAINTAIN A STABLE NET
ASSET VALUE OF $1.00 PER SHARE.
Prospectus Page 1
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
TABLE OF CONTENTS
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Page
---------
<S> <C>
General Information....................................................................... 3
Financial Highlights...................................................................... 4
Investment Objectives and Policies........................................................ 10
Risk Factors.............................................................................. 27
Currency, Options and Futures Strategies.................................................. 33
How to Invest............................................................................. 35
Calculation of Net Asset Value............................................................ 36
Dividends, Other Distributions and Federal Income Taxation................................ 36
Management................................................................................ 38
Other Information......................................................................... 44
</TABLE>
Prospectus Page 2
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
GENERAL INFORMATION
- --------------------------------------------------------------------------------
Each GT Global Variable Investment Fund is organized as a separate series of
either G.T. Global Variable Investment Series or G.T. Global Variable Investment
Trust. (G.T. Global Variable Investment Series and G.T. Global Variable
Investment Trust are referred to herein collectively as the "Companies," and may
be referred to singularly as a "Company"). Each Company is registered with the
SEC as an open-end management investment company. See "Other Information." Each
Fund is treated as a separate entity for certain matters under the 1940 Act and
for other purposes, including federal income tax purposes. A shareholder of one
Fund is not deemed to be a shareholder of any other Fund.
The GT Global Variable Investment Funds are mutual funds that serve as funding
vehicles for the VA Contracts offered by Participating Insurance Companies
through separate accounts. Shares of the Funds may be offered to separate
accounts of Participating Insurance Companies and serve as the underlying
investments for VA Contracts ("shared funding"). Due to differences in tax
treatment or other considerations, the interests of various VA Contract holders
might at some time be in conflict. The Companies currently do not foresee any
such conflict. However, the Companies' Board of Trustees intends to monitor
events to identify any material irreconcilable conflict that may arise and to
determine what action, if any, should be taken in response to such conflict. If
such a conflict were to occur, one or more Participating Insurance Companies'
separate accounts might be required to withdraw all or a substantial portion of
its investments in one or more Funds. This might disrupt a Fund's orderly
portfolio management to the potential detriment of VA Contract holders.
The following Funds are organized as series of G.T. Global Variable Investment
Series:
/ / GT Global Variable New Pacific Fund
/ / GT Global Variable Europe Fund
/ / GT Global Variable America Fund
/ / GT Global Variable International Fund
/ / GT Global Money Market Fund
The following Funds are organized as series of G.T. Global Variable Investment
Trust:
/ / GT Global Variable Latin America Fund
/ / GT Global Variable Infrastructure Fund
/ / GT Global Variable Natural Resources Fund
/ / GT Global Variable Telecommunications Fund
/ / GT Global Variable Growth & Income Fund
/ / GT Global Variable Strategic Income Fund
/ / GT Global Variable Emerging Markets Fund
/ / GT Global Variable Global Government Income Fund
/ / GT Global Variable U.S. Government Income Fund
The VA Contracts are described in a separate prospectus issued by each
Participating Insurance Company for which the Companies assume no
responsibility. Individual VA Contract holders are not the "shareholders" of
either Company or any Fund. Rather, each Participating Insurance Company and its
separate accounts are the shareholders (the "shareholders"). In accordance with
current law, shareholder voting rights will be passed on to VA Contract holders.
As described below, for certain matters Company shareholders vote together as a
group; as to other matters, they vote separately by Fund.
Prospectus Page 3
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding,
total investment return ratios and supplemental data for the periods shown. This
information is supplemented by the financial statements and accompanying notes
appearing in the Statement of Additional Information. The financial statements
and notes for the periods indicated below have been audited by Coopers &
Lybrand, L.L.P. independent accountants, whose report thereon appears in the
Statement of Additional Information.
G.T. GLOBAL VARIABLE INVESTMENT SERIES
<TABLE>
<CAPTION>
JULY 5, 1994
(COMMENCEMENT
OF
OPERATIONS)
YEAR ENDED TO
DECEMBER 31, DECEMBER 31,
1995*** 1994** YEAR ENDED DECEMBER 31, 1995*
------------ ------------- ------------------------------------------
GT GLOBAL GT GLOBAL GT GLOBAL
------------ ------------- ------------------------------------------
VARIABLE VARIABLE VARIABLE VARIABLE VARIABLE MONEY
INTERNATIONAL INTERNATIONAL NEW PACIFIC EUROPE AMERICA MARKET
FUND FUND FUND FUND FUND FUND
------------ ------------- ----------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.............. $ 11.25 $ 12.00 $ 14.01 $ 15.22 $ 15.81 $ 1.00
------------ ------------- ----------- -------- -------- --------
Income from investment operations
Net investment income........................... 0.09 0.06 0.20 0.18 0.21 0.05
Net gains or losses on securities (both realized
and unrealized)................................ (0.22) (0.76) (0.23) 1.28 3.80 0.00
------------ ------------- ----------- -------- -------- --------
Total from investment operations.................. (0.13) (0.70) (0.03) 1.46 4.01 0.05
------------ ------------- ----------- -------- -------- --------
Less distributions
From net investment income...................... (0.09) (0.05) (0.06) (0.16) (0.07) (0.05)
From capital gain............................... (0.02) (0.00) (0.00) (0.00) (0.29) (0.00)
In excess of capital gains...................... (0.00) (0.00) (0.00) (0.00) (0.00) (0.00)
Return of capital............................... (0.00) (0.00) (0.00) (0.00) (0.00) (0.00)
------------ ------------- ----------- -------- -------- --------
Total distributions........................... (0.11) (0.05) (0.06) (0.16) (0.36) (0.05)
------------ ------------- ----------- -------- -------- --------
Net asset value, end of period.................... $ 11.01 $ 11.25 $ 13.92 $ 16.52 $ 19.46 $ 1.00
------------ ------------- ----------- -------- -------- --------
------------ ------------- ----------- -------- -------- --------
Total returns+ (b)................................ (1.14)% (5.81)% (0.21)% 9.66% 25.37% 5.26%
Ratios/supplemental data
Net assets, end of period (in 000's)............ $ 3,663 $ 2,229 $ 23,025 $ 15,641 $ 37,643 $ 14,891
Ratio of net investment income (loss) to average
net assets:
With reimbursement by the Manager and expense
reductions (a)............................... 0.93% 3.33% 1.27% 1.12% 1.66% 5.15%
Without reimbursement by the Manager and
expense reductions (a)....................... (1.35)% (2.56)% 1.74% 0.60% 1.60% 4.85%
Without expenses assumed by the Manager (a)... --% --% --% --% --% --%
Ratio of expenses to average net assets:
With reimbursement by the Manager and expense
reductions (a)............................... 1.25% 0.69% 1.14% 1.20% 1.00% 0.75%
Without reimbursement by the Manager and
expense reductions (a)....................... 3.53% 6.58% 1.61% 1.72% 1.06% 1.05%
Without expenses assumed by the Manager (a)... --% --% --% --% --% --%
Portfolio turnover (a).......................... 107% 17% 67% 123% 79% N/A
</TABLE>
- ------------------
(a) Annualized for periods of less than one year.
(b) Not annualized for periods of less than one year.
* Includes reimbursement by the Manager of New Pacific Fund, Europe Fund,
America Fund and Money Market Fund operating expenses for the fiscal year
ended December 31, 1995 of $0.04, $0.08, $0.01 and $0.00, respectively.
** Includes reimbursement by the Manager of International Fund operating
expenses of $0.11.
*** Includes reimbursement by the Manager of International Fund operating
expenses of $0.22.
+ Total return information shown in the above table does not reflect expenses
that apply to the Separate Accounts or the related insurance policies, and
inclusion of these charges would reduce the total return figures for all
periods shown.
Prospectus Page 4
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
G.T. GLOBAL VARIABLE INVESTMENT SERIES (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1994**
-----------------------------------------
GT GLOBAL
-----------------------------------------
VARIABLE VARIABLE VARIABLE MONEY
NEW PACIFIC EUROPE AMERICA MARKET
FUND FUND FUND FUND
----------- -------- ------- -------
<S> <C> <C> <C> <C>
Net asset value, beginning of period.... $ 16.07 $ 15.33 $13.75 $ 1.00
----------- -------- ------- -------
Income from investment operations
Net investment income................. 0.08 0.16 0.48 0.03
Net gains or losses on securities
(both realized and unrealized)....... (2.08) (0.25) 2.08 0.00
----------- -------- ------- -------
Total from investment operations........ (2.00) (0.09) 2.56 0.03
----------- -------- ------- -------
Less distributions
From net investment income............ (0.06) (0.00) (0.50 ) (0.03)
From capital gain..................... (0.00) (0.02) (0.00 ) (0.00)
In excess of capital gains............ (0.00) (0.00) (0.00 ) (0.00)
Return of capital..................... (0.00) (0.00) (0.00 ) (0.00)
----------- -------- ------- -------
Total distributions..................... (0.06) (0.02) (0.50 ) (0.03)
----------- -------- ------- -------
Net asset value, end of period.......... $ 14.01 $ 15.22 $15.81 $ 1.00
----------- -------- ------- -------
----------- -------- ------- -------
Total returns+ (b)...................... (12.47)% (0.59)% 18.88 % 3.48%
Ratios/supplemental data
Net assets, end of period
(in 000's)........................... $19,391 $15,020 $15,257 $19,474
Ratio of net investment income to
average net assets:
With reimbursement by the Manager
and expense reductions (a)......... 0.83% 1.48% 1.83 % 3.70%
Without reimbursement by the Manager
and expense reductions (a)......... 0.48% 1.07% 0.76 % 3.64%
Without expenses assumed by the
Manager (a)........................ --% --% -- % --%
Ratio of expenses to average net
assets:
With reimbursement by the Manager
and expense reductions (a)......... 1.25% 1.25% 0.98 % 0.75%
Without reimbursement by the Manager
and expense reductions (a)......... 1.60% 1.66% 2.05 % 0.81%
Without expenses assumed by the
Manager (a)........................ --% --% -- % --%
Portfolio turnover (a)................ 30% 61% 139 % N/A
----------- -------- ------- -------
<CAPTION>
FEBRUARY 10, 1993 (COMMENCEMENT OF
OPERATIONS) TO DECEMBER 31, 1993*
-----------------------------------------
GT GLOBAL
-----------------------------------------
VARIABLE VARIABLE VARIABLE MONEY
NEW PACIFIC EUROPE AMERICA MARKET
FUND FUND FUND FUND
----------- -------- ------- ------
<S> <C> <C> <C> <C>
Net asset value, beginning of period.... $12.00 $12.00 $12.00 $1.00
----------- -------- ------- ------
Income from investment operations
Net investment income................. 0.04 0.05 1.11 0.03
Net gains or losses on securities
(both realized and unrealized)....... 4.03 3.28 0.64 0.00
----------- -------- ------- ------
Total from investment operations........ 4.07 3.33 1.75 0.03
----------- -------- ------- ------
Less distributions
From net investment income............ (0.00) (0.00) (0.00) (0.03 )
From capital gain..................... (0.00) (0.00) (0.00) (0.00 )
In excess of capital gains............ (0.00) (0.00) (0.00) (0.00 )
Return of capital..................... (0.00) (0.00) (0.00) (0.00 )
----------- -------- ------- ------
Total distributions..................... (0.00) (0.00) (0.00) (0.03 )
----------- -------- ------- ------
Net asset value, end of period.......... $16.07 $15.33 $13.75 $1.00
----------- -------- ------- ------
----------- -------- ------- ------
Total returns+ (b)...................... 33.9% 27.8% 14.7% 2.6 %
Ratios/supplemental data
Net assets, end of period
(in 000's)........................... $7,945 $5,410 $1,700 $3,775
Ratio of net investment income to
average net assets:
With reimbursement by the Manager
and expense reductions (a)......... 0.9% 1.1% 14.1% 2.9 %
Without reimbursement by the Manager
and expense reductions (a)......... 0.3% 0.4% 12.8% 2.1 %
Without expenses assumed by the
Manager (a)........................ (2.0)% (2.8)% 7.6% (2.6 )%
Ratio of expenses to average net
assets:
With reimbursement by the Manager
and expense reductions (a)......... 0.6% 0.7% 0.0% 0.2 %
Without reimbursement by the Manager
and expense reductions (a)......... 1.3% 1.4% 1.3% 1.0 %
Without expenses assumed by the
Manager (a)........................ 3.6% 4.6% 6.5% 5.7 %
Portfolio turnover (a)................ 15% 27% 831% N/A
----------- -------- ------- ------
</TABLE>
- ------------------
(a) Annualized for periods of less than one year.
(b) Not annualized for periods of less than one year.
* Includes reimbursement by the Manager for New Pacific Fund, Europe Fund,
America Fund and Money Market Fund operating expenses for the fiscal year
ended December 31, 1993 of $0.03, $0.03, $0.10 and $0.01, respectively.
** Includes reimbursement by the Manager for New Pacific Fund, Europe Fund,
America Fund and Money Market Fund operating expenses for the fiscal year
ended December 31, 1994, of $0.03, $0.04, $0.28 and $0.00, respectively.
+ Total return information shown in the above table does not reflect expenses
that apply to the Separate Accounts or the related insurance policies, and
inclusion of these charges would reduce the total return figures for all
periods shown.
Prospectus Page 5
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
G.T. GLOBAL VARIABLE INVESTMENT TRUST
<TABLE>
<CAPTION>
JULY 5, 1994
JANUARY 31, 1995 (COMMENCEMENT
(COMMENCEMENT OF YEAR ENDED OF OPERATIONS)
OPERATIONS) TO DECEMBER 31, TO DECEMBER 31,
DECEMBER 31, 1995*** 1995** 1994*
-------------------------- ------------ ---------------
GT GLOBAL VARIABLE
-----------------------------------------------------------
NATURAL
INFRASTRUCTURE RESOURCES EMERGING EMERGING
FUND FUND MARKETS FUND MARKETS FUND
-------------- --------- ------------ ---------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period........................ $12.00 $12.00 $11.89 $12.00
-------------- --------- ------------ ---------------
Income from investment operations
Net investment income..................................... 0.07 0.73 0.14 0.07
Net gains or losses on securities (both realized and
unrealized).............................................. 1.20 1.91 (1.04) (0.05)
-------------- --------- ------------ ---------------
Total from investment operations............................ 1.27 2.64 (0.90) 0.02
-------------- --------- ------------ ---------------
Less distributions
From net investment income................................ -- (0.71) (0.09) (0.07)
From capital gain......................................... -- -- -- (0.00)
In excess of capital gains................................ -- (0.05) -- (0.06)
Return of capital......................................... -- -- (0.02) (0.00)
-------------- --------- ------------ ---------------
-------------- --------- ------------ ---------------
Total distributions......................................... -- (0.76) (0.11) (0.13)
-------------- --------- ------------ ---------------
Net asset value, end of period.............................. $13.27 $13.88 $10.88 $11.89
-------------- --------- ------------ ---------------
-------------- --------- ------------ ---------------
Total returns+ (b) 10.58% 22.20% (7.54)% 0.12%
Ratios/supplemental data
Net assets, end of period (in 000's)...................... $ 1,594 $ 1,365 $ 8,983 $ 7,267
Ratio of net investment income to average net assets:
With reimbursement by the Manager and expense reductions
(a).................................................... 1.24% 10.87% 1.55% 4.10%
Without reimbursement by the Manager and expense
reductions (a)......................................... (6.11)% 2.94% 0.51% (0.20)%
Without expenses assumed by the Manager (a)............. --% --% --% --%
Ratio of expenses to average net assets:
With reimbursement by the Manager and expense reductions
(a).................................................... 1.22% 1.14% 1.18% 0.00%
Without reimbursement by the Manager and expense
reductions (a)......................................... 8.57% 9.07% 2.22% 4.30%
Without expenses assumed by the Manager (a)............. --% --% --% --%
Portfolio turnover (a).................................... 38% 875% 210% 117%
-------------- --------- ------------ ---------------
</TABLE>
- ------------------
(a) Annualized for periods of less than one year.
(b) Not annualized for periods of less than one year.
* Includes reimbursement by the Manager of Emerging Markets Fund operating
expenses of $0.07.
** Includes reimbursement by the Manager of Emerging Markets Fund operating
expenses for the fiscal year ended December 31, 1995 of $0.09.
*** Includes reimbursement by the Manager of operating expenses for the period
January 31, 1995 to December 31, 1995 for the Infrastructure Fund and
Natural Resources Fund of $0.42 and $0.47, respectively.
+ Total return information shown in the above table does not reflect expenses
that apply to the Separate Accounts or the related insurance policies, and
inclusion of these charges would reduce the total return figures for all
periods shown.
Prospectus Page 6
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
G.T. GLOBAL VARIABLE INVESTMENT TRUST (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1995*
-----------------------------------------------------------------------------------------
GT GLOBAL VARIABLE
-----------------------------------------------------------------------------------------
LATIN GLOBAL U.S.
AMERICA GROWTH & STRATEGIC GOVERNMENT GOVERNMENT TELECOMMUNICATIONS
FUND INCOME FUND INCOME FUND INCOME FUND INCOME FUND FUND
----------- ----------- ----------- ------------- ------------- --------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.... $ 19.17 $ 12.99 $ 10.82 $ 10.63 $ 10.79 $ 13.98
----------- ----------- ----------- ------------- ------------- --------
Income from investment operations
Net investment income................. 0.51 0.52 1.07 0.79 0.62 0.02
Net gains or losses on securities
(both realized and unrealized)....... (5.10) 1.46 0.93 0.84 0.93 3.26
----------- ----------- ----------- ------------- ------------- --------
Total from investment operations........ (4.59) 1.98 2.00 1.63 1.55 3.28
----------- ----------- ----------- ------------- ------------- --------
Less distributions
From net investment income............ (0.16) (0.40) (0.96) (0.75) (0.60) (0.03)
From capital gain..................... (2.00) (0.00) (0.00) (0.00) (0.00) (0.36)
In excess of capital gains............ (0.00) (0.00) (0.00) (0.00) (0.00) (0.00)
Return of capital..................... (0.00) (0.00) (0.00) (0.00) (0.00) (0.00)
----------- ----------- ----------- ------------- ------------- --------
Total distributions..................... (2.16) (0.40) (0.96) (0.75) (0.60) (0.39)
----------- ----------- ----------- ------------- ------------- --------
Net asset value, end of period.......... $ 12.42 $ 14.57 $ 11.86 $ 11.51 $ 11.74 $ 16.87
----------- ----------- ----------- ------------- ------------- --------
----------- ----------- ----------- ------------- ------------- --------
Total returns+(b)....................... (24.14)% 15.49% 19.50% 15.85% 14.73% 23.66%
Ratios/supplemental data
Net assets, end of period (in
000's)............................... $ 19,771 $ 30,565 $ 25,345 $ 11,944 $ 5,992 $ 50,778
Ratio of net investment income to
average net assets:
With reimbursement by the Manager and
expense reductions (a)............... 4.43% 3.87% 9.59% 7.03% 5.43% 0.16%
Without reimbursement by the Manager
and expense reductions (a)........... 3.92% 3.66% 9.35% 6.37% 3.87% 0.10%
Without expenses assumed by the
Manager (a).......................... --% --% --% --% --% --%
Ratio of expenses to average net assets:
With reimbursement by the Manager and
expense reductions (a)............... 1.18% 1.23% 1.00% 1.00% 1.00% 1.20%
Without reimbursement by the Manager
and expense reductions (a)........... 1.69% 1.44% 1.24% 1.66% 2.56% 1.26%
Without expenses assumed by the
Manager (a).......................... --% --% --% --% --% --%
Portfolio turnover (a).................. 140% 73% 193% 394% 186% 70%
----------- ----------- ----------- ------------- ------------- --------
</TABLE>
- ------------------
(a) Annualized for periods of less than one year.
(b) Not annualized for periods of less than one year.
* Includes reimbursement by the Manager of operating expenses for the fiscal
year ended December 31, 1995 for the Latin America Fund, the Growth & Income
Fund, the Strategic Income Fund, the Global Government Income Fund, the U.S.
Government Income Fund and the Telecommunications Fund of $0.06, $0.03,
$0.03, $0.07, $0.14, and $0.00, respectively.
+ Total return information shown in the above table does not reflect expenses
that apply to the Separate Accounts or the related insurance policies, and
inclusion of these charges would reduce the total return figures for all
periods shown.
Prospectus Page 7
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
G.T. GLOBAL VARIABLE INVESTMENT TRUST (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1994*
-----------------------------------------------------------------------------------------
GT GLOBAL VARIABLE
-----------------------------------------------------------------------------------------
LATIN GLOBAL U.S.
AMERICA GROWTH & STRATEGIC GOVERNMENT GOVERNMENT TELECOMMUNICATIONS
FUND INCOME FUND INCOME FUND INCOME FUND INCOME FUND FUND
----------- ----------- ----------- ------------- ------------- --------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period... $ 17.68 $ 13.77 $ 14.57 $ 12.53 $ 12.23 $ 13.07
Income from investment operations
Net investment income................ 0.11 0.46 1.71 0.77 0.63 0.01
Net gains or losses on securities
(both realized and unrealized)...... 1.49 (0.85) (4.17) (1.85) (1.39) 0.92
----------- ----------- ----------- ------------- ------------- --------
Total from investment operations....... 1.6 (0.39) (2.46) (1.08) (0.76) 0.93
----------- ----------- ----------- ------------- ------------- --------
Less distributions
From net investment income........... (0.04) (0.39) (0.79) (0.73) (0.62) (0.02)
From capital gain.................... (0.07) 0 (0.45) 0 (0.06) 0
In excess of capital gains........... 0 0 0 0 0 0
Return of capital.................... 0 0 (0.05) (0.09) 0 0
----------- ----------- ----------- ------------- ------------- --------
Total distributions.................... (0.11) (0.39) (1.29) (0.82) (0.68) (0.02)
----------- ----------- ----------- ------------- ------------- --------
Net asset value, end of period......... $ 19.17 $ 12.99 10.82 $ 10.63 $ 10.79 $ 13.98
----------- ----------- ----------- ------------- ------------- --------
----------- ----------- ----------- ------------- ------------- --------
Total returns+......................... 9.14% (2.85)% (17.09)% (8.70)% (6.27)% 7.15%
Ratios/supplemental data
Net assets, end of period (in
000's).............................. $ 26,631 $ 25,58 $ 23,367 $ 9,654 $ 2,415 $ 36,029
Ratio of net investment income to
average net assets
With reimbursement by the Manager
and expense reductions (a)........ 0.82% 3.69% 7.58% 6.89% 5.53% 0.31%
Without reimbursement by the
Manager and expense reductions
(a)............................... 0.49% 3.45% 7.43% 6.21% 1.29% 0.07%
Without expenses assumed by the
Manager (a)....................... --% --% --% --% --% --%
Ratio of expenses to average net
assets
With reimbursement by the Manager
and expense reductions (a)........ 1.25% 1.25% 1.00% 1.00% 0.38% 1.25%
Without reimbursement by the
Manager and expense reductions
(a)............................... 1.58% 1.49% 1.15% 1.68% 4.63% 1.49%
Without expenses assumed by the
Manager (a)....................... --% --% --% --% --% --%
Portfolio turnover................... 185% 53% 313% 350% 34% 81%
----------- ----------- ----------- ------------- ------------- --------
</TABLE>
- ------------------
(a) Annualized for periods of less than one year.
(b) Not annualized for periods of less than one year.
* Includes reimbursement by the Manager for Latin America Fund, Growth &
Income Fund, Strategic Income Fund, Global Government Income Fund, U.S.
Government Income Fund and Telecommunications Fund operating expenses for
the fiscal year ended December 31, 1994 of $0.04, $0.03, $0.04, $0.08, $0.48
and $0.01, respectively.
+ Total return information shown in the above table does not reflect expenses
that apply to the Separate Accounts or the related insurance policies, and
inclusion of these charges would reduce the total return figures for all
periods shown.
Prospectus Page 8
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
G.T. GLOBAL VARIABLE INVESTMENT TRUST (CONTINUED)
<TABLE>
<CAPTION>
OCTOBER 18, 1993
(COMMENCEMENT OF
FEBRUARY 10, 1993 (COMMENCEMENT OF OPERATIONS) TO
OPERATIONS) TO DECEMBER 31, 1993 DECEMBER 31, 1993
------------------------------------------------------------------- ---------------------
GT GLOBAL VARIABLE
------------------------------------------------------------------------------------------
LATIN GLOBAL U.S.
AMERICA GROWTH & STRATEGIC GOVERNMENT GOVERNMENT TELECOMMUNICATIONS
FUND INCOME FUND INCOME FUND INCOME FUND INCOME FUND FUND
----------- ----------- ----------- ------------- ------------- ---------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.... $ 12.00 $ 12.00 $ 12.00 $ 12.00 $ 12.00 $ 12.00
Income from investment operations
Net investment income*................ 0.04 0.31 0.61 0.57 0.53 0.04
Net gains or losses on securities
(both realized and unrealized)....... 5.64 1.79 2.57 0.52 0.23 1.03
----------- ----------- ----------- ------------- ------------- -------
Total from investment operations........ 5.68 2.10 3.18 1.09 0.76 1.07
----------- ----------- ----------- ------------- ------------- -------
Less distributions
From net investment income............ (0.00) (0.28) (0.61) (0.56) (0.53) (0.00)
From capital gain..................... (0.00) (0.05) (0.00) (0.00) (0.00) (0.00)
In excess of capital gains............ (0.00) (0.00) (0.00) (0.00) (0.00) (0.00)
----------- ----------- ----------- ------------- ------------- -------
Total distributions..................... (0.00) (0.33) (0.61) (0.56) (0.53) (0.00)
----------- ----------- ----------- ------------- ------------- -------
Net asset value, end of period.......... $ 17.68 $ 13.77 $ 14.57 $ 12.53 $ 12.23 $ 13.07
----------- ----------- ----------- ------------- ------------- -------
----------- ----------- ----------- ------------- ------------- -------
Total returns+ (b)...................... 47.3% 17.8% 27.5% 9.5% 6.4% 8.9%
Ratios/supplemental data
Net assets, end of period (in
000's)............................... $ 8,240 $ 11,677 $ 18,089 $ 6,136 $ 974 $ 7,903
Ratio of net investment income to
average net assets:
With reimbursement by the Manager
and expense reductions* (a)........ 1.0% 3.2% 6.6% 6.1% 5.3% 2.5%
Without reimbursement by the Manager
and expense reductions (a)......... 0.4% 2.7% 6.3% 5.5% 3.4% 2.3%
Without expenses assumed by
the Manager (a).................... (2.5)% 1.1% 5.2% 2.4% (6.9)% 1.6%
Ratio of expenses to average net
assets:
With reimbursement by the Manager
and expense reductions* (a)........ 0.7% 0.6% 0.5% 0.5% 0.0% 0.9%
Without reimbursement by the Manager
and expense reductions (a)......... 1.3% 1.2% 0.9% 1.1% 1.9% 1.1%
Without expenses assumed by
the Manager (a).................... 4.2% 2.8% 1.9% 4.2% 12.3% 1.8%
Portfolio turnover (a)................ 78% 17% 245% 298% 81% 20%
----------- ----------- ----------- ------------- ------------- -------
</TABLE>
- ------------------
(a) Annualized for periods of less than one year.
(b) Not annualized for periods of less than one year.
* Includes reimbursement by the Manager for Latin America Fund, Growth &
Income Fund, Strategic Income Fund, Global Government Income Fund, U.S.
Government Income Fund and Telecommunications Fund operating expenses for
the fiscal year ended December 31, 1993 of $0.02, $0.05, $0.03, $0.06, $0.19
and $0.00, respectively.
+ Total return information shown in the above table does not reflect expenses
that apply to the Separate Accounts or the related insurance policies, and
inclusion of these charges would reduce the total return figures for all
periods shown.
Prospectus Page 9
<PAGE>
GT 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, and will affect both the investment return and the
degree of risk to which that Fund is subject. There can be no assurance that any
Fund will achieve its investment objective(s).
GLOBAL GROWTH FUNDS
The investment objective of each of the New Pacific Fund, the Europe Fund, the
International Fund, and the America Fund (collectively, "Global Growth Funds")
is long-term growth of capital. Each Global Growth Fund seeks this objective by
investing, under normal circumstances, at least 65% of its total assets in
equity securities of issuers domiciled in its "Primary Investment Area", as
described below. Equity securities in which the Global Growth Funds may invest
include common stocks, preferred stocks, convertible debt securities and
warrants to acquire such securities.
The Primary Investment Areas of the Global Growth Funds are as follows:
NEW PACIFIC FUND -- Australia, Hong Kong, India, Indonesia, Malaysia, New
Zealand, Pakistan, the Philippines, Singapore, South Korea, Taiwan and Thailand.
EUROPE FUND -- Austria, Belgium, Denmark, Finland, France, Germany, Greece,
Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden,
Switzerland, Turkey and the United Kingdom.
INTERNATIONAL FUND -- all countries listed for each other Global Growth Fund,
and Argentina, Brazil, Canada, Chile, Colombia, Israel, Japan, Mexico, Peru and
Venezuela, but not the United States.
AMERICA FUND -- the United States.
From time to time the Company's Board of Trustees may add or delete countries
from a Global Growth Fund's Primary Investment Area.
Each Global Growth Fund may invest up to 35% of its assets in the securities of
issuers domiciled outside of the relevant Primary Investment Area, including:
(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 relevant Primary Investment Area or which stand to benefit from political
and economic events in the Primary Investment Area.
In managing the Global Growth Funds, the Manager seeks to identify those
countries and industries where economic and political factors, including
currency movements, are likely to produce above-average growth rates. The
Manager further attempts to identify those companies in such countries and
industries that are best positioned and managed to take advantage of these
economic and political factors. The Manager intends to invest in such countries
and industries only after balancing the potential for growth of selected
companies in each market relative to the risks of investing in each such
country. Among the factors to be considered are that several of the markets
included in the Primary Investment Areas of the New Pacific Fund, the Europe
Fund and the International Fund are so-called developing markets, i.e., less
developed and more prone to uncertainty, instability and risk than the other
markets in which those Funds invest. Under normal circumstances, the assets of
the International Fund are invested in the equity securities of issuers
domiciled in at least three different countries. The America Fund currently
expects to invest a majority of its assets in the securities of mid and
small-sized companies. In selecting securities for inclusion in the America
Fund's portfolio, the Manager normally initially focuses on companies with a
total equity market capitalization of $2 billion or less.
Up to 35% of each Global Growth Fund's assets may be invested in debt
securities. The issuers of such debt securities may or may not be domiciled in
the Primary Investment Area of the Fund purchasing the securities. The Global
Growth Funds will limit their purchases of debt securities to obligations rated
no lower than investment grade, i.e., rated no lower than Baa by Moody's
Investors Service, Inc. ("Moody's") or BBB by Standard &
Prospectus Page 10
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
Poor's Ratings Group ("S&P"), or if not similarly rated by any other nationally
recognized statistical rating organization ("NRSRO"), deemed by the Manager to
be of equivalent quality. See "Description of Debt Ratings" in the Statement of
Additional Information for a full description of S&P's and Moody's ratings. The
Global Growth Funds may also use instruments (including forward currency
contracts) often referred to as "derivatives." See "Currency, Options and
Futures Strategies."
INFRASTRUCTURE FUND
The INFRASTRUCTURE FUND'S investment objective is long-term capital growth. The
Infrastructure Fund seeks its objective by investing primarily in equity
securities of companies throughout the world that design, develop or provide
products and services significant to a country's infrastructure. The
Infrastructure Fund invests in infrastructure companies which, in the opinion of
the Manager, have potential for above average, long-term growth in sales and
earnings.
At least 65% of the Infrastructure Fund's total assets normally will be invested
in common stocks and preferred stocks and warrants to acquire such securities
issued by infrastructure companies. An "infrastructure" company is an entity in
which (i) at least 50% of either the revenues or earnings was derived from
infrastructure activities, or (ii) at least 50% of the assets was devoted to
such activities, based on the company's most recent fiscal year. The remainder
of the Infrastructure Fund's assets may be invested in debt securities issued by
infrastructure companies and/or equity and debt securities of companies outside
of the infrastructure industries which, in the opinion of the Manager, stand to
benefit from developments in the infrastructure industries.
The Infrastructure Fund will not invest more than 20% of its total assets in
debt securities rated below investment grade. Investment in non-investment grade
securities involves a high degree of risk and can be speculative. These debt
securities are the equivalent of high yield, high risk bonds, commonly known as
"junk bonds." See "Risk Factors."
The Infrastructure Fund may invest substantially in securities denominated in
one or more currencies. Under normal conditions, the Infrastructure Fund invests
in the securities of issuers located in at least three different countries,
including the United States. Investments in securities of issuers in any one
country, other than the United States, will represent no more than 50% of the
Fund's total assets. The Infrastructure Fund may also use instruments (including
forward currency contracts) often referred to as "derivatives." See "Currency,
Options and Futures Strategies."
In analyzing companies for possible investment by the Infrastructure Fund, the
Manager 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.
For purposes of the Infrastructure Fund's policy of investing at least 65% of
its total assets in the securities of infrastructure companies, the companies in
which the Infrastructure Fund will principally invest will be those engaged in
designing, developing or providing the following products and services:
electricity production; oil, gas, and coal exploration, development, production
and distribution; water supply, including water treatment facilities; nuclear
power and other alternative energy sources; transportation, including the
construction or operation of transportation systems; steel, concrete, or similar
types of products; communications equipment and services (including equipment
and services for both data and voice transmission); mobile communications and
cellular radio/paging; emerging technologies combining telephone, television
and/or computer systems; and other products and services which, in the Manager's
judgment, constitute services significant to the development of a country's
infrastructure.
The Manager believes that a country's infrastructure is one key to the long-term
success of that country's economy. The Manager believes that adequate energy,
transportation, water, and communications systems are essential elements for
long-term economic growth. The Manager believes that many developing nations,
especially in Asia and Latin America, plan to make significant expenditures to
the development of their infrastructure in the coming years, which is expected
to facilitate increased levels of services and manufactured goods.
In the developed countries of North America, Europe, Japan and the south
Pacific, the Manager
Prospectus Page 11
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
expects that the replacement and upgrade of transportation and communications
systems should stimulate growth in the infrastructure industries of those
countries. In addition, in the Manager's view, deregulation of
telecommunications and electric and gas utilities in many countries is promoting
significant changes in these industries.
The Manager believes that strong economic growth in developing countries and
infrastructure replacement, upgrade, and deregulation in more developed
countries provide an environment for favorable investment opportunities in
infrastructure companies worldwide. In addition, the long-term growth rates of
certain foreign countries' economies may be substantially higher than the
long-term growth rate of the U.S. economy. An integral aspect of other foreign
countries' economic growth may be the development or improvement of their
infrastructure.
NATURAL RESOURCES FUND
The NATURAL RESOURCES FUND'S investment objective is long-term capital growth.
The Natural Resources Fund seeks its objective by investing primarily in equity
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. The Natural Resources Fund expects to invest in those natural
resource companies which own, explore or develop energy sources, ferrous and
non-ferrous metals, strategic metals and precious metals, chemicals, forest
products, foodstuffs, refined products, such as steel, and other basic
commodities, which, in the Manager's opinion, historically have been produced
and marketed profitably during periods of improving supply and demand
fundamentals and rising inflation. The Natural Resources Fund invests in natural
resource companies which, in the opinion of the Manager, have potential for
above average, long-term growth in sales and earnings.
At least 65% of the Natural Resources Fund's total assets will normally be
invested in common stock and preferred stock, and warrants to acquire such
securities, issued by natural resource companies. A "natural resource" company
is an entity in which (i) at least 50% of either the revenues or earnings was
derived from natural resource activities, or (ii) at least 50% of the assets was
devoted to such activities, based upon the company's most recent fiscal year.
The remainder of the Natural Resources Fund's assets may be invested in debt
securities issued by natural resource companies and/or equity and debt
securities of companies outside of the natural resource industries which, in the
opinion of the Manager, stand to benefit from developments in the natural
resource industries.
The Natural Resources Fund will not invest more than 20% of its total assets in
debt securities rated below investment grade. Investment in non-investment grade
debt securities involves a high degree of risk and can be speculative. These
debt securities are the equivalent of high yield, high risk bonds, commonly
known as "junk bonds." See "Risk Factors."
The Natural Resources Fund may invest substantially in securities denominated in
one or more currencies. Under normal conditions, the Natural Resources Fund
invests in the securities of issuers located in at least three different
countries, including the United States. Investments in securities of issuers in
any one country, other than the United States, will represent no more than 50%
of the Fund's total assets. The Natural Resources Fund may also use instruments
(including forward currency contracts) often referred to as "derivatives." See
"Currency, Options and Futures Strategies."
The Natural Resources Fund may invest in securities of companies in those
natural resource industries and commodity groups which, in the Manager's
opinion, may perform well during periods of rising inflation. In analyzing such
companies for possible investment by the Natural Resources Fund, the Manager
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; development of new technologies; efficient service;
strong management; and general operating characteristics which will enable the
companies to compete successfully in their respective markets.
The natural resource industries are comprised of a variety of companies. For
purposes of the Natural Resources Fund's policy of investing at least 65% of its
total assets in the securities of natural resource companies, the companies in
which the Natural Resources Fund will principally invest will be those which
own, explore or develop: energy sources (such as oil, gas and coal); ferrous and
non-ferrous metals (such as iron, aluminum, copper, nickel, zinc and lead),
strategic metals (such as uranium and titanium) and precious metals (such as
gold,
Prospectus Page 12
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
silver and platinum); chemicals; forest products (such as timber, coated and
uncoated tree sheet, pulp and newsprint); other basic commodities (such as
foodstuffs); refined products (such as chemicals and steel) and service
companies that sell to these producers and refiners; and other products and
services which, in the Manager's opinion are significant to the ownership and
development of natural resources and other basic commodities.
The Manager will allocate the Natural Resources Fund's investments among those
natural resource companies depending on its assessment of their long-term growth
potential. In assessing these companies' long-term growth potential, the Manager
will evaluate, among other factors, their capabilities for expanded exploration
and production, superior exploration programs and production techniques and
facilities, current inventories, expected production and demand levels, and the
potential to accumulate new resources.
The Manager believes that the liberalization of formerly socialist economies
will bring about dramatic changes in both the supply and demand for natural
resources. In addition, rapid industrialization in developing countries of Asia
and Latin America is generating new demands for industrial materials which are
affecting world commodities markets. The Manager believes these changes are
likely to create investment opportunities that benefit from new sources of
supply and/or from changes in commodities prices.
The Manager also believes that investments in natural resource industries offer
an opportunity to protect wealth against the capital-eroding effects of
inflation. During periods of accelerating inflation or currency uncertainty,
worldwide investment demand for natural resources, particularly precious metals,
tends to increase, and during periods of disinflation or currency stability, it
tends to decrease. The Manager believes that rising commodity prices and
increasing worldwide industrial production may favorably affect share prices of
natural resource companies, and investments in such companies can offer
excellent opportunities to offset the effects of inflation.
TELECOMMUNICATIONS FUND
The TELECOMMUNICATIONS FUND seeks long-term growth of capital as its investment
objective. In seeking that objective, 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 telecommunications companies. A
"telecommunications company" is an entity which (i) derives at least 50% of
either its revenues or earnings from telecommunications activities, or (ii)
devotes at least 50% of its assets to telecommunications activities, based on
the company's most recent fiscal year.
Up to 35% of the Telecommunications Fund's assets may be invested in debt
securities issued by telecommunications companies, and/or in equity and debt
securities of companies outside of the telecommunications industry which, in the
opinion of the Manager, stand to benefit from developments in the
telecommunications industry. The Manager will allocate the Telecommunications
Fund's assets among securities of countries and in currency denominations and
industry sectors where opportunities for meeting the Fund's investment objective
are expected to be the most attractive.
The Telecommunications Fund may invest substantially in securities denominated
in one or more currencies. Under normal conditions, the Telecommunications Fund
invests in the securities of issuers located in at least three different
countries, including the United States. Investments in securities of issuers in
any one country, other than the United States, will represent no more than 40%
of the Fund's assets. The Telecommunications Fund may also use instruments
(including forward currency contracts) often referred to as "derivatives." See
"Currency, Options and Futures Strategies."
The telecommunications industry is comprised of a variety of sectors, ranging
from companies concentrating on established technologies to those primarily
engaged in emerging or developing technologies. The characteristics of companies
focusing on the same technology will vary among countries depending upon the
extent to which the technology is established in the particular country. The
Manager will allocate the Telecommunications Fund's investments among these
sectors depending upon its assessment of their relative long-term growth
potentials.
For purposes of the Telecommunications Fund's policy of investing at least 65%
of its total assets in the securities of telecommunications companies, the
companies in which the Fund will invest are those engaged in designing,
developing or providing the following products and services: communications
equipment and services (including equipment and services for both data and voice
Prospectus Page 13
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
transmission); electronic components and equipment; broadcasting (including
television and radio, satellite, microwave and cable television and
narrowcasting); computer equipment, mobile communications and cellular
radio/paging; electronic mail; local and wide area networking and linkage of
word and data processing systems; publishing and information systems; videotext
and teletext; and emerging technologies combining telephone, television and/or
computer systems.
The Telecommunications Fund expects that, from time to time, a significant
portion of its assets may be invested in the securities of domestic issuers.
Telecommunications, however, is a global industry with significant, growing
markets outside of the United States. A sizeable proportion of the companies
which comprise the telecommunications industry are headquartered outside of the
United States. The communication and use of information using existing and
developing technology increasingly is permeating global civilization.
For these reasons, the Manager believes that a portfolio comprised only of
securities of U.S. issuers does not provide the greatest potential for return
from a telecommunications investment. The Manager uses its financial expertise
in markets located throughout the world and the substantial global resources of
the Manager in attempting to identify those countries and telecommunications
companies then providing the greatest potential for long-term capital
appreciation. In this fashion, the Manager and the Telecommunications Fund seek
to enable shareholders to capitalize on the substantial investment opportunities
and the potential for long-term growth of capital presented by the global
telecommunications industry.
LATIN AMERICA FUND
The LATIN AMERICA FUND'S investment objective is capital appreciation. In
seeking that objective, the Latin America Fund normally invests at least 65% of
its total assets in a broad range of securities of Latin American issuers.
Consistent with its investment objective and policies, the Latin America Fund
may invest in common stock, preferred stock, rights, warrants and securities
convertible into common stock, and other substantially similar forms of equity
with comparable risk characteristics, as well as bonds, notes, debentures or
other forms of indebtedness that may be developed in the future. These
securities may be listed on securities exchanges, traded in various over-
the-counter ("OTC") markets or have no organized market.
Up to 35% of the Latin America Fund's total assets may be invested in a
combination of equity and debt securities of U.S. issuers. In evaluating
investments in securities of U.S. issuers, the Manager will consider, among
other things, the issuer's Latin American business activities and the impact
that developments in Latin America may have on the issuer's operations and
financial conditions.
The Latin America Fund may invest up to 50% of its assets in debt securities.
There are no credit quality limitations placed on the debt securities in which
the Latin America Fund may invest, and some or all of such debt securities may
be the equivalent of high yield, high risk bonds, commonly known as "junk
bonds." See "Risk Factors". The Latin America Fund may also use instruments
(including forward currency contracts) often referred to as "derivatives." See
"Currency, Options and Futures Strategies."
The Latin America Fund purchases equity and debt securities in seeking its
objective of capital appreciation. Capital appreciation in debt securities may
arise as a result of a favorable change in relative foreign exchange rates, in
relative interest rate levels, or in the creditworthiness of issuers. The
receipt of income from such debt securities is incidental to the Latin America
Fund's objective of capital appreciation.
The Latin America Fund defines securities of Latin American issuers as the
following: (a) securities of companies organized under the laws of a Latin
American country or for which the principal trading market is in Latin America;
(b) securities issued or guaranteed by the government of a country in Latin
America, its agencies or instrumentalities, or municipalities, or the central
bank of such country; (c) U.S. dollar-denominated securities or securities
denominated in a Latin American currency issued by companies to finance
operations in Latin America; (d) securities of companies that derive at least
50% of their revenues from either goods or services produced in Latin America or
sales made in Latin America; and (e) securities of Latin American issuers, as
defined herein, in the form of depositary shares. For purposes of the foregoing
definition, the Latin America Fund's purchases of securities issued by companies
outside of Latin America to finance their Latin American operations will be
limited to securities the performance of which is materially related to such
company's Latin American activities. For purposes of this Prospectus, unless
otherwise indicated, the Latin America Fund defines Latin America to include the
following countries: Argentina, the
Prospectus Page 14
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
Bahamas, Barbados, Belize, Bolivia, Brazil, Chile, Colombia, Costa Rica,
Dominican Republic, Ecuador, El Salvador, French Guiana, Guatemala, Guyana,
Haiti, Honduras, Jamaica, Mexico, the Netherlands Antilles, Nicaragua, Panama,
Paraguay, Peru, Suriname, Trinidad and Tobago, Uruguay and Venezuela.
The extent of the Latin America Fund's holdings in any Latin American country
will vary from time to time, based upon the Manager's judgment as to where the
greatest investment opportunities then lie. In allocating investments among the
various Latin American markets, the Manager looks principally at the stage of
industrialization, potential for productivity gains through economic
deregulation, the impact of financial liberalization and monetary conditions and
the political outlook in each country. Under current market conditions the Latin
America Fund intends to invest primarily in securities issued by companies and
governments in Mexico, Chile, Brazil, and Argentina, which currently have the
most developed capital markets in Latin America. The Latin America Fund may
invest more than 25% of its assets in any of these four countries but does not
expect to invest more than 60% of its total assets in any one country. The
portion of the Latin America Fund's total assets invested directly in Chile may
be less than the portions invested in other Latin American countries at present.
Due to onerous repatriation restrictions, investment by the Fund in Chile for
practical purposes is limited to investment in other investment funds which
purchase securities of Chilean issuers. The Latin America Fund's investment in
Latin American debt securities may consist substantially of Brady Bonds and
other sovereign debt securities issued by Latin American governments. "Sovereign
debt securities" are those debt securities issued by Latin American governments,
and other emerging market governments, that are traded in the markets of
developed countries or groups of developed countries. See "Investment Objectives
and Policies -- Other Investment Information."
EMERGING MARKETS FUND
The EMERGING MARKETS FUND'S investment objective is long-term growth of capital.
Under normal circumstances, the Emerging Markets Fund seeks its objective by
investing at least 65% of its total assets in equity securities of companies in
emerging markets. The Emerging Markets Fund may invest in the following types of
equity securities: common stock, preferred stock, securities convertible into
common stock, rights and warrants to acquire such securities and substantially
similar forms of equity with comparable risk characteristics. These securities
may be listed on securities exchanges, traded in various over-the-counter
("OTC") markets, or have no organized market.
For purposes of the Emerging Markets Fund's operations, "emerging markets" will
consist of all countries determined by the Manager to have developing or
emerging economies and markets. These countries generally include every country
in the world except the United States, Canada, Japan, Australia, New Zealand and
most countries located in Western Europe. See "Investment Objectives and
Policies" in the Statement of Additional Information for a complete list of all
the countries which the Emerging Markets Fund does not consider to be emerging
markets.
The Emerging Markets Fund will focus its investments in those emerging markets
which the Manager believes have strongly developing economies and in which the
markets are becoming more sophisticated. For purposes of the Emerging Markets
Fund's policy of normally investing at least 65% of its total assets in equity
securities of issuers in emerging markets, the Emerging Markets
Prospectus Page 15
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
Fund will consider investment in the following emerging markets:
<TABLE>
<S> <C>
Algeria Kenya
Argentina Malaysia
Bolivia Mauritius
Botswana Mexico
Brazil Morocco
Chile Nicaragua
China Nigeria
Colombia Pakistan
Costa Rica Panama
Cyprus Peru
Czech Republic Philippines
Dominican Republic Poland
Ecuador Portugal
Egypt Republic of Slovakia
El Salvador Russia
Finland Singapore
Ghana South Africa
Greece South Korea
Hong Kong Sri Lanka
Hungary Swaziland
India Taiwan
Indonesia Thailand
Israel Turkey
Ivory Coast Uruguay
Jamaica Venezuela
Jordan Zimbabwe
</TABLE>
Although the Emerging Markets Fund considers each of the above-listed countries
eligible for investment pursuant to the above described 65% of total assets
investment policy, the Emerging Markets Fund will not be invested in all such
markets at all times. Moreover, investing in some of those markets currently may
not be desirable or feasible, due to the lack of adequate custody arrangements
for the Emerging Markets Fund's assets, overly burdensome repatriation and
similar restrictions, the lack of organized and liquid securities markets,
unacceptable political risks or for other reasons.
As used in this Prospectus, a company in an emerging market is an entity: (i)
for which the principal securities trading market is an emerging market, as
defined above; (ii) that (alone or on a consolidated basis) derives 50% or more
of its total revenue from either goods produced, sales made or services
performed in emerging markets; or (iii) organized under the laws of, or with a
principal office in, an emerging market.
In managing the Emerging Markets Fund, the Manager seeks to identify those
countries and industries where economic and political factors, including
currency movements, are likely to produce above-average growth rates. The
Manager then seeks to invest in those companies in such countries and industries
that are best positioned and managed to take advantage of these economic and
political factors. The assets of the Emerging Markets Fund ordinarily will be
invested in the securities of issuers in at least three different emerging
markets.
The Emerging Markets Fund may invest up to 35% of its total 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 above, if investing therein
becomes feasible and desirable subsequent to the date of this Prospectus; and
(iv) cash and money market instruments. In evaluating investments in securities
of issuers in developed markets, the Manager will consider, among other things,
the business activities of the issuer in emerging markets and the impact that
developments in emerging markets are likely to have on the issuer. The Emerging
Markets Fund may also use instruments (including forward currency contracts)
often referred to as "derivatives." See "Currency, Options and Futures
Strategies."
The Emerging Markets Fund may invest in debt securities of both governmental and
corporate issuers in emerging markets. Emerging market debt securities often are
rated below investment grade. "Investment grade" debt securities are those rated
within the four highest ratings categories of S&P or Moody's or, if unrated,
determined by the Manager to be of comparable quality. Securities rated BBB by
S&P and Baa by Moody's are investment grade debt securities but are considered
to have speculative characteristics. Many emerging market debt securities are
not rated by U.S. ratings agencies. See "Risk Factors."
The Emerging Markets Fund will not invest more than 20% of its total assets in
debt securities rated below investment grade. Investment in non-investment grade
debt securities involves a high degree of risk and can be speculative. These
debt securities are the equivalent of high yield, high risk bonds, commonly
known as "junk bonds." See "Risk Factors."
If the rating of any of the Emerging Markets Fund's investments drops below a
minimum rating considered acceptable by the Manager for investment by the
Emerging Markets Fund, the Fund will dispose of any such security as soon as
practicable and
Prospectus Page 16
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GT GLOBAL VARIABLE INVESTMENT FUNDS
consistent with the best interests of the Emerging Markets Fund and its
shareholders.
Capital appreciation in debt securities in which the Emerging Markets Fund
invests may arise as a result of favorable changes in relative foreign exchange
rates, in relative interest rate levels and/or in the creditworthiness of
issuers. The receipt of income from debt securities owned by the Emerging
Markets Fund is incidental to the Emerging Markets Fund's objective of long-term
growth of capital.
GROWTH & INCOME FUND
The investment objectives of the GROWTH & INCOME FUND are long-term capital
appreciation together with current income. In seeking those objectives, the
Growth & Income Fund normally invests at least 65% of its total assets in a
combination of blue-chip equity securities and high quality government bonds.
The Growth & Income Fund considers an equity security to be "blue chip" if: (i)
during the issuer's most recent fiscal year the security offered an above
average dividend yield relative to the latest reported dividend yield on the
Morgan Stanley Capital International World Index; and (ii) the total equity
market capitalization of the issuer is at least $1 billion. Government bonds are
deemed to be high quality if at the time of the Fund's investment they are rated
within one of the two highest ratings categories of Moody's or S&P, i.e., rated
Aaa or Aa by Moody's or AAA or AA by S&P, or, if unrated, are determined by the
Manager to be of comparable quality.
Up to 35% of the Growth & Income Fund's assets may be invested in other equity
securities and investment grade government and corporate debt obligations which
the Manager believes will assist the Fund in achieving its objectives.
The equity securities in which the Growth & Income Fund may invest include
common stocks, preferred stocks, and warrants to acquire such stocks and other
equity securities. Government bonds that the Fund may purchase include debt
obligations issued or guaranteed by the U.S. or foreign governments (including
foreign states, provinces or municipalities) or their agencies, authorities or
instrumentalities. Such government securities also may include debt obligations
of supranational entities organized or supported by several national
governments, such as the World Bank and the Asian Development Bank. The debt
obligations held by the Growth & Income Fund may include debt obligations
convertible into equity securities or having attached warrants or rights to
purchase equity securities.
The Growth & Income Fund currently contemplates that it will invest principally
in securities of issuers in the United States, Canada, Japan, the Western
European nations, New Zealand and Australia. The Growth & Income Fund may invest
substantially in securities denominated in more than one currency. Under normal
market conditions, the Growth & Income Fund invests in the securities of issuers
located in at least three different countries. Investments in securities of
issuers in any one country, other than the United States, will represent no more
than 40% of the Fund's total assets. The Growth & Income Fund may purchase
securities of an issuer located in one country but denominated in the currency
of another country (or a multinational currency unit).
The Manager allocates the Growth & Income Fund's assets among securities of
issuers located in countries where opportunities for meeting the Fund's
investment objectives are expected to be the most attractive. The relative
proportions of equity and debt securities held by the Growth & Income Fund at
any one time will vary, and will depend upon the Manager's assessment of global
political and economic conditions and the relative strengths and weaknesses of
the world equity and debt markets. To enable the Growth & Income Fund to respond
to general economic changes and market conditions around the world, the Fund is
authorized to invest up to 100% of its assets in either equity securities or
debt securities.
The Growth & Income Fund may invest up to 5% of its assets in a combination of
securities purchased on a when-issued basis or with respect to which it has
entered into forward commitment agreements. The Growth & Income Fund may also
use instruments (including forward currency contracts) often referred to as
"derivatives." See "Currency, Options and Futures Strategies."
STRATEGIC INCOME FUND
The STRATEGIC INCOME FUND seeks high current income as its primary investment
objective and capital appreciation as its secondary investment objective.
The Strategic Income Fund allocates its assets among debt securities of issuers
located in three separate investment areas: (1) the United States; (2) developed
foreign countries; and (3) emerging markets. Within each area, the Strategic
Income Fund selects debt securities from those issued by
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GT GLOBAL VARIABLE INVESTMENT FUNDS
governments, their agencies and instrumentalities; central banks; and commercial
banks and other corporate entities. Debt securities in which the Strategic
Income Fund may invest include bonds, notes, debentures, and other similar
instruments. The Strategic Income Fund normally invests at least 50% of its
total assets in U.S. and foreign debt and other fixed income securities that, at
the time of purchase, are rated at least investment grade by Moody's or S&P, or,
if unrated, are determined by the Manager to be of comparable quality. No more
than 50% of the Strategic Income Fund's assets may be invested in securities
rated below investment grade, which involve a high degree of risk and are
predominantly speculative. These debt securities are the equivalent of high
yield, high risk bonds, commonly known as "junk bonds." The Strategic Income
Fund may invest in securities that are in default as to payment of principal
and/or interest. See "Risk Factors."
For purposes of the Strategic Income Fund's operations, "emerging markets"
consist of all countries determined by the Manager to have developing or
emerging economies and markets. These countries generally include every country
in the world except the United States, Canada, Japan, Australia, New Zealand and
most countries in Western Europe. The Strategic Income Fund currently considers
investment in the following emerging markets:
<TABLE>
<S> <C>
Algeria Ivory Coast
Argentina Jamaica
Bolivia Jordan
Botswana Kenya
Brazil Malaysia
Bulgaria Mauritius
Chile Mexico
China Morocco
Colombia Nicaragua
Costa Rica Nigeria
Cyprus Pakistan
Czech Republic Panama
Dominican Republic Peru
Ecuador Philippines
Egypt Poland
El Salvador Portugal
Finland Republic of Slovakia
Ghana Russia
Greece Singapore
Hong Kong South Africa
Hungary South Korea
India Sri Lanka
Indonesia Swaziland
Israel Taiwan
</TABLE>
<TABLE>
<S> <C>
Thailand Venezuela
Turkey Zimbabwe
Uruguay
</TABLE>
The Strategic Income Fund will not be invested in all such markets at all times.
Moreover, investing in some of those markets currently may not be desirable or
feasible, due to the lack of adequate custody arrangements for the Strategic
Income Fund's assets, overly burdensome repatriation requirements and similar
restrictions, the lack of organized and liquid securities markets, unacceptable
political risks or for other reasons.
The Strategic Income Fund's investments in emerging market securities may
consist substantially of Brady Bonds and other sovereign debt securities issued
by emerging market governments. "Sovereign debt securities" are those debt
securities issued by emerging market governments that are traded in the markets
of developed countries or groups of developed countries ("Sovereign Debt"). The
Manager may invest in debt securities of emerging market issuers that it
determines to be suitable investments for the Strategic Income Fund without
regard to ratings. Currently, substantially all emerging market debt securities
are considered to have a credit quality below investment grade.
The Strategic Income Fund also may consider making carefully selected
investments in debt securities rated below investment grade of corporate issuers
in the United States and in developed foreign markets, subject to the overall
50% limitation. See "Risk Factors." The Strategic Income Fund also may invest in
bank loan participations and assignments, which are fixed and floating rate
loans arranged through private negotiations between foreign entities. See "Other
Investment Information -- Loan Participations and Assignments." The Strategic
Income Fund may also use instruments (including forward currency contracts)
often referred to as "derivatives." See "Currency, Options and Futures
Strategies."
GLOBAL GOVERNMENT INCOME FUND
The GLOBAL GOVERNMENT INCOME FUND primarily seeks high current income. The
Fund's secondary objectives are capital appreciation and protection of principal
through active management of the maturity structure and currency exposure. The
Global Government Income Fund normally invests at least 65% of its total assets
in debt obligations issued or guaranteed by the U.S. or foreign governments
(including foreign states, provinces or
Prospectus Page 18
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
municipalities) or their agencies, authorities or instrumentalities. For
purposes of this policy, the Global Government Income Fund considers debt
obligations of supranational entities organized or supported by several national
governments, such as the World Bank and the Asian Development Bank, to be
"government securities." The Global Government Income Fund invests primarily in
high quality government securities, i.e., those securities rated in the two
highest ratings categories of Moody's or S&P, or, if unrated, determined by the
Manager to be of comparable quality.
The Global Government Income Fund currently contemplates that it will invest
principally in obligations of the United States, Canada, Japan, the Western
European nations, New Zealand and Australia, as well as in multinational
currency units. Under normal market conditions, the Global Government Income
Fund invests in the securities of issuers located in at least three different
countries. Investments in securities of issuers in any one country, other than
the United States, will represent no more than 40% of the Fund's total assets.
The Global Government Income Fund does 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 the Manager to be fully exchangeable into U.S.
dollars (or a multinational currency unit) without legal restriction. The Global
Government Income Fund may purchase securities of an issuer located in one
country but denominated in the currency of another country (or a multinational
currency unit).
Consistent with its investment objectives, the Global Government Income Fund may
invest up to 35% of its total assets in a combination of: (a) foreign government
securities that are not high quality but are rated at least investment grade by
S&P or Moody's, or if unrated, determined by the Manager to be of comparable
quality; (b) corporate debt obligations of U.S. or foreign issuers rated at
least investment grade by Moody's or S&P, including debt obligations convertible
into equity securities or having attached warrants or rights to purchase equity
securities; and (c) common and preferred stock, and warrants to acquire such
stocks, provided that the Fund will not invest more than 20% of its total assets
in such securities. The Global Government Income Fund may also use instruments
(including forward currency contracts) often referred to as "derivatives." See
"Currency, Options and Futures Strategies."
The U.S. government securities in which the Global Government Income Fund may
invest include direct obligations of the U.S. Treasury (such as Treasury bills,
notes and bonds) and obligations issued or guaranteed by U.S. government
agencies and instrumentalities, including securities that are supported by the
full faith and credit of the United States (such as Government National Mortgage
Association ("GNMA") certificates), securities that are supported by the right
of the issuer to borrow from the U.S. Treasury (such as securities of the
Federal Home Loan Banks) and securities that are supported primarily or solely
by the creditworthiness of the issuer (such as securities of the Federal
National Mortgage Association ("FNMA"), the Federal Home Loan Mortgage
Corporation ("FHLMC"), the Student Loan Marketing Association ("SLMA") and the
Tennessee Valley Authority ("TVA")).
The Manager allocates the Global Government Income Fund's assets among
securities of countries and in currency denominations where opportunities for
meeting the Fund's investment objectives are expected to be the most attractive.
The Manager selects securities of particular issuers on the basis of its views
as to the best values then currently available in the marketplace. Such values
are a function of 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.
U.S. GOVERNMENT INCOME FUND
The investment objective of the U.S. GOVERNMENT INCOME FUND is a high level of
current income, consistent with the preservation of capital. The U.S. Government
Income Fund normally invests at least 65% of its total assets in U.S. government
securities including: direct obligations of the U.S. Treasury (such as Treasury
bills, notes and bonds); and obligations issued or guaranteed by U.S. government
agencies and instrumentalities, including securities that are supported by the
full faith and credit of the United States (such as GNMAs), securities that are
supported by the right of the issuer to borrow from the U.S. Treasury (such as
securities of the Federal Home Loan Banks) and securities supported primarily or
solely by the creditworthiness of the issuer (such as securities of FNMA, FHLMC,
SLMA and TVA).
The U.S. Government Income Fund may invest in mortgage-related securities, such
as collateralized
Prospectus Page 19
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
mortgage obligations ("CMOs"), fixed-rate mortgage obligations and adjustable
rate mortgage obligations ("ARMs"). These securities are issued or guaranteed by
GNMA, FNMA or FHLMC, among others.
Treasury bills, notes and bonds and other obligations backed by the "full faith
and credit" pledge of the U.S. government historically have involved little risk
of loss of principal if held to maturity. While not backed by the full faith and
credit of the U.S. government, mortgage-related securities issued or guaranteed
by FNMA or FHLMC are high quality investments having minimal credit risks. All
securities in which the U.S. Government Income Fund invests, however, are
subject to variations in market value due to interest rate fluctuations.
A number of U.S. government agencies or government-sponsored organizations also
sell their own debt securities. These agencies typically are created by Congress
to fulfill a specific function, such as providing credit to home buyers or
farmers; for example, Federal Home Loan Banks, Federal Farm Credit Banks, and
SLMA. Some of these obligations are backed by the full faith and credit of the
U.S. government, as noted above, and some are supported primarily or solely by
the creditworthiness of the issuing agency, such as those issued by TVA. These
securities traditionally offer somewhat higher yields than U.S. Treasury
securities having similar maturities but may have greater principal risk.
The Resolution Funding Corporation ("Refcorp") issues bonds whose interest
payments are guaranteed by U.S. Treasury zero-coupon securities. The amount and
maturity date of the Refcorp bonds are the same as the amount and maturity date
of the corresponding U.S. Treasury zero-coupon bonds held in a separate custody
account at the Federal Reserve Bank of New York. Upon maturity, the Refcorp
bonds will be repaid from the proceeds of those U.S. Treasury zero-coupon bonds
maturing on the same date.
Consistent with its investment objective, the U.S. Government Income Fund may
invest up to 35% of its total assets in a combination of: foreign government
securities that are at least of investment grade quality and any U.S. government
securities that are rated below "high quality" but are rated at least investment
grade by Moody's or S&P, or if unrated determined by the Manager to be of
equivalent quality. For purposes of this policy, the U.S. Government Income Fund
considers debt obligations of supranational entities organized or supported by
several national governments, such as the World Bank and the Asian Development
Bank, to be "foreign government securities." The U.S. Government Income Fund may
purchase securities that are issued by the government of one country but
denominated in the currency of another country (or a multinational currency
unit). The U.S. Government Income Fund will not invest in a security denominated
in a foreign currency if such currency is not at the time of investment
considered by the Manager to be fully exchangeable into U.S. dollars (or a
multinational currency unit) without legal restriction. The U.S. Government
Income Fund may also use instruments (including forward currency contracts)
often referred to as "derivatives." See "Currency, Options and Futures
Strategies."
MONEY MARKET FUND
The investment objective of the MONEY MARKET FUND is maximum current income
consistent with liquidity and conservation of capital. The Money Market Fund
seeks this objective by investing in high quality, U.S. dollar-denominated money
market instruments, i.e., debt obligations with remaining maturities of 13
months or less.
The Money Market Fund seeks to maintain a net asset value of $1.00 per share. To
do so, the Money Market Fund will maintain a dollar-weighted average maturity of
90 days or less and will purchase only instruments having remaining maturities
of 13 months or less.
The Money Market Fund invests only in high quality, U.S. dollar-denominated
money market instruments determined by the Manager to present minimal credit
risks in accordance with procedures established by the Board of Trustees. To be
considered high quality, a security must be rated in accordance with applicable
rules in one of the two highest rating categories for short-term securities by
at least two NRSROs (or one, if only one NRSRO has rated the security); or, if
the issuer has no applicable short-term rating, determined by the Manager to be
of equivalent credit quality.
High quality securities are divided into "first tier" and "second tier"
securities. The Money Market Fund will invest only in first tier securities.
First tier securities have received the highest rating for short-term debt from
at least two NRSROs, i.e., rated not lower than A-1 by S&P or P-1 by Moody's (or
one, if only one such NRSRO has rated the
Prospectus Page 20
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
security), or, if unrated, determined to be of equivalent quality as described
above. If a security has been assigned different ratings by different NRSROs, at
least two NRSROs must have assigned the higher rating in order for the Manager
to determine the security's eligibility for purchase by the Fund.
The rating criteria of S&P and Moody's, two NRSROs which are currently rating
instruments of the type the Money Market Fund may purchase, are more fully
described in the "Description of Debt Ratings" in the Statement of Additional
Information.
The Money Market Fund may invest in the following types of money market
instruments:
Obligations issued or guaranteed by the U.S. and foreign governments, their
agencies and instrumentalities. These include direct obligations of the U.S.
Treasury, such as Treasury bills and notes; obligations backed by the full faith
and credit of the U.S. government, such as those issued by GNMA; obligations
supported primarily or solely by the creditworthiness of the issuer, such as
securities of FNMA, FHLMC and TVA; and similar U.S. dollar-denominated
instruments of foreign governments, their agencies, authorities and
instrumentalities.
Obligations of U.S. and non-U.S. banks, including certificates of deposit,
bankers' acceptances and similar instruments, when such banks have total assets
at the time of purchase equal to at least $1 billion.
Interest-bearing deposits in U.S. commercial and savings banks having total
assets of $1 billion or less, in principal amounts at each such bank not greater
than are insured by an agency of the U.S. government, provided that the
aggregate amount of such deposits (including interest earned) does not exceed 5%
of the Money Market Fund's assets.
Commercial paper and other short-term debt obligations of U.S. and foreign
companies, rated at least A-1 by S&P or Prime-1 by Moody's, or, if not rated,
determined to be of equivalent quality by the Manager, provided that any
outstanding intermediate- or long-term debt of the issuer is rated at least AA
by S&P or Aa by Moody's. See the "Description of Debt Ratings" in the Statement
of Additional Information. These instruments may include corporate bonds and
notes (corporate obligations that mature, or that may be redeemed, in one year
or less). These corporate obligations include variable rate master notes, which
are redeemable upon notice and permit investment of fluctuating amounts at
varying rates of interest pursuant to direct arrangements with the issuer of the
instrument.
Repurchase agreements secured by any of the foregoing.
In managing the Money Market Fund, the Manager may employ a number of
professional money management techniques, including varying the composition of
the Fund's investments and the average weighted maturity of the Fund's
securities within the limitations described above. Determinations to use such
techniques will be based on the Manager's identification and assessment of the
relative values of various money market instruments and the future of interest
rate patterns, economic conditions and shifts in fiscal and monetary policy. The
Manager also may seek to improve the Money Market Fund's income by purchasing or
selling securities in order to take advantage of yield disparities that
regularly occur in the market. For example, frequently there are yield
disparities between different types of money market instruments, and market
conditions from time to time result in similar securities trading at different
prices.
OTHER INVESTMENT INFORMATION
INVESTMENT IN 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. Repurchase
agreements maturing in more than seven days are considered to be illiquid
securities. The Manager believes that investment by the Infrastructure Fund, the
Natural Resources Fund, the Telecommunications Fund and the Latin America Fund
in carefully selected investments in joint ventures, cooperatives, partnerships
and state enterprises, private placements, and other similar vehicles which are
illiquid (collectively, "Special Situations") could enable the Infrastructure
Fund, the Natural Resources Fund, the Telecommunications Fund and the Latin
America Fund to achieve capital appreciation substantially exceeding the
appreciation each Fund would realize if it did not make such investments.
However, in order to limit investment risk, the Infrastructure Fund, the Natural
Resources Fund, the Telecommunications Fund and the Latin America Fund are
permitted to invest no more than 5% of their respective total assets in Special
Situations, and no more than 15% of their
Prospectus Page 21
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
respective net assets in Special Situations and other illiquid investments. See
"Risk Factors" in the Statement of Additional Information.
BRADY BONDS. The Latin America Fund and the Strategic Income Fund may invest in
"Brady Bonds," which are debt restructurings that provide for the exchange of
cash and loans for newly issued bonds. Brady Bonds have been issued by the
countries of, among others, Albania, Argentina, Brazil, Bulgaria, Costa Rica,
Dominican Republic, Ecuador, Jordan, Mexico, Nigeria, the Philippines, Poland,
Uruguay and Venezuela and are expected to be issued by Panama, Peru and other
emerging market countries. Approximately $139 billion in principal amount of
Brady Bonds is outstanding, the largest proportion having been issued by Brazil,
Argentina and Mexico. Brady Bonds issued by Brazil, Argentina and Mexico
currently are rated below investment grade. As of the date of this Prospectus,
the Funds are not aware of the occurrence of any payment defaults on Brady
Bonds. Investors should recognize, however, that Brady Bonds have been issued
only recently, and, accordingly, do not have a long payment history. Brady Bonds
may be collateralized or uncollateralized, are issued in various currencies
(primarily the U.S. dollar) and are actively traded in the secondary market for
Latin American debt. The Salomon Brothers Brady Bond Index provides a benchmark
that can be used to compare returns of emerging market Brady Bonds with returns
in other bond markets, e.g., the U.S. bond market.
The Strategic Income Fund may invest in either collateralized or
uncollateralized Brady Bonds. U.S. dollar-denominated, collateralized Brady
Bonds, which may be fixed rate par bonds or floating rate discount bonds, are
collateralized in full as to principal by U.S. Treasury zero coupon bonds having
the same maturity as the bonds. Interest payments on such bonds generally are
collateralized by cash or securities in an amount that, in the case of fixed
rate bonds, is equal to at least one year of rolling interest payments or, in
the case of floating rate bonds, initially is equal to at least one year's
rolling interest payments based on the applicable interest rate at that time and
is adjusted at regular intervals thereafter.
PRIVATIZATIONS. The governments of some foreign countries have been engaged in
programs of selling part or all of their stakes in government owned or
controlled enterprises ("privatizations"). The Manager believes that
privatizations may offer opportunities for significant capital appreciation and
intends to invest assets of the Infrastructure Fund, the Natural Resources Fund,
the Telecommunications Fund, the Emerging Markets Fund, and the Latin America
Fund, respectively, in privatizations in appropriate circumstances. In certain
foreign countries, the ability of foreign entities such as the Funds to
participate in privatizations may be limited by local law, or the terms on which
the Funds may be permitted to participate may be less advantageous than those
for local investors. There can be no assurance that foreign governments will
continue to sell companies currently owned or controlled by them or that
privatization programs will be successful.
TEMPORARY DEFENSIVE INVESTMENT STRATEGIES. Each Fund retains the flexibility to
respond promptly to changes in market and economic conditions. Accordingly, in
the interest of preserving shareholders' capital and consistent with each Fund's
investment objective(s), the Manager may employ a temporary defensive investment
strategy if it determines such a strategy to be warranted due to market
conditions. Under a defensive strategy, a Fund may hold cash (U.S. dollars,
foreign currencies or multinational currency units) and/or invest any portion or
all of its assets in debt securities or high quality money market instruments
issued by corporations or the U.S. or a foreign government. In addition, for
temporary defensive purposes, such as during times of international political or
economic uncertainty, most or all of a Fund's investments may be made in the
United States and denominated in U.S. dollars. To the extent a Fund adopts a
temporary defensive position, it will not be invested so as to achieve directly
its investment objective.
In addition, pending investment of proceeds from new sales of shares of a Fund
or to meet its ordinary daily cash needs, a Fund may hold up to 100% of its
total assets in cash (U.S. dollars, foreign currencies or multinational currency
units) and may invest any portion or all of its assets in foreign or domestic
high quality money market instruments. Money market instruments in which a Fund
may invest include, but are not limited to, U.S. or foreign government
securities; high grade commercial paper; bank certificates of deposit; bankers'
acceptances; and repurchase agreements related to any of the foregoing. High
grade commercial paper refers to commercial paper rated A-1 by S&P or P-1 by
Moody's or, if not rated, determined by the Manager to be of comparable quality
to commercial paper so rated.
LOAN PARTICIPATIONS AND ASSIGNMENTS. The Strategic Income Fund may invest in
fixed and
Prospectus Page 22
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GT GLOBAL VARIABLE INVESTMENT FUNDS
floating rate loans ("Loans") arranged through private negotiations between a
foreign entity and one or more financial institutions ("Lenders"). The majority
of the Strategic Income Fund's investments in Loans in emerging markets is
expected to be in the form of participations in Loans ("Participations") and
assignments of portions of Loans ("Assignments") from third parties.
Participations typically will result in the Strategic Income Fund's having a
contractual relationship only with the Lender, not with the borrowing
government. The Strategic Income Fund will have the right to receive payments of
principal, interest and any fees to which it is entitled only from the Lender
selling the Participation and only upon receipt by the Lender of the payments
from the borrower. In connection with purchasing Participations, the Strategic
Income Fund generally will have no right to enforce compliance by the borrower
with the terms of the loan agreement relating to the loan ("Loan Agreement"),
nor any rights of set-off against the borrower, and the Fund may not directly
benefit from any collateral supporting the Loan in which it has purchased the
Participation. As a result, the Strategic Income Fund will assume the credit
risk of both the borrower and the Lender that is selling the Participation. In
the event of the insolvency of the Lender selling a Participation, the Strategic
Income Fund may be treated as a general creditor of the Lender and may not
benefit from any set-off between the Lender and the borrower. The Strategic
Income Fund will acquire Participations only if the Lender interpositioned
between the Fund and the borrower is determined by the Manager to be
creditworthy. When the Strategic Income Fund purchases Assignments from Lenders,
the Fund will acquire direct rights against the borrower on the Loan. However,
because Assignments are arranged through private negotiations between potential
assignees and potential assignors, the rights and obligations acquired by the
Strategic Income Fund as the purchaser of an Assignment may differ from, and be
more limited than, those held by the assigning Lender.
The Strategic Income Fund may have difficulty disposing of Assignments and
Participations. The liquidity of such securities is limited and the Manager
anticipates that such securities could be sold only to a limited number of
institutional investors. The lack of a liquid secondary market could have an
adverse impact on the value of such securities and on the Strategic Income
Fund's ability to dispose of particular Assignments or Participations when
necessary to meet the Fund's liquidity needs or in response to a specific
economic event, such as a deterioration in the creditworthiness of the borrower.
The lack of a liquid secondary market for Assignments and Participations also
may make it more difficult for the Fund to assign a value to those securities
for purposes of valuing the Strategic Income Fund's holdings and calculating its
net asset value. The Strategic Income Fund's investment in illiquid securities,
including Assignments and Participations, is limited to 15% of its net assets.
BORROWING AND LENDING. From time to time, it may be advantageous for the Funds
to borrow money rather than sell existing securities to meet redemption
requests. Accordingly, a Fund may borrow from banks or (except for the Money
Market Fund) may borrow through reverse repurchase agreements in connection with
meeting requests for the redemption of shares of the Fund. Each Fund also may
borrow up to 5% of its total assets for temporary or emergency purposes other
than to meet redemptions by its investors. The Funds (except for the Strategic
Income Fund) will not borrow for leveraging purposes, nor will the Funds (except
for the Infrastructure Fund, the Natural Resources Fund, the Telecommunications
Fund, the Emerging Markets Fund and the Latin America Fund) purchase securities
while borrowings are outstanding. The Infrastructure Fund, the Natural Resources
Fund, the Telecommunications Fund, the Emerging Markets Fund and the Latin
America Fund may each purchase additional securities when outstanding borrowings
represent no more than 5% of its assets. See "Investment Objectives and
Policies" in the Statement of Additional Information.
The Strategic Income Fund is authorized to borrow money from banks in an amount
up to 33 1/3% of its total assets, (including the amount borrowed), less all
liabilities and indebtedness other than the borrowing and may use the proceeds
of such borrowings for investment purposes. The Strategic Income Fund will
borrow only when the Manager believes that such borrowings will benefit the
Fund, after taking into account considerations such as the costs of the
borrowing and the likely investment returns on the securities purchased with the
borrowed monies.
Borrowing for investment purposes is known as leveraging, which is a speculative
practice. Such borrowing by the Strategic Income Fund will create an opportunity
for increased net income but, at the same time, will involve special risk
considerations. For example, leveraging might exaggerate changes in the net
asset value of the Strategic Income Fund's shares and in the yield on the Fund's
Prospectus Page 23
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
portfolio. Although the principal of such borrowings will be fixed, the
Strategic Income Fund's assets may change in value during the time the borrowing
is outstanding. To the extent the income derived from the assets obtained with
borrowed funds exceeds the interest and other expenses that the Strategic Income
Fund will have to pay, the Fund's net income will be greater than if borrowing
were not used. Conversely, if the income from the assets obtained with borrowed
funds is not sufficient to cover the cost of borrowing, the net income of the
Strategic Income Fund will be less than if borrowing were not used, and
therefore the amount available for distribution to shareholders as dividends
will be reduced. The Strategic Income Fund expects that some of its borrowings
may be made on a secured basis.
Each Fund (except the Money Market Fund) is authorized to make loans of its
portfolio securities to broker/dealers or to other institutional investors. The
borrower must maintain with the lending Fund's custodian collateral consisting
of cash, U.S. government securities or other liquid, securities equal to at
least the value of the borrowed securities, plus any accrued interest. A Fund
will receive any interest paid on the loaned securities and a fee and/or a
portion of the interest earned on the collateral. Income received in connection
with securities lending may be used to offset the Funds' custody fees. Each Fund
will limit its loans of securities to an aggregate of 30% of the value of its
total assets, measured at the time any such loan is made. The risks in lending
portfolio securities, as with other extensions of secured credit, consist of
possible delays in receiving additional collateral or in recovery of the
securities or possible loss of rights in the collateral should the borrower fail
financially. See "Investment Objectives and Policies" in the Statement of
Additional Information.
INVESTMENT IN OTHER INVESTMENT COMPANIES OR VEHICLES. 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. Pursuant to the Investment Company Act of 1940, as amended (the "1940
Act"), each Fund (except the Money Market Fund) may invest up to 10% of its
total assets in the aggregate in shares of other investment companies, and up to
5% of its total assets in any one investment company, but may purchase no more
than 3% of the voting stock of the acquired investment company, all as of the
time such shares are purchased. Investment in other investment companies or
vehicles may be the most practical or only manner in which a Fund can
participate in certain securities markets. Such investment may involve the
payment of substantial premiums above the value of such issuers' portfolio
securities, and is subject to limitations under the 1940 Act and market
availability. There can be no assurance that investment companies or other
vehicles for investing in certain countries will be available for investment. A
Fund will not invest in such vehicles or funds unless, in the judgment of the
Manager, the potential benefits of such investment justify the payment of any
applicable premium or sales charge. As a shareholder in an investment company, a
Fund would bear its ratable share of that investment company's expenses,
including its advisory and administration fees. At the same time, a Fund would
continue to pay its own management fees and other expenses. See "Investment
Objectives and Policies" in the Statement of Additional Information.
WHEN-ISSUED AND FORWARD COMMITMENT SECURITIES. The Funds may purchase debt
securities on a "when-issued" basis and may purchase or sell such securities on
a "forward commitment" basis in order to hedge against anticipated changes in
interest rates and prices. The price of the securities, which is generally
expressed in yield terms, is fixed at the time the commitment is made, but
delivery and payment for the securities take place at a later date. When-issued
securities and forward commitments may be sold prior to the settlement date, but
a Fund will enter into when-issued and forward commitments only with the
intention of actually receiving or delivering the securities, as the case may
be. No income accrues on securities which have been purchased pursuant to a
forward commitment or on a when-issued basis prior to delivery to the Fund. If a
Fund disposes of the right to acquire a when-issued security prior to its
acquisition or disposes of its right to deliver or receive against a forward
commitment, it may incur a gain or loss. At the time a Fund enters into a
transaction on a when-issued or forward commitment basis, a segregated account
consisting of cash or liquid securities equal to the value of the when-issued or
forward commitment securities will be established and maintained at the Funds'
custodian bank and will be marked to market daily. There is a risk that the
securities purchased on a when-issued or forward commitment basis may not be
delivered and that the Fund may incur a loss or miss an opportunity to make an
alternative investment as a result.
Prospectus Page 24
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
The Strategic Income Fund may also sell securities on a "when, as and if issued"
basis for hedging purposes. Under such a transaction, the Fund is required to
deliver at a future date a security it does not presently hold, but which it has
a right to receive if the security is issued. Issuance of the security may not
occur, in which case the Fund would have no obligation to the other party, and
would not receive payment for the sale. Selling securities on a "when, as and if
issued" basis may reduce risk of loss to the extent that such a sale wholly or
partially offsets unfavorable price movements on the investments being hedged.
However, such sales also limit the amount the Fund can receive if the "when, as
and if issued" security is in fact issued.
REPURCHASE AGREEMENTS. Repurchase agreements are transactions in which a Fund
purchases a security from a bank or recognized securities dealer and
simultaneously commits to resell that security to the bank or dealer at an
agreed-upon price, date and market rate of interest unrelated to the coupon rate
or maturity of the purchased security. Although repurchase agreements carry
certain risks not associated with direct investments in securities, including
possible decline in the market value of the underlying securities and delays and
costs to the Fund if the other party to the repurchase agreement becomes
bankrupt, the Funds intend to enter into repurchase agreements only with banks
and dealers believed by the Manager to present minimal credit risks in
accordance with guidelines approved by the Companies' Boards of Trustees. The
Manager reviews and monitors the creditworthiness of such institutions under the
Board's general supervision. See "Investment Objectives and Policies --
Repurchase Agreements" in the Statement of Additional Information.
The Funds 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 a default in
the obligation to repurchase were less than the repurchase price, a Fund would
suffer a loss. If the financial institution that is party to a repurchase
agreement petitions for bankruptcy or otherwise becomes subject to bankruptcy or
other liquidation proceedings, there may be restrictions on a 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 Funds intend to comply with provisions under
the U.S. Bankruptcy Code that would allow them immediately to resell such
collateral. The Funds will not enter into a repurchase agreement with a maturity
of more than seven days if, as a result, more than 15% (10% with respect to the
Money Market Fund) of the value of their respective net assets would be invested
in such repurchase agreements and other illiquid securities.
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 Funds intend to comply with provisions under the U.S. Bankruptcy Code that
would allow them immediately to resell such collateral. The Funds will not enter
into a repurchase agreement with a maturity of more than seven days if, as a
result, more than 15% (10% with respect to the Money Market Fund) of the value
of their respective net assets would be invested in such repurchase agreements
and other illiquid securities.
STRIPPED MORTGAGE SECURITIES. The U.S. Government Income Fund may invest in
"stripped" mortgage securities which are derivative multi-class mortgage
securities. The stripped mortgage securities in which the U.S. Government Income
Fund may invest are issued or guaranteed by agencies or instrumentalities of the
U.S. government. Stripped mortgage securities have greater market volatility
than other types of mortgage securities in which the U.S. Government Income Fund
may invest.
Stripped mortgage securities are usually structured with two classes that
receive different proportions of the interest and principal distributions on a
pool of mortgage assets. A common type of stripped mortgage security will have
one class receiving some of the interest and most of the principal from the
mortgage assets, while the other class will receive most of the interest and the
remainder of the principal. In the most extreme case, one class will receive all
of the interest (the interest-only or "IO" class), while the other class will
receive all of the principal (the principal-only or "PO" class). The yield to
maturity on an IO class is extremely sensitive not only to changes in prevailing
interest rates but also to the rate of principal payments (including
prepayments) on the related underlying mortgage assets, and a rapid rate of
principal payments may have a material adverse effect on the yield to maturity
of certain mortgage securities held by the U.S. Government Income Fund. If the
underlying mortgage assets experience greater than anticipated prepayments of
principal, the U.S.
Prospectus Page 25
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GT GLOBAL VARIABLE INVESTMENT FUNDS
Government Income Fund may fail to fully recoup its initial investment in these
securities even if the securities are rated in the highest rating categories,
AAA or Aaa, by S&P or Moody's, respectively.
ZERO COUPON SECURITIES. The Strategic Income Fund and the U.S. Government Income
Fund may invest in certain zero coupon securities that are "stripped" U.S.
Treasury notes and bonds. The Strategic Income Fund also may invest in zero
coupon and other deep discount securities issued by foreign governments and
domestic and foreign corporations, including certain Brady Bonds and other
foreign debt securities and in payment-in-kind securities. Zero coupon
securities pay no interest to holders prior to maturity, and payment-in-kind
securities pay interest in the form of additional securities. However, a portion
of the original issue discount on zero coupon securities and the "interest" on
payment-in-kind securities are included in the investing Fund's income.
Accordingly, to continue to qualify for tax treatment as a regulated investment
company and to avoid a certain excise tax (see "Taxes" in the Statement of
Additional Information), the Strategic Income Fund or the U.S. Government Income
Fund may be required to distribute as a dividend an amount that is greater than
the total amount of cash it actually receives. These distributions must be made
from the Funds' respective cash assets or, if necessary, from the proceeds of
sales of portfolio securities. The Strategic Income Fund and the U.S. Government
Income Fund will not be able to purchase additional income-producing securities
with cash used to make such distributions, and their respective current incomes
ultimately may be reduced as a result. Zero coupon and payment-in-kind
securities usually trade at a deep discount from their face or par value and are
subject to greater fluctuations of market value in response to changing interest
rates than are debt obligations of comparable maturities that make current
distributions of interest in cash.
OTHER INFORMATION. The investment objective(s) of each Fund may not be changed
without the approval of a "majority of the outstanding voting securities" of
such Fund. As defined in the 1940 Act and as used in this Prospectus, a
"majority of the outstanding voting securities" of a Fund means 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. In addition, certain investment
limitations have been adopted by each Fund which may not be changed without the
approval by a "majority of the outstanding voting securities" of the Fund. A
complete description of these limitations is included in the Statement of
Additional Information. Unless specifically noted, the investment policies
described in this Prospectus and in the Statement of Additional Information are
not fundamental policies and may be changed by the Board of Trustees of the
relevant Company, without shareholder approval. See "Investment Limitations" in
the Statement of Additional Information.
PORTFOLIO TURNOVER. The Funds' portfolio turnover rates for the fiscal year
ended December 31, 1995 are outlined in the table below. These rates will vary
from year to year.
<TABLE>
<CAPTION>
FUND TURNOVER %
- -------------------------------------------- ---------------
<S> <C>
GT Global Variable New Pacific Fund 67%
GT Global Variable Europe Fund 123%
GT Global Variable Latin America Fund 140%
GT Global Variable America Fund 79%
GT Global Variable International Fund 107%
GT Global Variable Infrastructure Fund 38%
<CAPTION>
FUND TURNOVER %
- -------------------------------------------- ---------------
<S> <C>
GT Global Variable Telecommunications Fund 70%
GT Global Variable Emerging Markets Fund 210%
GT Global Variable Growth & Income Fund 73%
GT Global Variable Global Government Income
Fund 394%
GT Global Variable Strategic Income Fund 193%
GT Global Variable U.S. Government Income
Fund 186%
GT Global Variable Natural Resources Fund 875%
GT Global Money Market Fund N/A
</TABLE>
High turnover involves correspondingly greater transaction costs in the form of
dealer spreads or brokerage commissions and other costs that a Fund will bear
directly, and could result in the realization of net capital gains which would
be taxable when distributed to shareholders. See "Execution of Portfolio
Transactions" in the Statement of Additional Information.
Prospectus Page 26
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
RISK FACTORS
- --------------------------------------------------------------------------------
The net asset value of each Fund (other than the Money Market Fund) will
fluctuate, reflecting changes in the market value of its investments. There can
be no assurance, however, that the Money Market Fund will be able to maintain a
stable net asset value of $1.00 per share. The value of debt securities held by
a Fund generally varies inversely with movements in interest rates. In addition,
the various investment policies of each Fund present certain specific risks.
These risks are described below.
GENERAL RISKS OF FOREIGN INVESTING. All of the Funds (to a lesser extent the
America Fund) are authorized to invest in foreign securities. Foreign investing
entails certain risks not associated with investing in the securities of U.S.
issuers. Foreign securities generally will not be registered with, nor will the
issuers thereof be subject to the reporting requirements of, the SEC.
Accordingly, there may be less publicly available information about foreign
securities and issuers than is available about U.S. securities and issuers.
Foreign companies generally are not subject to uniform accounting, auditing and
financial reporting standards, practices and requirements comparable to those
applicable to U.S. companies. Securities of some foreign companies are less
liquid and their prices may be more volatile than securities of comparable U.S.
companies. In addition, certain costs attributable to foreign investing, such as
custody charges, are higher than those attributable to domestic investing. The
respective Funds' net investment income from foreign issuers may be subject to
non-U.S. withholding taxes, thereby reducing the respective Funds' net
investment income.
In addition, with respect to some foreign countries, there is the possibility of
expropriation or confiscatory taxation, limitations on the removal of funds or
other assets of the Funds, political or social instability, or diplomatic or
economic developments which could affect the Funds' investments in those
countries. Moreover, individual foreign economies may differ favorably or
unfavorably from the U.S. economy in such respects as growth of gross national
product, rates of inflation, rates of savings and capital reinvestment, resource
self-sufficiency and balance of payments positions. The Manager will rely on its
worldwide financial and investment expertise to attempt to limit these risks.
See "Risk Factors" in the Statement of Additional Information.
Because the Funds (except the Money Market Fund) may invest substantially, and
the America Fund to a lesser extent, in securities denominated in currencies
other than the U.S. dollar, and because most of the Funds may hold foreign
currencies, such Funds will be affected favorably or unfavorably by exchange
control regulations or changes in the exchange rates between such currencies and
the U.S. dollar. Changes in currency exchange rates will influence the value of
the securities held by the Funds and, as a result, the value of the Funds'
shares, and also may affect the value of dividends and interest earned by the
Funds and gains and losses realized by the Funds. Exchange rates are determined
by the forces of supply and demand in the foreign exchange markets. These forces
are affected by the international balance of payments and other economic and
financial conditions, government intervention, speculation and other factors. If
the currency in which a security is denominated appreciates against the U.S.
dollar, the dollar value of the security will increase. Conversely, a decline in
the exchange rate of the currency would adversely affect the value of the
security expressed in U.S. dollars.
SPECIAL RISKS OF A GLOBAL THEME FUND. As the Infrastructure Fund, the Natural
Resources Fund and the Telecommunications Fund concentrate their investments in
a specific industry, the value of the securities held by the Infrastructure
Fund, the Natural Resources Fund and the Telecommunications Fund and, as a
result, the share price of each Fund, may be more volatile than those of
investment companies that do not concentrate their investments in such a manner.
No Fund should be considered a complete investment program.
The net asset value of Infrastructure Fund shares will be susceptible to factors
affecting the infrastructure industries. In the U.S. and foreign countries,
these industries may be subject to greater political, environmental and other
governmental regulation than many other industries. The nature of such
regulation continues to evolve in the United States and foreign countries, and
changes
Prospectus Page 27
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
in governmental policies and the need for regulatory approvals may have a
material effect on the products and services of this industry. Electric, gas,
water and most telecommunications companies in the United States, for example,
are subject to both federal and state regulation affecting permitted rates of
return and the kinds of services that may be offered. Changes in prevailing
interest rates may also affect the Infrastructure Fund's share values because
prices of equity and debt securities of infrastructure companies often tend to
increase when interest rates decline and decrease when interest rates rise. In
addition, many infrastructure companies, including coal, steel, and other types
of companies, have historically been subject to the risks attendant to increases
in fuel and other operating costs, high interest costs on borrowed funds, costs
associated with compliance with environmental and other safety regulations and
changes in the regulatory climate. Such governmental regulation may also hamper
the development of new technologies, and it is impossible to predict the
direction, type or effect of any future regulation. Further competition is
intense for many infrastructure companies. As a result, many of these companies
may be adversely affected in the future and such companies may be subject to
increased share price volatility. In addition, many companies have diversified
into oil and gas exploration and development, therefore returns may be more
sensitive to energy prices. Other infrastructure companies, such as water supply
companies, are in a highly fragmented industry due to local ownership. Generally
these companies are mature and are experiencing little or no growth.
The net asset value of Natural Resources Fund shares will be susceptible to
factors affecting the natural resource industries. In the U.S. and foreign
countries, for example, these industries may be subject to greater political,
environmental and other governmental regulation than many other industries. The
nature of such regulation continues to evolve in the U.S. and foreign countries,
and changes in governmental policies and the need for regulatory approvals may
have a material effect on the products and services of natural resource
companies. For example, the exploration, development and distribution of coal,
oil and gas in the United States are subject to significant federal and state
regulation, which may affect rates of return on such investments and the kinds
of services that may be offered. In addition, many natural resource companies
historically have been subject to significant costs associated with compliance
with environmental and other safety regulations and changes in the regulatory
climate. Such governmental regulations may also hamper the development of new
technologies, and it is impossible to predict the direction, type or effect of
any future regulation. Further, competition is intense for many natural resource
companies. As a result, many of these companies may be adversely affected in the
future and the value of the securities issued by such companies may be subject
to increased share price volatility.
The value of the securities held in the portfolio of the Natural Resources Fund
will fluctuate in response to stock market developments, as well as market
conditions for the particular natural resources with which the issuer is
involved. The price of the commodity will fluctuate due to changes in worldwide
levels of inventory, and changes, perceived or actual, in production and
consumption. The values of natural resources may fluctuate directly with respect
to various stages of the inflationary cycle and perceived inflationary trends
and are subject to numerous factors, including national and international
politics. The Natural Resources Fund's investments in precious metals are
subject to many risks, including substantial price fluctuations over short
periods of time. Further, the Natural Resources Fund's investments in companies
are expected to be subject to irregular fluctuations in earnings, because these
companies are affected by changes in the availability of money, the level of
interest rates, and other factors.
The net asset value of Telecommunications Fund shares will be susceptible to
factors affecting the telecommunications industry. This industry may be subject
to greater governmental regulation than many other industries, and changes in
governmental policies and the need for regulatory approvals may have a material
effect on the products and services of the industry. Telephone operating
companies in the United States, for example, are subject to both federal and
state regulations affecting permitted rates of return and the kinds of services
that may be offered. Certain types of companies in which the Telecommunications
Fund might invest are engaged in fierce competition for a share of the market
for their products. In recent years, these have been companies providing goods
and services such as private and local area networks and telephone set
equipment.
While the holdings of the Telecommunications Fund, the Infrastructure Fund and
the Natural Resources Fund normally will include securities of established
suppliers of traditional products and services, each of these Funds may invest
in
Prospectus Page 28
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
smaller companies which can benefit from the development of new products and
services. These smaller companies may present greater opportunities for capital
appreciation, but may involve greater risks than large, established issuers.
Such smaller companies may have limited product lines, markets or financial
resources, and their securities may trade less frequently and in more limited
volume than the securities of larger, more established companies. As a result,
the prices of the securities of such smaller companies may fluctuate to a
greater degree than the prices of the securities of other issuers.
SPECIAL RISKS OF EMERGING MARKETS. The Latin America Fund and the Emerging
Markets Fund concentrate their investments in emerging markets. Most of the
other Funds also may invest a portion of their assets in emerging markets.
Investing in emerging markets involves risks relating to potential political and
economic instability within such markets and the risks of expropriation,
nationalization, confiscation of assets and property or the imposition of
restrictions on foreign investment and on repatriation of capital invested. In
the event of such expropriation, nationalization or other confiscation in any
emerging market, the Funds could lose their entire investment in that market.
The net asset value of the Funds that invest in emerging markets will fluctuate,
reflecting fluctuations in the market value of their portfolio positions and
their net currency exposure. There is no assurance that these Funds will achieve
their investment objectives.
The Manager believes that the issuers of securities in emerging markets often
have sales and earnings growth rates which exceed those in developed countries
and that such growth rates may in turn be reflected in more rapid share price
appreciation. Accordingly, the Manager believes that investing in equity
securities in emerging markets may enable Funds investing in such markets to
achieve results superior to those produced by mutual funds with similar
objectives that invest solely in equity securities of issuers domiciled in the
U.S. and/or in other developed markets.
Nonetheless, investing in the Funds that invest in emerging markets entails a
substantial degree of risk. Because of the special risks associated with
investing in emerging markets, an investment in such Funds should be considered
speculative. Investors are strongly advised to consider carefully the special
risks involved in emerging markets, which are in addition to the usual risks of
investing in developed markets around the world.
Economies in individual emerging markets may differ favorably or unfavorably
from the U.S. economy in the following respects: growth of gross national
product, rates of inflation, currency depreciation, capital reinvestment,
resource self-sufficiency and balance of payments positions. Many emerging
markets 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 very negative effects on the economies and
securities markets of certain countries with emerging markets.
Economies in emerging markets generally are dependent heavily upon international
trade and, accordingly, have been and may continue to be affected adversely by
trade barriers, exchange controls, managed adjustments in relative currency
values and other protectionist measures imposed or negotiated by the countries
with which they trade. These economies also have been and may continue to be
affected adversely by economic conditions in the countries in which they trade.
The securities markets of emerging countries are substantially smaller, less
developed, less liquid and more volatile than the securities markets of the
United States and other developed countries. Disclosure and regulatory standards
in many respects are less stringent than in more developed markets. There also
may be a lower level of monitoring and regulation of emerging markets and the
activities of investors in such markets, and enforcement of existing regulations
has been extremely limited.
In addition, brokerage commissions, custodial services and other costs relating
to investment in foreign markets, particularly emerging markets, generally are
more expensive than in the United States. Such markets have different settlement
and clearance procedures. In certain markets there have been times when
settlements have been unable to keep pace with the volume of securities
transactions, making it difficult to conduct such transactions.
The inability of a Fund to make intended securities purchases due to settlement
problems could cause the Fund to miss attractive investment opportunities.
Inability to dispose of a portfolio security caused by settlement problems could
result either in losses to the Fund due to subsequent declines in value of the
portfolio security or, if the Fund has entered into a contract to sell the
security, in possible liability to the purchaser.
Prospectus Page 29
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
The risk also exists that an emergency situation may arise in one or more
emerging markets as a result of which trading of securities may cease or may be
substantially curtailed and prices for a Fund's investments in such markets may
not be readily available. Section 22(e) of the 1940 Act permits a registered
investment company to suspend redemption of its shares for any period, during
which an emergency exists, as determined by the SEC. Accordingly, if a Fund
believes that circumstances dictate, it will promptly apply to the SEC for a
determination that such an emergency exists within the meaning of Section 22(e)
of the 1940 Act. During the period commencing from a Fund's identification of
such conditions until the date of SEC action, the Fund's investments in the
affected markets will be valued at fair value determined in good faith by or
under the direction of the relevant Company's Board of Trustees.
LOWER QUALITY DEBT SECURITIES. There are no credit quality limitations placed on
the debt securities in which the Latin America Fund may invest. In addition, the
Infrastructure Fund, the Natural Resources Fund and the Emerging Markets Fund
may each invest up to 20% of its total assets, the Telecommunications Fund may
invest up to 5% of its assets, and the Strategic Income Fund may invest up to
50% of its assets, in debt securities rated below investment grade. Such
investments involve a high degree of risk. However, the Infrastructure Fund and
the Natural Resources Fund will not invest in securities in default as to
principal and interest.
Investment grade debt securities include those rated at least BBB by S&P or at
least Baa by Moody's, as well as unrated securities determined by the Manager to
be of comparable quality. Moody's considers securities rated Baa to have
speculative characteristics. Debt securities rated BB, B, CCC, CC and C by S & P
or debt securities rated Ba, B, Caa, Ca or C by Moody's are regarded by S&P and
Moody's, on balance, as predominantly speculative with respect to capacity to
pay interest and repay principal in accordance with the terms of the obligation.
For S&P, BB indicates the lowest degree of speculation for such lower rated debt
and C the highest degree of speculation. For Moody's, Baa indicates the lowest
degree of speculation for such lower rated debt 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
exposures to adverse conditions. Debt rated C by Moody's or S&P is the lowest
rated debt that is not in default as to principal or interest, and such issues
so rated can be regarded as having extremely poor prospects of ever attaining
any real investment standing. Such securities are also generally considered to
be subject to greater risk than securities with higher ratings with regard to a
deterioration of general economic conditions. These debt securities are the
equivalent of high yield, high risk bonds, commonly known as "junk bonds."
Ratings of debt securities represent the rating agency's opinion regarding their
quality and are not a guarantee of quality. Credit ratings attempt to evaluate
the safety of principal and interest payments and do not evaluate the risks of
fluctuations in market value. Also, rating agencies may fail to make timely
changes in credit ratings in response to subsequent events, so that an issuer's
current financial condition may be better or worse than the rating indicates.
See "Description of Debt Ratings" in the Statement of Additional Information for
a full description of Moody's and S&P's ratings.
The market values of lower rated debt securities tend to reflect individual
developments of the issuer to a greater extent than do higher rated securities,
which react primarily to fluctuations in the general level of interest rates,
tend to be more sensitive to economic conditions and generally have more
volatile prices than higher rated securities. Issuers of lower rated debt
securities are often highly leveraged and may not have available to them more
traditional methods of financing. For example, during an economic downturn or a
sustained period of rising interest rates, highly leveraged issuers of lower
rated debt securities may experience financial stress. During such periods, such
issuers may not have sufficient revenues to meet their interest payment
obligations. The issuer's ability to service its debt obligations may also be
adversely affected by specific developments affecting the issuer, such as the
issuer's inability to meet specific projected business forecasts or the
unavailability of additional financing.
Similarly, certain emerging market governments that issue lower quality debt
securities are among the largest debtors to commercial banks, foreign
governments and supranational organizations such as the World Bank, and may not
be able or willing to make principal and/or interest repayments as they come
due. The risk of loss due to default by the issuer is significantly greater for
the holders of lower rated debt securities because such securities are generally
unsecured and are often subordinated to other creditors of the issuer.
Lower rated debt securities frequently have call or buy-back features which
would permit an issuer to call or repurchase the security from a Fund. If an
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GT GLOBAL VARIABLE INVESTMENT FUNDS
issuer exercises these provisions in a declining interest rate market, a Fund
may have to replace the security with a lower yielding security, resulting in a
decreased return for investors. In addition, a Fund may have difficulty
disposing of such lower rated securities because there may be no established
retail secondary market for many of these securities. The lack of a liquid
secondary market may have an adverse impact on market prices of such instruments
and may make it more difficult for a Fund to obtain accurate market quotations
for purposes of valuing the securities held by such Fund. Adverse publicity and
investor perceptions, whether or not based on fundamental analysis, may also
decrease the values and liquidity of lower rated securities, especially in a
thinly traded market. The Infrastructure Fund, the Natural Resources Fund, the
Telecommunications Fund and the Strategic Income Fund may also acquire lower
rated securities during an initial underwriting or which are sold without
registration under applicable securities laws. Such securities involve special
considerations and risks.
In addition to the foregoing, factors that could have an adverse effect on the
market value of lower rated debt securities include: (i) potential adverse
publicity; (ii) heightened sensitivity to general economic conditions; and (iii)
likely adverse impact of a major economic recession. The Funds may also incur
additional expenses to the extent they are required to seek recovery upon a
default in the payment of principal or interest on its holdings, and the Funds
may have limited legal recourse in the event of a default. Debt securities
issued by governments in emerging markets can differ from debt obligations
issued by private entities in that remedies from defaults generally must be
pursued in the courts of the defaulting government, and legal recourse is
therefore somewhat diminished. Political conditions, in terms of a government's
willingness to meet the terms of its debt obligations, also are of considerable
significance. There can be no assurance that the holders of commercial bank debt
may not contest payments to the holders of debt securities issued by governments
in emerging markets in the event of default by the governments under commercial
bank loan agreements.
As of December 31, 1995, the Strategic Income Fund had 77.7% of its total net
assets in debt securities that received a rating from Moody's and 15.0% of its
total net assets in debt securities that were not so rated. In addition, the
Strategic Income Fund had 7.3% of its total net assets in cash and cash items.
The Strategic Income Fund had the following percentages of its total net assets
invested in rated securities: Aaa--33.2%, Aa--7.9%, A--8.6%, Baa--6.9%,
Ba--10.5%, B--10.6%, Caa--0%, Ca--0%, C--0%. Included under the unrated category
are securities comprising 15.0% of the Strategic Income Fund's total net assets
which, while unrated, have been determined by the Manager to be of comparable
quality to securities rated B. The allocation of the investments of the
Strategic Income Fund by rating on any given date will vary and should not be
considered representative of the Strategic Income Fund's future portfolio
composition.
The Manager attempts to minimize the speculative risks associated with
investments in lower quality securities through credit analysis and by carefully
monitoring current trends in interest rates, political developments and other
factors. Nonetheless, investors should carefully review the investment
objective(s) and policies of each Fund and consider their ability to assume the
investment risks involved before making an investment.
SOVEREIGN DEBT. The Latin America Fund, the Emerging Markets Fund, and the
Strategic Income Fund may invest in Sovereign Debt. Investments in Sovereign
Debt involve special risks. The issuer of the debt or the governmental
authorities that control the repayment of the debt may be unable or unwilling to
repay principal or interest when due in accordance with the terms of such debt,
and a Fund may have limited legal recourse in the event of a default. Periods of
economic uncertainty may result in the volatility of market prices of Sovereign
Debt and, in turn, a Fund's net asset value, to a greater extent than the
volatility inherent in domestic fixed income securities.
Sovereign Debt differs from debt obligations issued by private entities in that,
generally, remedies for defaults must be pursued in the courts of the defaulting
party. Legal recourse is therefore somewhat limited. Political conditions,
especially a sovereign entity's willingness to meet the terms of its debt
obligations, are of considerable significance. Also, there can be no assurance
that the holders of commercial bank loans to the same sovereign entity may not
contest payments to the holders of Sovereign Debt in the event of default under
commercial bank loan agreements.
A sovereign debtor's willingness or ability to repay principal and pay interest
in a timely manner may be affected by, among other factors, its cash flow
situation, the extent of its foreign reserves, the availability of sufficient
foreign exchange on the date a payment is due, the relative size of the debt
service burden to the sovereign debtor's economy as a whole, the sovereign
debtor's policy toward
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GT GLOBAL VARIABLE INVESTMENT FUNDS
principal international lenders and the political constraints to which the
sovereign debtor may be subject. Sovereign debtors may default on their
Sovereign Debt. Sovereign debtors also may be dependent on expected
disbursements from foreign governments, multilateral agencies and others abroad
to reduce principal and interest arrearages on their debt. The commitment on the
part of these governments, agencies and others to make such disbursements may be
conditioned on a sovereign debtor's implementation of economic reforms and/or
economic performance and the timely service of such debtor's obligations.
Failure to implement such reforms, achieve such levels of economic performance
or repay principal or interest when due, may result in the cancellation of such
third parties' commitments to lend funds to the sovereign debtor, which may
further impair such debtor's ability or willingness to timely service its debts.
The occurrence of political, social or diplomatic changes in one or more of the
countries issuing Sovereign Debt could adversely affect a Fund's investments.
The countries issuing such instruments are faced with social and political
issues, and some of them have experienced high rates of inflation in recent
years and have extensive internal debt. Among other effects, high inflation and
internal debt service requirements may adversely affect the cost and
availability of future domestic sovereign borrowing to finance governmental
programs, and may have other adverse social, political and economic
consequences. Political changes or a deterioration of a country's domestic
economy or balance of trade may affect the willingness of countries to service
their Sovereign Debt. Although the Manager intends to manage the respective
Funds' investments in a manner that will minimize the exposure to such risks,
there can be no assurance that adverse political changes will not cause a Fund
to suffer a loss of interest or principal on any of its holdings.
In recent years, some of the emerging market countries in which the Funds may
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 rescheduling of such
debt. Certain emerging market countries are among the largest debtors to
commercial banks and foreign governments. Currently, Brazil, Mexico and
Argentina are the largest debtors among developing countries. At times certain
emerging market countries have declared moratoria on the payment of principal
and interest on external debt; such a moratorium is currently in effect in
certain emerging market countries. There is no bankruptcy proceeding by which a
creditor may collect in whole or in part Sovereign Debt on which an emerging
market government has defaulted.
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.
Investors should also be aware that certain Sovereign Debt instruments in which
the Funds may invest involve great risk. Sovereign Debt issued by emerging
market issuers generally is deemed to be the equivalent in terms of quality to
securities rated below investment grade by Moody's and S&P. Such securities are
regarded as predominantly speculative with respect to the issuer's capacity to
pay interest and repay principal in accordance with the terms of the obligations
and involve major risk exposure to adverse conditions. Some of such Sovereign
Debt, which may not be paying interest currently or may be in payment default,
may be comparable to securities rated D by S&P or C by Moody's. A Fund may have
difficulty disposing of and valuing certain Sovereign Debt obligations because
there may be a limited trading market for such securities. Because there is no
liquid secondary market for many of these securities, the Funds anticipate that
such securities could be sold only to a limited number of dealers or
institutional investors.
ARMS. ARMs differ from conventional bonds in that principal is repaid over the
life of the ARM rather than at maturity. The holder of an ARM, (e.g., the U.S.
Government Income Fund) receives not only monthly scheduled payments of
principal and interest, but also may receive unscheduled principal payments
representing prepayments on the
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GT GLOBAL VARIABLE INVESTMENT FUNDS
underlying mortgages. An investor, therefore, may have to reinvest the periodic
payments and any unscheduled prepayments of principal it receives, at a rate of
interest which is lower than the rate on the ARMs held by it. For this reason,
ARMs may be less effective than other types of U.S. government securities as a
means of "locking in" long-term interest rates.
The market value of ARMs, like other U.S. government securities, will generally
vary inversely with changes in market interest rates, declining when interest
rates rise and rising when interest rates decline. ARMs have less risk of price
decline during periods of rapidly rising rates than other investments of
comparable maturities. However, they will also have less potential for capital
appreciation due to the likelihood of increased prepayments of mortgages as
interest rates decline. In addition, to the extent ARMs are purchased at a
premium, mortgage foreclosures and unscheduled principal prepayments will result
in some loss of the holder's principal investment to the extent of the premium
paid. On the other hand, if ARMs are purchased at a discount, both a scheduled
payment of principal and an unscheduled prepayment of principal will increase
current and total returns and will accelerate the recognition of income which,
when distributed to shareholders, will be taxable as ordinary income.
RISKS OF THE MONEY MARKET FUND. In periods of declining interest rates the Money
Market Fund's yield will tend to be somewhat higher than prevailing market
rates; conversely, in periods of rising interest rates, the Money Market Fund's
yield will tend to be somewhat lower than those rates. Also, when interest rates
are falling, the net new money flowing into the Money Market Fund from the sale
of its shares and reinvestment of dividends likely will be invested by the Fund
in instruments producing lower yields than the balance of the securities held by
the Fund, thereby reducing the Fund's yield. The opposite generally will be true
in periods of rising interest rates. The Money Market Fund is designed to
provide maximum current income consistent with the liquidity and safety afforded
by investment in high quality money market instruments; the Money Market Fund's
yield may be lower than that produced by funds investing directly in lower
quality and/or longer-term securities.
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CURRENCY, OPTIONS AND
FUTURES STRATEGIES
- --------------------------------------------------------------------------------
Each Fund (except the Money Market Fund) may use forward currency contracts,
options contracts and futures contracts to attempt to hedge its portfolio, i.e.,
reduce the overall level of investment risk normally associated with the Fund.
These instruments are often referred to as "derivatives," which may be defined
as financial instruments whose performance is derived, at least in part, from
the performance of another asset (such as a security, currency, or an index of
securities). The Funds may enter into such investments up to the full value of
their portfolio assets. There can be no assurance that such risk management
practices will succeed. These hedging techniques are described below and are
further detailed in the Statement of Additional Information.
To attempt to increase return, the Growth & Income Fund, the Strategic Income
Fund, the Global Government Income Fund and the U.S. Government Income Fund may
write covered call options on securities they hold. This strategy will be
employed only when, in the opinion of the Manager, the size of the premium the
Fund receives for writing the option is adequate to compensate the Fund against
the risk that appreciation in the underlying security may not be fully realized
if the option is exercised. Each of these Funds is also authorized to write
covered put options to attempt to enhance return.
To attempt to hedge against adverse movements in exchange rates between
currencies, each Fund (except the Money Market Fund) may enter into forward
currency contracts for the purchase or sale of a specified currency at a
specified future date. Such contracts may involve the purchase or sale of a
foreign currency against the U.S. dollar or may involve two foreign currencies.
Each such Fund may enter into forward currency contracts either with respect to
specific transactions or with respect to specific securities held by the Fund.
For example, when a Fund anticipates making a purchase or sale of a security, it
may enter into a forward currency contract in order to set the rate (either
relative to the U.S. dollar or another
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GT GLOBAL VARIABLE INVESTMENT FUNDS
currency) at which a currency exchange transaction related to the purchase or
sale will be made. Further, when the Manager believes that a particular currency
may decline compared to the U.S. dollar or another currency, each such Fund may
enter into a forward contract to sell the currency the Manager expects to
decline in an amount approximating the value of some or all of the Fund's
securities denominated in a foreign currency. Each such Fund also may write
covered call options and purchase put and call options on currencies to hedge
against movements in exchange rates.
In addition, each Fund (except the Money Market Fund) may write covered call
options and purchase put and call options on equity and debt securities to hedge
against the risk of fluctuations in the prices of securities held by the Fund or
which the Manager intends to purchase for the Fund. Each such Fund, except for
the Strategic Income Fund, the Global Government Income Fund and the U.S.
Government Income Fund, also may write covered call options and buy put and call
options on stock indices. Such stock index options serve to hedge against
overall fluctuations in the securities markets generally, rather than
anticipated increases or decreases in the value of a particular security.
Further, each such Fund, except for the Strategic Income Fund, the Global
Government Income Fund and the U.S. Government Income Fund, may sell stock index
futures contracts and may purchase put options or write covered call options on
such futures contracts to protect against a general stock market decline that
could adversely affect the value of securities held by the Fund. Such Funds also
may buy stock index futures contracts and purchase call options on such
contracts to hedge against a general stock market or market sector advance and
thereby attempt to lessen the cost of future securities acquisitions. Such
Funds, (including the Strategic Income Fund, the Global Government Income Fund
and the U.S. Government Income Fund), may use interest rate futures contracts
and options thereon to hedge debt securities held by it against changes in the
general level of interest rates. Each Fund may write only "covered" call
options. Each Fund will also "cover" stock index options and options on futures
contracts that it writes.
These practices may result in the loss of principal under certain conditions. In
addition, certain provisions of the Internal Revenue Code of 1986, as amended
(the "Code"), have the effect of limiting the extent to which the Funds may
enter into forward contracts or futures contracts, or engage in options
transactions. See "Taxes" in the Statement of Additional Information.
Although the Funds might not employ any of the foregoing strategies, the use of
forward currency contracts, options and futures would involve certain investment
risks and transaction costs to which they might not otherwise be subject. These
risks include: dependence on the Manager's ability to predict movements in the
prices of individual securities, fluctuations in the general securities markets
and movements in interest rates and currency markets; imperfect correlation
between movements in the prices of currencies, options, futures contracts or
options thereon and movements in the price of the currency or security hedged or
used for cover; the fact that skills and techniques needed to trade options,
futures contracts and options thereon or to use forward currency contracts are
different from those needed to select the securities in which the Funds invest;
lack of assurance that a liquid secondary market will exist for any particular
option, futures contract or option thereon at any particular time, which may
cause a Fund to purchase or sell a portfolio security at a disadvantageous time,
which, in turn, may cause an increase in that Fund's rate of portfolio turnover;
and the possible need to defer closing out of certain options, futures contracts
and options thereon in order for a Fund to qualify or continue to qualify for
the beneficial tax treatment afforded regulated investment companies under the
Code. See "Taxes" in the Statement of Additional Information.
SWAPS, CAPS, FLOORS AND COLLARS. The Strategic Income Fund may enter into
interest rate, currency and index swaps, and purchase or sell related caps,
floors and collars and other derivative instruments. The Strategic Income Fund
expects to enter into these transactions primarily to preserve a return or
spread on a particular investment or portion of its portfolio, to protect
against currency fluctuations, as a duration management technique or to protect
against any increase in the price of securities the Fund anticipates purchasing
at a later date. The Strategic Income Fund intends to use these transactions as
hedges, and will not sell interest rate caps or floors if it does not own
securities or other instruments providing the income the Strategic Income Fund
may be obligated to pay.
Interest rate swaps involve the exchange by the Strategic Income Fund with
another party of their respective commitments to pay or receive interest (for
example, an exchange of floating rate payments for fixed rate payments) with
respect to a notional amount of principal. A currency swap is an agreement to
exchange cash flows on a notional amount based on changes in the values of the
reference indices.
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GT GLOBAL VARIABLE INVESTMENT FUNDS
The purchase of an interest rate cap entitles the purchaser to receive payments
on a notional principal amount from the party selling the cap to the extent that
a specified index exceeds a predetermined interest rate. The purchase of an
interest rate floor entitles the purchaser to receive payments of interest on a
notional principal amount from the party selling the interest rate floor to the
extent that a specified index falls below a predetermined interest rate or
amount. A collar is a combination of a cap and a floor that preserves a certain
return with a predetermined range of interest rates or values.
INDEXED COMMERCIAL PAPER. The Strategic Income Fund also may invest without
limitation in commercial paper which is indexed to certain specific foreign
currency exchange rates. The terms of such commercial paper provide that its
principal amount is adjusted upwards or downwards (but not below zero) at
maturity to reflect changes in the exchange rate between two currencies while
the obligation is outstanding. The Fund will purchase such commercial paper with
the currency in which it is denominated and, at maturity, will receive interest
and principal payments thereon in that currency, but the amount of principal
payable by the issuer at maturity will change in proportion to the change (if
any) in the exchange rate between the two specified currencies between the date
the instrument is issued and the date the instrument matures. While such
commercial paper entails the risk of loss of principal, the potential for
realizing gains as a result of changes in foreign currency exchange rates
enables the Strategic Income Fund to hedge (or cross-hedge) against a decline in
the U.S. dollar value of investments denominated in foreign currencies while
providing an attractive money market rate of return. The Strategic Income Fund
will not purchase such commercial paper for speculation.
OTHER INDEXED SECURITIES. The Strategic Income Fund and Global Government Income
Fund may invest in indexed securities (in addition to indexed commercial paper),
which are securities whose prices are indexed to the prices of other securities,
securities indices, currencies, precious metals or other commodities, or other
financial indicators. Indexed securities typically, but not always, are debt
securities or deposits whose value at maturity or coupon rate is determined by
reference to a specific instrument or statistic. The performance of indexed
securities depends to a great extent on the performance of the security,
currency or other instrument to which they are indexed, and may also be
influenced by interest rate changes in the United States and abroad. At the same
time, indexed securities are subject to the credit risks associated with the
issuer of the security, and their values may decline substantially if the
issuer's creditworthiness deteriorates. Indexed securities may be more volatile
than the underlying instruments. New forms of indexed securities continue to be
developed. Each Fund and Portfolio may invest in such securities to the extent
consistent with its investment objective.
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HOW TO INVEST
- --------------------------------------------------------------------------------
Shares of the Funds currently are offered to separate accounts established by
the Participating Insurance Companies for funding variable annuity contracts
("Separate Accounts") pursuant to the insurance laws of their respective
jurisdictions.
The owners of such contracts may allocate premium payments among the general
accounts of the Participating Insurance Companies and the divisions of the
Separate Accounts which correspond to the Funds. Individuals may not pay
variable annuity premiums directly to the Funds. These Separate Accounts are
registered with the SEC as unit investment trusts, each having a prospectus of
its own.
Shares of the Funds are offered and redeemed at their respective net asset
values without the addition of any sales load or redemption charge next
determined following receipt by a Separate Account of premium payments,
surrender requests under policies, loan payments, transfer requests, and similar
or related transactions. The Funds do not issue share certificates. See
"Calculation of Net Asset Value."
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GT GLOBAL VARIABLE INVESTMENT FUNDS
CALCULATION OF NET ASSET VALUE
- --------------------------------------------------------------------------------
Each Fund calculates its net asset value as of the close of normal trading on
the New York Stock Exchange ("NYSE") (currently 4:00 p.m. Eastern Time, unless
weather, equipment failure or other factors contribute to an earlier closing
time) each Business Day. Net asset value per share is computed by determining
the value of each Fund's assets, subtracting all the Fund's liabilities, and
dividing the result by the total number of shares outstanding at such time.
Equity securities are valued at the last sale price on the exchange or in the
OTC market in which such securities are primarily 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. Fixed income securities and debt securities
generally are valued at the mean of representative quoted bid or asked prices.
Short-term debt investments are amortized to maturity based on their cost,
adjusted for foreign exchange translation.
Securities for which market quotations are not readily available are valued at
fair value as determined in good faith by or under direction of the respective
Company's Board of Trustees. Securities and other assets quoted in foreign
currencies are valued in U.S. dollars based on the prevailing exchange rates on
that day. Each Fund's portfolio securities, from time to time, may be listed
primarily on foreign exchanges or OTC dealer markets which may trade on days
when the NYSE is closed (such as Saturday). As a result, the net asset value of
a Fund may be affected significantly by such trading on days when shareholders
have no access to that Fund.
The Money Market Fund uses the amortized cost method of valuing its investments,
pursuant to which the market value of an instrument is approximated by
amortizing the difference between the acquisition cost and value at maturity of
the instrument on a straight-line basis over its remaining life. All cash,
receivables and current payables are carried at their face value.
The Money Market Fund intends to use its best efforts to maintain its net asset
value at $1.00 per share. There can be no assurance that the Money Market Fund
will be able to maintain a stable $1.00 per share price. The value of each share
of the Money Market Fund is computed by dividing the Fund's net assets by the
number of its outstanding shares. "Net assets" equal the value of the Money
Market Fund's investments and other assets, less its liabilities.
- --------------------------------------------------------------------------------
DIVIDENDS, OTHER DISTRIBUTIONS
AND FEDERAL INCOME TAXATION
- --------------------------------------------------------------------------------
The Money Market Fund declares dividends from net investment income on each day
the Fund determines its net asset value, payable to shareholders of record as of
the close of regular trading on the NYSE on the preceding business day.
Dividends are usually paid on the last calendar day of each month. The Fund's
net investment income consists of accrued interest and earned discount
(including both original issue and market discounts), less amortization of
market premium and applicable expenses, and is calculated immediately prior to
the determination of net asset value per share. The Fund generally distributes
to its shareholders any net short-term capital gain (the excess of short-term
capital gains over short-term capital losses) annually after the end of its
fiscal year on December 31 but may make earlier distributions of that gain if
necessary to maintain its net asset value per share at $1.00 or to avoid income
or excise taxes. The Fund does not expect to realize long-term capital gain.
The Strategic Income Fund, the Global Government Income Fund and the U.S.
Government Income
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GT GLOBAL VARIABLE INVESTMENT FUNDS
Fund declare and pay dividends from net investment income, if any, monthly.
The Growth & Income Fund declares and pays dividends from net investment income,
if any, and may pay net short-term capital gain, if any, quarterly.
Each other Fund declares and pays dividends from net investment income, if any,
annually. In addition, all Funds also annually distribute to their shareholders
substantially all of their net capital gain (the excess of net long-term capital
gain over net short-term capital loss), net short-term capital gain and net
gains from foreign currency transactions. Dividends and other distributions from
a Fund are paid in additional shares of that Fund at net asset value per share,
unless the transfer agent is instructed otherwise. See the applicable VA
Contract prospectus for information regarding the federal income tax treatment
of distributions to the Separate Accounts.
Each Fund intends to continue to qualify for treatment as a regulated investment
company ("RIC") under Subchapter M of the Code. In each taxable year that a Fund
so qualifies, the Fund (but not its shareholders) will be relieved of federal
income tax on that part of its investment company taxable income (consisting
generally of net investment income, net gains from certain foreign currency
transactions and net short-term capital gain) and net capital gain that is
distributed to Fund shareholders. Each Fund will distribute to its shareholders
at least 90% of its investment company taxable income.
Fund shares are offered only to Separate Accounts established to fund variable
annuity contracts. Under the Code, no tax is imposed on an insurance company
with respect to income of a qualifying separate account properly allocable to
the value of eligible variable annuity or variable life insurance contracts. See
the applicable VA Contract prospectus for a discussion of the federal income tax
status of: (1) the Separate Accounts that purchase and hold shares of the Funds;
and (2) the holders of VA Contracts funded through those accounts.
Each Fund intends 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 imposed on the Funds
by the 1940 Act and Subchapter M of the Code, place certain limitations on the
amount of assets of each Separate Account -- and, because section 817(h) and
those regulations treat each Fund's assets as assets of the related Separate
Accounts of each Fund -- that can be invested in securities of a single issuer.
Specifically, the regulations provide in part that, except as permitted by the
"safe harbor" described below, as of the end of each calender quarter or within
30 days thereafter, no more than 55% of the total assets of a Fund may be
invested in the securities of any one issuer. For this purpose, all securities
of the same issuer are consolidated, and, while each U.S. government agency and
instrumentality is considered a separate issuer, a particular foreign government
and its agencies, instrumentalities and political subdivisions are all
considered to be the same issuer. Section 817(h) provides, as a safe harbor,
that adequate diversification will exist for a separate account if the
diversification requirements under Subchapter M are satisfied and no more than
55% of the value of the separate account's total assets are cash and cash items,
government securities and securities of other RICs. Failure of a Fund to satisfy
the section 817(h) requirements would result in treatment of the VA Contract
holders other than as described in the applicable VA Contract prospectus.
The foregoing is only a summary of some of the important federal income tax
considerations generally affecting the Funds and the Separate Accounts. See the
Statement of Additional Information for a more detailed discussion.
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GT GLOBAL VARIABLE INVESTMENT FUNDS
MANAGEMENT
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Each Company's Board of Trustees has overall responsibility for the operation of
the Funds organized as series of that Company. Pursuant to such responsibility,
the Board of each Company has approved contracts with various financial
organizations to provide, among other things, day to day management services
required by its Funds.
INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES FOR THE FUNDS. Services
provided by Chancellor LGT Asset Management, Inc. (the "Manager") as each Fund's
investment manager and administrator include, but are not limited to,
determining the composition of each Fund's portfolio and placing orders to buy,
sell or hold particular securities; furnishing corporate officers and clerical
staff; providing office space, services and equipment; and supervising all
matters relating to each Fund's operation. For these services, the Money Market
Fund pays the Manager an investment management and administration fee at the
annualized rate of 0.50% of that Fund's average daily net assets. The America
Fund, the Strategic Income Fund, the Global Government Income Fund and the U.S.
Government Income Fund each pays the Manager an investment management and
administration fee at the annualized rate of 0.75% of the Fund's average daily
net assets. Each other Fund pays the Manager 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. These rates are higher
than those paid by most mutual funds.
In addition, the Manager provides services as each Fund's pricing and fund
accounting agent. For those services, each Fund pays the Manager a pro-rated fee
(calculated based on each Fund's average daily net assets) at the annualized
rate of .03% of the first $5 billion and allocating the result according to each
Fund's average daily net assets.
The Manager provides investment management and/or administration services to the
GT Global Mutual Funds. The Manager and its worldwide asset management
affiliates have provided investment management and/or administration services to
institutional, corporate and individual clients around the world since 1969. The
U.S. offices of the Manager are located at 50 California Street, 27th Floor, San
Francisco, CA 94111 and 1166 Avenue of the Americas, New York, NY 10036.
The Manager and its worldwide affiliates, including LGT Bank in Liechtenstein,
formerly Bank in Liechtenstein, comprise Liechtenstein Global Trust, formerly
BIL GT Group Limited. Liechtenstein Global Trust is a provider of global asset
management and private banking products and services to individual and
institutional investors. Liechtenstein Global Trust is controlled by the Prince
of Liechtenstein Foundation, which serves as a parent organization for the
various business enterprises of the Princely Family of Liechtenstein. The
principal business address of the Prince of Liechtenstein Foundation is
Herrengasse 12, FL-9490, Vaduz, Liechtenstein.
As of October 31, 1996, the Manager and its worldwide asset management
affiliates manage approximately $59 billion. In the United States, as of October
31, 1996, the Manager manages or administers approximately $10 billion of GT
Global Mutual Funds. As of October 31, 1996, assets entrusted to Liechtenstein
Global Trust total approximately $80 billion.
On October 31, 1996, Chancellor Capital Management, Inc. ("Chancellor Capital")
merged with LGT Asset Management, Inc. As of September 30, 1996, Chancellor
Capital and its affiliates, based in New York, were the 15th largest independent
investment manager in the United States with approximately $33 billion in assets
under management. Chancellor Capital specialized in public and private U.S.
equity and bond portfolio management for over 300 U.S. institutional clients.
In addition to the investment resources of its San Francisco and New York
offices, the Manager draws upon the expertise, personnel, data and systems of
other offices of Liechtenstein Global Trust, including investment offices in
Frankfurt, Hong Kong, London, Singapore, Sydney, Tokyo, and Toronto. In managing
the GT Global Mutual Funds, the Manager employs a team approach, taking
advantage of its investment resources around the world in seeking to achieve
each Fund's investment objective. Many of the GT Global
Prospectus Page 38
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
Mutual Funds' portfolio managers are natives of the countries in which they
invest, speak local languages and/or live or work in the markets they follow.
The investment professionals primarily responsible for the portfolio management
of each Fund are as follows:
NEW PACIFIC FUND
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND LAST FIVE YEARS
- -------------------------------------- -------------------------------------- --------------------------------------
<S> <C> <C>
Lawrence Yip Portfolio Manager since 1995 Portfolio Manager for the Manager
Hong Kong since 1993 and a Portfolio Manager
for LGT Asset Management Ltd.
</TABLE>
EUROPE FUND
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND LAST FIVE YEARS
- -------------------------------------- -------------------------------------- --------------------------------------
<S> <C> <C>
Anna Powell Portfolio Manager since 1995 Portfolio Manager for LGT Asset
London Management PLC (London) and the
Manager since 1995. From 1989 to
1995, Ms. Powell was a Portfolio
Manager for Robert Fleming & Co.,
Ltd. (London).
</TABLE>
LATIN AMERICA FUND
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND LAST FIVE YEARS
- -------------------------------------- -------------------------------------- --------------------------------------
<S> <C> <C>
Andrew Boczek Portfolio Manager since 1995 Assistant Portfolio Manager and
San Francisco Investment Analyst for the Manager
since 1993. From 1991 to 1993, Mr.
Boczek was an Analyst at Continental
Bank Corporation. Prior thereto, he
was a Research Assistant at the
International Monetary Fund
(Washington, D.C.).
</TABLE>
EMERGING MARKETS FUND
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND LAST FIVE YEARS
- -------------------------------------- -------------------------------------- --------------------------------------
<S> <C> <C>
James M. Bogin Portfolio Manager since Fund inception Portfolio Manager for the Manager
San Francisco in 1994 since 1993. From 1989 to 1993, Mr.
Bogin was a Fund Manager at Nomura
Investment Management Co. (Tokyo).
</TABLE>
Prospectus Page 39
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
AMERICA FUND
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND LAST FIVE YEARS
- -------------------------------------- -------------------------------------- --------------------------------------
<S> <C> <C>
Derek H. Webb Portfolio Manager since 1996 Portfolio Manager for the Manager
San Francisco since 1994. Analyst for the Manager
from 1992 to 1994. From 1990 to 1992,
Mr. Webb was a student at the
University of Pennsylvania, Wharton
School of Business. During 1989, he
was Vice President, Citicorp
Investment Bank of Los Angeles. Prior
thereto, he was a Bond Trader, Trust
Co. of the West (Los Angeles).
</TABLE>
INFRASTRUCTURE FUND
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND LAST FIVE YEARS
- -------------------------------------- -------------------------------------- --------------------------------------
<S> <C> <C>
David L. Sherry Portfolio Manager since Fund inception Portfolio Manager and Investment
San Francisco in 1995 Analyst for the Manager since 1993.
From 1992 to 1993, Mr. Sherry was
Senior Securities Analyst for
Franklin Resources, Inc. (San Mateo,
CA). From 1990 to 1992, he was a
student at University of California
at Los Angeles Graduate School of
Business (where he received a Masters
of Business Administration). Prior
thereto, he was an Assistant
Treasurer with Brown Brothers
Harriman (NY).
Michael J. Mahoney Portfolio Manager since Fund inception Portfolio Manager for the Manager
San Francisco in 1995 since 1993. From 1991 to 1993, Mr.
Mahoney was an Investment Analyst for
the Manager. From 1989 to 1991, he
was a student at Stanford University
Graduate School of Business (where he
received a Masters of Business
Administration). Prior thereto, he
was a Management Consultant of Bain &
Co., management consulting (Boston).
</TABLE>
Prospectus Page 40
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
NATURAL RESOURCES FUND
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND LAST FIVE YEARS
- -------------------------------------- -------------------------------------- --------------------------------------
<S> <C> <C>
Derek H. Webb Portfolio Manager since Fund inception Portfolio Manager for the Manager
San Francisco in 1995 since 1994. Analyst for the Manager
from 1992 to 1994. From 1990 to 1992,
Mr. Webb was a student at the
University of Pennsylvania, Wharton
School of Business. During 1989, he
was Vice President, Citicorp
Investment Bank of Los Angeles. Prior
thereto, he was a Bond Trader for
Trust Co. of the West (Los Angeles).
</TABLE>
TELECOMMUNICATIONS FUND
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND LAST FIVE YEARS
- -------------------------------------- -------------------------------------- --------------------------------------
<S> <C> <C>
Michael J. Mahoney Portfolio Manager since Fund inception Portfolio Manager for the Manager
San Francisco in 1993 since 1993. From 1991 to 1993, Mr.
Mahoney was an Investment Analyst for
the Manager. From 1989 to 1991, he
was a student at Stanford University
Graduate School of Business (where he
received a Masters of Business
Administration). Prior thereto, he
was a Management Consultant of Bain &
Co., management consulting (Boston).
David L. Sherry Portfolio Manager since Fund inception Portfolio Manager and Investment
San Francisco in 1993 Analyst for the Manager since 1993.
From 1992 to 1993, Mr. Sherry was
Senior Securities Analyst for
Franklin Resources, Inc. (San Mateo,
CA). From 1990 to 1992, he was a
student at University of California
at Los Angeles Graduate School of
Business (where he received a Masters
of Business Administration). Prior
thereto, he was an Assistant
Treasurer with Brown Brothers
Harriman (NY).
</TABLE>
Prospectus Page 41
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
GROWTH & INCOME FUND
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND LAST FIVE YEARS
- -------------------------------------- -------------------------------------- --------------------------------------
<S> <C> <C>
Paul Griffiths Portfolio Manager since 1995 Portfolio Manager of the Manager since
London 1994; Portfolio Manager for LGT Asset
Management PLC (London) since 1994;
from 1993 to 1994, Global Bond Fund
Manager, Lazard Investors; from 1991
to 1993, Global Bond Fund Manager,
Sanwa International PLC; from 1989 to
1991, Account Officer, Royal Bank of
Canada.
Nicholas S. Train Portfolio Manager since Fund inception Portfolio Manager for LGT Asset
London in 1993 Management PLC (London); Portfolio
Manager for the Manager since 1991.
</TABLE>
STRATEGIC INCOME FUND
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND LAST FIVE YEARS
- -------------------------------------- -------------------------------------- --------------------------------------
<S> <C> <C>
Simon Nocera Portfolio Manager since Fund inception Portfolio Manager and Economist for
San Francisco in 1993 the Manager since 1992. From 1991 to
1992, Mr. Nocera was a Senior Vice
President and Director for Global
Fixed Income Research at The Putnam
Companies. Prior thereto, he was a
Financial Economist for the
International Monetary Fund.
Ralf Lochmuller Portfolio Manager since 1996 Chief Investment Officer for Core
San Francisco Market Debt for the Manager since
January 1996. Prior thereto, Mr.
Lochmuller was head of Portfolio
Management for a subsidiary of
Liechtenstein Global Trust. He also
held a number of positions of
increasing responsibility with LGT
Asset Management GmbH, Frankfurt. He
joined the Manager in 1988 as a
Portfolio Manager.
</TABLE>
Prospectus Page 42
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
INTERNATIONAL FUND
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND LAST FIVE YEARS
- -------------------------------------- -------------------------------------- --------------------------------------
<S> <C> <C>
F. Christian Wignall Portfolio Manager since Fund inception Chief Investment Officer -- Global
San Francisco in 1994 Equities for the Manager.
</TABLE>
U.S. GOVERNMENT INCOME FUND
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND LAST FIVE YEARS
- -------------------------------------- -------------------------------------- --------------------------------------
<S> <C> <C>
Beate Gerdes Portfolio Manager since 1996 Portfolio Manager for the Manager
San Francisco since May 1996. Prior thereto, Ms.
Gerdes was a Portfolio Manager for
LGT Asset Management GmbH
(Frankfurt).
</TABLE>
GLOBAL GOVERNMENT INCOME FUND
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND LAST FIVE YEARS
- -------------------------------------- -------------------------------------- --------------------------------------
<S> <C> <C>
Robert F. Allen Portfolio Manager since Fund inception Portfolio Manager for the Manager.
San Francisco in 1993
</TABLE>
MONEY MARKET FUND
<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND LAST FIVE YEARS
- -------------------------------------- -------------------------------------- --------------------------------------
<S> <C> <C>
Jeffrey W. Gorman Portfolio Manager since 1995 Portfolio Manager for the Manager
San Francisco since May 1995; Money Market Analyst
and Trader for the Manager from April
1994 to May 1995; Investment
Operations Specialist for the Manager
from February 1993 to April 1994;
Financial Services Representative for
the Manager from June 1992 to
February 1993; prior thereto, a
student at the University of
California at Berkeley.
</TABLE>
Prospectus Page 43
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
In placing orders for the Funds' portfolio transactions, the Manager seeks to
obtain the best net results. The Manager has no agreement or commitment to place
orders with any broker/dealer. Commissions or discounts in foreign securities
exchanges or OTC markets often are fixed and generally are higher than those in
U.S. securities exchanges or markets. Debt 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 are paid and no discounts
obtained. Broker/dealers may receive commissions on futures, currency and
options transactions. Brokerage transactions for the Funds may be executed
through any Liechtenstein Global Trust affiliates.
FUND EXPENSES. Each Fund pays all of its respective expenses not assumed by the
Manager and other agents.
The Manager has undertaken to limit the total operating expenses (exclusive of
brokerage commissions, interest, taxes and extraordinary items) of each of the
New Pacific Fund, the Europe Fund, the International Fund, the Emerging Markets
Fund, the Latin America Fund, the Infrastructure Fund, the Natural Resources
Fund, the Telecommunications Fund, and the Growth & Income Fund to 1.25% of
their respective net assets. In addition, the Manager has undertaken to limit
the total operating expenses (exclusive of brokerage commissions, interest,
taxes and extraordinary items) of each of the America Fund, the Strategic Income
Fund, the Global Government Income Fund, and the U.S. Government Income Fund to
1.00% of their respective net assets. Likewise, the Manager has undertaken to
limit the total operating expenses (exclusive of brokerage commissions,
interest, taxes and extraordinary items) of the Money Market Fund to 0.75% of
its net assets.
From time to time, the Manager in its sole discretion may waive its fees and/or
voluntarily assume certain Fund expenses. All general expenses of each Company
and joint expenses of the Funds (see "Other Information") are allocated among
the Funds on a basis deemed fair and equitable.
- --------------------------------------------------------------------------------
OTHER INFORMATION
- --------------------------------------------------------------------------------
DIVERSIFICATION STANDARDS. Each of the following Funds is classified as a
"diversified" investment company under the 1940 Act: the New Pacific Fund, the
Europe Fund, the America Fund, the Infrastructure Fund, the Natural Resources
Fund, the Telecommunications Fund, the U.S. Government Income Fund, the
International Fund, the Emerging Markets Fund, and the Money Market Fund. This
means that with respect to 75% of each Fund's total assets, no more than 5% will
be invested in the securities of any one issuer, and each Fund will purchase no
more than 10% of the voting securities of any one issuer.
Each of the following Funds is classified as a "non-diversified" investment
company under the 1940 Act: the Latin America Fund, the Growth & Income Fund,
the Strategic Income Fund and the Global Government Income Fund. Each such Fund,
however, intends to continue to qualify as a regulated investment company for
federal income tax purposes. This means, in general, that more than 5% of the
Fund's total assets may be invested in securities of one issuer but only if, at
the close of each quarter of the Fund's taxable year, the aggregate amount of
such holdings does not exceed 50% of the value of its total assets and no more
than 25% of the value of its total assets is invested in the securities of a
single issuer.
Because each such Fund is permitted to invest a greater proportion of its assets
in the securities of a smaller number of issuers, each such Fund may be subject
to greater investment and credit risk with respect to its portfolio than a Fund
that is more broadly diversified.
ORGANIZATION. Each of G.T. Global Variable Investment Trust and G.T. Global
Variable Investment Series is organized as a Massachusetts business trust and
each is registered with the SEC as an open-end management investment company.
Each Company and each Fund of each Company, except the Telecommunications Fund,
the Emerging Markets Fund, the International Fund, the Infrastructure Fund and
the Natural Resources Fund,
Prospectus Page 44
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
commenced operations on February 10, 1993. The Telecommunications Fund commenced
operations on October 18, 1993. The Emerging Markets Fund and the International
Fund commenced operations on July 5, 1994. The Infrastructure Fund and the
Natural Resources Fund commenced operations on January 31, 1995. The fiscal year
end for each Company is December 31.
From time to time, each Company's Board of Trustees may, in its discretion,
establish additional series and issue shares of additional series of the
Company's shares of beneficial interest. Shares of the Funds are entitled to one
vote per share (with proportional voting for fractional shares). Shareholders
have no preemptive or conversion rights.
On any matter submitted to a vote of shareholders, shares of each Fund will be
voted by that Fund's shareholders individually when the matter affects the
specific interest of that Fund only. The shares of all Funds of a Company will
be voted in the aggregate on other matters, such as the election of Trustees and
ratification of that Company's Board of Trustees' selection of the Company's
independent accountants. In accordance with current law, the Funds anticipate
that when a Participating Insurance Company issues a VA Contract that invests in
a Company, VA Contract holders will be asked for instructions on how to vote,
and shares will be voted by a Participating Insurance Company in accordance with
the voting instructions received. For further information on voting rights, see
the VA Contract prospectus.
The Companies normally will not hold annual meetings of shareholders, except as
required under the 1940 Act. Either Company would be required to hold a
shareholders meeting in the event that at any time less than a majority of that
Company's Trustees holding office had been elected by shareholders. Trustees
shall continue to hold office until their successors are elected and have
qualified. Fund shares do not have cumulative voting rights, which means that
the holders of a majority of the shares of all of a Company's Funds in the
aggregate voting for the election of Trustees can elect all the Trustees. A
Trustee may be removed upon a majority vote of the shareholders qualified to
vote in the election. Shareholders holding 10% of a Company's outstanding voting
shares may call a meeting of shareholders for the purpose of voting upon the
question of removal of any Trustee or for any other purpose. The 1940 Act
requires each Company to assist shareholders in calling such a meeting.
Pursuant to each Company's Declaration of Trust, each Company may issue an
unlimited number of shares for each of its Funds. Each share of a Fund
represents an interest in that Fund only, has no par value, represents an equal
proportionate interest in the Fund with other shares of the Fund and is entitled
to such dividends and other distributions out of the income earned and gain
realized on the assets belonging to the Fund as may be declared by the Board of
Trustees.
Effective July 5, 1994, the name of "G.T. Global: Variable Pacific Fund" was
changed to "G.T. Global: Variable New Pacific Fund" and its investment policy
was revised by the Board of Trustees to remove Japan from the Fund's Primary
Investment Area.
Currently, owners of VA Contracts issued by the Participating Insurance
Companies for which shares of one or more Funds are the investment vehicle will
receive from such Participating Insurance Company unaudited semi-annual
financial statements and audited year-end financial statements certified by the
Fund's independent accountants. Each report will show the investments owned by
the Fund and the market values thereof as determined by the Trustees and will
provide other information about the Fund and its operations.
PERFORMANCE INFORMATION. The Funds, from time to time, may include information
on their investment results and/or comparisons of their investment results to
various unmanaged indices or results of other mutual funds or groups of mutual
funds whose shares are offered to insurance company separate accounts, in
advertisements, sales literature or reports furnished to present or prospective
shareholders.
In such materials, each Fund may quote its average annual total return
("Standardized Return"). Standardized Return shows percentage rates reflecting
the average annual change in the value of an assumed investment in the Fund at
the end of a one-year period and at the end of five-and ten-year periods. If a
one-, five-and/or ten-year period has not yet elapsed, data will be provided as
of the end of a shorter period corresponding to the life of the Fund.
Standardized Return assumes the reinvestment of all dividends and other
distributions at net asset value on the reinvestment date as established by the
Board of Trustees.
In addition, in order to more completely represent each Fund's performance or
more accurately compare such performance to other measures of investment return,
each Fund also may include in advertisements, sales literature and shareholder
reports other total return performance data ("Non-Standardized Return").
Non-Standardized Return reflects percentage rates of return encompassing all
elements of return (i.e., income and
Prospectus Page 45
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
capital appreciation or depreciation); it assumes reinvestment of all dividends
and other distributions. Non-Standardized Return may be quoted for the same or
different periods as those for which Standardized Return is quoted; it may
consist of an aggregate or average annual percentage rate of return, actual
year-by-year rates or any combination thereof.
The Strategic Income Fund, the Global Government Income Fund and the U.S.
Government Income Fund also may refer in advertising and promotional materials
to their respective yields, which will fluctuate over time. A Fund's yield shows
the rate of income that it earns on its investments, expressed as a percentage
of the public offering price of its shares. A Fund calculates yield by
determining the interest income it earned from its portfolio investments for a
specified thirty-day period (net of expenses), dividing such income by the
average number of shares outstanding, and expressing the result as an annualized
percentage based on the public offering price at the end of that thirty-day
period. Yield accounting methods differ from the methods used for other
accounting purposes; accordingly, a Fund's yield may not equal the dividend
income actually paid to investors or the income reported in the Fund's financial
statements.
From time to time the Money Market Fund may advertise its "yield" and "effective
yield" in advertisements or promotional materials. The "yield" of the Money
Market Fund refers to the income generated by an investment in the Fund over a
seven-day period (which period will be stated in the advertisement). This income
is then "annualized." That is, the amount of income generated by the investment
during that week is assumed to be generated each week over a 52-week period and
is shown as a percentage of the investment. The "effective yield" is calculated
similarly but, when annualized, the income earned by an investment in the Fund
is assumed to be reinvested. The "effective yield" will be slightly higher than
the "yield" because of the compounding effect of this assumed reinvestment. The
Statement of Additional Information describes the methods used to calculate the
Money Market Fund's yield and effective yield.
In addition to "yield" and "effective yield," advertisements or promotional
materials also may include other performance data of the Money Market Fund which
may consist of: (1) the actual return or total income (including realized net
short-term capital gain, if any) generated by a hypothetical investment in the
Fund year-by-year since the commencement of the Fund's operations; (2) the
compounded return or total income generated by a hypothetical investment in the
Fund year by year for the same period, assuming reinvestment of all dividends
and any other distributions; and (3) the cumulative return (or overall change in
account value) of a hypothetical investment in the Fund year by year over the
same period, also assuming reinvestment of all dividends and any other
distributions.
Each Fund's performance data will reflect past performance and will not
necessarily be indicative of future results. The Fund's investment results will
vary from time to time depending upon market conditions, the composition of its
portfolio and its operating expenses. Yield and performance information of any
Fund will not be compared with such information for funds that offer their
shares directly to the public, because Fund data do not reflect charges imposed
by a Participating Insurance Company on the VA Contracts. The effective yield
and total return for a Fund should be distinguished from the rate of return of a
corresponding division of a separate account of such Participating Insurance
Company, which rate will reflect the deduction of additional charges, including
mortality and expense risk charges, and will therefore be lower. Accordingly,
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. VA Contract holders should consult their Participating
Insurance Company's VA Contract prospectus for further information. Each Fund's
results also should be considered relative to the risks associated with its
investment objectives and policies.
Calculations of a Fund's yield or performance information may reflect any
undertaking that may be in effect. See "Management" and "Investment Results" in
the Statement of Additional Information.
Each Fund's annual report contains additional information with respect to its
performance. The annual report is available to investors upon request and free
of charge.
TRANSFER AGENT. Reporting and general transfer agent functions for the Funds and
servicing of the Separate Accounts are performed by GT Global Investor Services,
Inc., (the "Transfer Agent). The Transfer Agent is an affiliate of the Manager,
a subsidiary of Liechtenstein Global Trust and maintains its offices at
California Plaza, 2121 N. California Boulevard, Suite 450, Walnut Creek,
California 94596.
Prospectus Page 46
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
CUSTODIAN. State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110, is custodian of each Fund's assets.
COUNSEL. The law firm of Kirkpatrick & Lockhart LLP, 1800 Massachusetts Avenue,
N.W., Washington, D.C. 20036-1800, acts as counsel to the Companies. Kirkpatrick
& Lockhart LLP also acts as counsel to the Manager, GT Global, Inc. and the
Transfer Agent in connection with other matters.
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 the Funds, 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.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND IN THE FUNDS'
OFFICIAL SALES LITERATURE IN CONNECTION WITH THE OFFER OF THE FUNDS' SHARES,
AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUNDS. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER IN ANY STATE IN WHICH, OR TO ANY PERSON TO WHOM, SUCH
OFFERING MAY NOT LAWFULLY BE MADE.
Prospectus Page 47
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
GT GLOBAL VARIABLE NEW PACIFIC FUND
GT GLOBAL VARIABLE EUROPE FUND
GT GLOBAL VARIABLE LATIN AMERICA FUND
GT GLOBAL VARIABLE AMERICA FUND
GT GLOBAL VARIABLE INTERNATIONAL FUND
GT GLOBAL VARIABLE INFRASTRUCTURE FUND
GT GLOBAL VARIABLE NATURAL RESOURCES FUND
GT GLOBAL VARIABLE TELECOMMUNICATIONS FUND
GT GLOBAL VARIABLE EMERGING MARKETS FUND
GT GLOBAL VARIABLE GROWTH & INCOME FUND
GT GLOBAL VARIABLE GLOBAL GOVERNMENT INCOME FUND
GT GLOBAL VARIABLE STRATEGIC INCOME FUND
GT GLOBAL VARIABLE U.S. GOVERNMENT INCOME FUND
GT 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 April 29, 1996, As Revised October 31, 1996
- --------------------------------------------------------------------------------
This Statement of Additional Information relates to the GT 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 April 29, 1996, as
revised October 31, 1996, 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").
Chancellor LGT Asset Management, Inc. (the "Manager") serves as the Funds'
Investment Manager and Administrator. The Funds' Transfer Agent is GT Global
Investor Services, Inc. ("GT Services" or "Transfer Agent").
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Investment Objectives and Policies....................................................................................... 2
Options, Futures and Currency Strategies................................................................................. 13
Risk Factors............................................................................................................. 22
Investment Limitations................................................................................................... 26
Execution of Portfolio Transactions...................................................................................... 37
Trustees and Executive Officers.......................................................................................... 41
Management............................................................................................................... 43
Valuation of Shares...................................................................................................... 46
Information Relating to Sales and Redemptions............................................................................ 47
Taxes.................................................................................................................... 48
Additional Information................................................................................................... 50
Investment Results....................................................................................................... 51
Description of Debt Ratings.............................................................................................. 59
Appendix................................................................................................................. 62
Financial Statements..................................................................................................... 63
</TABLE>
[LOGO]
Statement of Additional Information Page 1
<PAGE>
GT 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: GT GLOBAL VARIABLE
NEW PACIFIC FUND ("New Pacific Fund"), GT GLOBAL VARIABLE INTERNATIONAL FUND
("International Fund"), GT GLOBAL VARIABLE EUROPE FUND ("Europe Fund") and GT
GLOBAL VARIABLE AMERICA FUND ("America Fund"). GT GLOBAL VARIABLE LATIN AMERICA
FUND ("Latin America Fund") seeks capital appreciation. The investment objective
of each of GT GLOBAL VARIABLE EMERGING MARKETS FUND ("Emerging Markets Fund")
and GT GLOBAL VARIABLE TELECOMMUNICATIONS FUND ("Telecommunications Fund") is
long-term growth of capital. The investment objective of each of GT GLOBAL
VARIABLE INFRASTRUCTURE FUND ("Infrastructure Fund") and GT GLOBAL VARIABLE
NATURAL RESOURCES FUND ("Natural Resources Fund") is long-term capital growth.
The investment objectives of GT GLOBAL VARIABLE GROWTH & INCOME FUND ("Growth &
Income Fund") are long-term capital appreciation together with current income.
GT 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. GT 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 GT 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 GT 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, the Manager
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 possible investment by each Fund, the Manager
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 the Manager, 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.
At this time, the Manager 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, the Manager 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 GLOBAL GROWTH FUND under normal circumstances invests at least 65% of its
total assets in equity securities of issuers domiciled in that Fund's "Primary
Investment Area."
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GT GLOBAL VARIABLE INVESTMENT FUNDS
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 the Manager 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.
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. The Manager 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.
The NATURAL RESOURCES FUND normally invests at least 65% of its total 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 industries, the Manager has
identified four areas that it expects will create investment opportunities: (a)
improving supply/demand fundamentals, which may result in higher commodity
prices; (b) privatization of state-owned natural resource businesses; (c)
management which can improve production efficiencies without correspondingly
increasing commodity prices; and (d) 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, the Manager 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.
The Manager 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.
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GT GLOBAL VARIABLE INVESTMENT FUNDS
The Telecommunications Fund and the Manager 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, the Manager 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 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. The Manager 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.
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
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GT GLOBAL VARIABLE INVESTMENT FUNDS
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, 1995, the market capitalizations of
listed equity securities on the major exchanges in Argentina, Brazil, Chile, and
Mexico were US$26.0 billion, $77.0 billion, $36.9 billion, and $59.3 billion,
respectively. By comparison, at December 31, 1995, the market capitalization of
the New York Stock Exchange ("NYSE") alone was US$6.0 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 normally hold no more
than 15% of its net assets in illiquid securities.
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.
In December 1994, Mexico reversed a long-held currency policy by devaluing the
Mexican peso and allowing it to float freely. The value of the peso against the
U.S. dollar and other currencies declined sharply. As a result, Mexican stocks
plunged while interest rates soared, and other Latin America securities markets
were also adversely affected. In addition, extension and continuance of
financial aid to Mexico from the U.S., including loan guarantees, is uncertain
at this time, leading to further uncertainty in the securities markets of Latin
America.
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. As described below under "Risk Factors,"
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 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.
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GT GLOBAL VARIABLE INVESTMENT FUNDS
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.
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. The Manager 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 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.
In determining what countries constitute emerging markets, the Manager 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.
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 the Manager 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 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. The
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GT GLOBAL VARIABLE INVESTMENT FUNDS
Manager 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, the Manager 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 the Manager to be at risk of substantial or total loss because of
such political or economic situation.
The Manager 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, the Manager 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 the Manager 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. The Manager 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, the Manager 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.
The Manager 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, the Manager will evaluate what action, if any, is
appropriate with respect to such security. See "Description of Debt Ratings."
The Manager 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 the Manager, as of December 31, 1995, 67% of the total equity
market capitalization worldwide was represented by non-U.S. equity securities,
and more than 65% 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, the
Manager 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.
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 the Manager 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
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GT GLOBAL VARIABLE INVESTMENT FUNDS
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, the Manager
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 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 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;
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GT GLOBAL VARIABLE INVESTMENT FUNDS
(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.
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 the Manager'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. The Manager 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.
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
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GT GLOBAL VARIABLE INVESTMENT FUNDS
issuers. These securities may not necessarily be denominated in the same
currency 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 New 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.
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. The Fund
will not
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GT GLOBAL VARIABLE INVESTMENT FUNDS
have the right to vote equity securities while they are being lent, but it may
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 the Manager to be of good standing
and will not be made unless, in the judgment of the Manager, 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. No Fund will 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 its 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 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.
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GT GLOBAL VARIABLE INVESTMENT FUNDS
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 set aside, cash, U.S. government securities or other
liquid 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.
Moreover, 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.
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 the Manager 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 the Manager 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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GT GLOBAL VARIABLE INVESTMENT FUNDS
OPTIONS, FUTURES AND CURRENCY
STRATEGIES
- --------------------------------------------------------------------------------
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 the
Manager'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 the Manager is experienced in the
use of these instruments, there can be no assurance that any particular
strategy adopted will succeed.
(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 the Manager 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.
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 the Manager, 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.
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GT GLOBAL VARIABLE INVESTMENT FUNDS
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 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, the Manager 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, indices 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 the Manager
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 security or
currency would decline below the exercise price less the premiums received.
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GT GLOBAL VARIABLE INVESTMENT FUNDS
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 the Manager 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 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.
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GT GLOBAL VARIABLE INVESTMENT FUNDS
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 an average of the
last bid prices, obtained from dealers, unless a quotation from only one dealer
is available, in which case only that dealer's price will be used. 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 staff of the Securities and Exchange Commission (the "SEC") 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 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.
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GT GLOBAL VARIABLE INVESTMENT FUNDS
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 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
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GT GLOBAL VARIABLE INVESTMENT FUNDS
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 generally will be entered into for hedging
purposes, except as discussed below under "Synthetic Securities"; 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 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.
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GT GLOBAL VARIABLE INVESTMENT FUNDS
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 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 Trustees 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.
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GT GLOBAL VARIABLE INVESTMENT FUNDS
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
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 the Manager believes will have a positive
correlation to the value of the currency being hedged. The risk 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
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GT GLOBAL VARIABLE INVESTMENT FUNDS
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 securities.
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 is used for cover or otherwise set aside, it could affect
portfolio management or the Fund's ability to meet redemption requests or other
current obligations.
SYNTHETIC SECURITY POSITIONS
The Global Government Income Fund and the Strategic Income Fund, each may
utilize, up to 5% of its total assets, combinations of futures on bonds and
forward currency contracts to create investment positions that have
substantially the same characteristics as bonds of the same type as those on
which the futures contracts are written. Investment positions of this type are
generally referred to as "synthetic securities."
For example, in order to establish a synthetic security position for a Fund that
is comparable to owning a Japanese government bond, the Manager might purchase
futures contracts on Japanese government bonds in the desired principal amount
and purchase forward currency contracts for Japanese Yen in an amount equal to
the then current purchase price for such bonds in the Japanese cash market, with
each contract having approximately the same delivery date.
The Manager might roll over the futures and forward currency contract positions
before taking delivery in order to continue the Fund's investment position, or
the Manager might close out those positions, thus effectively selling the
synthetic security. Further, the amount of each contract might be adjusted in
response to market conditions and the forward currency contract might be changed
in amount or eliminated in order to hedge against currency fluctuations.
Further, while these futures and currency contracts remain open, the Funds will
comply with applicable Securities and Exchange Commission guidelines to set
aside cash, U.S. government securities or other liquid high grade debt
securities in a segregated account with its custodian in an amount sufficient to
cover its potential obligations under such contracts.
The Manager would create synthetic security positions for a Fund when it
believes that it can obtain a better yield or achieve cost savings in comparison
to purchasing actual bonds or when comparable bonds are not readily available in
the market. Synthetic security positions are subject to the risk that changes in
the value of purchased futures contracts may differ from changes in the value of
the bonds that might otherwise have been purchased in the cash market.
Also, while the Manager believes that the cost of creating synthetic security
positions generally will be materially lower than the cost of acquiring
comparable bonds in the cash market, a Fund will incur transaction costs in
connection with each purchase of a futures or forward currency contract. The use
of futures contracts and forward currency contracts to create synthetic security
positions also is subject to substantially the same risks as those that exist
when these instruments are used in connection with hedging strategies.
Statement of Additional Information Page 21
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GT GLOBAL VARIABLE INVESTMENT FUNDS
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. The Manager 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 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 the Manager. 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.
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 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.
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.
Statement of Additional Information Page 22
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GT GLOBAL VARIABLE INVESTMENT FUNDS
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 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.
RELIGIOUS, POLITICAL, OR ETHNIC INSTABILITY. 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 may 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.
Illiquid securities include those that are subject to restrictions contained in
the securities laws of other countries. However, securities that are freely
marketable in the country where they are principally traded, but would not be
freely marketable in the United States, will not be considered illiquid. Where
registration is required, the Fund may be obligated to pay all or part of the
registration expenses and a considerable period may elapse between the time of
the decision to sell and the time the Fund may be permitted to sell a security
under an effective registration statement. If, during such a period,
Statement of Additional Information Page 23
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
adverse market conditions were to develop, the Fund might obtain a less
favorable price than prevailed when it decided to sell.
Not all restricted securities are illiquid. In recent years a large
institutional market has developed for certain securities that are not
registered under the Securities Act of 1933, as amended ("1933 Act"), including
private placements, repurchase agreements, commercial paper, foreign securities
and corporate bonds and notes. These instruments are often restricted securities
because the securities are sold in transactions not requiring registration.
Institutional investors generally will not seek to sell these instruments to the
general public, but instead will often depend either on an efficient
institutional market in which such unregistered securities can be readily resold
or on an issuer's ability to honor a demand for repayment. Therefore, the fact
that there are contractual or legal restrictions on resale to the general public
or certain institutions is not dispositive of the liquidity of such investments.
Rule 144A under the 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 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 Manager monitors the liquidity of securities in the
respective Funds' portfolios and periodically reports on such decisions to the
Boards of Trustees. The Manager 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).
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, the Manager 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
Statement of Additional Information Page 24
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
matters as restrictions on market manipulation, insider trading rules,
shareholder proxy requirements and timely disclosure of information.
CURRENCY FLUCTUATIONS. Because each Fund under normal circumstances (except
the Money Market Fund and to a lesser extent, the America Fund) will invest a
substantial portion 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, the
Manager will consider such difficulties when determining the allocation of each
Fund's assets, although the Manager 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."
Statement of Additional Information Page 25
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
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 affirmative vote
of the lesser of (i) 67% or more of the Fund's shares 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 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 the
Manager 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 the
Manager 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.
Statement of Additional Information Page 26
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GT GLOBAL VARIABLE INVESTMENT FUNDS
For purposes of the concentration policy contained in limitation (12) above,
each 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 are not fundamental policies and
may be changed by the Company's Board of Trustees without shareholder or
investor approval. No Fund may:
(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.
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;
Statement of Additional Information Page 27
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GT GLOBAL VARIABLE INVESTMENT FUNDS
(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.
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 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;
Statement of Additional Information Page 28
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
(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.
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 are not fundamental policies and
may be changed by 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) 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;
Statement of Additional Information Page 29
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
(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
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 investment policies of the Fund are not fundamental policies and
may be changed by 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 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 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.
Statement of Additional Information Page 30
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
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 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 are not fundamental policies and
may be changed by the Company's Board of Trustees, without shareholder or
investor 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) 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
Statement of Additional Information Page 31
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
(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 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.
Statement of Additional Information Page 32
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
The following investment policies of the Fund are not fundamental policies and
may be changed by the Company's Board of Trustees, without shareholder or
investor 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) 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 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 repurchaseagreements
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;
Statement of Additional Information Page 33
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
(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.
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 are not fundamental policies and
may be changed by the Company's Board of Trustees, without shareholder or
investor approval. The Fund may 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
Statement of Additional Information Page 34
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
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;
(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;
Statement of Additional Information Page 35
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
(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
(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 are not fundamental policies and
may be changed by the Company's Board of Trustees, without shareholder or
investor approval. The Fund may 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 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.
Statement of Additional Information Page 36
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
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 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, the Manager
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, the Manager 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
the Manager 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, the Manager may select brokers on
the basis of the research and brokerage services they provide to the Manager 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 the
Manager 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 the Manager determines
in good faith that such commission is reasonable in terms either of that
particular transaction or the overall responsibility of the Manager 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 Manager may allocate brokerage transactions to broker/dealers who have
entered into arrangements under which the broker/dealer allocates a portion of
the commissions paid by the Funds toward payment of the Funds' expenses, such as
custodian fees.
Statement of Additional Information Page 37
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
Investment decisions for each Fund and for other investment accounts managed by
the Manager 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 the
Manager 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, the Manager may consider a
broker/dealer's sale of the shares of the Funds, and the other GT 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 Liechtenstein Global Trust. 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.
For the fiscal year ended December 31, 1995, the Europe Fund paid LGT Bank in
Liechtenstein (Zurich), an "affiliated" broker as defined in the 1940 Act,
brokerage commissions of $565 for purchases and sales of portfolio securities,
which represented 2.22% of the brokerage commissions paid by the Europe Fund and
0% of the aggregate dollar amount of transactions involving payment of
commissions by the Europe Fund.
The aggregate brokerage commissions paid by the Funds for the fiscal periods
ended December 31, 1993, 1994 and 1995, are as follows:
FEBRUARY 10, 1993 (COMMENCEMENT OF OPERATIONS)
THROUGH DECEMBER 31, 1993
<TABLE>
<S> <C>
Variable America Fund.......................................................................... $ 30,752
Variable Europe Fund........................................................................... 25,414
Variable New Pacific Fund...................................................................... 53,627
Money Market Fund.............................................................................. 0
Variable Growth & Income Fund.................................................................. 8,908
Variable Strategic Income Fund................................................................. 0
Variable Global Government Income Fund......................................................... 0
Variable U.S. Government Income Fund........................................................... 0
Variable Latin America Fund.................................................................... 36,242
</TABLE>
OCTOBER 18, 1993 (COMMENCEMENT OF OPERATIONS)
THROUGH DECEMBER 31, 1993
<TABLE>
<S> <C>
Variable Telecommunications Fund............................................................... $ 16,679
</TABLE>
Statement of Additional Information Page 38
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
YEAR ENDED DECEMBER 31, 1994
<TABLE>
<S> <C>
Variable America Fund.......................................................................... $ 12,879
Variable Europe Fund........................................................................... 14,294
Variable New Pacific Fund...................................................................... 46,394
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 Telecommunications Fund............................................................... 88,040
</TABLE>
JULY 5, 1994 (COMMENCEMENT OF OPERATIONS)
THROUGH DECEMBER 31, 1994
<TABLE>
<S> <C>
Variable International Fund.................................................................... $ 9,920
Variable Emerging Markets...................................................................... 33,112
</TABLE>
YEAR ENDED DECEMBER 31, 1995
<TABLE>
<S> <C>
Variable America Fund.......................................................................... $ 48,017
Variable Europe Fund........................................................................... 81,066
Variable New Pacific Fund...................................................................... 148,304
Variable International Fund.................................................................... 32,846
Money Market Fund.............................................................................. 0
Variable Growth & Income Fund.................................................................. 24,481
Variable Strategic Income Fund................................................................. 0
Variable Global Government Income Fund......................................................... 0
Variable U.S. Government Income Fund........................................................... 0
Variable Latin America Fund.................................................................... 163,060
Variable Telecommunications Fund............................................................... 75,529
Variable Emerging Markets...................................................................... 100,931
</TABLE>
JANUARY 31, 1995 (COMMENCEMENT OF OPERATIONS)
THROUGH DECEMBER 31, 1995
<TABLE>
<S> <C>
Variable Infrastructure Fund................................................................... $ 4,412
Variable Natural Resources Fund................................................................ 8,399
</TABLE>
TRADING AND TURNOVER
The Funds engage in securities trading when the Manager 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. Although
the Funds generally do not intend to trade for short-term profits, the
securities held by a Fund will be sold whenever the Manager believes it is
appropriate to do so, without regard to the length of time a particular security
may have been held.
No Fund will consider portfolio turnover to be a limiting factor in the purchase
or sale of portfolio securities. Higher turnover involves correspondingly
greater brokerage commissions and other transaction costs that a Fund will bear
directly, and may result in realization of net capital gains that are taxable
when distributed to shareholders.
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, the portfolio turnover rates for
Statement of Additional Information Page 39
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
the Funds (except for the Infrastructure Fund and Natural Resources Fund) for
the fiscal year ended December 31, 1995, and for the Infrastructure Fund and
Natural Resources Fund for the period January 31, 1995 to December 31, 1995,
were as follows:
<TABLE>
<CAPTION>
JANUARY 31,
JULY 5, 1994 1995
(COMMENCEMENT (COMMENCEMENT
OF OF
OPERATIONS) OPERATIONS)
YEAR ENDED TO DECEMBER YEAR ENDED TO DECEMBER
DECEMBER 31, 31, DECEMBER 31, 31,
GT GLOBAL VARIABLE 1994 1994 1995 1995
- -------------------------------------------------- ------------ ------------- ------------ -------------
<S> <C> <C> <C> <C>
America Fund...................................... 139% N/A 79% N/A
Europe Fund....................................... 61% N/A 123% N/A
New Pacific Fund.................................. 30% N/A 67% N/A
International Fund................................ N/A 17% 107% N/A
Money Market Fund................................. N/A N/A N/A N/A
Growth and Income Fund............................ 53% N/A 73% N/A
Strategic Income Fund............................. 313% N/A 193% N/A
Global Government Income Fund..................... 350% N/A 394% N/A
U.S. Government Income Fund....................... 34% N/A 186% N/A
Latin America Fund................................ 185% N/A 140% N/A
Telecommunications Fund........................... 81% N/A 70% N/A
Emerging Markets Fund............................. N/A 117% 210% N/A
Infrastructure Fund............................... N/A N/A N/A 38%
Natural Resources Fund............................ N/A N/A N/A 875%
</TABLE>
Statement of Additional Information Page 40
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
TRUSTEES AND EXECUTIVE OFFICERS
- --------------------------------------------------------------------------------
The Trustees and Executive Officers of each Company are listed below:
<TABLE>
<CAPTION>
NAME, POSITION(S) WITH EACH PRINCIPAL OCCUPATIONS AND BUSINESS
COMPANY AND THE FUNDS AND ADDRESS EXPERIENCE FOR PAST 5 YEARS
- --------------------------------------- ------------------------------------------------------------------------------------------
<S> <C>
David A. Minella*, 43 Chairman, the Manager since October 1996; Director, Liechtenstein Global Trust (holding
Director, Chairman of the Board and company of the various international LGT companies) since 1990; President, Asset
President Management Division, Liechtenstein Global Trust since 1995; Director and President, LGT
50 California, Street Asset Management Holdings, Inc. ("LGT Asset Management Holdings") since 1988; Director and
San Francisco CA 94111 President, the Manager since 1989; Director, GT Global since 1987 and President, GT Global
from 1987 to 1995; Director, GT Services since 1990; President, GT Services from 1990 to
1995; Director, G.T. Global Insurance Agency, Inc. ("G.T. Insurance") since 1992; and
President, G.T. Insurance from 1992 to 1995. 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 the Manager.
C. Derek Anderson, 54 Chief Executive Officer, Anderson Capital Management, Inc.; Chairman and Chief Executive
Trustee Officer, Plantagenet Holdings, Ltd. from 1991 to present; Director, Munsingwear, Inc.; and
220 Sansome Street Director, American Heritage Group Inc. and various other companies. Mr. Anderson also is a
Suite 400 director or trustee of each of the other investment companies registered under the 1940
San Francisco, CA 94104 Act that is managed or administered by the Manager.
Frank S. Bayley, 55 Partner with Baker & McKenzie (a law firm); Director and Chairman, C.D. Stimson Company (a
Director private investment company); and Trustee, Seattle Art Museum. Mr. Bayley also is a
Two Embarcadero Center director or trustee or each of the other investment companies registered under the 1940
Suite 2400 Act that is managed or administered by the Manager.
San Francisco, CA 94111
Arthur C. Patterson, 52 Managing Partner, Accel Partners (a venture capital firm). He also serves as a director of
Director various computing and software companies. Mr. Patterson also is a director or trustee of
One Embarcadero Center each of the other investment companies registered under the 1940 Act that is managed or
Suite 3820 administered by the Manager.
San Francisco, CA 94111
Ruth H. Quigley, 59 Private investor; and President, Quigley Friedlander & Co., Inc. (a financial advisory
Director services firm) from 1984 to 1986. Ms. Quigley also is a director or trustee or each of the
1055 California Street other investment companies registered under the 1940 Act that is managed or administered
San Francisco, CA 94108 by the Manager.
F. Christian Wignall, 39 Director, LGT Asset Management Holdings since 1989; Senior Vice President, Chief
Vice President and Chief Investment Officer -- Global Equities and Director, the Manager since 1987; and Chairman,
Investment Officer -- Investment Policy Committee of the affiliated international LGT companies since 1990.
Global Equities
50 California Street
San Francisco, CA 94111
</TABLE>
- --------------
* Mr. Minella is an "interested person" of the Company as defined by the 1940
Act due to his affiliation with the LGT companies.
Statement of Additional Information Page 41
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
<TABLE>
<CAPTION>
NAME, POSITION(S) WITH EACH PRINCIPAL OCCUPATIONS AND BUSINESS
COMPANY AND THE FUNDS AND ADDRESS EXPERIENCE FOR PAST 5 YEARS
- --------------------------------------- ------------------------------------------------------------------------------------------
<S> <C>
James R. Tufts, 37 President, GT Services since 1995; Senior Vice President -- Finance and
Vice President and Chief Administration, GT Global, GT Services and G.T. Insurance, from 1994 to
Financial Officer 1995; Senior Vice President -- Finance and Administration, LGT Asset
50 California Street Management Holdings and the Manager since 1994; Vice President --
San Francisco, CA 94111 Finance, LGT Asset Management Holdings, the Manager, GT Global and GT
Services from 1990 to 1994; Vice President -- Finance, G.T. Insurance
from 1992 to 1994; and a Director of the Manager, GT Global and GT
Services since 1991.
Kenneth W. Chancey, 50 Vice President -- Mutual Fund Accounting, the Manager since 1992; and
Vice President and Vice President, Putnam Fiduciary Trust Company from 1989 to 1992.
Principal Accounting Officer
50 California Street
San Francisco, CA 94111
Helge K. Lee, 48 Senior Vice President, General Counsel and Secretary, LGT Asset
Vice President and Secretary Management Holdings, the Manager, GT Global, GT Services and G.T.
50 California Street Insurance since February 1996. Senior Vice President, Secretary and
San Francisco, CA 94111 General Counsel, LGT Asset Management Holdings, the Manager, GT Global,
GT Services and G.T. Insurance from May 1994 to February 1996; Senior
Vice President, General Counsel and Secretary, Strong/Corneliuson
Management, Inc. and Secretary, each of the Strong Funds from October
1991 through May 1994; and shareholder in the law firm of Godfrey &
Kahn, S.C., Milwaukee, Wisconsin for more than five years prior to
October 1991.
</TABLE>
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, Global Investment Portfolio and Growth Portfolio, which also are
registered investment companies managed by the Manager. Each Trustee and Officer
serves in total as a Director and or Trustee and Officer, respectively, of 10
registered investment companies and 40 series funds managed or administered by
the Manager.
Each Company pays each Trustee who is not a director, officer or employee of the
Manager 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, 1995, Mr. Anderson, Mr. Bayley,
Mr. Patterson and Ms. Quigley, who are not directors, officers or employees of
the Manager or any affiliated company, received from G.T. Global Variable
Investment Series and G.T. Global Variable Investment Trust aggregate Trustees'
fees and expenses of $2,090 and $3,145, $2,051 and $3,083, $2,090 and $3,144 and
$2,043 and $3,067, respectively. For the fiscal year ended December 31, 1995 Mr.
Anderson, Mr. Bayley, Mr. Patterson and Ms. Quigley received total compensation
of $99,676, $95,368, $92,139 and $94,457, respectively, from the 40 GT Global
Funds for which he or she serves as a Director or Trustee. Fees and expenses
disbursed to the Trustees contained no accrued or payable pension, or retirement
benefits. As of April 1, 1996, the officers and Trustees of the Funds and their
families as a group own beneficially or of record less than 1% of the
outstanding shares of the Funds, except for International Fund, Infrastructure
Fund and Natural Resources Fund. As of April 1, 1996, the officers and Trustees
of the Funds, as a group, owned 5.31%, 5.40% and 4.18% of the outstanding shares
of International Fund, Infrastructure Fund and Natural Resources Fund,
respectively.
Statement of Additional Information Page 42
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
MANAGEMENT
- --------------------------------------------------------------------------------
INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES
Chancellor LGT Asset Management, Inc. (the "Manager") 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 the Manager. As investment
manager, the Manager makes all investment decisions for each Fund and
administers each Fund's affairs. The Manager also serves as the Company's
administrator under an Administration Contract ("Administration Contract")
between each Company and the Manager. As administrator, the Manager, 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 may be renewed for one-year terms, 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 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. Either the Fund or
the Manager 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 the Manager 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
for the fiscal periods ended December 31, 1993, 1994 and 1995, were as follows:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1993
-----------------------------
INVESTMENT
MANAGEMENT REIMBURSEMENT
GT GLOBAL FEES AMOUNT
- ---------------------------------------------------------------------------------------------------- ------------ ---------------
<S> <C> <C>
Variable America Fund............................................................................... $ 7,258 $ 7,258
Variable Europe Fund................................................................................ 15,376 5,332
Variable New Pacific Fund........................................................................... 21,393 7,574
Money Market Fund................................................................................... 5,359 2,791
Variable Strategic Income Fund...................................................................... 35,351 10,782
Variable Global Government Income Fund.............................................................. 12,124 4,044
Variable U.S. Government Income Fund................................................................ 3,617 3,617
Variable Latin America Fund......................................................................... 17,539 5,351
Variable Growth & Income Fund....................................................................... 31,504 11,294
Variable Telecommunications Fund
(from October 18, 1993, commencement of operations)................................................ 8,558 415
</TABLE>
Statement of Additional Information Page 43
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1994
-----------------------------
INVESTMENT
MANAGEMENT REIMBURSEMENT
GT GLOBAL FEES AMOUNT
- ---------------------------------------------------------------------------------------------------- ------------ ---------------
Variable America Fund............................................................................... $ 51,664 $ 0
<S> <C> <C>
Variable Europe Fund................................................................................ 125,533 0
Variable New Pacific Fund........................................................................... 155,724 0
Variable International Fund
(from July 5, 1994, commencement of operations).................................................... 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
(from July 5, 1994, commencement of operations).................................................... 20,347 20,347
Variable Telecommunications Fund.................................................................... 239,566 0
Variable Growth & Income Fund....................................................................... 210,934 0
<CAPTION>
YEAR ENDED
DECEMBER 31, 1995
-----------------------------
INVESTMENT
MANAGEMENT REIMBURSEMENT
GT GLOBAL FEES AMOUNT
- ---------------------------------------------------------------------------------------------------- ------------ ---------------
<S> <C> <C>
Variable America Fund............................................................................... $ 236,272 $ 18,927
Variable Europe Fund................................................................................ 152,847 71,515
Variable New Pacific Fund........................................................................... 204,362 73,848
Variable International Fund......................................................................... 32,608 32,608
Money Market Fund................................................................................... 79,561 48,354
Variable Strategic Income Fund...................................................................... 173,720 56,631
Variable Global Government Income Fund.............................................................. 81,039 71,061
Variable U.S. Government Income Fund................................................................ 33,749 33,749
Variable Latin America Fund......................................................................... 205,457 89,040
Variable Emerging Markets Fund...................................................................... 76,146 73,847
Variable Telecommunications Fund.................................................................... 434,684 6,725
Variable Growth & Income Fund....................................................................... 277,913 53,927
Variable Infrastructure Fund
(from January 31, 1995, commencement of operations)................................................ 6,836 6,836
Variable Natural Resources Fund
(from January 31, 1995, commencement of operations)................................................ 5,918 5,918
</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 for the fiscal periods ended December 31, 1994 and 1995 was as follows:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1994
----------------------------
OTHER
EXPENSES REIMBURSEMENT
GT 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
(from July 5, 1994, commencement of operations)...................................................... 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
(from July 5, 1994, commencement of operations)...................................................... 22,391 22,391
Variable Telecommunications Fund...................................................................... 116,804 44,272
Variable Growth & Income Fund......................................................................... 102,726 47,986
</TABLE>
Statement of Additional Information Page 44
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1995
----------------------------
OTHER
EXPENSES REIMBURSEMENT
GT GLOBAL PAID AMOUNT
- ------------------------------------------------------------------------------------------------------ ----------- ---------------
<S> <C> <C>
Variable America Fund................................................................................. $ 97,684 $ 0
Variable Europe Fund.................................................................................. 101,496 0
Variable New Pacific Fund............................................................................. 102,323 0
Variable International Fund........................................................................... 82,424 41,664
Money Market Fund..................................................................................... 88,135 0
Variable Strategic Income Fund........................................................................ 114,537 0
Variable Global Government Income Fund................................................................ 98,074 0
Variable U.S. Government Income Fund.................................................................. 81,338 36,337
Variable Latin America Fund........................................................................... 125,734 0
Variable Emerging Markets Fund........................................................................ 87,351 0
Variable Telecommunications Fund...................................................................... 94,520 0
Variable Growth & Income Fund......................................................................... 117,206 0
Variable Infrastructure Fund
(from January 31, 1995, commencement of operations).................................................. 51,615 43,241
Variable Natural Resources Fund
(from January 31, 1995, commencement of operations).................................................. 47,167 40,401
</TABLE>
TRANSFER AGENCY AND ACCOUNTING AGENT SERVICES
GT 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 $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.
As of December 31, 1995, each Fund paid pricing and accounting agent fees to the
Manager in the following amounts:
<TABLE>
<CAPTION>
GT GLOBAL
- --------------------------------------------------
<S> <C>
Variable Strategic Income Fund.................... $2,523
Variable Global Government Income Fund............ 1,197
Variable U.S. Government Income Fund.............. 567
Variable Latin America Fund....................... 2,080
Variable Growth & Income Fund..................... 3,066
Variable Telecommunications Fund.................. 5,248
Variable Emerging Markets Fund.................... 884
Variable Infrastructure Fund...................... 124
Variable Natural Resources Fund................... 109
Variable America Fund............................. 4,066
Variable New Pacific Fund......................... 2,215
Variable Europe Fund.............................. 1,673
Money Market Fund................................. 1,633
Variable International Fund....................... 386
</TABLE>
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.
Statement of Additional Information Page 45
<PAGE>
GT GLOBAL VARIABLE INVESTMENT 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 the Manager to be the primary market. Securities
traded in the OTC market are valued at the last available sale price prior to
the time of valuation.
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
the Manager 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.
Options on indices, securities and currencies purchased by the Funds are valued
at their last bid price in the case of listed options or in the case of OTC
options, at the average of the last bid prices obtained from dealers, unless a
quotation from only one dealer is available, in which case only that dealer's
price will be used. 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.
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. 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 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 various foreign markets on other days
on which the NYSE is not open. 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. 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
Statement of Additional Information Page 46
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
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 the Manager, 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 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."
GT Global, 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
Statement of Additional Information Page 47
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
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
- --------------------------------------------------------------------------------
GENERAL
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 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, the America Fund, and the U.S.
Government Income 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
Statement of Additional Information Page 48
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
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
most likely 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.
Pursuant to proposed regulations, 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 each
such 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 transactions, 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.
Gains from the disposition of foreign currencies (except certain gains that may
be excluded by future regulations), and gains from 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 intends that, when it engages in hedging transactions, it will qualify for
this treatment, but at the present time it is not clear whether this treatment
will be available for all these transactions. To the extent this treatment is
not available, a Fund, may be forced to defer the closing out of certain
options, Futures, Forward Contracts, and foreign currency positions 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 gains and losses from transactions in foreign countries,
foreign currency-denominated debt securities, and options, Futures, and Forward
Contracts on foreign currencies ("Section 988 gains or losses"). Each Section
988 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.
Statement of Additional Information Page 49
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
LIECHTENSTEIN GLOBAL TRUST
Liechtenstein Global Trust, formerly BIL GT Group, is composed of the Manager
and its worldwide affiliates. Other worldwide affiliates of Liechtenstein Global
Trust include LGT Bank in Liechtenstein, formerly Bank in Liechtenstein, an
international financial services institution founded in 1920. LGT Bank in
Liechtenstein has principal offices in Vaduz, Liechtenstein. Its subsidiaries
currently include LGT Bank in Liechtenstein (Deutschland) GmbH, formerly Bank in
Liechtenstein (Frankfurt) GmbH, and LGT Asset Management AG, formerly Bilfinanz
und Verwaltung AG, located in Zurich, Switzerland.
Worldwide asset management affiliates also currently include LGT Asset
Management PLC, formerly G.T. Management PLC in London, England; LGT Asset
Management Ltd., formerly G.T. Management (Asia) Ltd. in Hong Kong; LGT Asset
Management Ltd., formerly G.T. Management (Japan) in Tokyo; LGT Asset Management
Pte. Ltd., formerly G.T. Management (Singapore) PTE Ltd. located in Singapore;
LGT Asset Management Ltd., formerly G.T. Management (Australia) Ltd., located in
Sydney, Australia; and LGT Asset Management GmbH, formerly BIL Asset Management
GmbH, located in Frankfurt, Germany.
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
The Manager has granted each Company the right to use the "GT" name and "GT
Global" and has reserved the right to withdraw its consent to the use of such
names by either Company and/or any of the Funds at any time, or to grant the use
of such names 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.
Statement of Additional Information Page 50
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
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 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.
The Non-Standardized Returns for each Fund (except the Telecommunications Fund,
the Emerging Markets Fund, the International Fund, the Infrastructure Fund and
the Natural Resources Fund) for the fiscal year ended December 31, 1995, and
from inception on February 10, 1993 to December 31, 1995, (except for the
Telecommunications Fund, the International Fund, the Emerging Markets Fund, the
Infrastructure Fund and the Natural Resources Fund) quoted as average annual
total return, were as follows:
<TABLE>
<S> <C>
Variable America Fund
-- Year ended December 31, 1995......................................................... 25.37%
-- From inception on February 10, 1993 to December 31, 1995............................. 20.39%
Variable Europe Fund
-- Year ended December 31, 1995......................................................... 9.66%
-- From inception on February 10, 1993 to December 31, 1995............................. 12.15%
Variable New Pacific Fund
-- Year ended December 31, 1995......................................................... -0.21%
-- From inception on February 10, 1993 to December 31, 1995............................. 5.58%
Variable Growth and Income Fund
-- Year ended December 31, 1995......................................................... 15.49%
-- From inception on February 10, 1993 to December 31, 1995............................. 10.12%
Variable Strategic Income Fund
-- Year ended December 31, 1995......................................................... 19.50%
-- From inception on February 10, 1993 to December 31, 1995............................. 8.44%
Variable Global Government Income Fund
-- Year ended December 31, 1995......................................................... 15.85%
-- From inception on February 10, 1993 to December 31, 1995............................. 5.14%
Variable U.S. Government Income Fund
-- Year ended December 31, 1995......................................................... 14.73%
-- From inception on February 10, 1993 to December 31, 1995............................. 4.77%
</TABLE>
Statement of Additional Information Page 51
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
<TABLE>
<S> <C>
Variable Latin America Fund
-- Year ended December 31, 1995......................................................... 24.14%
-- From inception on February 10, 1993 to December 31, 1995............................. 7.12%
Money Market Fund
-- Year ended December 31, 1995......................................................... 5.26%
-- From inception on February 10, 1993 to December 31, 1995............................. 3.91%
</TABLE>
The Non-Standardized Returns for the Telecommunications Fund for the fiscal year
ended December 31, 1995, and from inception on October 18, 1993 to December 31,
1995, quoted as average annual total return, were 23.66% and 18.12%,
respectively.
The Non-Standardized Returns for the International Fund and Emerging Markets
Fund, quoted as average annual total returns for the fiscal year ended December
31, 1995, were -1.14% and -7.54%, and -4.67% and -5.04%, respectively.
The Non-Standardized Returns of each Fund, (except for the Telecommunications
Fund, the International Fund, the Emerging Markets Fund, the Infrastructure Fund
and the Natural Resources Fund) quoted as aggregate total returns, for the
period February 10, 1993 (commencement of operations) through December 31, 1995,
were as follows:
<TABLE>
<CAPTION>
AGGREGATE
GT GLOBAL RETURN
- -------------------------------------------------------------------------------- ---------
<S> <C>
Variable America Fund........................................................... 70.90%
Variable Europe Fund............................................................ 39.26
Variable New Pacific Fund....................................................... 16.97
Variable Growth & Income Fund................................................... 32.11
Variable Strategic Income Fund.................................................. 26.37
Variable Global Government Income Fund.......................................... 15.56
Variable U.S. Government Income Fund............................................ 14.40
Variable Latin America Fund..................................................... 21.98
Money Market Fund............................................................... 11.70
</TABLE>
The Non-Standardized Return for the Telecommunications Fund quoted as aggregate
total return for the period October 18, 1993 (commencement of operations)
through December 31, 1995, was 41.32%.
The Non-Standardized Returns for the International Fund and the Emerging Markets
Fund, quoted as aggregate total returns for the period July 5, 1994
(commencement of operations) through December 31, 1995, were -6.87% and -7.43%,
respectively.
The Non-Standardized Returns for the Infrastructure Fund and the Natural
Resources Fund, quoted as aggregate total returns for the period January 31,
1995 (commencement of operations) to December 31, 1995 were 10.58% and 22.20%,
respectively.
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>
a-b(1)
YIELD = 2 [( -- + 1 ) (6)-1]
cd
</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 Monitor-TM-, IBC/Donaghue's Money Fund
Report, MONEY
Statement of Additional Information Page 52
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
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 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, 1995, the Fund's share yield was
5.10% and effective yield was 5.23% which reflects .14% 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, 1995:.................................................. $ 1.000977676
</TABLE>
- ------------------
* Value includes additional shares acquired with dividends paid on the
original shares.
<TABLE>
<S> <C>
Calculation:
Ending account value:.............................................................. $ 1.000977676
Less beginning account value:...................................................... $ 1.000000000
Net change in account value:....................................................... $ .000977676
Seven-day yield = $.000977676 X 365/7 = 5.10%
Effective yield** = [1 + .000977676] 365/7 - 1 = 5.23%
</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
Information relating to foreign market performance, capitalization and
diversification 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 GT 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.
Statement of Additional Information Page 53
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
GT 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 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., the Manager, 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 Companies Service ("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, 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.
Statement of Additional Information Page 54
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
(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 Service, Inc., Fitch Investors Service, Inc.and
Standard & Poor's.
(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 various financial organizations such as
Salomon Brothers, Inc., Lehman Brothers, Merrill Lynch, Pierce, Fenner & Smith,
Inc., J.P. Morgan, Morgan Stanley, Smith Barney, S.G. Warburg, Jardine Flemming,
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, GT 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 GT 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 GT Global may refer to the total amount of
assets under Liechtenstein Global Trust management, or the total amount of
assets under custody with the Liechtenstein Global Trust, in advertising
materials.
GT 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. GT Global may provide information designed to
help individuals understand their investment goals and explore various financial
strategies. For example, GT 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 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, GT Global may refer to or advertise the names of companies,
or their products although there can be no assurance that any GT Global Variable
Investment Fund may own the securities of these companies.
Statement of Additional Information Page 55
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
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.
GT 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 GT 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).
GT Global may from time to time in its sales materials and advertising discuss
the risks inherent in investing. The major types of 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.
Statement of Additional Information Page 56
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
From time to time, the GT Global Variable Investment Funds and GT Global will
quote information including but not limited to data regarding: individual
countries, regions, world stock exchanges, and economic and demographic
statistics from sources GT 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, LGT Guide
to World Equity Markets, Salomon Brothers, Inc, and S.G. Warburg.
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,
LGT Guide to World Equity Markets, Salomon Brothers Inc and S.G. Warburg.
15) Foreign direct investments to developing countries: The World Bank and
Datastream.
16) Supply, consumption, demand and growth in demand of certain products,
services and industries, including, but not limited to electricity, water,
transportation, construction materials, natural resources, technology, other
basic infrastructure, financial services, health care services and supplies,
consumer products and services and telecommunications equipment and services
(sources of such information may include, but would not be limited to, The
World Bank, OECD, IMF, Bloomberg and Datastream).
17) Standard deviation and performance returns for U.S. and non-U.S. equity and
bond markets: Morgan Stanley Capital International.
18) Countries restructuring their debt, including those under the Brady Plan:
the Manager.
19) Political and economic structure of countries: Economist Intelligence Unit.
20) Government and corporate bonds -- credit ratings, yield to maturity and
performance returns: Salomon Brothers, Inc.
21) Dividend yields for U.S. and non-U.S. companies: Bloomberg.
From time to time, the Funds and GT Global may quote in advertising materials
economic and financial data, including statistics and commentary from published
works including, but not limited to, Megatrends 2000, Global Paradox, and
Megatrends Asia.
From time to time, GT 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, GT Global may make reference to or discuss
its products, services and accomplishments. Among these accomplishments are that
in 1983 the Manager 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 LGT Asset Management Ltd. as one of the first foreign
discretionary investment managers for Japanese investors. Such accomplishments,
however, should not be viewed as an endorsement of the Manager by the government
of Hong Kong, Japan's Ministry of Finance or any other government or government
agency. Nor do any such accomplishments of the Manager provide any assurance
that the GT Global Variable Investment Funds' investment objectives will be
achieved.
Statement of Additional Information Page 57
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
THE GT ADVANTAGE
The Manager has developed a unique team approach to its global money management
which we call the GT Advantage. The Manager's money management style combines
the best of the "top-down" and "bottom-up" investment manager strategies. The
top-down approach is implemented by the Manager's Investment Policy Committee
which sets broad guidelines for asset allocation and currency management based
on the Manager'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 securities
that offer both strong income and/or growth potential.
From time to time, each Fund and GT 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 GT 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.
Each Fund and GT Global from time to time, may quote information on stock market
capitalization and may show the performance of certain national stock markets.
The Funds and GT Global may also quote information similar to that shown above
from other sources, but not limited to, the International Finance Corporation,
S.G. Warburg, Salomon Brothers, Wilshire Associates, Inc. and Datastream.
From time to time, each Fund and GT Global may quote information on the top
companies listed on an exchange or index for countries around the world.
From time to time, each Fund and GT Global may quote the most currently
available data for GDP, GDP Growth, Regulations, Per Capita GDP, Total Exports,
Total Imports and Inflation Rates.
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.
From time to time, each Fund and GT Global may quote data for stock market
trading volume and number of listed companies for various countries, from
information provided by IFC.
In addition, the GT 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>
Algeria Greece Peru
Argentina Hong Kong Philippines
Bolivia Hungary Poland
Botswana India Portugal
Brazil Indonesia Republic of Slovakia
Chile Israel Russia
China Ivory Coast Singapore
Colombia Jamaica South Africa
Costa Rica Jordan South Korea
Cyprus Kenya Sri Lanka
Czech Republic Malaysia Swaziland
Dominican Republic Mauritius Taiwan
Ecuador Mexico Thailand
Egypt Morocco Turkey
El Salvador Nicaragua Uruguay
Finland Nigeria Venezuela
Ghana Pakistan Zimbabwe
Panama
</TABLE>
Statement of Additional Information Page 58
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
The Manager 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.
ECONOMIC DEVELOPMENT IN EMERGING MARKETS
The Manager has identified six phases to track the progress of developing
economies.
In addition, the Manager 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.
- --------------------------------------------------------------------------------
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. 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.
Statement of Additional Information Page 59
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
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" 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
Statement of Additional Information Page 60
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
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.
Statement of Additional Information Page 61
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
APPENDIX
- --------------------------------------------------------------------------------
VARIABLE TELECOMMUNICATIONS FUND
From time to time the Fund and GT Global will quote information including, but
not limited to, data regarding:
/ / Increased usage of new technologies such as, but not limited to,
cellular and wireless communications in emerging and established
countries around the world
/ / Supply and demand of telephone equipment and services
/ / Regulatory environment of telecommunications industries
/ / Revenue, price and usage of telecommunications products and services
/ / Privatization of telecommunications companies
The information quoted has not been independently verified by the Fund or GT
Global and will be based on data provided that is believed to be reliable and
accurate from, but not limited to, the following sources:
/ / Salomon Brothers World Equity Telecommunications Index, which includes
stock market data about the telecommunications industry in established
and developing markets
/ / OECD and other publications from its subsidiaries such as the
International Telecommunications Union
/ / Morgan Stanley Capital International stock market industry indices such
as Telecommunications, Broadcasting & Publishing and Data Processing &
Reproduction
/ / International Technology Consultants, a Washington D.C. based firm which
publishes reports such as EASTERN EUROPEAN & SOVIET TELECOM REPORT and
LATIN AMERICAN TELECOM REPORT
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.
The Manager expects this scenario to continue to benefit such companies in the
U.S. and to similarly to be realized by the established telecommunications
companies in established economies, although no assurances can be made in this
regard.
VARIABLE INFRASTRUCTURE FUND
From time to time the Fund and GT Global may quote information including, but
not limited to:
/ / Supply and demand of telephone equipment and services, electricity,
water, transportation, construction materials and other infrastructure
related products and services
/ / Regulatory environment of infrastructure industries
/ / Quantity and costs of current and projected infrastructure projects
/ / Privatization of industries and companies
/ / New technologies, products and services used in infrastructure
industries
VARIABLE NATURAL RESOURCES FUND
From time to time the Fund and GT Global may quote information including, but
not limited to:
/ / Supply, demand and prices of natural resources
/ / Regulatory environment of natural resources
/ / Supply, demand and prices of products manufactured from natural
resources
/ / New technologies, products and services used in the natural resources
industries
Statement of Additional Information Page 62
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The audited financial statements of the Funds, except GT Global Variable
Infrastructure Fund and GT Global Variable Natural Resources Fund, as of
December 31, 1995, and for their fiscal years then-ended, and the audited
financial statements of GT Global Variable Infrastructure Fund and GT Global
Variable Natural Resources Fund for the period January 31, 1995 (commencement of
operations) through December 31, 1995, appear on the following pages.
Statement of Additional Information Page 63
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
REPORT OF
INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
TO THE SHAREHOLDERS AND BOARD OF TRUSTEES OF THE G.T. GLOBAL VARIABLE INVESTMENT
TRUST COMPRISING THE FOLLOWING FUNDS: GT GLOBAL VARIABLE STRATEGIC INCOME FUND,
GT GLOBAL VARIABLE GLOBAL GOVERNMENT INCOME FUND, GT GLOBAL VARIABLE U.S.
GOVERNMENT INCOME FUND, GT GLOBAL VARIABLE LATIN AMERICA FUND, GT GLOBAL
VARIABLE GROWTH & INCOME FUND, GT GLOBAL VARIABLE TELECOMMUNICATIONS FUND, GT
GLOBAL VARIABLE EMERGING MARKETS FUND, GT GLOBAL VARIABLE INFRASTRUCTURE FUND,
GT GLOBAL VARIABLE NATURAL RESOURCES FUND; AND G.T. GLOBAL VARIABLE INVESTMENT
SERIES COMPRISING THE FOLLOWING FUNDS: GT GLOBAL VARIABLE AMERICA FUND, GT
GLOBAL VARIABLE NEW PACIFIC FUND, GT GLOBAL VARIABLE EUROPE FUND, GT GLOBAL
MONEY MARKET FUND AND GT 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, 1995, the
related statements of operations for the periods indicated herein, and the
related 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, 1995 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 positions of the
Funds as of December 31, 1995, the results of their operations for the periods
indicated herein, 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 21, 1996
Statement of Additional Information Page 64
<PAGE>
GT GLOBAL VARIABLE STRATEGIC INCOME FUND
PORTFOLIO OF INVESTMENTS
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market % of Net
Fixed Income Investments Currency Amount Value Assets
- ----------------------------------------------------------- -------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Government & Government Agency Obligations (85.9%)
Argentina (6.1%)
Republic of Argentina:
Discount Bond, 6.5625% due 3/31/23+ ................. USD 1,000,000 $ 652,500 2.6
Par Bond, 5% due 3/31/23=/= ......................... USD 800,000 454,000 1.8
BOCON Pre 2, 5.9766% due 4/1/01[.] + ................ USD 250,000 243,750 1.0
Floating Rate Bond, 6.8125% due 3/31/05+ ........... USD 250,000 177,031 0.7
Australia (1.7%)
Australian Government, 7.5% due 7/15/05 ............... AUD 600,000 426,250 1.7
Brazil (4.5%)
Republic of Brazil:
Par Z-L Bond, 4.25% due 4/15/24=/= .................. USD 840,000 443,625 1.8
C Bond, 4% due 4/15/14 - 144A (Effective rate at
period end is 6.2825%, including "payment-in-kind"
bonds.)[.] =/= .................................... USD 530,604 302,776 1.2
Discount Bond, 6.8125% due 4/15/24+ ................. USD 400,000 245,750 1.0
Debt Conversion Bond Series L, 6.875% due
4/15/12+ ........................................... USD 200,000 114,500 0.5
Bulgaria (3.5%)
Bulgaria:
Past Due Interest Bond (IAB), 6.75% due 7/28/11 -
144A+ {::} ........................................ USD 829,186 384,017 1.5
Discount Bond Series A, 6.75% due 7/28/24 - EURO+ ... USD 700,000 373,188 1.5
Discount Bond Series A, 6.75% due 7/28/24 - 144A+
{::} .............................................. USD 250,000 133,281 0.5
Canada (0.3%)
Canadian Government, 8.75% due 12/1/05 .............. CAD 100,000 81,861 0.3
Denmark (2.8%)
Kingdom of Denmark, 7% due 12/15/04 ................... DKK 3,937,000 705,057 2.8
Ecuador (3.6%)
Ecuador:
Discount Bond, 6.8125% due 2/28/25 - EURO+ .......... USD 750,000 380,625 1.5
Par Bond, 3% due 2/28/25 - EURO=/= ................. USD 1,000,000 363,125 1.4
Past Due Interest Bond, 3% due 2/27/15 - EURO
(Effective rate at period end is 4.28%, including
"payment-in-kind" bonds.)[.] + ..................... USD 510,743 171,737 0.7
France (4.9%)
French O.A.T.:
7.25% due 4/25/06 ................................... FRF 3,640,000 774,901 3.1
7.5% due 4/25/05 .................................... FRF 2,160,000 468,269 1.8
Germany (5.4%)
Deutschland Republic, 6.25% due 1/4/24 ............... DEM 2,110,000 1,372,846 5.4
Ireland (0.9%)
Irish Gilts, 6.25% due 10/18/04 ....................... IEP 160,000 236,800 0.9
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 65
<PAGE>
GT GLOBAL VARIABLE STRATEGIC INCOME FUND
<TABLE>
<CAPTION>
Principal Market % of Net
Fixed Income Investments Currency Amount Value Assets
- ----------------------------------------------------------- -------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Government & Government Agency Obligations (Continued)
Italy (6.9%)
Italian Buoni Poliennali del Tesoro (BTPS):
8.5% due 4/1/04 .................................... ITL 1,270,000,000 $ 712,041 2.8
9.5% due 1/1/05 .................................... ITL 450,000,000 266,167 1.1
8.5% due 1/1/04 .................................... ITL 440,000,000 247,677 1.0
Republic of Italy, 5.125% due 7/29/03 ................... JPY 46,000,000 501,788 2.0
Mexico (4.6%)
United Mexican States:
Discount Bond Series B, 6.7656% due 12/31/19+
{/\} ............................................... USD 750,000 540,000 2.1
Par Bond Series A, 6.25% due 12/31/19{/\} ........... USD 500,000 326,563 1.3
Par Bond, 6.63% due 12/31/19{/\} ................... FRF 1,500,000 164,127 0.6
Petroleos Mexicanos (PEMEX), 8.625% due 12/1/23 -
144A{::} ........................................... USD 200,000 150,000 0.6
New Zealand (2.8%)
New Zealand Government:
8% due 2/15/01 ...................................... NZD 360,000 241,619 1.0
6.5% due 2/15/00 .................................... NZD 375,000 237,352 0.9
8% due 11/15/06 ..................................... NZD 340,000 234,815 0.9
Nigeria (2.5%)
Central Bank of Nigeria:
Par Bond, 6.25% due 11/15/20=/= {/\} ............... USD 1,250,000 615,625 2.4
5.092% due 1/5/10=/= ............................... USD 100,000 37,063 0.1
Philippines (2.5%)
Central Bank of the Philippines:
Par Bond Series B, 6.25% due 12/1/17=/= ............. USD 550,000 409,750 1.6
Debt Conversion Bond Series B, 6.5% due 12/1/09+ .... USD 250,000 215,313 0.9
Poland (4.4%)
Poland:
Past Due Interest Bond, 3.75% due 10/27/14 - 144A=/ =
{::} ............................................... USD 999,000 650,599 2.6
Discount Bond, 6.875% due 10/27/24 - 144A+ {::} ..... USD 384,000 290,880 1.1
Par Bond, 2.75% due 10/27/24 - 144A=/= {::} ......... USD 384,000 183,360 0.7
Par Bond, 2.75% due 10/27/24 - EURO=/= .............. USD 16,000 7,640 --
Portugal (1.7%)
Portuguese Government Bond, 11.875% due 2/23/05 ....... PTE 56,000,000 420,731 1.7
Russia (1.2%)
Ministry Finance of Russia, 3% due 5/14/99 ............ USD 500,000 305,313 1.2
South Africa (0.6%)
Republic of South Africa, 12% due 2/28/05 ............. ZAR 600,000 146,384 0.6
Spain (3.8%)
Kingdom of Spain:
10% due 2/28/05 ..................................... ESP 58,000,000 485,334 1.9
5.75% due 3/23/02 ................................... JPY 42,000,000 477,282 1.9
Sweden (3.8%)
Swedish Government, 13% due 6/15/01 ................. SEK 5,300,000 962,457 3.8
United States (14.0%)
United States Treasury Note:
6.25% due 5/31/00 ................................... USD 1,400,000 1,447,633 5.7
7.75% due 11/30/99 ................................. USD 680,000 736,950 2.9
6.5% due 8/15/05 .................................... USD 230,000 244,734 1.0
United States Treasury Bond, 6.875% due 8/15/25 ....... USD 1,000,000 1,122,500 4.4
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 66
<PAGE>
GT GLOBAL VARIABLE STRATEGIC INCOME FUND
<TABLE>
<CAPTION>
Principal Market % of Net
Fixed Income Investments Currency Amount Value Assets
- ----------------------------------------------------------- -------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Government & Government Agency Obligations (Continued)
Venezuela (3.4%)
Republic of Venezuela, Par Bond Series A, 6.75% due
3/31/20{/\} ........................................ USD 1,500,000 $ 859,688 3.4
------------
Total Government & Government Agency Obligations (cost
$20,712,667) ............................................ 21,747,274
------------
Sovereign Debt (3.4%)
Morocco (2.4%)
Kingdom of Morocco, Tranche A Loan Agreement, 6.5938%
due 1/1/09+ .......................................... USD 910,000 611,975 2.4
Russia (1.0%)
Bank for Foreign Economic Affairs (Vnesheconombank)
Loan Agreement ** {.} ................................ DEM 1,000,000 264,576 1.0
------------
Total Sovereign Debt (cost $916,315) ...................... 876,551
------------
Corporate Bonds (0.8%)
Brazil (0.8%)
Banco BCN - BCN Leasing, 11% due 6/9/97 - 144A (cost
$200,000){::} ........................................ USD 200,000 198,250 0.8
------------
Supranational Bonds (0.7%)
International Bank of Reconstruction & Development, 4.5%
due 6/20/00 (cost $229,878) ........................... JPY 17,500,000 188,735 0.7
------------ -----
TOTAL FIXED INCOME INVESTMENTS (cost $22,058,860) ........ 23,010,810 90.8
------------ -----
<CAPTION>
Underlying
Nominal Market % of Net
Options Currency Amount Value Assets
- ----------------------------------------------------------- -------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Call Option on Japanese Government Bond, 4.9% due
6/20/03, strike 114.406, expires 3/12/96 (cost $18,133)
....................................................... JPY 150,000,000 5,741 --
------------ -----
<CAPTION>
Principal Market % of Net
Short-Term Investments Currency Amount Value Assets
- ----------------------------------------------------------- -------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Treasury Bills (1.9%)
Mexico (1.9%)
Mexican Cetes: ........................................ MXN -- -- 1.9
Effective yield 50.06%, due 2/22/96 ................. -- 2,075,870 251,413 --
Effective yield 48.10%, due 3/28/96 ................. -- 952,330 110,799 --
Effective yield 45.50%, due 9/26/96 ................. -- 1,100,000 106,609 --
------------ -----
TOTAL SHORT-TERM INVESTMENTS (cost $493,524) .............. 468,821 1.9
------------ -----
<CAPTION>
Market % of Net
Repurchase Agreement Value Assets
- ----------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated December 29, 1995, with State Street Bank and Trust
Company, due January 2, 1996, for an effective yield of
5.55%, collateralized by $1,155,000 U.S. Treasury Notes,
6% due 8/31/97 (market value of collateral is
$1,192,123, including accrued interest). (cost
$1,164,538) ........................................... 1,164,538 4.6
------------ -----
TOTAL INVESTMENTS (cost $23,735,055) {j} .................. 24,649,910 97.3
Other Assets and Liabilities .............................. 694,974 2.7
------------ -----
Net Assets ................................................ $ 25,344,884 100.0
------------ -----
------------ -----
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 67
<PAGE>
GT GLOBAL VARIABLE STRATEGIC INCOME FUND
- ----------------
* Percentages indicated are based on net assets of $25,344,884.
+ The coupon rate shown on floating rate note represents the rate at
period end.
{.} Non-income producing security.
** Underlying loan agreement currently in default.
{::} 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.
[.] Bond pays stated or additional interest with "payment-in-kind"
(PIK) bonds.
=/= The coupon rate shown on step-up coupon bond represents the rate at
period end.
{/\} Issued with detachable warrants or value recovery rights. The
current market value of each warrant or right is zero.
{j} For Federal income tax purposes, cost is $23,931,295 and
appreciation (depreciation) is as follows:
Unrealized appreciation: $ 1,229,742
Unrealized depreciation: (511,127)
-------------
Net unrealized appreciation: $ 718,615
-------------
-------------
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 68
<PAGE>
GT GLOBAL VARIABLE STRATEGIC INCOME FUND
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
DECEMBER 31, 1995
<TABLE>
<CAPTION>
Unrealized
Market Value Contract Delivery Appreciation
Contracts to Buy: (U.S. Dollars) Price Date (Depreciation)
- ---------------------------------------- -------------- ----------- -------- --------------
<S> <C> <C> <C> <C>
Australian Dollars...................... 277,607 1.32674 01/18/96 $ (3,910)
British Pounds.......................... 69,642 0.65067 02/21/96 483
British Pounds.......................... 687,635 0.63788 01/16/96 (6,856)
Canadian Dollars........................ 243,154 1.37780 02/20/96 2,190
Canadian Dollars........................ 172,112 1.38171 02/20/96 2,033
Canadian Dollars........................ 40,282 1.37580 02/20/96 305
Canadian Dollars........................ 102,532 1.37535 03/18/96 739
Danish Kroner........................... 27,025 5.58040 01/16/96 145
Deutsche Marks.......................... 76,796 1.44535 01/24/96 690
Deutsche Marks.......................... 303,695 1.40715 01/24/96 (5,441)
Deutsche Marks.......................... 209,445 1.38179 01/24/96 (7,665)
Deutsche Marks.......................... 349,075 1.39266 01/24/96 (9,951)
Deutsche Marks.......................... 510,727 1.42920 02/29/96 (48)
Italian Lira............................ 232,631 1,608.63103 01/26/96 2,622
Italian Lira............................ 122,971 1,610.70002 01/26/96 1,542
Japanese Yen............................ 214,332 100.07340 03/01/96 (4,696)
Japanese Yen............................ 294,062 100.13000 03/18/96 (5,548)
New Zealand Dollars..................... 24,129 1.53953 02/29/96 96
Spanish Pesetas......................... 119,097 123.28000 02/07/96 1,478
Swedish Krona........................... 365,705 6.66278 01/05/96 1,442
Swedish Krona........................... 92,668 6.64000 01/05/96 50
-------------- --------------
Total Contracts to Buy (Payable amount
$4,565,622).......................... 4,535,322 (30,300)
-------------- --------------
</TABLE>
THE VALUE OF CONTRACTS TO BUY AS A PERCENTAGE OF NET ASSETS IS 17.89%.
<TABLE>
<CAPTION>
Contracts to Sell:
- ----------------------------------------
<S> <C> <C> <C> <C>
Australian Dollars...................... 185,443 1.35007 01/18/96 (638)
Australian Dollars...................... 277,607 1.35007 01/18/96 (955)
British Pounds.......................... 247,616 0.64677 02/21/96 (232)
Danish Kroner........................... 493,653 5.43600 01/16/96 10,394
Danish Kroner........................... 234,215 5.48110 01/16/96 2,964
Deutsche Marks.......................... 216,426 1.43100 01/24/96 206
Deutsche Marks.......................... 37,700 1.43958 01/24/96 (189)
Deutsche Marks.......................... 181,519 1.43680 01/24/96 (561)
Deutsche Marks.......................... 123,834 1.44173 02/29/96 (1,065)
Deutsche Marks.......................... 258,862 1.44460 02/29/96 (2,736)
French Francs........................... 208,864 4.96960 03/04/96 (3,612)
French Francs........................... 169,344 5.01220 03/04/96 (4,346)
French Francs........................... 733,072 4.96700 03/04/96 (12,315)
French Francs........................... 339,959 4.97820 03/13/96 (6,505)
Irish Punts............................. 248,102 0.62393 01/29/96 324
Italian Lira............................ 238,604 1,628.90001 01/26/96 (5,625)
Italian Lira............................ 219,648 1,637.27600 01/26/96 (6,275)
New Zealand Dollars..................... 228,250 1.54083 02/29/96 (1,100)
New Zealand Dollars..................... 244,554 1.54536 02/29/96 (1,891)
Portuguese Escudos...................... 426,624 148.90000 02/21/96 3,195
Spanish Pesetas......................... 19,713 122.99997 02/07/96 (200)
Spanish Pesetas......................... 243,121 123.15000 02/07/96 (2,764)
Spanish Pesetas......................... 246,407 123.25500 02/07/96 (3,009)
Swedish Krona........................... 140,955 6.72850 01/05/96 (1,927)
Swedish Krona........................... 242,464 6.69158 01/05/96 (1,996)
Swedish Krona........................... 132,566 6.80770 01/05/96 (3,334)
Swedish Krona........................... 316,432 7.03330 01/05/96 (17,858)
-------------- --------------
Total Contracts to Sell (Receivable
amount $6,593,504)................... 6,655,554 (62,050)
-------------- --------------
THE VALUE OF CONTRACTS TO SELL AS A
PERCENTAGE OF NET ASSETS IS 26.26%.
Total Open Forward Foreign Currency Contracts, Net.......................... $ (92,350)
--------------
--------------
</TABLE>
- ------------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 69
<PAGE>
GT GLOBAL VARIABLE GLOBAL GOVERNMENT INCOME FUND
PORTFOLIO OF INVESTMENTS
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market % of Net
Fixed Income Investments Currency Amount Value Assets
- ----------------------------------------------------------- -------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Government & Government Agency Obligations (88.6%)
Australia (4.1%)
Australian Government:
7% due 4/15/00 ...................................... AUD 400,000 $ 290,304 2.4
12% due 11/15/01 ................................... AUD 225,000 198,963 1.7
Austria (4.7%)
Republic of Austria, 3.75% due 2/3/09 ................. JPY 57,000,000 565,858 4.7
Canada (5.0%)
Canadian Government, 8.75% due 12/1/05 ................ CAD 725,000 593,493 5.0
Denmark (4.9%)
Kingdom of Denmark, 9% due 11/15/00 ................... DKK 2,900,000 581,202 4.9
France (6.9%)
French Treasury Bond (BTAN), 7% due 10/12/00 .......... FRF 2,730,000 583,950 4.9
French O.A.T., 6% due 10/25/25 ........................ FRF 1,400,000 237,724 2.0
Germany (10.3%)
Deutschland Republic, 6.25% due 1/4/24 ............... DEM 1,890,000 1,229,706 10.3
Italy (9.9%)
Italian Buoni Poliennali del Tesoro (BTPS):
10.5% due 9/1/05 .................................... ITL 1,480,000,000 928,945 7.8
9.5% due 12/1/99 .................................... ITL 415,000,000 255,785 2.1
New Zealand (2.0%)
New Zealand Government, 8% due 11/15/06 ............... NZD 345,000 238,268 2.0
South Africa (2.9%)
Republic of South Africa, 12% due 2/28/05 ............. ZAR 1,420,000 346,441 2.9
Spain (6.0%)
Kingdom of Spain:
10% due 2/28/05 ..................................... ESP 44,000,000 368,185 3.1
12.25% due 3/25/00 ................................. ESP 37,900,000 343,335 2.9
Sweden (8.0%)
Swedish Government:
13% due 6/15/01 ..................................... SEK 4,600,000 835,340 7.0
10.25% due 5/5/03 ................................... SEK 700,000 116,398 1.0
United Kingdom (6.4%)
United Kingdom Treasury, 8.5% due 12/7/05 ............. GBP 459,480 766,870 6.4
United States (17.5%)
United States Treasury Note, 7.875% due 11/15/04 ...... USD 1,811,000 2,096,799 17.5
------------
Total Government & Government Agency Obligations (cost
$10,283,450) ............................................ 10,577,566
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 70
<PAGE>
GT GLOBAL VARIABLE GLOBAL GOVERNMENT INCOME FUND
<TABLE>
<CAPTION>
Principal Market % of Net
Fixed Income Investments Currency Amount Value Assets
- ----------------------------------------------------------- -------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Supranational Bond (2.9%)
International Bank of Reconstruction & Development,
4.75% due 12/20/04 (cost $381,505) .................. JPY 32,000,000 $ 352,403 2.9
------------ -----
TOTAL FIXED INCOME INVESTMENTS (cost $10,664,955) ........ 10,929,969 91.5
------------ -----
<CAPTION>
Principal Market % of Net
Short-Term Investments Currency Amount Value Assets
- ----------------------------------------------------------- -------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Treasury Bills (2.0%)
Mexico (2.0%)
Mexican Cetes: ...................................... MXN -- -- 2.0
Effective yield 50.69%, due 2/22/96 ................. -- 1,037,930 125,600 --
Effective yield 38.32%, due 1/18/96 ................. -- 850,000 108,428 --
------------ -----
TOTAL SHORT-TERM INVESTMENTS (cost $250,619) .............. 234,028 2.0
------------ -----
<CAPTION>
Market % of Net
Repurchase Agreement Value Assets
- ----------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated December 29, 1995, with State Street Bank and
Trust, Company, due January 2, 1996, for an effective
yield of 5.55%, collateralized by $385,000 U.S. Treasury
Notes, 6% due 8/31/97 (market value of collateral is
$397,374, including accrued interest). (cost $389,180)
....................................................... 389,180 3.2
------------ -----
TOTAL INVESTMENTS (cost $11,304,754){j} ................... 11,553,177 96.7
Other Assets and Liabilities .............................. 390,569 3.3
------------ -----
Net Assets ................................................ $ 11,943,746 100.0
------------ -----
------------ -----
<FN>
- ----------------
* Percentages indicated are based on net assets of $11,943,746.
{j} For Federal income tax purposes, cost is $11,322,742 and
appreciation (depreciation) is as follows:
Unrealized appreciation: $ 379,852
Unrealized depreciation: (149,417)
-------------
Net unrealized appreciation: $ 230,435
-------------
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 71
<PAGE>
GT GLOBAL VARIABLE GLOBAL GOVERNMENT INCOME FUND
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
DECEMBER 31, 1995
<TABLE>
<CAPTION>
Unrealized
Market Value Contract Delivery Appreciation
Contracts to Buy: (U.S. Dollars) Price Date (Depreciation)
- ---------------------------------------- -------------- ----------- -------- --------------
<S> <C> <C> <C> <C>
Australian Dollars...................... 91,792 1.35369 01/18/96 $ 560
Australian Dollars...................... 22,298 1.34409 01/18/96 (22)
British Pounds.......................... 58,985 0.64331 01/16/96 (85)
British Pounds.......................... 19,403 0.63788 01/16/96 (193)
British Pounds.......................... 30,952 0.65104 02/21/96 232
Canadian Dollars........................ 142,084 1.38171 02/20/96 1,678
Canadian Dollars........................ 23,231 1.37765 02/20/96 207
Deutsche Marks.......................... 150,102 1.44535 01/24/96 1,349
Deutsche Marks.......................... 300,204 1.40712 01/24/96 (5,385)
Deutsche Marks.......................... 209,445 1.38179 01/24/96 (7,665)
Deutsche Marks.......................... 440,765 1.42920 02/29/96 (41)
French Francs........................... 126,898 4.93335 01/31/96 1,222
Italian Lira............................ 37,855 1,629.00000 01/11/96 1,022
Italian Lira............................ 28,391 1,601.02010 01/11/96 284
Italian Lira............................ 116,718 1,610.69996 01/26/96 1,464
Japanese Yen............................ 296,286 102.44000 03/01/96 503
Japanese Yen............................ 231,617 100.07340 03/01/96 (5,075)
Japanese Yen............................ 196,041 100.13000 03/18/96 (3,699)
Spanish Pesetas......................... 119,096 123.28000 02/07/96 1,478
Swedish Krona........................... 362,239 6.66278 01/05/96 1,429
Swedish Krona........................... 101,710 6.64000 01/05/96 54
-------------- --------------
Total Contracts to Buy (Payable amount
$3,116,795) 3,106,112 (10,683)
-------------- --------------
</TABLE>
THE VALUE OF CONTRACTS TO BUY AS A PERCENTAGE OF NET ASSETS IS 26.01%
<TABLE>
<CAPTION>
Contracts to Sell:
- ----------------------------------------
<S> <C> <C> <C> <C>
Australian Dollars...................... 133,786 1.32675 01/18/96 1,883
Australian Dollars...................... 228,180 1.35007 01/18/96 (785)
British Pounds.......................... 3,104 0.63355 01/16/96 52
British Pounds.......................... 26,388 0.65028 01/16/96 (245)
British Pounds.......................... 131,546 0.64309 02/21/96 629
British Pounds.......................... 239,878 0.64677 02/21/96 (224)
Canadian Dollars........................ 245,352 1.35418 02/20/96 2,032
Canadian Dollars........................ 36,620 1.36755 02/20/96 (58)
Danish Kroner........................... 221,603 5.48110 01/16/96 2,804
Danish Kroner........................... 120,062 5.50000 01/16/96 1,102
Deutsche Marks.......................... 117,537 1.44173 02/29/96 (1,011)
Deutsche Marks.......................... 244,869 1.44460 02/29/96 (2,588)
French Francs........................... 373,529 4.92000 01/31/96 (2,594)
French Francs........................... 208,767 4.97000 01/31/96 (3,536)
French Francs........................... 81,907 4.96700 03/04/96 (1,376)
French Francs........................... 158,716 4.97820 03/13/96 (3,037)
French Francs........................... 133,125 4.96540 03/18/96 (2,220)
Italian Lira............................ 157,729 1,588.47000 01/11/96 (345)
Italian Lira............................ 56,782 1,600.45012 01/11/96 (548)
Italian Lira............................ 91,483 1,609.60005 01/11/96 (1,398)
Italian Lira............................ 78,864 1,634.54994 01/11/96 (2,391)
Italian Lira............................ 20,338 1,606.51975 01/26/96 (202)
Italian Lira............................ 157,279 1,640.29199 01/26/96 (4,774)
Spanish Pesetas......................... 262,834 121.82250 02/07/96 (156)
Spanish Pesetas......................... 19,713 122.99997 02/07/96 (200)
Spanish Pesetas......................... 208,090 123.15000 02/07/96 (2,366)
Swedish Krona........................... 22,603 6.58100 01/05/96 190
Swedish Krona........................... 80,716 6.70930 01/05/96 (876)
Swedish Krona........................... 245,299 6.69158 01/05/96 (2,019)
Swedish Krona........................... 132,566 6.80770 01/05/96 (3,334)
Swedish Krona........................... 512,318 7.03330 01/05/96 (28,904)
-------------- --------------
Total Contracts to Sell (Receivable
amount $4,695,088)................... 4,751,583 (56,495)
-------------- --------------
THE VALUE OF CONTRACTS TO SELL AS A
PERCENTAGE OF NET ASSETS IS 39.78%.
Total Open Forward Foreign Currency Contracts, Net.......................... $ (67,178)
--------------
--------------
</TABLE>
- ------------------
See Note 1 to the financial statements.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHORT FUTURES CONTRACTS OUTSTANDING
DECEMBER 31, 1995
<TABLE>
<CAPTION>
Expiration Market
Description Date Par Value Currency Value
- ---------------------------------------- ---------- --------- -------- -----------
<S> <C> <C> <C> <C>
U.S. 30-year Treasury Bond (face
$237,625).............................. 03/20/96 200,000 USD $ 242,250
</TABLE>
- ------------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 72
<PAGE>
GT GLOBAL VARIABLE U.S. GOVERNMENT INCOME FUND
PORTFOLIO OF INVESTMENTS
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market % of Net
Fixed Income Investments Currency Amount Value Assets
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Government & Government Agency Obligations (52.0%)
United States (52.0%)
United States Treasury Note:
7.625% due 2/15/25 ................................... USD 700,000 $ 852,031 14.2
5.75% due 10/31/00 ................................... USD 600,000 609,000 10.2
Tennessee Valley Authority Series A, 6.375% due
6/15/05 ................................................ USD 600,000 623,438 10.4
Sallie Mae, 7.5% due 3/8/00 ............................. USD 350,000 375,047 6.2
Federal Home Loan Mortgage Corp., 7.125% due 7/21/99 .... USD 350,000 368,320 6.1
Federal National Mortgage Association:
7.85% due 9/10/98 ..................................... USD 100,000 106,063 1.8
6.80% due 1/10/03 ..................................... USD 90,000 95,330 1.6
Financial Assistance Corp., 9.375% due 7/21/03 ........ USD 75,000 91,102 1.5
------------
Total Government & Government Agency Obligations (cost
$2,982,428) ................................................ 3,120,331
------------
Supranational Bonds (9.4%)
International Bank of Reconstruction & Development, 5.25%
due 9/16/03 .............................................. USD 350,000 339,780 5.7
Asian Development Bank, 8% due 4/30/01 .................... USD 200,000 220,747 3.7
------------
Total Supranational Bonds (cost $516,093) ................... 560,527
------------ -----
TOTAL FIXED INCOME INVESTMENTS (cost $3,498,521) ............ 3,680,858 61.4
------------ -----
<CAPTION>
Principal Market % of Net
Short-Term Investments Currency Amount Value Assets
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Government & Government Agency Obligations (16.5%)
United States (16.5%)
Federal Farm Credit Bank, effective yield 5.91% due
3/22/96 (cost $987,738) ................................ USD 1,000,000 987,577 16.5
------------ -----
<CAPTION>
Market % of Net
Repurchase Agreement Value Assets
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated December 29, 1995, with State Street Bank & Trust
Company, due January 2, 1996, for an effective yield of
5.55%, collateralized by $1,225,000 U.S. Treasury Notes,
6.1% due 5/15/98 (market value of collateral is
$1,258,600, including accrued interest). (cost $1,232,570)
......................................................... 1,232,570 20.6
------------ -----
TOTAL INVESTMENTS (cost $5,718,829){j} ...................... 5,901,005 98.5
Other Assets and Liabilities ................................ 91,440 1.5
------------ -----
Net Assets .................................................. $ 5,992,445 100.0
------------ -----
------------ -----
<FN>
- ----------------
* Percentages indicated are based on net assets of $5,992,445.
{j} For Federal income tax purposes, cost is $5,719,892 and
appreciation (depreciation) is as follows:
Unrealized appreciation: $ 184,001
Unrealized depreciation: (2,888)
-------------
Net unrealized appreciation: $ 181,113
-------------
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 73
<PAGE>
GT GLOBAL VARIABLE LATIN AMERICA FUND
PORTFOLIO OF INVESTMENTS
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Materials/Basic Industry (19.6%)
Apasco S.A. ................................................ MEX 140,000 $ 574,545 2.9
CEMENT
Cia de Minas Buenaventura "C" .............................. PERU 67,768 439,019 2.2
METALS-NON-FERROUS
Kimberly-Clark de Mexico, S.A. de C.V. "A" ................. MEX 28,000 423,273 2.1
PAPER/PACKAGING
Companhia Siderurgica Nacional S.A. ........................ BRZL 17,650,000 363,281 1.8
METALS-STEEL
Cementos Argos S.A. ........................................ COL 58,700 355,578 1.8
CEMENT
Industrias Penoles S.A. "CP" ............................... MEX 85,000 353,247 1.8
METALS-NON-FERROUS
Grupo Mexico S.A. "B"{.} ................................... MEX 82,000 347,169 1.8
METALS-NON-FERROUS
Angel Estrada y Cia S.A.{.} ................................ ARG 93,000 339,416 1.7
PAPER/PACKAGING
Caemi Mineracao e Metalurgia S.A. Preferred ................ BRZL 7,390,000 296,604 1.5
METALS-STEEL
Grupo Industrial Durango, S.A. de C.V. "A" -- ADR{.} {l} ... MEX 28,450 188,481 0.9
FOREST PRODUCTS
Grupo Simec, S.A. de C.V. -- ADR{.} {l} .................... MEX 19,200 120,000 0.6
METALS-STEEL
Venezolana de Cementos, S.A.C.A. "A" ...................... VENZ 60,000 73,816 0.4
CEMENT
Siderurgica Venezolana Sivensa (Sivensa) -- ADR{l} ......... VENZ 15,000 27,450 0.1
METALS-STEEL
-----------
3,901,879
-----------
Services (16.0%)
Telecomunicacoes Brasileiras S.A. (Telebras) -- ADR{l} ..... BRZL 12,000 568,500 2.9
TELEPHONE NETWORKS
Telefonica de Argentina S.A. B -- ADR{l} ................... ARG 16,000 436,000 2.2
TELEPHONE NETWORKS
CPT Telefonica De Peru "B" ................................. PERU 193,649 416,766 2.1
TELEPHONE NETWORKS
Grupo Televisa, S.A. de C.V. -- GDR{.} {l} ................. MEX 18,000 405,000 2.0
BROADCASTING & PUBLISHING
Lojas Americanas S.A. Preferred{.} ......................... BRZL 16,600,000 389,503 2.0
RETAILERS-OTHER
Ceteco Holding N.V. ........................................ NETH 11,000 352,335 1.8
RETAILERS-OTHER
Santa Isabel S.A. -- ADR{.} {l} ............................ CHLE 14,100 338,400 1.7
RETAILERS-FOOD
Grupo Situr, S.A. de C.V. "B"{.} .......................... MEX 416,000 132,904 0.7
LEISURE & TOURISM
Grupo Marti S.A.{.} ........................................ MEX 218,000 75,875 0.4
RETAILERS-OTHER
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 74
<PAGE>
GT GLOBAL VARIABLE LATIN AMERICA FUND
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Services (Continued)
Gran Cadena de Almacenes Colombianos S.A.
-- 144A ADR{.} {l} ........................................ COL 3,300 $ 37,950 0.2
RETAILERS-OTHER
-----------
3,153,233
-----------
Finance (15.0%)
First Financial Caribbean Corp. ............................ US 33,000 618,750 3.1
OTHER FINANCIAL
Administradora de Fondos de Pensiones Provida S.A. --
ADR{l} .................................................... CHLE 21,200 585,650 3.0
OTHER FINANCIAL
Banco Bradesco S.A. Preferred .............................. BRZL 58,781,950 514,198 2.6
BANKS-MONEY CENTER
Banco Ganadero S.A. -- ADR{l} .............................. COL 33,400 434,200 2.2
BANKS-MONEY CENTER
Grupo Financiero Banamex Accival, S.A. de C.V. "B"{.} ...... MEX 240,000 402,701 2.0
BANKS-MONEY CENTER
Banco LatinoAmericano de Exportaciones S.A. (Bladex)
"E"{l} .................................................... PAN 7,700 358,050 1.8
OTHER FINANCIAL
Grupo Financiero Serlin S.A. -- ADR{.} {l} ................. MEX 16,500 55,689 0.3
BANKS-MONEY CENTER
-----------
2,969,238
-----------
Consumer Non-Durables (12.5%)
Companhia Tecidos Norte de Mina Preferred{.} ............... BRZL 1,560,000 521,766 2.6
TEXTILES & APPAREL
Grupo Modelo S.A. "C" ..................................... MEX 98,400 466,442 2.4
BEVERAGES-ALCOHOLIC
Companhia Cervejaria Brahma Preferred ..................... BRZL 915,000 376,669 1.9
BEVERAGES-ALCOHOLIC
Bavaria .................................................... COL 134,610 366,933 1.9
BEVERAGES-ALCOHOLIC
Panamerican Beverages, Inc. "A"{l} ......................... MEX 10,800 345,600 1.7
BEVERAGES-NON ALCOHOLIC
Industrias J B Duarte S.A. Preferred ....................... BRZL 215,600,000 155,315 0.8
FOOD
Cerveceria San Juan Common ................................. PERU 104,071 90,044 0.5
BEVERAGES-ALCOHOLIC
Ekco S.A. CP{.} ............................................ MEX 656,000 86,899 0.4
HOUSEHOLD PRODUCTS
Inversiones Aledo .......................................... VENZ 472,885 62,851 0.3
FOOD
-----------
2,472,519
-----------
Energy (9.1%)
Enron Global Power & Pipelines L.L.C. ..................... US 20,000 497,500 2.5
ENERGY SOURCE
Chilectra S.A. -- ADR{l} ................................... CHLE 8,300 410,850 2.1
ELECTRICAL & GAS UTILITIES
YPF S.A. -- ADR{l} ........................................ ARG 18,000 389,250 2.0
OIL
C.A. La Electricidad de Caracas ........................... VENZ 479,500 328,202 1.7
ELECTRICAL & GAS UTILITIES
Industrias Ventane ........................................ VENZ 664,215 131,295 0.7
GAS PRODUCTION & DISTRIBUTION
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 75
<PAGE>
GT GLOBAL VARIABLE LATIN AMERICA FUND
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Energy (Continued)
Compania Boliviana de Energia Electrica{l} ................. BOL 700 $ 23,275 0.1
ELECTRICAL & GAS UTILITIES
-----------
1,780,372
-----------
Multi Industry/Miscellaneous (3.8%)
Alfa, S.A. de C.V. ......................................... MEX 31,000 398,571 2.0
CONGLOMERATE
Grupo Sidek, S.A. de C.V. -- ADR{.} {l} .................... MEX 157,300 353,925 1.8
CONGLOMERATE
-----------
752,496
-----------
Consumer Durables (1.5%)
Refrigeracao Parama S.A. Preferred ......................... BRZL 145,000,000 289,493 1.5
APPLIANCES & HOUSEHOLD
----------- -----
TOTAL EQUITY INVESTMENTS (cost $16,180,920) .................. 15,319,230 77.5
----------- -----
<CAPTION>
No. of
Rights
--------
<S> <C> <C> <C> <C>
Rights (0.0%)
Banco Bradesco S.A. Preferred Rights, expire 1/24/96 (cost
$0){.} .................................................... BRZL 1,374,440 2,263 --
----------- -----
BANKS-MONEY CENTER
<CAPTION>
Principal
Short-Term Investments Currency Amount
- -------------------------------------------------------------- -------- -----------
<S> <C> <C> <C> <C>
Treasury Bills (12.4%)
Mexico (12.4%)
Mexican Cetes: ........................................... MXN -- -- 12.4
Effective yield 25.91%, due 1/18/96 .................... -- 13,738,960 1,762,714 --
Effective yield 61.61%, due 2/1/96 ..................... -- 5,531,150 682,141 --
----------- -----
TOTAL SHORT-TERM INVESTMENTS (cost $3,137,118) ............... 2,444,855 12.4
----------- -----
<CAPTION>
Repurchase Agreement
- --------------------------------------------------------------
<S> <C> <C> <C> <C>
Dated December 29, 1995, with State Street Bank & Trust
Company, due January 2, 1996, for an effective yield of
5.55%, collateralized by $1,705,000 U.S. Treasury Notes, 6%
due 8/31/97 (market value of collateral is $1,759,800,
including accrued interest). (cost $1,724,797) ............ 1,724,797 8.7
----------- -----
TOTAL INVESTMENTS (cost $21,042,835){d} ..................... 98.6
Other Assets and Liabilities ................................. 279,701 1.4
----------- -----
Net Assets ................................................... $19,770,846 100.0
----------- -----
----------- -----
</TABLE>
- ----------------
* Percentages indicated are based on net assets of $19,770,846.
{l} 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.
{d} For Federal income tax purposes, cost is $21,171,991 and
appreciation (depreciation) is as follows:
Unrealized appreciation: $ 1,694,978
Unrealized depreciation: (3,375,824)
-------------
Net unrealized depreciation: $ (1,680,846)
-------------
-------------
Abbreviations:
ADR -- American Depository Receipt
GDR -- Global Depository Receipt
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 76
<PAGE>
GT GLOBAL VARIABLE LATIN AMERICA FUND
The Fund's Portfolio of Investments at December 31, 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) .................. 5.9 5.9
Bolivia (BOL/BOL) .................... 0.1 0.1
Brazil (BRZL/BRL) .................... 17.6 17.6
Chile (CHLE/CLP) ..................... 6.8 6.8
Colombia (COL/COP) .................. 6.1 6.1
Mexico (MEX/MXN) ..................... 23.8 12.4 36.2
Netherlands (NETH/NLG) ............... 1.8 1.8
Panama (PAN/PND) ..................... 1.8 1.8
Peru (PERU/PES) ...................... 4.8 4.8
United States (US/USD) .............. 5.6 10.1 15.7
Venezuela (VENZ/VEB) ................. 3.2 3.2
------ --- -----
Total .............................. 77.5 22.5 100.0
------ --- -----
------ --- -----
<FN>
- ----------------
* Percentages indicated are based on net assets of $19,770,846.
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SHORT FUTURES CONTRACTS OUTSTANDING
DECEMBER 31, 1995
<TABLE>
<CAPTION>
Expiration No. of Market
Description Date Contracts Currency Value
- -------------------------------------------------- ---------- --------- -------- ----------
<S> <C> <C> <C> <C>
Brazilian Real Currency Futures, strike rate
0.9782 (face $2,555,750)......................... 01/31/96 25 USD $2,553,500
</TABLE>
- ------------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 77
<PAGE>
GT GLOBAL VARIABLE GROWTH & INCOME FUND
PORTFOLIO OF INVESTMENTS
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets
- ----------------------------------------------------------- -------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (22.9%)
Swiss Bank Corp. -- Bearer .............................. SWTZ 1,569 $ 641,213 2.1
BANKS-MONEY CENTER
National Australia Bank Ltd. ............................ AUSL 66,674 599,417 2.0
BANKS-MONEY CENTER
Union Bank of Switzerland -- Bearer ..................... SWTZ 477 517,353 1.7
BANKS-MONEY CENTER
CS Holding AG -- Registered ............................. SWTZ 4,625 474,539 1.5
BANKS-MONEY CENTER
Fortis Amev N.V. ........................................ NETH 5,920 397,352 1.3
OTHER FINANCIAL
AEGON N.V. .............................................. NETH 7,640 338,686 1.1
INSURANCE-LIFE
First Tennessee National Corp. .......................... US 5,400 326,700 1.1
BANKS-REGIONAL
Mercury Asset Management Group PLC ...................... UK 20,211 272,837 0.9
INVESTMENT MANAGEMENT
Internationale Nederlanden Groep N.V. ................... NETH 3,995 267,397 0.9
OTHER FINANCIAL
Generale de Banque S.A. ................................. BEL 754 267,271 0.9
BANKS-MONEY CENTER
American General Corp. .................................. US 7,400 258,075 0.8
INSURANCE-LIFE
ABN AMRO Holding N.V. ................................... NETH 5,398 246,375 0.8
BANKS-REGIONAL
National Westminster Bank PLC ........................... UK 22,700 228,551 0.7
BANKS-MONEY CENTER
Bank of Montreal ........................................ CAN 8,000 181,645 0.6
BANKS-REGIONAL
General Accident PLC .................................... UK 16,970 171,386 0.6
INSURANCE-PROPERTY-CASUALTY
Deutsche Bank AG ....................................... GER 3,500 165,908 0.5
BANKS-MONEY CENTER
MAI PLC: ................................................ UK -- -- 0.5
OTHER FINANCIAL
Common ............................................... -- 22,500 106,195 --
Convertible Preferred, 5.9% till 12/31/49 ............ -- 31,196 54,822 --
Sun Hung Kai Properties Ltd. ............................ HK 18,400 150,517 0.5
REAL ESTATE
Banco Popular Espanol S.A. ............................. SPN 710 130,991 0.4
BANKS-MONEY CENTER
Commercial Union PLC .................................... UK 13,382 130,475 0.4
INSURANCE-MULTI-LINE
Dresdner Bank AG ........................................ GER 4,540 121,265 0.4
BANKS-MONEY CENTER
Henderson Investment Ltd. ............................... HK 129,000 105,943 0.3
REAL ESTATE
M & G Group PLC ......................................... UK 5,000 97,733 0.3
INVESTMENT MANAGEMENT
Banco de Santander S.A. ................................. SPN 1,915 96,184 0.3
BANKS-MONEY CENTER
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 78
<PAGE>
GT GLOBAL VARIABLE GROWTH & INCOME FUND
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets
- ----------------------------------------------------------- -------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (Continued)
Kredietbank N.V. ....................................... BEL 315 $ 86,221 0.3
BANKS-REGIONAL
Amoy Properties Ltd. .................................... HK 78,000 77,677 0.3
REAL ESTATE
Sparebanken NOR (Union Bank of Norway) .................. NOR 3,000 77,540 0.2
BANKS-REGIONAL
Hopewell Holdings ....................................... HK 114,000 65,610 0.2
REAL ESTATE
Societe Generale Paris .................................. FR 475 58,774 0.2
BANKS-MONEY CENTER
Lloyds Abbey Life PLC ................................... UK 7,000 48,905 0.2
INSURANCE-LIFE
Gerrard & National Holdings PLC ......................... UK 7,080 48,805 0.2
SECURITIES BROKER
UAP Compagnie ........................................... FR 1,316 34,424 0.1
INSURANCE-MULTI-LINE
Sedgwick Group PLC ...................................... UK 17,000 31,936 0.1
INSURANCE-MULTI-LINE
Realty Development Corp., Ltd. "A" ...................... HK 10,000 31,557 0.1
REAL ESTATE
Commerzbank AG .......................................... GER 130 30,734 0.1
BANKS-MONEY CENTER
Henderson Land Development Co., Ltd ..................... HK 5,000 30,135 0.1
REAL ESTATE
Compagnie Financiere de Paribas S.A ..................... FR 524 28,774 0.1
OTHER FINANCIAL
IKB Deutsche Industriebank AG ........................... GER 122 22,972 0.1
BANKS-REGIONAL
------------
7,022,894
------------
Energy (10.8%)
Elektrowatt AG ......................................... SWTZ 1,910 699,366 2.3
ELECTRICAL & GAS UTILITIES
Electrabel S.A. ......................................... BEL 1,880 450,024 1.5
ELECTRICAL & GAS UTILITIES
Royal Dutch Petroleum Co. ............................... NETH 2,678 374,879 1.2
OIL
Mobil Corp. ............................................. US 2,900 324,800 1.1
OIL
Exxon Corp. ............................................. US 4,000 320,500 1.0
OIL
Reunies Electrobel & Tractebel S.A. .................... BEL 763 315,214 1.0
ELECTRICAL & GAS UTILITIES
Pacific Gas and Electric Co. ............................ US 9,550 270,981 0.9
ELECTRICAL & GAS UTILITIES
Groupe Bruxelles Lambert S.A.: .......................... BEL -- -- 0.5
OIL
Common ............................................... -- 1,050 145,843 --
VVPR .................................................. -- 17 2,361 --
Elf Aquitaine ........................................... FR 1,920 141,678 0.5
OIL
Shell Transport & Trading Co., PLC ...................... UK 6,530 86,327 0.3
OIL
British Gas PLC ......................................... UK 21,000 82,813 0.3
GAS PRODUCTION & DISTRIBUTION
Union Electrica Fenosa S.A. ............................. SPN 5,000 30,103 0.1
ELECTRICAL & GAS UTILITIES
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 79
<PAGE>
GT GLOBAL VARIABLE GROWTH & INCOME FUND
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets
- ----------------------------------------------------------- -------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Energy (Continued)
Iberdrola S.A. .......................................... SPN 2,000 $ 18,309 0.1
ELECTRICAL & GAS UTILITIES
------------
3,263,198
------------
Materials/Basic Industry (7.6%)
Broken Hill Proprietary Co., Ltd ........................ AUSL 40,241 568,080 1.9
MISC. MATERIALS & COMMODITIES
Solvay S.A. "A" ......................................... BEL 751 406,015 1.3
CHEMICALS
Amcor Ltd. ............................................. AUSL 56,200 396,686 1.3
PAPER/PACKAGING
Akzo Nobel N.V. ......................................... NETH 3,069 355,648 1.2
CHEMICALS
Monsanto Co. ............................................ US 2,900 355,250 1.2
CHEMICALS
RWE AG .................................................. GER 480 174,071 0.6
MISC. MATERIALS & COMMODITIES
BASF AG ................................................ GER 100 22,282 0.1
CHEMICALS
------------
2,278,032
------------
Consumer Non-Durables (6.1%)
Philip Morris Cos., Inc. ................................ US 3,700 334,850 1.1
FOOD
Avon Products, Inc. ..................................... US 4,000 301,500 1.0
PERSONAL CARE/COSMETICS
Universal Corp. ......................................... US 12,200 297,375 1.0
TOBACCO
Noble China{.} .......................................... CAN 67,900 273,530 0.9
BEVERAGES-ALCOHOLIC
Brown-Forman Corp. "B" .................................. US 6,200 226,300 0.7
BEVERAGES-ALCOHOLIC
Fleming Cos., Inc. ...................................... US 8,800 181,500 0.6
FOOD
Booker PLC .............................................. UK 13,800 77,774 0.3
FOOD
Bass PLC ............................................... UK 6,600 73,624 0.2
BEVERAGES-ALCOHOLIC
Associated British Foods Group PLC ...................... UK 8,400 48,123 0.2
FOOD
Dairy Farm International Holdings Ltd.{l} ............... HK 36,000 33,120 0.1
FOOD
------------
1,847,696
------------
Services (6.0%)
Telecom Corporation of New Zealand Ltd. ................ NZ 109,160 470,825 1.5
TELEPHONE NETWORKS
Dun & Bradstreet Corp. .................................. US 4,800 310,800 1.0
BROADCASTING & PUBLISHING
McGraw-Hill, Inc. ....................................... US 3,490 304,066 1.0
BROADCASTING & PUBLISHING
Royal PTT Nederland N.V. ................................ NETH 5,915 215,312 0.7
TELEPHONE NETWORKS
Tele Danmark AS "B" ..................................... DEN 2,570 140,282 0.5
TELEPHONE NETWORKS
THORN EMI PLC ........................................... UK 5,500 129,494 0.4
LEISURE & TOURISM
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 80
<PAGE>
GT GLOBAL VARIABLE GROWTH & INCOME FUND
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets
- ----------------------------------------------------------- -------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Services (Continued)
British Telecommunications PLC .......................... UK 19,546 $ 107,425 0.3
TELEPHONE NETWORKS
Cathay Pacific Airways .................................. HK 57,000 86,989 0.3
TRANSPORTATION-AIRLINES
Granada PLC, Convertible Preferred, 7.5% till 4/30/03 ... UK 23,482 80,388 0.3
LEISURE & TOURISM
------------
1,845,581
------------
Capital Goods (4.1%)
General Electric PLC .................................... UK 51,900 286,050 0.9
AEROSPACE/DEFENSE
Mannesmann AG ........................................... GER 770 245,247 0.8
MACHINERY & ENGINEERING
Siemens AG .............................................. GER 427 233,765 0.8
TELECOM EQUIPMENT
Lockheed Martin Corp .................................... US 2,726 215,354 0.7
AEROSPACE/DEFENSE
Rolls-Royce PLC ......................................... UK 42,548 124,850 0.4
AEROSPACE/DEFENSE
BICC PLC ................................................ UK 17,200 73,703 0.2
INDUSTRIAL COMPONENTS
Thomson CSF S.A. ........................................ FR 3,275 73,075 0.2
AEROSPACE/DEFENSE
Trafalgar House PLC: .................................... UK -- -- 0.1
MACHINERY & ENGINEERING
Convertible Preferred, 6% due 1/31/49 ................. -- 44,800 38,234 --
Common ............................................... -- 4,800 2,068 --
------------
1,292,346
------------
Health Care (2.8%)
Bristol Myers Squibb Co. ................................ US 6,000 515,250 1.7
PHARMACEUTICALS
Bayer AG ............................................... GER 1,250 329,957 1.1
PHARMACEUTICALS
------------
845,207
------------
Multi Industry/Miscellaneous (1.8%)
VEBA AG ................................................. GER 5,400 229,347 0.7
CONGLOMERATE
Pacific Dunlop Ltd ..................................... AUSL 85,000 198,938 0.6
MULTI-INDUSTRY
Hutchison Whampoa ....................................... HK 24,000 146,197 0.5
CONGLOMERATE
------------
574,482
------------
Consumer Durables (1.1%)
GKN PLC ................................................. UK 28,600 345,900 1.1
------------
AUTO PARTS
Technology (0.4%)
Alcatel Alsthom Compagnie Generale d'Electricite ....... FR 1,290 111,389 0.4
TELECOM TECHNOLOGY
------------ -----
TOTAL EQUITY INVESTMENTS (cost $16,627,956) ............... 19,426,725 63.6
------------ -----
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 81
<PAGE>
GT GLOBAL VARIABLE GROWTH & INCOME FUND
<TABLE>
<CAPTION>
Principal Market % of Net
Fixed Income Investment Currency Amount Value Assets
- ----------------------------------------------------------- -------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
GOVERNMENT & GOVERNMENT AGENCY OBLIGATIONS (30.4%)
Canada (0.7%)
Canadian Government, 8.75% due 12/1/05 .............. CAD 250,000 $ 204,653 0.7
Denmark (1.1%)
Kingdom of Denmark, 8% due 3/15/06 .................. DKK 1,700,000 322,881 1.1
Germany (7.9%)
Deutschland Republic:
6.75% due 4/22/03 ................................... DEM 1,500,000 1,106,772 3.6
6.25% due 1/4/24 .................................... DEM 1,070,000 696,183 2.3
Treuhandanstalt, 6.375% due 7/1/99 .................... DEM 500,000 369,586 1.2
Bundesschatzanweisungen, 6.875% due 12/2/98 ........... DEM 350,000 261,371 0.8
Italy (2.8%)
Italian Buoni Poliennali del Tesoro (BTPS):
8.5% due 8/1/04 .................................... ITL 1,100,000,000 613,328 2.0
10.5% due 4/15/98 ................................... ITL 370,000,000 235,096 0.8
New Zealand (1.3%)
New Zealand Government, 8% due 4/15/04 ................ NZD 600,000 410,505 1.3
Spain (1.3%)
Kingdom of Spain, 8% due 5/30/04 ...................... ESP 55,000,000 411,241 1.3
Sweden (2.3%)
Swedish Government, 6% due 2/9/05 .................... SEK 5,500,000 704,164 2.3
United Kingdom (4.4%)
United Kingdom Treasury:
6% due 8/10/99 ...................................... GBP 375,000 569,654 1.9
6.75% due 11/26/04 ................................. GBP 70,000 104,060 0.3
Conversion, 9.5% due 4/18/05 ........................ GBP 375,000 660,624 2.2
United States (8.6%)
United States Treasury Note:
7.25% due 5/15/04 ................................... USD 1,060,000 1,176,600 3.8
7.5% due 2/15/05 .................................... USD 250,000 283,438 0.9
6.5% due 8/15/05 .................................... USD 105,000 111,727 0.4
United States Treasury Bond:
6.25% due 8/15/23 ................................... USD 645,000 660,521 2.2
6.875% due 8/15/25 ................................. USD 350,000 392,875 1.3
------------
TOTAL GOVERNMENT & GOVERNMENT AGENCY OBLIGATIONS (cost
$8,508,745) .............................................. 9,295,279
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 82
<PAGE>
GT GLOBAL VARIABLE GROWTH & INCOME FUND
<TABLE>
<CAPTION>
Principal Market % of Net
Fixed Income Investment Currency Amount Value Assets
- ----------------------------------------------------------- -------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Corporate Bonds (4.3%)
Germany (1.9%)
Siemens Capital Corp., 8% due 6/24/02{/\} ............. USD 180,000 $ 244,800 0.8
Commerzbank AG, Convertible Bond, 8.4% due
12/31/00+ ............................................ DEM 187,000 193,664 0.6
Deutsche Bank AG, 9% due 12/31/02{/\} ................. DEM 175,000 143,403 0.5
IKB Deutsche Industriebank, 6.45% due 3/31/06 ......... DEM 1,500 1,014 --
United Kingdom (2.4%)
Daily Mail & General Trust, Convertible Bond, 5.75% due
9/26/03 .............................................. GBP 167,000 333,170 1.1
Land Securities PLC, Convertible Bond, 9.375% due
7/31/04 .............................................. GBP 140,000 245,397 0.8
Elf Enterprises Finance PLC, 8.75% due 6/27/06 ........ GBP 65,000 100,346 0.3
Reckitt & Colman Capital, Convertible Bond, 9.5% due
3/31/05 .............................................. GBP 22,000 55,504 0.2
------------
Total Corporate Bonds (cost $1,265,830) ................... 1,317,298
------------ -----
Total Fixed Income Investments (cost $9,774,575) .......... 10,612,577 34.7
------------ -----
<CAPTION>
No. of Market % of Net
Country Warrants Value Assets
- ----------------------------------------------------------- -------- ------------- ------------
<S> <C> <C> <C> <C>
Warrants (0.0%)
Henderson Investment Warrants, expire 3/31/96
(cost $0){.} .......................................... HK 9,400 145 --
------------ -----
INVESTMENT MANAGEMENT
<CAPTION>
Repurchase Agreement
- -----------------------------------------------------------
<S> <C> <C> <C> <C>
Dated December 29, 1995, with State Street Bank & Trust
Company, due January 2, 1996, for an effective yield of
5.55%, collateralized by $190,000 U.S. Treasury Notes,
6% due 8/31/97 (market value of collateral is $196,107,
including accrued interest). (cost $191,089) .......... 191,089 0.6
------------ -----
Total Investments (cost $26,593,620){d} ................... 30,230,536 98.9
Other Assets and Liabilities .............................. 334,865 1.1
------------ -----
Net Assets ................................................ $ 30,565,401 100.0
------------ -----
------------ -----
</TABLE>
- ----------------
* Percentages indicated are based on net assets of $30,565,401.
{.} Non-income producing security.
{l} U.S. currency denominated.
+ The coupon rate shown on floating rate note represents the rate at
period end.
{/\} Issued with detachable warrants or value recovery rights. The
current market value of each warrant or right is zero.
{d} For Federal income tax purposes, cost is $26,605,056 and
appreciation (depreciation) is as follows:
Unrealized appreciation: $ 4,234,758
Unrealized depreciation: (609,278)
-------------
Net unrealized appreciation: $ 3,625,480
-------------
-------------
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 83
<PAGE>
GT GLOBAL VARIABLE GROWTH & INCOME FUND
The Fund's Portfolio of Investments at December 31, 1995, was concentrated in
the following countries:
<TABLE>
<CAPTION>
Percentage of Net Assets *
-------------------------------------------
Fixed Income,
Rights & Short-Term
Country (Country Code/Currency Code) Equity Warrants & Other Total
- -------------------------------------- ------ ------------- ---------- -----
<S> <C> <C> <C> <C>
Australia (AUSL/AUD) ................. 5.8 5.8
Belgium (BEL/BEF) ................... 5.5 5.5
Canada (CAN/CAD) ..................... 1.5 0.7 2.2
Denmark (DEN/DKK) .................... 0.5 1.1 1.6
France (FR/FRF) ...................... 1.5 1.5
Germany (GER/DEM) .................... 5.2 9.8 15.0
Hong Kong (HK/HKD) ................... 2.4 2.4
Italy (ITLY/ITL) ..................... 2.8 2.8
Netherlands (NETH/NLG) ............... 7.2 7.2
New Zealand (NZ/NZD) ................. 1.5 1.3 2.8
Norway (NOR/NOK) ..................... 0.2 0.2
Spain (SPN/ESP) ...................... 0.9 1.3 2.2
Sweden (SWDN/SEK) .................... 2.3 2.3
Switzerland (SWTZ/CHF) ............... 7.6 7.6
United Kingdom (UK/GBP) .............. 8.9 6.8 15.7
United States (US/USD) ............... 14.9 8.6 1.7 25.2
------ --- --- -----
Total ............................... 63.6 34.7 1.7 100.0
------ --- --- -----
------ --- --- -----
<FN>
- ----------------
* Percentages indicated are based on net assets of $30,565,401.
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
DECEMBER 31, 1995
<TABLE>
<CAPTION>
Unrealized
Market Value Contract Delivery Appreciation
Contracts to Sell: (U.S. Dollars) Price Date (Depreciation)
- -------------------------------------------------- -------------- -------- -------- --------------
<S> <C> <C> <C> <C>
Deutsche Marks.................................... 1,504,197 1.42738 02/29/96 $ 2,059
French Francs..................................... 40,939 4.91125 02/06/96 (216)
French Francs..................................... 179,584 4.88280 02/16/96 67
Netherland Guilders............................... 644,995 1.58000 02/15/96 6,904
Swiss Francs...................................... 462,477 1.12168 02/20/96 10,029
-------------- --------------
Total Contracts to Sell (Receivable amount
$2,851,035).................................... 2,832,192 18,843
-------------- --------------
THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF NET ASSETS IS 9.27%.
Total Open Forward Foreign Currency Contracts, Net.................................. $18,843
--------------
--------------
</TABLE>
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 84
<PAGE>
GT GLOBAL VARIABLE TELECOMMUNICATIONS FUND
PORTFOLIO OF INVESTMENTS
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (51.0%)
Call-Net Enterprises, Inc. "B"{.} ........................ CAN 233,000 $ 2,133,228 4.2
TELEPHONE-LONG DISTANCE
Tele Danmark AS -- ADR{l} ................................. DEN 72,500 2,002,813 3.9
TELEPHONE NETWORKS
Tel-Save Holdings, Inc.{.} ................................ US 125,000 1,734,375 3.4
TELEPHONE-LONG DISTANCE
WinStar Communications, Inc.{.} ........................... US 100,000 1,712,500 3.4
WIRELESS COMMUNICATIONS
Telefonica de Espana -- ADR{l} ............................ SPN 40,000 1,675,000 3.3
TELEPHONE NETWORKS
IntelCom Group, Inc.{.} ................................... US 125,000 1,546,875 3.0
TELEPHONE-REGIONAL/LOCAL
Stet Di Risp .............................................. ITLY 757,000 1,545,522 3.0
TELEPHONE NETWORKS
DDI Corp. ................................................. JPN 187 1,449,612 2.9
WIRELESS COMMUNICATIONS
Centennial Cellular Corp. "A"{.} .......................... US 71,500 1,224,438 2.4
WIRELESS COMMUNICATIONS
Vodafone Group PLC -- ADR{l} .............................. UK 30,000 1,057,500 2.1
WIRELESS COMMUNICATIONS
SPT Telecom{.} ........................................... CZCH 11,000 1,039,721 2.0
TELEPHONE NETWORKS
WorldCom, Inc.{.} ......................................... US 28,144 992,076 2.0
TELEPHONE-LONG DISTANCE
Telecomunicacoes Brasileiras S.A. (Telebras) -- ADR{l} ... BRZL 20,876 989,001 2.0
TELEPHONE NETWORKS
Royal PTT Nederland N.V. .................................. NETH 22,343 813,310 1.6
TELEPHONE NETWORKS
United International Holdings, Inc. "A"{.} ................ US 55,000 811,250 1.6
CABLE TELEVISION
Century Telephone Enterprises, Inc. ....................... US 25,500 809,625 1.6
TELEPHONE-REGIONAL/LOCAL
CellStar Corp.{.} ......................................... US 30,000 780,000 1.5
WHOLESALE & INTERNATIONAL TRADE
Telephone and Data Systems, Inc. .......................... US 19,200 758,400 1.5
WIRELESS COMMUNICATIONS
PT Indonesia Satellite (Indosat) -- ADR{l} ................ INDO 20,000 730,000 1.4
TELEPHONE-LONG DISTANCE
Philippine Long Distance Telephone Co. -- ADR{l} .......... PHIL 10,000 541,250 1.1
TELEPHONE-LONG DISTANCE
Brightpoint, Inc.{.} ...................................... US 25,000 353,125 0.7
WHOLESALE & INTERNATIONAL TRADE
Pakistan Telecommunications Co., Ltd. -- 144A GDR{::} {.}
{l} ...................................................... PAK 3,300 280,500 0.6
TELEPHONE NETWORKS
Total Access Communication Public Co., Ltd. -- 144A{::} {.}
{l} ..................................................... THAI 39,600 257,400 0.5
WIRELESS COMMUNICATIONS
Gilat Satellite Networks Ltd.{.} .......................... US 10,000 252,500 0.5
TELECOM-OTHER
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 85
<PAGE>
GT GLOBAL VARIABLE TELECOMMUNICATIONS FUND
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (Continued)
Grupo Iusacell, S.A. de C.V. "D" -- ADR{.} {l} ............ MEX 22,000 $ 176,000 0.3
WIRELESS COMMUNICATIONS
Matav (Hungarian Telecommunications Co., Ltd.)[.] {.} ..... HGRY 1,000 150,095 0.3
TELEPHONE NETWORKS
Wireless One, Inc.{.} ..................................... US 5,000 82,500 0.2
WIRELESS COMMUNICATIONS
------------
25,898,616
------------
Capital Goods (28.5%)
DSC Communications Corp.{.} ............................... US 66,100 2,437,438 4.8
TELECOM EQUIPMENT
Mannesmann AG ............................................. GER 6,740 2,146,703 4.2
MACHINERY & ENGINEERING
Spectrian Corp.{.} ........................................ US 80,000 1,780,000 3.5
TELECOM EQUIPMENT
Nokia AB Preferred -- ADR{l} .............................. FIN 37,000 1,438,375 2.8
TELECOM EQUIPMENT
Dialogic Corp.{.} ......................................... US 35,000 1,347,500 2.7
TELECOM EQUIPMENT
Pairgain Technologies, Inc.{.} ............................ US 20,000 1,095,000 2.2
TELECOM EQUIPMENT
Glenayre Technologies, Inc.{.} ............................ US 16,000 996,000 2.0
TELECOM EQUIPMENT
BroadBand Technologies, Inc.{.} ........................... US 50,000 812,500 1.6
TELECOM EQUIPMENT
Benefon Oy{.} ............................................. FIN 25,000 621,218 1.2
TELECOM EQUIPMENT
Microwave Power Devices, Inc.{.} .......................... US 50,000 556,250 1.1
TELECOM EQUIPMENT
Allgon AB "B" Free ........................................ SWDN 33,000 457,470 0.9
TELECOM EQUIPMENT
PCS Wireless, Inc.{.} ..................................... CAN 200,000 257,819 0.5
TELECOM EQUIPMENT
Unitech Industries, Inc.[.] {.} ........................... US 100,000 215,625 0.4
TELECOM EQUIPMENT
Champion Technology Holdings .............................. HK 1,889,849 197,980 0.4
TELECOM EQUIPMENT
Cincinnati Microwave, Inc.{.} ............................. US 25,000 112,500 0.2
TELECOM EQUIPMENT
------------
14,472,378
------------
Technology (6.8%)
DSP Communications, Inc.{.} ............................... US 50,000 2,181,250 4.3
TELECOM TECHNOLOGY
Cisco Systems, Inc.{.} .................................... US 17,000 1,268,625 2.5
NETWORKING
------------
3,449,875
------------
Consumer Durables (2.2%)
Three-Five Systems, Inc.{.} .............................. US 61,800 1,042,875 2.1
CONSUMER ELECTRONICS
Audiovox Corp. "A"{.} ..................................... US 6,000 32,625 0.1
CONSUMER ELECTRONICS
------------
1,075,500
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 86
<PAGE>
GT GLOBAL VARIABLE TELECOMMUNICATIONS FUND
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Materials/Basic Industry (1.4%)
PT Bakrie and Brothers .................................... INDO 400,000 $ 726,795 1.4
------------
BUILDING MATERIALS & COMPONENTS
Consumer Non-Durables (0.0%)
Bavaria ................................................... COL 3,000 8,178 --
BEVERAGES-ALCOHOLIC
------------ -----
TOTAL EQUITY INVESTMENTS (cost $41,446,599) ................. 45,631,342 89.9
------------ -----
<CAPTION>
Market % of Net
Repurchase Agreement Value Assets
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated December 29, 1995, with State Street Bank & Trust
Company, due January 2, 1996, for an effective yield of
5.55%, collateralized by $4,250,000 U.S. Treasury Notes,
6.125% due 5/15/98 (market value of collateral is
$4,366,571, including accrued interest). (cost $4,278,978)
......................................................... 4,278,978 8.4
------------ -----
TOTAL INVESTMENTS (cost $45,725,577){d} ..................... 49,910,320 98.3
Other Assets and Liabilities ................................ 867,755 1.7
------------ -----
Net Assets .................................................. $ 50,778,075 100.0
------------ -----
------------ -----
</TABLE>
- ----------------
* Percentages indicated are based on net assets of $50,778,075.
{.} Non-income producing security.
{l} U.S. currency denominated.
[.] Restricted securities. At December 31, 1995, the fund owned the
following restricted securities constituting 0.7% of net assets
which may not be publicly sold without registration under the
Securities Act of 1933 (Note 1). Additional information on the
restricted securities is as follows:
<TABLE>
<CAPTION>
Fair Value
Acquisition Acquisition Per Share at
Date Shares Cost 12/31/95
----------- ------- ----------- ------------
<S> <C> <C> <C> <C>
Unitech Industries, Inc................. 08/24/95 100,000 $ 1,200,000 $ 2.16
Matav................................... 07/20/94 1,000 $ 247,819 $150.10
</TABLE>
{::} 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.
{d} For Federal income tax purposes, cost is $45,757,682 and
appreciation (depreciation) is as follows:
Unrealized appreciation: $ 8,704,830
Unrealized depreciation: (4,552,192)
-------------
Net unrealized appreciation: $ 4,152,638
-------------
-------------
Abbreviations:
ADR -- American Depository Receipt
GDR -- Global Depository Receipt
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 87
<PAGE>
GT GLOBAL VARIABLE TELECOMMUNICATIONS FUND
The Fund's Portfolio of Investments at December 31, 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>
Brazil (BRZL/BRL) .................... 2.0 2.0
Canada (CAN/CAD) ..................... 4.7 4.7
Czech Republic (CZCH/SK) ............. 2.0 2.0
Denmark (DEN/DKK) .................... 3.9 3.9
Finland (FIN/FIM) .................... 4.0 4.0
Germany (GER/DEM) .................... 4.2 4.2
Hong Kong (HK/HKD) ................... 0.4 0.4
Hungary (HGRY/HUF) ................... 0.3 0.3
Indonesia (INDO/IDR) ................. 2.8 2.8
Italy (ITLY/ITL) ..................... 3.0 3.0
Japan (JPN/JPY) ...................... 2.9 2.9
Mexico (MEX/MXN) ..................... 0.3 0.3
Netherlands (NETH/NLG) ............... 1.6 1.6
Pakistan (PAK/PKR) .................. 0.6 0.6
Philippines (PHIL/PHP) ............... 1.1 1.1
Spain (SPN/ESP) ...................... 3.3 3.3
Sweden (SWDN/SEK) .................... 0.9 0.9
Thailand (THAI/THB) .................. 0.5 0.5
United Kingdom (UK/GBP) .............. 2.1 2.1
United States (US/USD) ............... 49.3 10.1 59.4
------ --- -----
Total ............................... 89.9 10.1 100.0
------ --- -----
------ --- -----
<FN>
- ----------------
* Percentages indicated are based on net assets of $50,778,075.
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
DECEMBER 31, 1995
<TABLE>
<CAPTION>
Market Value Unrealized
(U.S. Delivery Appreciation
Contracts to Sell: Dollars) Contract Price Date (Depreciation)
------------- -------------- --------- -------------
<S> <C> <C> <C> <C>
Deutsche Marks........................................................... 97,741 1.37500 01/24/96 $ 4,077
Deutsche Marks........................................................... 979,477 1.42738 02/29/96 1,341
Italian Lira............................................................. 882,124 1,613.30000 02/16/96 (9,726)
Japanese Yen............................................................. 106,281 101.50000 02/09/96 1,108
Japanese Yen............................................................. 275,154 99.00000 02/14/96 9,694
Japanese Yen............................................................. 121,966 98.95800 02/14/96 4,351
Japanese Yen............................................................. 146,655 99.80000 02/29/96 3,646
Netherland Guilders...................................................... 375,725 1.58068 02/15/96 3,858
Netherland Guilders...................................................... 250,484 1.58000 02/15/96 2,681
------------- -------------
Total Contracts to Sell (Receivable amount $3,256,637)............... 3,235,607 $ 21,030
------------- -------------
THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF NET ASSETS IS 6.37%
Total Open Forward Foreign Currency Contracts, Net................... $ 21,030
-------------
-------------
</TABLE>
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 88
<PAGE>
GT GLOBAL VARIABLE EMERGING MARKETS FUND
PORTFOLIO OF INVESTMENTS
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (22.8%)
Administradora de Fondos de Pensiones Provida S.A. --
ADR{l} ................................................... CHLE 18,800 $ 519,350 5.8
OTHER FINANCIAL
Peregrine Investment Holdings Ltd. ........................ HK 305,000 394,465 4.4
INVESTMENT MANAGEMENT
First Financial Caribbean Corp. ........................... US 19,500 365,625 4.1
OTHER FINANCIAL
Banco de Colombia -- 144A GDR{::} {l} ..................... COL 44,800 224,000 2.5
BANKS-MONEY CENTER
PT Lippo Securities -- Foreign ............................ INDO 616,500 215,937 2.4
SECURITIES BROKER
Robinson's Land Corp. "B"{.} .............................. PHIL 1,400,000 197,634 2.2
REAL ESTATE
House of Investments, Inc. ................................ PHIL 606,000 129,477 1.4
OTHER FINANCIAL
------------
2,046,488
------------
Multi Industry/Miscellaneous (20.3%)
BHI Corp.{l} .............................................. BLZ 19,000 299,250 3.3
CONGLOMERATE
Jardine Matheson Holding Ltd.{l} .......................... HK 39,400 269,890 3.0
CONGLOMERATE
Corticeira Amorim, S.A. ................................... PORT 22,650 261,626 2.9
MISCELLANEOUS
John Keells Holdings Ltd. -- ADR{l} ....................... LUX 48,400 217,800 2.4
CONGLOMERATE
Malbak Ltd. ............................................... SAFR 25,000 173,206 1.9
CONGLOMERATE
Harvard Investment Co. Growth Fund ........................ CZCH 4,833 121,455 1.4
COUNTRY FUNDS
Mahindra & Mahindra Ltd. -- GDR{.} {l} .................... IND 8,000 102,960 1.1
MISCELLANEOUS
Pakistan Investment Fund, Inc. ............................ US 19,000 99,750 1.1
COUNTRY FUNDS
Aboitiz Equity Ventures, Inc.{.} .......................... PHIL 500,000 95,383 1.1
CONGLOMERATE
Grasim Industries Ltd. -- 144A GDR Tranche 2{::} {.}
{l} ...................................................... IND 4,000 78,000 0.9
MISCELLANEOUS
Harvardsky Dividendovy Investment Fund .................... CZCH 2,500 57,293 0.6
COUNTRY FUNDS
Czeske Energeticke Zavody (CEZ AS){.} ..................... CZCH 1,500 54,237 0.6
MISCELLANEOUS
------------
1,830,850
------------
Consumer Non-Durables (12.5%)
Noble China{.} ............................................ CAN 91,800 369,809 4.1
BEVERAGES-ALCOHOLIC
Mantex -- ADR{l} .......................................... VENZ 50,000 225,000 2.5
TEXTILES & APPAREL
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 89
<PAGE>
GT GLOBAL VARIABLE EMERGING MARKETS FUND
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Consumer Non-Durables (Continued)
Amway Asia Pacific Ltd.{l} ................................ HK 6,300 $ 224,438 2.5
HOUSEHOLD PRODUCTS
South African Breweries Ltd. .............................. SAFR 5,000 183,153 2.0
BEVERAGES-ALCOHOLIC
Companhia Cervejaria Brahma Preferred ..................... BRZL 300,000 123,498 1.4
BEVERAGES-ALCOHOLIC
------------
1,125,898
------------
Services (11.1%)
Ceteco Holding N.V. ...................................... NETH 9,000 288,274 3.2
RETAILERS-OTHER
Dickson Concepts International Ltd. ....................... HK 250,000 232,799 2.6
WHOLESALE & INTERNATIONAL TRADE
Pakistan Telecommunications Co., Ltd. -- 144AGDR{::} {.}
{l} ...................................................... PAK 2,300 195,500 2.2
TELEPHONE NETWORKS
Wah Kwong Shipping Holdings Ltd. .......................... HK 134,500 193,087 2.2
TRANSPORTATION-SHIPPING
SPT Telecom{.} ........................................... CZCH 900 85,068 0.9
TELEPHONE NETWORKS
------------
994,728
------------
Materials/Basic Industry (6.0%)
Siderurgica Venezolana Sivensa (Sivensa) -- ADR{l} ........ VENZ 156,000 285,480 3.2
METALS-STEEL
SA Iron & Steel Industrial Corp., Ltd. (ISCOR) ............ SAFR 150,000 134,998 1.5
METALS-STEEL
Venezolana de Pulpa Y Papel -- 144A GDR{::} {l} ........... VENZ 56,000 112,000 1.2
FOREST PRODUCTS
Indo Gulf Fertilizer & Chemical -- GDR{l} ................. IND 7,500 9,000 0.1
CHEMICALS
------------
541,478
------------
Health Care (5.8%)
PT Darya Varia Laboratoria ................................ INDO 286,000 519,658 5.8
------------
PHARMACEUTICALS
Energy (4.2%)
Compania Boliviana de Energia Electrica{l} ................ BOL 10,800 359,100 4.0
ELECTRICAL & GAS UTILITIES
Czech Power Co. -- GDR{.} {l} ............................. CZCH 500 17,750 0.2
ELECTRICAL & GAS UTILITIES
------------
376,850
------------
Consumer Durables (4.1%)
Singer Co. N.V.{l} ........................................ HK 9,300 259,238 2.9
APPLIANCES & HOUSEHOLD
Tata Engineering and Locomotive Co. Ltd. -- GDR{l} ........ IND 8,000 105,040 1.2
AUTOMOBILES
------------
364,278
------------
Capital Goods (1.3%)
Hindalco Industries Ltd. -- 144A GDR{::} {.} {l} .......... IND 3,500 116,375 1.3
INDUSTRIAL COMPONENTS
------------ -----
TOTAL EQUITY INVESTMENTS (cost $7,723,035) ................. 7,916,603 88.1
------------ -----
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 90
<PAGE>
GT GLOBAL VARIABLE EMERGING MARKETS FUND
<TABLE>
<CAPTION>
Market % of Net
Repurchase Agreement Value Assets
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated December 29, 1995, with State Street Bank & Trust
Company, due January 2, 1996, for an effective yield of
5.55%, collateralized by $1,020,000 U.S. Treasury Notes,
6.125% due 5/15/98 (market value of collateral is
$1,047,977, including accrued interest. (cost $1,027,475)
......................................................... $ 1,027,475 11.5
------------ -----
TOTAL INVESTMENTS (cost $8,750,510) ......................... 8,944,078 99.6
Other Assets and Liabilities ................................ 38,683 0.4
------------ -----
Net Assets .................................................. $ 8,982,761 100.0
------------ -----
------------ -----
</TABLE>
- ----------------
* Percentages indicated are based on net assets of $8,982,761.
{l} 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.
{d} For Federal income tax purposes, cost is $8,764,187 and
appreciation (depreciation) is as follows:
Unrealized appreciation: $ 729,513
Unrealized depreciation: (549,622)
-------------
Net unrealized appreciation $ 179,891
-------------
-------------
Abbreviations:
ADR -- American Depository Receipt
GDR -- Global Depository Receipt
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at December 31, 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>
Belize (BLZ/BZD) ..................... 3.3 3.3
Bolivia (BOL/BOL) .................... 4.0 4.0
Brazil (BRZL/BRL) .................... 1.4 1.4
Canada (CAN/CAD) ..................... 4.1 4.1
Chile (CHLE/CLP) ..................... 5.8 5.8
Colombia (COL/COP) ................... 2.5 2.5
Czech Republic (CZCH/CSK) ........... 3.7 3.7
Hong Kong (HK/HKD) ................... 17.6 17.6
India (IND/INR) ...................... 4.6 4.6
Indonesia (INDO/IDR) ................. 8.2 8.2
Luxembourg (LUX/LUF) ................. 2.4 2.4
Netherlands (NETH/NLG) ............... 3.2 3.2
Pakistan (PAK/PKR) .................. 2.2 2.2
Philippines (PHIL/PHP) ............... 4.7 4.7
Portugal (PORT/PTE) ................. 2.9 2.9
South Africa (SAFR/ZAR) .............. 5.4 5.4
United States (US/USD) ............... 5.2 11.9 17.1
Venezuela (VENZ/VEB) ................. 6.9 6.9
------ --- -----
Total ............................... 88.1 11.9 100.0
------ --- -----
------ --- -----
<FN>
- ----------------
* Percentages indicated are based on net assets of $8,982,761.
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 91
<PAGE>
GT GLOBAL VARIABLE INFRASTRUCTURE FUND
PORTFOLIO OF INVESTMENTS
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Energy (21.8%)
Korea Electric Power Corp. -- ADR{l} ...................... KOR 1,800 $ 48,150 3.0
ELECTRICAL & GAS UTILITIES
Compania Boliviana de Energia Electrica{l} ................ BOL 1,200 39,900 2.5
ELECTRICAL & GAS UTILITIES
Capex S.A. ................................................ ARG 5,000 36,496 2.3
ELECTRICAL & GAS UTILITIES
EVN Energie-Versorgung Niederoesterreich AG ............... ASTRI 260 35,738 2.2
ELECTRICAL & GAS UTILITIES
Empresa Nacional de Electridad S.A. -- ADR{l} ............. SPN 600 34,350 2.2
ELECTRICAL & GAS UTILITIES
Companhia Energetica de Minas Gerais (Cemig) --ADR{.}
{l} ...................................................... BRZL 1,489 32,572 2.1
ELECTRICAL & GAS UTILITIES
Enron Global Power & Pipelines L.L.C. ..................... US 1,300 32,338 2.0
ELECTRICAL & GAS UTILITIES
Consolidated Electric Power Asia Ltd. ..................... HK 14,000 25,440 1.6
ELECTRICAL & GAS UTILITIES
Edison S.p.A. ............................................. ITLY 5,000 21,438 1.4
ELECTRICAL & GAS UTILITIES
Chilgener S.A. -- ADR{l} .................................. CHLE 700 17,500 1.1
ELECTRICAL & GAS UTILITIES
MetroGas S.A. -- ADR{l} ................................... ARG 1,500 14,625 0.9
ELECTRICAL & GAS UTILITIES
AES China Generating Co., Ltd. "A"{.} ..................... US 1,000 8,000 0.5
ELECTRICAL & GAS UTILITIES
------------
346,547
------------
Capital Goods (18.6%)
Nokia AB Preferred -- ADR{l} .............................. FIN 1,300 50,536 3.2
TELECOM EQUIPMENT
Mannesmann AG ............................................. GER 140 44,590 2.8
MACHINERY & ENGINEERING
ASEA AB "B" Free .......................................... SWDN 400 38,936 2.4
ELECTRICAL PLANT/EQUIPMENT
Caterpillar, Inc. ......................................... US 600 35,250 2.2
MACHINERY & ENGINEERING
Fluor Corp. .............................................. US 500 33,000 2.1
CONSTRUCTION
Allgon AB "B" Free ....................................... SWDN 2,000 27,725 1.7
TELECOM EQUIPMENT
DSC Communications Corp.{.} ............................... US 600 22,125 1.4
TELECOM EQUIPMENT
United Engineers Ltd. ..................................... MAL 3,000 19,140 1.2
CONSTRUCTION
E.R.G. Ltd. ............................................... AUSL 11,121 13,303 0.8
ELECTRICAL PLANT/EQUIPMENT
BroadBand Technologies, Inc.{.} ........................... US 500 8,125 0.5
TELECOM EQUIPMENT
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 92
<PAGE>
GT GLOBAL VARIABLE INFRASTRUCTURE FUND
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Capital Goods (Continued)
C & P Homes, Inc.{.} ..................................... PHIL 5,300 $ 3,893 0.3
CONSTRUCTION
------------
296,623
------------
Services (18.2%)
ABC Rail Products Corp.{.} ............................... US 2,100 46,463 2.9
TRANSPORTATION-ROAD & RAIL
Vodafone Group PLC -- ADR{l} .............................. UK 1,200 42,300 2.7
WIRELESS COMMUNICATIONS
DDI Corp. ................................................. JPN 5 38,760 2.4
WIRELESS COMMUNICATIONS
Telefonica de Espana -- ADR{l} ............................ SPN 800 33,500 2.1
TELEPHONE NETWORKS
SPT Telecom{.} ............................................ CZCH 350 33,082 2.1
TELEPHONE NETWORKS
PT Indonesia Satellite (Indosat) -- ADR{l} ................ INDO 900 32,850 2.1
TELEPHONE-LONG DISTANCE,
Stet Di Risp .............................................. ITLY 8,700 17,762 1.1
TELEPHONE NETWORKS
Philippine Long Distance Telephone Co. -- ADR{l} .......... PHIL 300 16,238 1.0
TELEPHONE NETWORKS
Canadian National Railway Co.{.} {l} ...................... CAN 1,000 15,000 0.9
TRANSPORTATION-ROAD & RAIL
Pakistan Telecommunications Co., Ltd. -- 144AGDR{::} {.}
{l} ...................................................... PAK 100 8,500 0.5
TELEPHONE NETWORKS
International Container Terminal Services (ICTS){.} ....... PHIL 9,025 4,735 0.3
TRANSPORTATION-SHIPPING
PST Vans, Inc.{.} ......................................... US 300 1,388 0.1
TRANSPORTATION-ROAD & RAIL
------------
290,578
------------
Materials/Basic Industry (12.0%)
La Cementos Nacional, C.A. -- 144A GDR{::} {l} .............. ECDR 220 37,400 2.4
CEMENT
Giant Cement Holding, Inc.{.} ............................ US 3,000 34,500 2.2
CEMENT
Siam Cement Co., Ltd. -- Foreign .......................... THAI 500 27,720 1.7
CEMENT
Lone Star Industries, Inc. ................................ US 1,100 27,500 1.7
CEMENT
PT Bakrie and Brothers .................................... INDO 10,000 18,170 1.1
BUILDING MATERIALS & COMPONENTS
Northwest Pipe Co.{.} ..................................... US 1,500 16,477 1.0
METALS-STEEL
Hylsamex, S.A. de C.V. -- 144A ADR{::} {.} {l} ............ MEX 700 14,875 0.9
METALS-STEEL
PT Semen Cibinong -- Foreign .............................. INDO 5,000 12,478 0.8
CEMENT
Grupo Simec, S.A. de C.V. -- ADR{.} {l} ................... MEX 500 3,125 0.2
METALS-STEEL
------------
192,245
------------
Technology (4.4%)
DSP Communications, Inc.{.} ............................... US 1,600 69,800 4.4
------------
TELECOM TECHNOLOGY
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 93
<PAGE>
GT GLOBAL VARIABLE INFRASTRUCTURE FUND
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Multi Industry/Miscellaneous (2.3%)
General Electric Co. ...................................... US 500 $ 36,000 2.3
------------
CONGLOMERATE
Consumer Durables (1.8%)
Three-Five Systems, Inc.{.} ............................... US 1,700 28,688 1.8
CONSUMER ELECTRONICS
------------ -----
TOTAL EQUITY INVESTMENTS (cost $1,248,231) .................. 1,260,481 79.1
------------ -----
<CAPTION>
Market % of Net
Repurchase Agreement Value Assets
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated December 29, 1995, with State Street Bank & Trust
Company, due January 2, 1996, for an effective yield of
5.55%, collateralized by $290,000 U.S. Treasury Notes,
6.125% due 5/15/98 (market value of collateral is
$297,954, including accrued interest). (cost $292,135)
......................................................... 292,135 18.3
------------ -----
TOTAL INVESTMENTS (cost $1,540,366){d} ..................... 1,552,616 97.4
Other Assets and Liabilities ................................ 41,602 2.6
------------ -----
Net Assets .................................................. $ 1,594,218 100.0
------------ -----
------------ -----
</TABLE>
- ----------------
* Percentages indicated are based on net assets of $1,594,218.
{.} Non-income producing security.
{l} U.S. currency denominated.
{::} Security exempt from registration under Rule144A of the Securities
Act of 1933. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers.
{d} For Federal income tax purposes, cost is $1,542,802 and
appreciation (depreciation) is as follows:
Unrealized appreciation: $ 90,647
Unrealized depreciation: (80,833)
-------------
Net unrealized appreciation: $ 9,814
-------------
-------------
Abbreviations:
ADR -- American Depository Receipt
GDR -- Global Depository Receipt
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 94
<PAGE>
GT GLOBAL VARIABLE INFRASTRUCTURE FUND
The Fund's Portfolio of Investments at October 31, 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) .................. 3.0 3.0
Australia (AUSL/AUD) ................. 0.8 0.8
Austria (ASTRI/ATS) .................. 2.2 2.2
Bolivia (BOL/BOL) .................... 2.5 2.5
Brazil (BRZL/BRL) .................... 2.1 2.1
Canada (CAN/CAD) ..................... 0.9 0.9
Chile (CHLE/CLP) ..................... 1.1 1.1
Czech Republic (CZCH/CSK) ............ 2.1 2.1
Ecuador (ECDR/ECS) ................... 2.4 2.4
Finland (FIN/FIM) .................... 3.2 3.2
Germany (GER/DEM) .................... 2.8 2.8
Hong Kong (HK/HKD) ................... 1.6 1.6
Indonesia (INDO/IDR) ................. 4.0 4.0
Italy (ITLY/ITL) ..................... 2.5 2.5
Japan (JPN/JPY) ..................... 2.4 2.4
Korea (KOR/KRW) ...................... 3.0 3.0
Malaysia (MAL/MYR) ................... 1.2 1.2
Mexico (MEX/MXN) ..................... 1.1 1.1
Pakistan (PAK/PKR) ................... 0.5 0.5
Philippines (PHIL/PHP) ............... 1.6 1.6
Spain (SPN/ESP) ...................... 4.3 4.3
Sweden (SWDN/SEK) .................... 4.1 4.1
Thailand (THAI/THB) .................. 1.7 1.7
United Kingdom (UK/GBP) ............. 2.7 2.7
United States (US/USD) .............. 25.1 20.9 46.0
------ --- -----
Total .............................. 79.1 20.9 100.0
------ --- -----
------ --- -----
<FN>
- ----------------
* Percentages indicated are based on net assets of $1,594,218.
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 95
<PAGE>
GT GLOBAL VARIABLE NATURAL RESOURCES FUND
PORTFOLIO OF INVESTMENTS
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Materials/Basic Industry (41.6%)
Diamond Fields Resources, Inc.{.} ......................... CAN 3,200 $ 60,353 4.4
METALS-NON-FERROUS
PT Tambang Timah: ......................................... INDO -- -- 3.8
METALS-NON-FERROUS
144A GDR{::} {.} {l} .................................... -- 3,300 40,095 --
Reg. S GDR{.} [.] {l} ................................... -- 1,000 12,150 --
Cabot Corp. ............................................... US 800 43,100 3.2
CHEMICALS
UCAR International, Inc.{.} ............................... US 1,200 40,500 3.0
METALS-NON-FERROUS
SGL Carbon AG{.} .......................................... GER 500 38,706 2.8
METALS-NON-FERROUS
Cytec Industries{.} ....................................... US 600 37,425 2.7
CHEMICALS
Anglovaal Ltd.: ........................................... SAFR -- -- 2.7
MISC. MATERIALS & COMMODITIES
"N" ..................................................... -- 600 24,365 --
Common ................................................. -- 300 12,841 --
Cameco Corp. .............................................. CAN 1,000 37,171 2.7
METALS-NON-FERROUS
Agrium, Inc. .............................................. CAN 2,400 36,036 2.6
CHEMICALS
USG Corp.{.} .............................................. US 1,200 36,000 2.6
BUILDING MATERIALS & COMPONENTS
Potash Corporation of Saskatchewan, Inc.{l} .............. CAN 500 35,438 2.6
METALS-NON-FERROUS
Mississippi Chemical Corp. ................................ US 1,500 34,875 2.6
CHEMICALS
Ashanti Goldfields Co., Ltd. -- GDR{l} .................... SAFR 1,500 30,375 2.2
GOLD
J&L Specialty Steel, Inc. ................................ US 1,100 20,625 1.5
METALS-STEEL
Acacia Resources Ltd.{.} .................................. AUSL 8,000 14,384 1.1
GOLD
Asia Pulp & Paper Co., Ltd. -- ADR{.} {l} ................. INDO 1,400 11,375 0.8
FOREST PRODUCTS
Delta Gold Ltd.{.} ........................................ AUSL 1,700 4,118 0.3
GOLD
------------
569,932
------------
Energy (32.1%)
Input/Output, Inc.{.} ..................................... US 900 51,975 3.8
ENERGY EQUIPMENT & SERVICES
Chesapeake Energy Corp.{.} ................................ US 1,500 49,875 3.7
ENERGY SOURCES
Seagull Energy Corp.{.} ................................... US 1,900 42,275 3.1
ENERGY SOURCES
Total Compagnie Francaise des Petroles S.A. -- ADR{l} ..... FR 1,114 37,876 2.8
OIL
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 96
<PAGE>
GT GLOBAL VARIABLE NATURAL RESOURCES FUND
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Energy (Continued)
Reading & Bates Corp.{.} .................................. US 2,500 $ 37,500 2.8
ENERGY EQUIPMENT & SERVICES
Saga Petroleum AS "A" ..................................... NOR 2,800 37,402 2.7
OIL
Sonat Offshore Drilling Co. ............................... US 800 35,800 2.6
ENERGY EQUIPMENT & SERVICES,
Alberta Energy Co., Ltd. .................................. CAN 2,200 35,249 2.6
ENERGY SOURCES
Mobil Corp. ............................................... US 300 33,600 2.5
OIL
Anadarko Petroleum Corp. .................................. US 600 32,475 2.4
OIL
British Petroleum Co., PLC -- ADR{l} ...................... UK 250 25,531 1.9
OIL
Norsk Hydro AS -- ADR{l} .................................. NOR 300 12,563 0.9
OIL
Ente Nazionale Idrocarburi (ENI) S.p.A. -- ADR{.} {l} ..... ITLY 100 3,425 0.3
OIL
------------
435,546
------------
Capital Goods (7.8%)
Harnischfeger Industries, Inc. ........................... US 1,400 46,550 3.4
MACHINERY & ENGINEERING
Rauma Oy -- ADR{.} {l} .................................... FIN 1,900 35,863 2.6
MACHINERY & ENGINEERING
Valmet Corp. "A" .......................................... FIN 1,000 24,848 1.8
MACHINERY & ENGINEERING
------------
107,261
------------ -----
TOTAL EQUITY INVESTMENTS (cost $1,051,696) ................. 1,112,739 81.5
------------ -----
<CAPTION>
Repurchase Agreement
- -------------------------------------------------------------
<S> <C> <C> <C> <C>
Dated December 29, 1995, with State Street Bank and Trust
Company, due January 2, 1996, for an effective yield of
5.55%, collateralized by $195,000 U.S. Treasury Notes,
8.125% due 5/15/96 (market value of collateral is
$200,349, included accrued interest). (cost $192,089) ... 192,089 14.1
------------ -----
TOTAL INVESTMENTS (cost $1,243,785){d} ...................... 1,304,828 95.6
Other Assets and Liabilities ................................ 60,119 4.4
------------ -----
Net Assets .................................................. $ 1,364,947 100.0
------------ -----
------------ -----
</TABLE>
- ----------------
* Percentages indicated are based on net assets of $1,364,947.
{l} 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.
[.] Restricted security -- At December 31, 1995, the Fund owned the
following restricted security constituting 0.9% 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:
Fair Value
Per Share
Acquisition Acquisition at
Date Shares Cost 12/31/95
--------- ----------- ----------- -----------
PT Tambang Timah -- Reg S..... 11/24/95 1,000 $ 11,700 $ 12.15
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 97
<PAGE>
GT GLOBAL VARIABLE NATURAL RESOURCES FUND
{d} For Federal income tax purposes, cost is $1,244,847 and appreciation
(depreciation) is as follows:
<TABLE>
<S> <C>
Unrealized appreciation: $ 79,779
Unrealized depreciation: (19,798)
-------------
Net unrealized appreciation: $ 59,981
-------------
-------------
</TABLE>
Abbreviations:
ADR -- American Depository Receipt
GDR -- Global Depository Receipt
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at December 31, 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>
Australia (AUSL/AUD) ................. 1.4 1.4
Canada (CAN/CAD) ..................... 14.9 14.9
Finland (FIN/FIM) .................... 4.4 4.4
France (FR/FRF) ...................... 2.8 2.8
Germany (GER/DEM) .................... 2.8 2.8
Indonesia (INDO/IDR) ................. 4.6 4.6
Italy (ITLY/ITL) ..................... 0.3 0.3
Norway (NOR/NOK) ..................... 3.6 3.6
South Africa (SAFR/ZAR) .............. 4.9 4.9
United Kingdom (UK/GBP) .............. 1.9 1.9
United States (US/USD) ............... 39.9 18.5 58.4
------ --- -----
Total ............................... 81.5 18.5 100.0
------ --- -----
------ --- -----
<FN>
- ----------------
* Percentages indicated are based on net assets of $1,364,947.
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 98
<PAGE>
GT GLOBAL VARIABLE AMERICA FUND
PORTFOLIO OF INVESTMENTS
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Shares Value Assets
- ------------------------------------------------------------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Technology (32.1%)
Integrated Device Technology, Inc.{.} ..................... 91,500 $ 1,178,059 3.1
SEMICONDUCTORS
LAM Research Corp.{.} ..................................... 24,500 1,120,875 3.0
SEMICONDUCTORS
Applied Materials, Inc.{.} ................................ 28,400 1,118,250 3.0
SEMICONDUCTORS
National Semiconductor Corp.{.} ........................... 48,000 1,068,000 2.8
SEMICONDUCTORS
Komag, Inc.{.} ............................................ 22,300 1,028,588 2.7
COMPUTERS & PERIPHERALS
Read-Rite Corporation{.} .................................. 42,200 981,150 2.6
COMPUTERS & PERIPHERALS
Micron Technology, Inc. ................................... 24,400 966,850 2.6
SEMICONDUCTORS
BMC Software Inc.{.} ..................................... 17,600 752,400 2.0
SOFTWARE
Seagate Technology{.} ..................................... 15,700 745,750 2.0
COMPUTERS & PERIPHERALS
Cirrus Logic, Inc.{.} ..................................... 37,100 732,725 1.9
SEMICONDUCTORS
Compuware Corporation ..................................... 27,200 503,200 1.3
SOFTWARE
Dallas Semiconductor Corp.{.} ............................ 23,700 491,775 1.3
SEMICONDUCTORS
Excalibur Technologies Corp.{.} ........................... 13,000 474,500 1.3
SOFTWARE
Conner Peripherals, Inc.{.} ............................... 14,700 308,700 0.8
COMPUTERS & PERIPHERALS
Western Digital Corp.{.} .................................. 16,500 294,938 0.8
COMPUTERS & PERIPHERALS
Quantum Corp.{.} .......................................... 12,200 196,725 0.5
COMPUTERS & PERIPHERALS
MEMC Electronic Materials, Inc.{.} ........................ 4,600 150,075 0.4
SEMICONDUCTORS
------------
12,112,560
------------
Services (15.4%)
Michaels Stores, Inc. .................................... 85,800 1,179,750 3.1
RETAILERS-OTHER
AnnTaylor Stores, Inc.{.} ................................. 86,100 882,525 2.3
RETAILERS-APPAREL
Sports Authority, Inc.{.} ................................. 40,500 825,188 2.2
LEISURE & TOURISM
United Video Satellite Group, Inc. "A"{.} ................. 26,300 710,100 1.9
CABLE TELEVISION
Kelly Services, Inc. "A" .................................. 22,800 632,700 1.7
CONSUMER SERVICES
Younkers, Inc.{.} ......................................... 24,600 624,225 1.7
RETAILERS-APPAREL
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 99
<PAGE>
GT GLOBAL VARIABLE AMERICA FUND
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Shares Value Assets
- ------------------------------------------------------------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (Continued)
Proffitt's, Inc.{.} ....................................... 12,900 $ 338,625 0.9
RETAILERS-OTHER
Rio Hotel and Casino, Inc.{.} ............................. 21,800 258,875 0.7
LEISURE & TOURISM
Friedman's Inc. "A"{.} .................................... 12,500 240,625 0.6
RETAILERS-OTHER
Buckle Inc.{.} ............................................ 5,800 102,950 0.3
RETAILERS-APPAREL
------------
5,795,563
------------
Finance (13.6%)
RFS Hotel Investors, Inc. ................................. 53,200 817,950 2.2
REAL ESTATE INVESTMENT TRUST
H&R Block, Inc. ........................................... 18,500 749,250 2.0
CONSUMER FINANCE
KeyCorp ................................................... 20,500 743,125 2.0
BANKS-REGIONAL
Equity Inns Inc. .......................................... 62,100 714,150 1.9
REAL ESTATE INVESTMENT TRUST
Leader Financial Corp. .................................... 17,600 657,800 1.7
SAVINGS & LOANS
Signet Banking Corp. ...................................... 25,200 598,500 1.6
BANKS-REGIONAL
ADVANTA Corp. "B" ......................................... 11,700 425,588 1.1
CONSUMER FINANCE
Mid-America Apartment Communities, Inc. ................... 9,100 225,225 0.6
REAL ESTATE
Trans Financial, Inc. ..................................... 10,100 180,538 0.5
BANKS-REGIONAL
------------
5,112,126
------------
Health Care (6.2%)
Coventry Corp.{.} ......................................... 56,800 1,171,500 3.1
HEALTH CARE SERVICES
Health Systems International, Inc. "A"{.} ................. 24,700 793,488 2.1
HEALTH CARE SERVICES
Abaxis, Inc.{.} ........................................... 39,400 275,800 0.7
MEDICAL TECHNOLOGY & SUPPLIES
GranCare, Inc.{.} ......................................... 8,400 121,800 0.3
HEALTH CARE SERVICES
------------
2,362,588
------------
Consumer Non-Durables (3.7%)
V F Corporation ........................................... 11,900 627,725 1.7
TEXTILES & APPAREL
Haggar Corp. .............................................. 29,500 531,000 1.4
TEXTILES & APPAREL
Varsity Spirit Corp. ...................................... 14,850 207,900 0.6
TEXTILES & APPAREL
------------
1,366,625
------------
Consumer Durables (3.4%)
Eaton Corp. ............................................... 16,000 858,000 2.3
AUTO PARTS
Syratech Corp.{.} ......................................... 12,900 259,612 0.7
APPLIANCES & HOUSEHOLD
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 100
<PAGE>
GT GLOBAL VARIABLE AMERICA FUND
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Shares Value Assets
- ------------------------------------------------------------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Consumer Durables (Continued)
Lifetime Hoan Corp.{.} .................................... 15,730 $ 145,503 0.4
APPLIANCES & HOUSEHOLD
------------
1,263,115
------------
Materials/Basic Industry (1.5%)
Georgia Gulf Corp. ........................................ 18,200 559,650 1.5
CHEMICALS
------------ -----
TOTAL EQUITY INVESTMENTS (cost $27,993,546) ................. 28,572,227 75.9
------------ -----
<CAPTION>
Market % of Net
Repurchase Agreement Value Assets
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated December 29, 1995, with Merrill Lynch, due January 2,
1996, for an effective yield of 5.60%, collateralized by
$7,030,000 U.S. Treasury Notes, due 10/31/97 (market value
of collateral is $7,150,092, including accrued interest).
(cost $7,003,267) ....................................... 7,003,267 18.6
Dated December 29, 1995, with State Street Bank & Trust
Company, due January 2, 1996, for an effective yield of
5.55%, collateralized by $4,240,000 U.S. Treasury Notes,
6.125% due 5/15/98 (market value of collateral is
$4,356,296, including accrued interest). (cost $4,267,973)
......................................................... 4,267,973 11.3
------------ -----
TOTAL REPURCHASE AGREEMENTS ................................. 11,271,240 29.9
------------ -----
TOTAL INVESTMENTS (cost $39,264,786){d} ..................... 39,843,467 105.8
Other Assets and Liabilities ................................ (2,200,489) (5.8)
------------ -----
Net Assets .................................................. $ 37,642,978 100.0
------------ -----
------------ -----
</TABLE>
- ----------------
* Percentages indicated are based on net assets of $37,642,978.
{.} Non-income producing security.
{d} For Federal income tax purposes, cost is $39,464,665 and
appreciation (depreciation) is as follows:
Unrealized appreciation: $ 2,887,352
Unrealized depreciation: (2,508,550)
-------------
Net unrealized appreciation: $ 378,802
-------------
-------------
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 101
<PAGE>
GT GLOBAL VARIABLE NEW PACIFIC FUND
PORTFOLIO OF INVESTMENTS
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (36.2%)
HSBC Holdings PLC ......................................... HK 80,000 $ 1,210,551 5.3
BANKS-MONEY CENTER
New World Development Co., Ltd. ........................... HK 246,000 1,072,193 4.7
REAL ESTATE
Straits Steamship Land Ltd. .............................. SING 220,000 743,706 3.2
REAL ESTATE
Henderson Land Development Co., Ltd. ...................... HK 100,000 602,690 2.6
REAL ESTATE
National Australia Bank Ltd. .............................. AUSL 60,200 541,214 2.3
BANKS-MONEY CENTER
Westpac Banking Corp., Ltd.: .............................. AUSL -- -- 2.2
BANKS-REGIONAL
Common ................................................. -- 110,000 487,109 --
Convertible Preferred, 6.5% till 6/30/98 ................ -- 2,800 15,915 --
Thai Farmers Bank, Ltd. -- Foreign ........................ THAI 45,000 453,932 2.0
BANKS-REGIONAL
United Overseas Bank Ltd. -- Foreign ...................... SING 46,000 442,433 1.9
BANKS-MONEY CENTER
Henderson Investment Ltd. ................................. HK 500,000 410,631 1.8
REAL ESTATE
Ayala Land, Inc. "B" ...................................... PHIL 312,500 381,534 1.7
REAL ESTATE
Development Bank of Singapore -- Foreign .................. SING 30,000 373,409 1.6
BANKS-MONEY CENTER
Bangkok Bank Co., Ltd. -- Foreign ........................ THAI 30,000 364,575 1.6
BANKS-MONEY CENTER
Siam Commercial Bank PLC -- Foreign ....................... THAI 25,000 329,627 1.4
BANKS-MONEY CENTER
DCB Holdings Bhd. ......................................... MAL 75,000 218,573 0.9
BANKS-REGIONAL
PT Lippo Bank -- Foreign .................................. INDO 120,000 185,201 0.8
BANKS-MONEY CENTER
Siam City Bank Ltd. -- Foreign ........................... THAI 140,000 161,239 0.7
BANKS-REGIONAL
Hang Seng Bank ............................................ HK 16,030 143,569 0.6
BANKS-MONEY CENTER
Bank of East Asia, Ltd. ................................... HK 38,161 136,959 0.6
BANKS-MONEY CENTER
Cheung Kong (Holdings) Ltd. ............................... HK 10,000 60,916 0.3
REAL ESTATE
------------
8,335,976
------------
Services (20.0%)
China Hong Kong Photo Products Holdings, Ltd. ............. HK 2,000,000 1,131,661 4.9
WHOLESALE & INTERNATIONAL TRADE
Guangnan Holdings ......................................... HK 2,300,000 751,099 3.3
WHOLESALE & INTERNATIONAL TRADE
Waterfront Philippines, Inc.{.} ........................... PHIL 4,000,000 686,761 3.0
LEISURE & TOURISM
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 102
<PAGE>
GT GLOBAL VARIABLE NEW PACIFIC FUND
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (Continued)
Goldlion Holdings Ltd. .................................... HK 630,000 $ 460,360 2.0
RETAILERS-APPAREL
Telecom Corporation of New Zealand Ltd. .................. NZ 100,000 431,316 1.9
TELEPHONE NETWORKS
Cathay Pacific Airways .................................... HK 250,000 381,531 1.7
TRANSPORTATION-AIRLINES
News Corp., Ltd. .......................................... AUSL -- -- 1.3
BROADCASTING & PUBLISHING
Common ................................................. -- 40,269 214,824 --
Preferred .............................................. -- 20,164 94,236 --
International Container Terminal Services (ICTS){.} ....... PHIL 437,500 229,516 1.0
TRANSPORTATION-SHIPPING
AAPC Ltd. ................................................. AUSL 235,500 127,732 0.6
LEISURE & TOURISM
Philippine Long Distance Telephone Co. -- ADR{l} .......... PHIL 1,500 81,188 0.3
TELEPHONE-LONG DISTANCE
------------
4,590,224
------------
Multi Industry/Miscellaneous (11.0%)
Hutchison Whampoa ......................................... HK 250,000 1,522,892 6.6
CONGLOMERATE
Swire Pacific Ltd. "A" .................................... HK 50,000 387,998 1.7
MULTI-INDUSTRY
Citic Pacific Ltd. ........................................ HK 100,000 342,085 1.5
CONGLOMERATE
Korea Fund, Inc.{l} ....................................... KOR 12,672 278,784 1.2
COUNTRY FUNDS
------------
2,531,759
------------
Materials/Basic Industry (9.2%)
PT Semen Gresik -- Foreign ................................ INDO 214,000 599,650 2.6
CEMENT
Western Mining Corporation Holdings Ltd. .................. AUSL 66,000 423,687 1.8
METALS-NON-FERROUS
Carter Holt Harvey Ltd. .................................. NZ 150,000 323,487 1.4
FOREST PRODUCTS
Broken Hill Proprietary Co., Ltd. ......................... AUSL 20,865 294,550 1.3
MISC. MATERIALS & COMMODITIES
Siam Cement Co., Ltd. -- Foreign .......................... THAI 5,000 277,204 1.2
CEMENT
Royal Ceramic Industry -- Foreign{.} ...................... THAI 100,000 156,871 0.7
BUILDING MATERIALS & COMPONENTS
PT Ekadharma Tape Industries .............................. INDO 66,000 40,455 0.2
CHEMICALS
------------
2,115,904
------------
Consumer Durables (8.1%)
Gadek (Malaysia) Bhd. ..................................... MAL 150,000 767,958 3.3
AUTOMOBILES
Samsung Electronics Co. ................................... KOR -- -- 2.3
CONSUMER ELECTRONICS
GDR{.} {l} .............................................. -- 7,000 409,500 --
New-GDR Non-voting{.} {l} .............................. -- 1,385 81,023 --
New-144A GDR{::} {.} {l} ................................ -- 432 41,472 --
GDR 1/2 Voting{.} {l} ................................... -- 110 10,560 --
New-GDR{.} {l} .......................................... -- 84 8,064 --
Leading Spirit Holding Co. ................................ HK 1,650,000 453,473 2.0
APPLIANCES & HOUSEHOLD
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 103
<PAGE>
GT GLOBAL VARIABLE NEW PACIFIC FUND
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Consumer Durables (Continued)
Hyundai Motor Co. -- 144A GDR{::} {.} {l} ................. KOR 8,000 $ 116,000 0.5
AUTOMOBILES
------------
1,888,050
------------
Capital Goods (2.2%)
E.R.G. Ltd. .............................................. AUSL 323,529 387,014 1.7
ELECTRICAL PLANT/EQUIPMENT
International Engineering PLC -- Foreign .................. THAI 24,000 122,955 0.5
TELECOM EQUIPMENT
United Engineers Ltd., Convertible Unsecured Loan Stock, 4%
expires 5/22/99 .......................................... MAL 21,000 11,744 --
CONSTRUCTION
United Engineers Ltd. .................................... MAL 300 1,914 --
CONSTRUCTION
------------
523,627
------------
Energy (2.1%)
Oil Search Ltd. ........................................... AUSL 560,000 482,651 2.1
------------
OIL
Consumer Non-Durables (1.0%)
China Foods Holdings Ltd.{.} .............................. HK 1,322,000 220,561 1.0
FOOD
------------ -----
TOTAL EQUITY INVESTMENTS (cost $19,787,950) ................. 20,688,752 89.8
------------ -----
<CAPTION>
No. of
Warrants
--------
<S> <C> <C> <C> <C>
Warrants (0.3%)
Development & Commercial Bank Warrants,
expire12/28/99{.} ........................................ MAL 37,500 37,216 0.2
BANKS-MONEY CENTER
Guangnan Holdings Warrants, expire 12/31/96{.} ............ HK 230,000 23,500 0.1
WHOLESALE & INTERNATIONAL TRADE
Leading Spirit Holding Co. Warrants, expire 12/31/97{.} ... HK 150,000 -- --
APPLIANCES & HOUSEHOLD
------------ -----
TOTAL WARRANTS (cost $20,964) .............................. 60,716 0.3
------------ -----
<CAPTION>
Repurchase Agreement
- -------------------------------------------------------------
<S> <C> <C> <C> <C>
Dated December 29, 1995, with State Street Bank & Trust
Company, due January 2, 1996, for an effective yield of
5.55%, collateralized by $1,940,000 U.S. Treasury Notes,
6.125% due 5/15/98 (market value of collateral is
$1,993,211, including accrued interest). (cost $1,950,902)
......................................................... 1,950,902 8.5
------------ -----
TOTAL INVESTMENTS (cost $21,759,816){d} ..................... 22,700,370 98.6
Other Assets and Liabilities ................................ 324,414 1.4
------------ -----
Net Assets .................................................. $ 23,024,784 100.0
------------ -----
------------ -----
</TABLE>
- ----------------
* Percentages indicated are based on net assets of $23,024,784.
{l} 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.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 104
<PAGE>
GT GLOBAL VARIABLE NEW PACIFIC FUND
<TABLE>
<C> <S>
{d} For Federal income tax purposes, cost is $21,759,816 and
appreciation (depreciation) is as follows:
Unrealized appreciation: $ 2,286,637
Unrealized depreciation: (1,346,083)
-------------
Net unrealized appreciation: $ 940,554
-------------
-------------
</TABLE>
Abbreviations:
ADR -- American Depository Receipt
GDR -- Global Depository Receipt
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at December 31, 1995, was concentrated in
the following countries:
<TABLE>
<CAPTION>
Percentage of Net Assets *
-------------------------------------------
Fixed Income,
Rights & Short-Term
Country (Country Code/Currency Code) Equity Warrants & Other Total
- -------------------------------------- ------ ------------- ---------- -----
<S> <C> <C> <C> <C>
Australia (AUSL/AUD) ................. 13.3 13.3
Hong Kong (HK/HKD) ................... 40.6 0.1 40.7
Indonesia (INDO/IDR) ................. 3.6 3.6
Korea (KOR/KRW) ...................... 4.0 4.0
Malaysia (MAL/MYR) ................... 4.2 0.2 4.4
New Zealand (NZ/NZD) ................. 3.3 3.3
Philippines (PHIL/PHP) ............... 6.0 6.0
Singapore (SING/SGD) ................. 6.7 6.7
Thailand (THAI/THB) .................. 8.1 8.1
United States (US/USD) ............... 9.9 9.9
-- --
------ -----
Total ............................... 89.8 0.3 9.9 100.0
-- --
-- --
------ -----
------ -----
<FN>
- ----------------
* Percentages indicated are based on net assets of $23,024,784.
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 105
<PAGE>
GT GLOBAL VARIABLE EUROPE FUND
PORTFOLIO OF INVESTMENTS
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Services (23.3%)
Canal Plus ................................................. FR 2,700 $ 506,926 3.2
BROADCASTING & PUBLISHING
Telecom Italia Mobile S.p.A. ............................... ITLY 221,000 389,016 2.5
TELEPHONE NETWORKS
Wolters Kluwer CVA ........................................ NETH 4,065 385,282 2.5
BROADCASTING & PUBLISHING
Vodafone Group PLC ......................................... UK 100,740 361,294 2.3
WIRELESS COMMUNICATIONS
Elsevier N.V. ............................................. NETH 24,000 320,679 2.1
BROADCASTING & PUBLISHING
Reuters Holdings PLC ....................................... UK 33,000 302,026 1.9
BROADCASTING & PUBLISHING
British Airport Authority PLC .............................. UK 40,000 301,195 1.9
TRANSPORTATION-AIRLINES
EMAP PLC ................................................... UK 36,200 300,683 1.9
BROADCASTING & PUBLISHING
National Express Group PLC ................................ UK 52,000 291,445 1.9
TRANSPORTATION-ROAD & RAIL
Granada Group PLC .......................................... UK 25,502 255,376 1.6
LEISURE & TOURISM
Tesco PLC .................................................. UK 52,100 240,238 1.5
RETAILERS-FOOD
-----------
3,654,160
-----------
Consumer Non-Durables (18.6%)
De Rigo S.p.A. -- ADR{l} ................................... ITLY 40,000 910,000 5.8
TEXTILES & APPAREL
Gucci Group -- NY Registered Shares{l} ..................... ITLY 13,600 528,700 3.4
TEXTILES & APPAREL
Industrie Natuzzi S.p.A. -- ADR{l} ......................... ITLY 9,850 446,944 2.9
HOUSEHOLD PRODUCTS
Polygram ................................................... NETH 7,000 372,378 2.4
RECREATION
Adidas AG{.} .............................................. GER 6,715 355,442 2.3
TEXTILES & APPAREL
B.A.T. Industries PLC ..................................... UK 18,470 162,734 1.0
TOBACCO
Nutricia Vereenigde Bedrijven N.V. ......................... NETH 1,560 126,429 0.8
FOOD
-----------
2,902,627
-----------
Finance (10.8%)
Cetelem Group .............................................. FR 2,550 479,282 3.1
CONSUMER FINANCE
M & G Group PLC ............................................ UK 17,000 332,293 2.1
INVESTMENT MANAGEMENT
Invesco PLC ............................................... UK 74,000 291,244 1.9
INVESTMENT MANAGEMENT
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 106
<PAGE>
GT GLOBAL VARIABLE EUROPE FUND
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Finance (Continued)
National Westminster Bank PLC .............................. UK 21,336 $ 214,818 1.4
BANKS-MONEY CENTER
Lloyds TSB Group PLC ....................................... UK 40,560 208,436 1.3
BANKS-REGIONAL
Fokus Banken AS{.} ......................................... NOR 23,600 127,778 0.8
BANKS-MONEY CENTER
UNI Storebrand AS "A"{.} ................................... NOR 5,300 29,324 0.2
INSURANCE-MULTI-LINE
-----------
1,683,175
-----------
Health Care (10.1%)
Ciba-Geigy AG -- Registered ................................ SWTZ 716 630,577 4.0
PHARMACEUTICALS
Amersham International PLC ................................. UK 35,000 481,990 3.1
PHARMACEUTICALS
SmithKline Beecham PLC "A" ................................. UK 30,928 340,923 2.2
PHARMACEUTICALS
Bayer AG ................................................... GER 450 118,784 0.8
PHARMACEUTICALS
-----------
1,572,274
-----------
Technology (9.3%)
Austria Mikro Systeme International AG .................... ASTRI 3,132 508,220 3.3
SEMICONDUCTORS
Nera AS .................................................... NOR 12,460 405,761 2.6
TELECOM TECHNOLOGY
Group Axime{.} ............................................. FR 4,440 342,342 2.2
COMPUTERS & PERIPHERALS
Benefon Oy{.} .............................................. FIN 7,745 192,453 1.2
TELECOM TECHNOLOGY
-----------
1,448,776
-----------
Capital Goods (8.9%)
Olivetti Group{.} ......................................... ITLY 488,000 395,326 2.5
OFFICE EQUIPMENT
Mannesmann AG .............................................. GER 1,003 319,457 2.0
MACHINERY & ENGINEERING
Nokia AB "A" ............................................... FIN 7,400 286,036 1.8
TELECOM EQUIPMENT
SGS-Thomson Microelectronics N.V. -- ADR{.} {l} ............ FR 6,935 279,134 1.8
ELECTRICAL PLANT/EQUIPMENT
Altran Technologies SA ..................................... FR 815 118,845 0.8
MACHINERY & ENGINEERING
-----------
1,398,798
-----------
Consumer Durables (5.0%)
Hoganas AB "B" ............................................. SWDN 15,200 444,331 2.8
AUTO PARTS
Kiekert AG{.} .............................................. GER 5,780 343,438 2.2
AUTO PARTS
-----------
787,769
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 107
<PAGE>
GT GLOBAL VARIABLE EUROPE FUND
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Materials/Basic Industry (4.2%)
Pilkington PLC: ............................................ UK -- -- 2.5
BUILDING MATERIALS & COMPONENTS
Common ................................................... -- 97,300 $ 305,148 --
New ...................................................... -- 24,325 76,287 --
Hoechst AG ................................................. GER 1,000 271,288 1.7
CHEMICALS
-----------
652,723
-----------
Multi Industry/Miscellaneous (2.5%)
Assystem{.} ............................................... FR 5,400 393,279 2.5
MULTI-INDUSTRY
----------- -----
TOTAL EQUITY INVESTMENTS (cost $12,515,270) ................. 14,493,581 92.7
----------- -----
<CAPTION>
Underlying
Nominal Market % of Net
Equity Investments Currency Shares Value Assets
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Options (1.4%)
Italian Government Bond Call Option, strike 95.48, expires
8/16/96 (cost $159,778) ................................... ITL 71,600 227,674 1.4
GOVERNMENT & GOVERNMENT AGENCY OBLIGATIONS
----------- -----
TOTAL INVESTMENTS (cost $12,675,048){l} ...................... 14,721,255 94.1
Other Assets and Liabilities ................................. 919,622 5.9
----------- -----
Net Assets ................................................... $15,640,877 100.0
----------- -----
----------- -----
</TABLE>
- ----------------
* Percentages indicated are based on net assets of $15,640,877.
{l} U.S. currency denominated.
{::} Non-income producing security.
{d} For Federal income tax purposes, cost is $12,675,048 and
appreciation (depreciation) is as follows:
Unrealized appreciation: $ 2,362,529
Unrealized depreciation: (316,322)
-------------
Net unrealized appreciation: $ 2,046,207
-------------
-------------
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 108
<PAGE>
GT GLOBAL VARIABLE EUROPE FUND
The Fund's Portfolio of Investments at December 31, 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>
Austria (ASTRI/ATS) .................. 3.3 3.3
Finland (FIN/FIM) .................... 3.0 3.0
France (FR/FRF) ...................... 13.6 13.6
Germany (GER/DEM) .................... 9.0 9.0
Italy (ITLY/ITL) ..................... 17.1 1.4 18.5
Netherlands (NETH/NLG) ............... 7.8 7.8
Norway (NOR/NOK) ..................... 3.6 3.6
Sweden (SWDN/SEK) .................... 2.8 2.8
Switzerland (SWTZ/CHF) ............... 4.0 4.0
United Kingdom (UK/GBP) .............. 28.5 28.5
Other ................................ 5.9 5.9
------ --- -----
Total ............................... 92.7 7.3 100.0
------ --- -----
------ --- -----
<FN>
- ----------------
* Percentages indicated are based on net assets of $15,640,877.
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
DECEMBER 31, 1995
<TABLE>
<CAPTION>
Market Value Unrealized
(U.S. Contract Delivery Appreciation
Contracts to Sell: Dollars) Price Date (Depreciation)
- -------------------------------------------------- ------------ -------- -------- --------------
<S> <C> <C> <C> <C>
Deutsche Marks.................................... 314,832 1.42738 02/29/96 $ 431
French Francs..................................... 614,083 4.91125 01/02/96 (3,240)
Netherland Guilders............................... 250,483 1.58000 02/15/96 2,681
Netherland Guilders............................... 231,698 1.58068 02/15/96 2,379
Swiss Francs...................................... 340,312 1.12168 02/20/96 7,380
------------ --------------
Total Contracts to Sell (Receivable amount
$1,761,039).................................... 1,751,408 9,631
------------ --------------
------------ --------------
THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF NET ASSETS IS 11.20%.
Total Open Forward Foreign Currency Contracts, Net................................ $ 9,631
--------------
--------------
</TABLE>
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 109
<PAGE>
GT GLOBAL MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Maturity Principal Market
Short-Term Investments Yield Date Amount Value
- --------------------------------------------------------------------------------- --------- --------- ----------- ------------
<S> <C> <C> <C> <C>
Commercial Paper -- Discounted (53.9%)
Minnesota Mining & Manufacturing Co. .......................................... 5.70% 01/19/96 750,000 $ 747,887
PHH Corp. ..................................................................... 5.77% 01/26/96 750,000 747,042
General Electric Capital Corp. ................................................ 5.72% 02/12/96 650,000 645,723
AIG Funding Inc. .............................................................. 5.77% 01/08/96 600,000 599,329
E.I. DuPont de Nemours & Co. .................................................. 5.78% 01/12/96 600,000 598,944
Hanson Finance PLC. ........................................................... 5.80% 01/17/96 600,000 598,480
Toronto Dominion Holdings USA, Inc. ........................................... 5.72% 01/24/96 600,000 597,849
Merrill Lynch & Co., Inc. ..................................................... 5.86% 01/04/96 500,000 499,756
Ford Motor Credit Co. ......................................................... 5.78% 01/05/96 500,000 499,682
AT&T Corp. .................................................................... 5.79% 01/05/96 500,000 499,679
Philip Morris Cos., Inc. ...................................................... 5.91% 01/05/96 500,000 499,672
Bellsouth Capital Funding Corp. .............................................. 5.66% 01/09/96 500,000 499,372
Ameritech Corp. ............................................................... 5.61% 02/09/96 500,000 496,978
Procter & Gamble Co. .......................................................... 5.66% 02/13/96 500,000 496,656
------------
Total Commercial Paper -- Discounted (amortized cost $8,027,049) ................ 8,027,049
------------
Government & Government Agency Obligations (14.2%)
Sallie Mae ................................................................... 5.80% 07/19/96 600,000 599,550
Federal National Mortgage Association ......................................... 5.73% 09/20/96 600,000 599,415
Federal Home Loan Mortgage Corp. .............................................. 5.50% 03/12/96 600,000 593,586
Federal Home Loan Bank ........................................................ 5.76% 10/02/96 330,000 329,768
------------
Total Government & Government Agency Obligations (amortized cost $2,122,319) .... 2,122,319
------------
Treasury Bills (13.1%)
United States Treasury Bill ................................................... 5.47% 04/04/96 1,000,000 986,096
United States Treasury Bill ................................................... 5.58% 09/19/96 1,000,000 961,428
------------
Total Treasury Bills (amortized cost $1,947,524) ............................... 1,947,524
------------
<CAPTION>
Market
Repurchase Agreement Value
- --------------------------------------------------------------------------------- ------------
<S> <C> <C> <C> <C>
Dated December 29, 1995, with State Street Bank & Trust Company, due January 2,
1996, for an effective yield of 5.55%, collateralized by $1,725,000 U.S.
Treasury Notes, 6% due 8/31/97 (market value of collateral is $1,780,443,
including accrued interest). (cost $1,740,805) .............................. 1,740,805
------------
Total Short-Term Investments (cost $13,837,697){d} .............................. 13,837,697
Other Assets and Liabilities ................................................... 1,052,895
------------
Net Assets ...................................................................... $ 14,890,592
------------
------------
<CAPTION>
% of Net
Short-Term Investments Assets
- --------------------------------------------------------------------------------- -------------
<S> <C>
Commercial Paper -- Discounted (53.9%)
Minnesota Mining & Manufacturing Co. .......................................... 5.0
PHH Corp. ..................................................................... 5.0
General Electric Capital Corp. ................................................ 4.3
AIG Funding Inc. .............................................................. 4.0
E.I. DuPont de Nemours & Co. .................................................. 4.0
Hanson Finance PLC. ........................................................... 4.0
Toronto Dominion Holdings USA, Inc. ........................................... 4.0
Merrill Lynch & Co., Inc. ..................................................... 3.4
Ford Motor Credit Co. ......................................................... 3.4
AT&T Corp. .................................................................... 3.4
Philip Morris Cos., Inc. ...................................................... 3.4
Bellsouth Capital Funding Corp. .............................................. 3.4
Ameritech Corp. ............................................................... 3.3
Procter & Gamble Co. .......................................................... 3.3
-----
Total Commercial Paper -- Discounted (amortized cost $8,027,049) ................ 53.9
-----
Government & Government Agency Obligations (14.2%)
Sallie Mae ................................................................... 4.0
Federal National Mortgage Association ......................................... 4.0
Federal Home Loan Mortgage Corp. .............................................. 4.0
Federal Home Loan Bank ........................................................ 2.2
-----
Total Government & Government Agency Obligations (amortized cost $2,122,319) .... 14.2
-----
Treasury Bills (13.1%)
United States Treasury Bill ................................................... 6.6
United States Treasury Bill ................................................... 6.5
-----
Total Treasury Bills (amortized cost $1,947,524) ............................... 13.1
-----
% of Net
Repurchase Agreement Assets
- --------------------------------------------------------------------------------- -------------
<S> <C>
Dated December 29, 1995, with State Street Bank & Trust Company, due January 2,
1996, for an effective yield of 5.55%, collateralized by $1,725,000 U.S.
Treasury Notes, 6% due 8/31/97 (market value of collateral is $1,780,443,
including accrued interest). (cost $1,740,805) .............................. 11.7
-----
Total Short-Term Investments (cost $13,837,697){d} .............................. 92.9
Other Assets and Liabilities ................................................... 7.1
-----
Net Assets ...................................................................... 100.0
-----
-----
</TABLE>
- ----------------
* Percentages indicated are based on net assets of $14,890,592.
{d} For Federal income tax purposes, cost is $13,837,697.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 110
<PAGE>
GT GLOBAL VARIABLE INTERNATIONAL FUND
PORTFOLIO OF INVESTMENTS
December 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (19.3%)
Invesco PLC ............................................... UK 20,500 $ 80,682 2.2
INVESTMENT MANAGEMENT
Nichiei Co., Ltd .......................................... JPN 1,000 74,612 2.0
INVESTMENT MANAGEMENT
Axa Group ................................................. FR 1,000 67,492 1.8
INSURANCE -- MULTI-LINE
M & G Group PLC ........................................... UK 3,400 66,459 1.8
INVESTMENT MANAGEMENT
Barclays PLC ............................................. UK 5,000 57,367 1.6
BANKS-MONEY CENTER
Societe Generale de Paris ................................. FR 441 54,567 1.5
BANKS-MONEY CENTER
Peregrine Investment Holdings Ltd. ........................ HK 40,000 51,733 1.4
INVESTMENT MANAGEMENT
Bangkok Bank Co., Ltd. & Foreign .......................... THAI 4,000 48,610 1.3
BANKS-MONEY CENTER
Anglo-Irish Bank Corp. PLC ................................ IRE 44,186 43,562 1.2
BANKS-MONEY CENTER
Sparbanken Sverige AB "A" ................................. SWDN 3,000 38,198 1.0
INVESTMENT MANAGEMENT
House of Investments, Inc. ................................ PHIL 173,000 36,963 1.0
OTHER FINANCIAL
National Australia Bank Ltd. .............................. AUSL 4,000 35,961 1.0
BANKS-MONEY CENTER
Westpac Banking Corp., Ltd. ............................... AUSL 7,000 30,998 0.8
BANKS-REGIONAL
TA Enterprise Bhd. ........................................ MAL 20,000 24,260 0.7
INVESTMENT MANAGEMENT
------------
711,464
------------
Services (18.6%)
Wolters Kluwer CVA ........................................ NETH 800 75,824 2.1
BROADCASTING & PUBLISHING
British Airport Authority PLC ............................ UK 10,000 75,297 2.1
TRANSPORTATION-AIRLINES
Dixons Group PLC .......................................... UK 10,700 74,174 2.0
RETAILERS-APPAREL
Fast Retailing Co., Ltd. .................................. JPN 1,400 69,593 1.9
RETAILERS-APPAREL
IHC Caland N.V. ........................................... NETH 1,850 62,375 1.7
TRANSPORTATION-SHIPPING
DDI Corp. ................................................. JPN 7 54,264 1.5
WIRELESS COMMUNICATIONS
Vodafone Group PLC ........................................ UK 15,000 53,796 1.5
WIRELESS COMMUNICATIONS
Club Mediterrannee ........................................ FR 672 53,738 1.5
LEISURE & TOURISM
Compass Group PLC ......................................... UK 7,000 53,144 1.4
RESTAURANTS
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 111
<PAGE>
GT GLOBAL VARIABLE INTERNATIONAL FUND
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (Continued)
Autobacs Seven Co., Ltd. .................................. JPN 500 $ 41,570 1.1
RETAILERS-OTHER
Telecom Corporation of New Zealand Ltd. -- ADR{l} ......... NZ 500 34,688 0.9
TELEPHONE NETWORKS
Telecom Italia: ITLY -- -- 0.9
TELEPHONE NETWORKS
Mobile Di Risp S.p.A. ..................................... -- 20,000 21,073 --
Di Risp ................................................... -- 7,900 9,654 --
------------
679,190
------------
Capital Goods (17.3%)
Nokia AB "K" .............................................. FIN 2,920 115,556 3.2
TELECOM EQUIPMENT
Murata Manufacturing Co., Ltd. ............................ JPN 2,000 73,643 2.0
ELECTRICAL PLANT/EQUIPMENT
Unitech PLC ............................................... UK 8,700 66,050 1.8
ELECTRICAL PLANT/EQUIPMENT
Bouygues ................................................. FR 600 60,534 1.7
CONSTRUCTION
Autopistas del Mare "R" .................................. SPN 4,600 59,942 1.6
CONSTRUCTION
Canon, Inc. ............................................... JPN 3,000 54,360 1.5
OFFICE EQUIPMENT
Kurita Water Industries ................................... JPN 2,000 53,295 1.5
ELECTRICAL PLANT/EQUIPMENT
L.M. Ericsson Telephone Co. ............................... SWDN 2,640 51,714 1.4
TELECOM EQUIPMENT
Allgon AB "B" Free ........................................ SWDN 3,000 41,588 1.1
TELECOM EQUIPMENT
NBM-Amstelland N.V. ....................................... NETH 2,300 35,040 1.0
CONSTRUCTION
Valmet Corp. "A" .......................................... FIN 800 19,879 0.5
MACHINERY & ENGINEERING
------------
631,601
------------
Consumer Non-Durables (9.7%)
Hoya Corp. ................................................ JPN 3,000 103,198 2.8
OTHER CONSUMER GOODS
Nutricia Vereenigde Bedrijven N.V. ........................ NETH 725 58,757 1.6
FOOD
Salomon S.A. ............................................. FR 100 58,288 1.6
RECREATION
Amway Japan Ltd. .......................................... JPN 1,300 54,922 1.5
HOUSEHOLD PRODUCTS
Giordano International Ltd. .............................. HK 54,000 46,094 1.3
TEXTILES & APPAREL
Polygram .................................................. NETH 600 31,918 0.9
RECREATION
------------
353,177
------------
Technology (8.0%)
Koei Co., Ltd. ............................................ JPN 2,500 86,725 2.4
SOFTWARE
Kyocera Corp. ............................................. JPN 1,000 74,322 2.0
SEMICONDUCTORS
Bowthorpe PLC ............................................. UK 10,000 65,207 1.8
COMPUTERS & PERIPHERALS
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 112
<PAGE>
GT GLOBAL VARIABLE INTERNATIONAL FUND
<TABLE>
<CAPTION>
Market % of Net
Equity Investments Country Shares Value Assets
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Technology (Continued)
Nera AS ................................................... NOR 2,000 $ 65,130 1.8
TELECOM TECHNOLOGY
------------
291,384
------------
Materials/Basic Industry (7.8%)
Tostem Corp. .............................................. JPN 3,000 99,709 2.7
BUILDING MATERIALS & COMPONENTS
Broken Hill Proprietary Co., Ltd. ......................... AUSL 5,580 78,773 2.1
MISC. MATERIALS & COMMODITIES
S.A. Iron & Steel Industrial Corp., Ltd. -- ADR{l} ........ SAFR 4,750 42,513 1.2
METALS-STEEL
RWE AG .................................................... GER 100 36,265 1.0
MISC. MATERIALS & COMMODITIES
TPI Polene Co., Ltd. -- Foreign ........................... THAI 5,000 29,786 0.8
CHEMICALS
------------
287,046
------------
Consumer Durables (7.7%)
Suzuki Motor Co., Ltd. .................................... JPN 8,000 89,147 2.4
AUTOMOBILES
Kiekert AG{.} ............................................. GER 1,180 70,114 1.9
AUTO PARTS
Toyota Motor Corp. ........................................ JPN 3,000 63,663 1.7
AUTOMOBILES
Samsung Electronics Co.: .................................. KOR -- -- 1.0
CONSUMER ELECTRONICS
GDR{.} {l} .............................................. -- 500 29,250 --
New-GDR Non-Voting{.} {l} .............................. -- 98 5,733 --
New-144A GDR{::} {.} {l} ................................ -- 10 960 --
GDR 1/2 Voting{.} {l} ................................... -- 6 576 --
New-GDR Voting{.} {l} ................................... -- 1 96 --
Hyundai Motor Co. -- GDR{.} {l} ........................... KOR 1,700 24,650 0.7
AUTOMOBILES
------------
284,189
------------
Health Care (2.7%)
Sandoz AG -- Registered ................................... SWTZ 60 54,976 1.5
PHARMACEUTICALS
SmithKline Beecham PLC "A" ................................ UK 4,102 45,217 1.2
PHARMACEUTICALS
------------
100,193
------------
Multi Industry/Miscellaneous (2.7%)
Keppel Corp., Ltd ......................................... SING 6,000 53,465 1.5
CONGLOMERATE
Hutchison Whampoa ......................................... HK 7,000 42,641 1.2
CONGLOMERATE
------------
96,106
------------
Energy (0.9%)
British Petroleum Co., PLC ................................ UK 4,000 33,442 0.9
OIL
------------ -----
TOTAL EQUITY INVESTMENTS (cost $3,293,599) ................. 3,467,792 94.7
------------ -----
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 113
<PAGE>
GT GLOBAL VARIABLE INTERNATIONAL FUND
<TABLE>
<CAPTION>
Market % of Net
Rights (0.0%) Country Shares Value Assets
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
TPI Polene Co., Ltd. Rights, expire 1/26/96 (cost
$0){.} ................................................... THAI 250 $ 1,390 --
------------ -----
CHEMICALS
<CAPTION>
Repurchase Agreement
- -------------------------------------------------------------
<S> <C> <C> <C> <C>
Dated December 29, 1995, with State Street Bank & Trust
Company, due January 2, 1996, for an effective yield of
5.55%, collateralized by $430,000 U.S. Treasury Notes,
6.125% due 5/15/98 (market value of collateral is
$441,794, including accrued interest). (cost $432,200)
......................................................... 432,200 11.8
------------ -----
TOTAL INVESTMENTS (cost $3,725,799){d} ...................... 3,901,382 106.5
Other Assets and Liabilities ................................ (238,782) (6.5)
------------ -----
Net Assets .................................................. $ 3,662,600 100.0
------------ -----
------------ -----
</TABLE>
- ----------------
* Percentages indicated are based on net assets of $3,662,600.
{.} Non-income producing security.
{l} U.S. currency denominated.
{::} Security exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers.
{d} For Federal income tax purposes, cost is $3,738,358 and
appreciation (depreciation) is as follows:
Unrealized appreciation: $ 298,113
Unrealized depreciation: (135,089)
-------------
Net unrealized appreciation: $ 163,024
-------------
-------------
Abbreviations:
ADR -- American Depository Receipt
GDR -- Global Depository Receipt
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 114
<PAGE>
GT GLOBAL VARIABLE INTERNATIONAL FUND
The Fund's Portfolio of Investments at December 31, 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>
Australia (AUSL/AUD) ................. 3.9 3.9
Finland (FIN/FIM) .................... 3.7 3.7
France (FR/FRF) ...................... 8.1 8.1
Germany (GER/DEM) .................... 2.9 2.9
Hong Kong (HK/HKD) ................... 3.9 3.9
Ireland (IRE/IEP) .................... 1.2 1.2
Italy (ITLY/ITL) ..................... 0.9 0.9
Japan (JPN/JPY) ...................... 27.0 27.0
Korea (KOR/KRW) ...................... 1.7 1.7
Malaysia (MAL/MYR) ................... 0.7 0.7
Netherlands (NETH/NLG) ............... 7.3 7.3
New Zealand (NZ/NZD) ................. 0.9 0.9
Norway (NOR/NOK) ..................... 1.8 1.8
Philippines (PHIL/PHP) ............... 1.0 1.0
Singapore (SING/SGD) ................. 1.5 1.5
South Africa (SAFR/ZAR) .............. 1.2 1.2
Spain (SPN/ESP) ...................... 1.6 1.6
Sweden (SWDN/SEK) .................... 3.5 3.5
Switzerland (SWTZ/CHF) ............... 1.5 1.5
Thailand (THAI/THB) .................. 2.1 2.1
United Kingdom (UK/GBP) .............. 18.3 18.3
United States (US/USD) ............... 5.3 5.3
------ --- -----
Total ............................... 94.7 5.3 100.0
------ --- -----
------ --- -----
<FN>
- ----------------
* Percentages indicated are based on net assets of $3,662,600.
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
DECEMBER 31, 1995
<TABLE>
<CAPTION>
Market Value Unrealized
(U.S. Delivery Appreciation
Contracts to Sell: Dollars) Contract Price Date (Depreciation)
------------- -------------- --------- -------------
<S> <C> <C> <C> <C>
French Francs............................................................ 61,408 4.91125 02/06/96 $ (324)
French Francs............................................................ 70,405 4.88280 02/16/96 26
Japanese Yen............................................................. 203,786 101.50000 02/09/96 2,125
Japanese Yen............................................................. 151,237 98.95800 02/14/96 5,395
Japanese Yen............................................................. 41,956 99.00001 02/14/96 1,478
Japanese Yen............................................................. 146,655 99.80001 02/29/96 3,646
Japanese Yen............................................................. 32,319 100.04699 03/12/96 665
Netherland Guilders...................................................... 62,621 1.58068 02/15/96 643
Swedish Krona............................................................ 82,517 6.60950 02/22/96 697
Swiss Francs............................................................. 52,506 1.15258 03/19/96 (449)
------------- -------------
Total Contracts to Sell (Receivable amount $919,312)................. 905,410 13,902
------------- -------------
THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF NET ASSETS IS 24.72%.
Total Open Forward Foreign Currency Contracts, Net................... $ 13,902
-------------
-------------
</TABLE>
- ----------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 115
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
STATEMENT OF ASSETS
AND LIABILITIES
December 31, 1995
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
GT GLOBAL
------------------------------------------------------
VARIABLE VARIABLE VARIABLE
VARIABLE GLOBAL U.S. LATIN
STRATEGIC GOVERNMENT GOVERNMENT AMERICA
INCOME FUND INCOME FUND INCOME FUND FUND
------------ ------------- ----------- ------------
<S> <C> <C> <C> <C>
Assets:
Investments in securities (Note 1):
At identified cost.................... $ 22,570,517 $10,915,574 $4,486,259 $ 19,318,038
------------ ------------- ----------- ------------
------------ ------------- ----------- ------------
At value.............................. $ 23,485,372 $11,163,997 $4,668,435 $ 17,766,348
Repurchase agreements, at value and
cost (Note 1)....................... 1,164,538 389,180 1,232,570 1,724,797
U.S. currency......................... 469 650 58 117
Foreign currencies.................... 248,687 9,438 -- 258,356
Receivable for Fund shares sold....... 140,578 7,085 -- 18,803
Receivable for securities sold........ -- 1,016,659 -- 104,423
Receivable for forward foreign
currency contracts -- closed (Note
1).................................. -- -- -- --
Receivable for open forward foreign
currency contracts, net (Note 1).... -- -- -- --
Dividends and dividend tax reclaims
receivable.......................... -- -- -- 17,753
Interest and interest tax reclaims
receivable.......................... 710,011 355,806 63,674 --
Reimbursement receivable from LGT
Asset Management, Inc. (Note 2)..... -- 38,141 47,020 7,204
Unamortized organizational costs (Note
1).................................. 13,264 13,264 13,264 13,264
Other receivables..................... 4,509 19,860 -- 25,250
Cash held as collateral for securities
loaned (Note 1)..................... 599,961 367,840 -- 1,447,200
------------ ------------- ----------- ------------
Total assets.......................... 26,367,389 13,381,920 6,025,021 21,383,515
------------ ------------- ----------- ------------
Liabilities:
Payable for Fund shares repurchased... 26,193 5,000 8,340 83,221
Payable for securities purchased...... 244,090 958,355 -- 29,922
Payable for forward foreign currency
contracts -- closed (Note 1)........ 31 14,416 -- --
Payable for open forward foreign
currency contracts, net (Note 1).... 92,350 67,178 -- --
Payable for custodian fees (Note 1)... 3,791 2,599 916 4,441
Payable for fund accounting fees (Note
2).................................. 534 252 126 401
Payable for investment management and
administration fees (Note 2)........ 33,275 -- -- --
Payable for printing and postage
expenses............................ 9,669 9,542 10,645 9,642
Payable for professional fees......... 10,550 9,321 10,117 10,439
Payable for registration and filing
fees................................ 347 607 607 608
Payable for Trustees' fees and
expenses (Note 2)................... 1,714 2,416 1,825 1,726
Distribution payable (Note 1)......... -- -- -- --
Other accrued expenses................ -- 648 -- 25,069
Collateral for securities loaned (Note
1).................................. 599,961 367,840 -- 1,447,200
------------ ------------- ----------- ------------
Total liabilities..................... 1,022,505 1,438,174 32,576 1,612,669
------------ ------------- ----------- ------------
Net assets.............................. $ 25,344,884 $11,943,746 $5,992,445 $ 19,770,846
------------ ------------- ----------- ------------
------------ ------------- ----------- ------------
Net assets consist of:
Paid in capital (Note 4).............. $ 28,372,215 $12,383,353 $5,801,060 $ 27,124,256
Undistributed/Accumulated net
investment income (loss)............ 230,962 36,751 10,272 619,523
Accumulated net realized gain (loss)
on investments and foreign currency
transactions........................ (4,079,601) (654,105) (1,063) (6,415,793)
Net unrealized appreciation
(depreciation) on translation of
assets and liabilities in foreign
currencies.......................... (93,547) (66,051) -- (7,700)
Net unrealized appreciation
(depreciation) of investments,
including futures................... 914,855 243,798 182,176 (1,549,440)
------------ ------------- ----------- ------------
Total -- representing net assets
applicable to capital shares
outstanding......................... $ 25,344,884 $11,943,746 $5,992,445 $ 19,770,846
------------ ------------- ----------- ------------
------------ ------------- ----------- ------------
Shares outstanding...................... 2,137,820 1,037,688 510,243 1,592,435
------------ ------------- ----------- ------------
------------ ------------- ----------- ------------
Net asset value per share............... $ 11.86 $ 11.51 $ 11.74 $ 12.42
------------ ------------- ----------- ------------
------------ ------------- ----------- ------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 116
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
STATEMENT OF ASSETS
AND LIABILITIES
December 31, 1995
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
GT GLOBAL
-------------------------------------------------------------------------------------
VARIABLE
VARIABLE VARIABLE TELE- VARIABLE VARIABLE NATURAL VARIABLE
GROWTH & COMMUNICATIONS EMERGING INFRASTRUCTURE RESOURCES AMERICA
INCOME FUND FUND MARKETS FUND FUND FUND FUND
------------ -------------- ------------ ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments in securities (Note 1):
At identified cost.................... $ 26,402,531 $ 41,446,599 $ 7,723,035 $1,248,231 $ 1,051,696 $ 27,993,546
------------ -------------- ------------ ------------ ------------- ------------
------------ -------------- ------------ ------------ ------------- ------------
At value.............................. $ 30,039,447 $ 45,631,342 $ 7,916,603 $1,260,481 $ 1,112,739 $ 28,572,227
Repurchase agreements, at value and
cost (Note 1)....................... 191,089 4,278,978 1,027,475 292,135 192,089 11,271,240
U.S. currency......................... 485 812 859 61 996 714
Foreign currencies.................... 230,506 844 9,345 16,690 93,215 --
Receivable for Fund shares sold....... 9,063 61,911 13,602 10,000 -- 37,420
Receivable for securities sold........ -- 1,408,766 93,365 21,236 -- --
Receivable for forward foreign
currency contracts -- closed (Note
1).................................. -- -- -- -- -- --
Receivable for open forward foreign
currency contracts, net (Note 1).... 18,843 21,030 -- -- -- --
Dividends and dividend tax reclaims
receivable.......................... 74,583 60,178 10,929 701 743 27,382
Interest and interest tax reclaims
receivable.......................... 327,678 -- -- -- -- --
Reimbursement receivable from LGT
Asset Management, Inc. (Note 2)..... -- -- 2,075 43,239 40,401 --
Unamortized organizational costs (Note
1).................................. 13,264 17,554 -- -- -- 13,264
Other receivables..................... -- -- -- -- 22,656 --
Cash held as collateral for securities
loaned (Note 1)..................... 2,681,946 767,000 -- 17,422 -- --
------------ -------------- ------------ ------------ ------------- ------------
Total assets.......................... 33,586,904 52,248,415 9,074,253 1,661,965 1,462,839 39,922,247
------------ -------------- ------------ ------------ ------------- ------------
Liabilities:
Payable for Fund shares repurchased... 205,424 118,728 2,500 -- -- 539,497
Payable for securities purchased...... -- 250,000 63,746 27,571 75,698 1,576,023
Payable for forward foreign currency
contracts -- closed (Note 1)........ -- -- -- -- -- --
Payable for open forward foreign
currency contracts, net (Note 1).... -- -- -- -- -- --
Payable for custodian fees (Note 1)... 5,322 2,867 2,135 1,280 407 2,940
Payable for fund accounting fees (Note
2).................................. 646 2,139 180 32 31 826
Payable for investment management and
administration fees (Note 2)........ 106,698 275,976 -- -- -- 138,403
Payable for printing and postage
expenses............................ 10,087 9,684 10,874 9,320 9,820 9,493
Payable for professional fees......... 9,531 10,700 10,095 10,814 10,128 10,010
Payable for registration and filing
fees................................ 360 360 360 340 340 590
Payable for Trustees' fees and
expenses (Note 2)................... 1,489 1,553 1,602 968 1,468 1,487
Distribution payable (Note 1)......... -- -- -- -- -- --
Other accrued expenses................ -- 31,333 -- -- -- --
Collateral for securities loaned (Note
1).................................. 2,681,946 767,000 -- 17,422 -- --
------------ -------------- ------------ ------------ ------------- ------------
Total liabilities..................... 3,021,503 1,470,340 91,492 67,747 97,892 2,279,269
------------ -------------- ------------ ------------ ------------- ------------
Net assets.............................. $ 30,565,401 $ 50,778,075 $ 8,982,761 $1,594,218 $ 1,364,947 $ 37,642,978
------------ -------------- ------------ ------------ ------------- ------------
------------ -------------- ------------ ------------ ------------- ------------
Net assets consist of:
Paid in capital (Note 4).............. $ 27,912,383 $ 40,306,223 $ 10,145,241 $1,559,483 $ 1,313,252 $ 31,793,105
Undistributed/Accumulated net
investment income (loss)............ 344,740 70,025 -- 7,607 -- 522,417
Accumulated net realized gain (loss)
on investments and foreign currency
transactions........................ (1,349,273) 6,196,073 (1,355,973) 15,019 (9,948) 4,748,775
Net unrealized appreciation
(depreciation) on translation of
assets and liabilities in foreign
currencies.......................... 20,635 21,011 (75) (141) 600 --
Net unrealized appreciation
(depreciation) of investments,
including futures................... 3,636,916 4,184,743 193,568 12,250 61,043 578,681
------------ -------------- ------------ ------------ ------------- ------------
Total -- representing net assets
applicable to capital shares
outstanding......................... $ 30,565,401 $ 50,778,075 $ 8,982,761 $1,594,218 $ 1,364,947 $ 37,642,978
------------ -------------- ------------ ------------ ------------- ------------
------------ -------------- ------------ ------------ ------------- ------------
Shares outstanding...................... 2,097,824 3,010,510 825,657 120,130 98,358 1,934,541
------------ -------------- ------------ ------------ ------------- ------------
------------ -------------- ------------ ------------ ------------- ------------
Net asset value per share............... $ 14.57 $ 16.87 $ 10.88 $ 13.27 $ 13.88 $ 19.46
------------ -------------- ------------ ------------ ------------- ------------
------------ -------------- ------------ ------------ ------------- ------------
<CAPTION>
- ----------------------------------------
VARIABLE VARIABLE MONEY VARIABLE
NEW PACIFIC EUROPE MARKET INTERNATIONAL
FUND FUND FUND FUND
------------ ------------ ------------ -----------
Assets:
Investments in securities (Note 1):
At identified cost.................... $ 19,808,914 $ 12,675,048 $ 12,096,892 $3,293,599
------------ ------------ ------------ -----------
------------ ------------ ------------ -----------
At value.............................. $ 20,749,468 $ 14,721,255 $ 12,096,892 $3,469,182
Repurchase agreements, at value and
cost (Note 1)....................... 1,950,902 -- 1,740,805 432,200
U.S. currency......................... 791 -- 71 511
Foreign currencies.................... 1,921,566 630,281 -- 192,226
Receivable for Fund shares sold....... 10,556 4,485 1,140,467 2,329
Receivable for securities sold........ 297,675 409,185 -- 130,663
Receivable for forward foreign
currency contracts -- closed (Note
1).................................. 2,015 -- -- --
Receivable for open forward foreign
currency contracts, net (Note 1).... -- 9,631 -- 13,902
Dividends and dividend tax reclaims
receivable.......................... 69,951 42,907 -- 7,555
Interest and interest tax reclaims
receivable.......................... -- 36 20,948 --
Reimbursement receivable from LGT
Asset Management, Inc. (Note 2)..... -- -- 16,933 45,766
Unamortized organizational costs (Note
1).................................. 13,264 13,264 13,264 --
Other receivables..................... -- -- -- --
Cash held as collateral for securities
loaned (Note 1)..................... 814,000 560,213 -- 71,769
------------ ------------ ------------ -----------
Total assets.......................... 25,830,188 16,391,257 15,029,380 4,366,103
------------ ------------ ------------ -----------
Liabilities:
Payable for Fund shares repurchased... 25,740 34,944 48,472 545,030
Payable for securities purchased...... 1,900,084 115,504 -- 64,302
Payable for forward foreign currency
contracts -- closed (Note 1)........ -- -- -- --
Payable for open forward foreign
currency contracts, net (Note 1).... -- -- -- --
Payable for custodian fees (Note 1)... 2,366 5,998 2,198 1,741
Payable for fund accounting fees (Note
2).................................. 469 346 651 79
Payable for investment management and
administration fees (Note 2)........ 40,636 12,397 -- --
Payable for printing and postage
expenses............................ 9,600 9,851 8,845 9,657
Payable for professional fees......... 10,601 9,909 10,145 9,415
Payable for registration and filing
fees................................ 312 590 440 312
Payable for Trustees' fees and
expenses (Note 2)................... 1,596 628 132 1,198
Distribution payable (Note 1)......... -- -- 67,905 --
Other accrued expenses................ -- -- -- --
Collateral for securities loaned (Note
1).................................. 814,000 560,213 -- 71,769
------------ ------------ ------------ -----------
Total liabilities..................... 2,805,404 750,380 138,788 703,503
------------ ------------ ------------ -----------
Net assets.............................. $ 23,024,784 $ 15,640,877 $ 14,890,592 $3,662,600
------------ ------------ ------------ -----------
------------ ------------ ------------ -----------
Net assets consist of:
Paid in capital (Note 4).............. $ 23,680,318 $ 14,269,234 $ 14,890,592 $3,825,896
Undistributed/Accumulated net
investment income (loss)............ 314,449 151,677 -- --
Accumulated net realized gain (loss)
on investments and foreign currency
transactions........................ (1,912,687) (839,050) -- (352,402)
Net unrealized appreciation
(depreciation) on translation of
assets and liabilities in foreign
currencies.......................... 2,150 12,809 -- 13,523
Net unrealized appreciation
(depreciation) of investments,
including futures................... 940,554 2,046,207 -- 175,583
------------ ------------ ------------ -----------
Total -- representing net assets
applicable to capital shares
outstanding......................... $ 23,024,784 $ 15,640,877 $ 14,890,592 $3,662,600
------------ ------------ ------------ -----------
------------ ------------ ------------ -----------
Shares outstanding...................... 1,654,052 946,839 14,890,622 332,563
------------ ------------ ------------ -----------
------------ ------------ ------------ -----------
Net asset value per share............... $ 13.92 $ 16.52 $ 1.00 $ 11.01
------------ ------------ ------------ -----------
------------ ------------ ------------ -----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 117
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
STATEMENT OF OPERATIONS
For the year ended December 31, 1995
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
GT GLOBAL
------------------------------------------------------
VARIABLE VARIABLE VARIABLE
VARIABLE GLOBAL U.S. LATIN
STRATEGIC GOVERNMENT GOVERNMENT AMERICA
INCOME FUND INCOME FUND INCOME FUND FUND
------------ ------------- ----------- ------------
<S> <C> <C> <C> <C>
Investment income (Note 1):
Dividends............................. $ -- $ -- $ -- $ 361,161
Interest.............................. 2,452,031 867,199 289,380 686,448
Other................................. 1,600 -- -- --
------------ ------------- ----------- ------------
Total investment income *............. 2,453,631 867,199 289,380 1,047,609
------------ ------------- ----------- ------------
Expenses:
Investment management and
administration fees (Note 2)........ 173,720 81,039 33,749 205,457
Amortization of organizational costs
(Note 1)............................ 6,263 6,263 6,263 6,263
Audit fees............................ 37,350 31,250 31,750 37,250
Custodian fees (Note 1)............... 28,175 21,728 2,670 55,082
Fund accounting fees (Note 2)......... 5,848 2,726 1,197 5,098
Legal fees............................ 6,361 5,805 5,477 7,475
Printing and postage expenses......... 25,640 24,589 25,675 24,865
Registration and filing fees.......... 650 650 650 650
Trustees' fees and expenses (Note
2).................................. 3,650 3,650 3,650 3,650
Other expenses........................ 600 1,413 4,006 70
------------ ------------- ----------- ------------
Total expenses........................ 288,257 179,113 115,087 345,860
------------ ------------- ----------- ------------
Expenses reimbursed by LGT Asset
Management, Inc. (Note 2)......... (56,631) (71,061) (70,086) (89,040)
Other expense reductions (Notes 1 &
5)................................ -- -- -- (14,669)
------------ ------------- ----------- ------------
Total net expenses after reimbursement
and reductions...................... 231,626 108,052 45,001 242,151
------------ ------------- ----------- ------------
Net investment income................... 2,222,005 759,147 244,379 805,458
------------ ------------- ----------- ------------
Net realized and unrealized gain (loss)
on investments and foreign currencies
(Note 1):
Net realized gain (loss) on
investments......................... (91,900) 973,908 71,394 (6,228,909)
Net realized gain (loss) on foreign
currency transactions............... (370,151) (458,271) -- (271,353)
------------ ------------- ----------- ------------
Net realized gain (loss) during
the year........................ (462,051) 515,637 71,394 (6,500,262)
------------ ------------- ----------- ------------
Net change in unrealized appreciation
(depreciation) on translation of
assets and liabilities in foreign
currencies.......................... (75,200) (69,644) -- (8,565)
Net change in unrealized appreciation
(depreciation) of investments,
including futures................... 2,375,053 357,858 290,078 (500,292)
------------ ------------- ----------- ------------
Net unrealized appreciation
(depreciation) during the
year............................ 2,299,853 288,214 290,078 (508,857)
------------ ------------- ----------- ------------
Net realized and unrealized gain (loss)
on investments and foreign
currencies............................ 1,837,802 803,851 361,472 (7,009,119)
------------ ------------- ----------- ------------
Net increase (decrease) in net assets
resulting from operations............. $ 4,059,807 $ 1,562,998 $ 605,851 $ (6,203,661)
------------ ------------- ----------- ------------
------------ ------------- ----------- ------------
- ------------------
* Net of foreign withholding taxes
of.................................... $ 6,129 $ 703 $ -- $ 40,134
** The Variable Infrastructure and Variable Natural Resources Funds did not commence operations
until January 31, 1995.
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 118
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
STATEMENT OF OPERATIONS
For the year ended December 31, 1995
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
GT GLOBAL
---------------------------------------------------------------------------------------
VARIABLE
VARIABLE VARIABLE TELE- VARIABLE VARIABLE NATURAL VARIABLE
GROWTH & COMMUNICATIONS EMERGING INFRASTRUCTURE RESOURCES AMERICA
INCOME FUND FUND MARKETS FUND FUND** FUND** FUND
------------ -------------- ------------ ------------ --------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Investment income (Note 1):
Dividends............................. $ 625,259 $ 368,360 $ 139,301 $ 7,488 $ 60,959 $ 218,369
Interest.............................. 791,948 224,144 68,520 9,369 7,003 619,031
Other................................. -- -- -- -- 3,143 47
------------ -------------- ------------ ------------ --------------- ------------
Total investment income *............. 1,417,207 592,504 207,821 16,857 71,105 837,447
------------ -------------- ------------ ------------ --------------- ------------
Expenses:
Investment management and
administration fees (Note 2)........ 277,913 434,684 76,146 6,836 5,918 236,272
Amortization of organizational costs
(Note 1)............................ 6,263 6,263 -- -- -- 6,263
Audit fees............................ 36,250 35,450 36,950 16,700 16,000 24,050
Custodian fees (Note 1)............... 35,626 28,008 17,961 10,844 6,556 22,981
Fund accounting fees (Note 2)......... 7,020 11,040 1,923 180 163 8,095
Legal fees............................ 7,011 5,475 5,475 3,010 3,010 5,876
Printing and postage expenses......... 25,270 24,797 27,475 19,075 19,575 25,835
Registration and filing fees.......... 651 650 650 340 340 650
Trustees' fees and expenses (Note
2).................................. 3,452 3,650 2,450 1,640 2,140 3,650
Other expenses........................ 1,864 63 -- -- 14 284
------------ -------------- ------------ ------------ --------------- ------------
Total expenses........................ 401,320 550,080 169,030 58,625 53,716 333,956
------------ -------------- ------------ ------------ --------------- ------------
Expenses reimbursed by LGT Asset
Management, Inc. (Note 2)......... (53,927) (6,725) (73,847) (50,077) (46,319) (18,927)
Other expense reductions (Notes 1 &
5)................................ (6,201) (20,876) (5,533) (174) (631) --
------------ -------------- ------------ ------------ --------------- ------------
Total net expenses after reimbursement
and reductions...................... 341,192 522,479 89,650 8,374 6,766 315,029
------------ -------------- ------------ ------------ --------------- ------------
Net investment income................... 1,076,015 70,025 118,171 8,483 64,339 522,418
------------ -------------- ------------ ------------ --------------- ------------
Net realized and unrealized gain (loss)
on investments and foreign currencies
(Note 1):
Net realized gain (loss) on
investments......................... 53,219 6,847,299 (1,303,135) 15,019 (8,040) 4,769,966
Net realized gain (loss) on foreign
currency transactions............... (1,126,256) (588,487) (17,275) (876) 468 --
------------ -------------- ------------ ------------ --------------- ------------
Net realized gain (loss) during
the year........................ (1,073,037) 6,258,812 (1,320,410) 14,143 (7,572) 4,769,966
------------ -------------- ------------ ------------ --------------- ------------
Net change in unrealized appreciation
(depreciation) on translation of
assets and liabilities in foreign
currencies.......................... (6,017) (8,781) 119 (141) 600 --
Net change in unrealized appreciation
(depreciation) of investments,
including futures................... 4,101,938 2,438,359 714,821 12,250 61,043 96,985
------------ -------------- ------------ ------------ --------------- ------------
Net unrealized appreciation
(depreciation) during the
year............................ 4,095,921 2,429,578 714,940 12,109 61,643 96,985
------------ -------------- ------------ ------------ --------------- ------------
Net realized and unrealized gain (loss)
on investments and foreign
currencies............................ 3,022,884 8,688,390 (605,470) 26,252 54,071 4,866,951
------------ -------------- ------------ ------------ --------------- ------------
Net increase (decrease) in net assets
resulting from operations............. $ 4,098,899 $ 8,758,415 $ (487,299) $ 34,735 $ 118,410 $ 5,389,369
------------ -------------- ------------ ------------ --------------- ------------
------------ -------------- ------------ ------------ --------------- ------------
* Net of foreign withholding taxes
of.................................... $ 75,628 $ 57,943 $ 9,519 $ 499 $ 272 $ --
** The Variable Infrastructure and Variable Natural Resources Funds did not commence operations until January 31, 1995.
<CAPTION>
- ----------------------------------------
VARIABLE VARIABLE MONEY VARIABLE
NEW PACIFIC EUROPE MARKET INTERNATIONAL
FUND FUND FUND FUND
------------ ------------ ------------ -----------
<S> <C> <C> <C> <C>
Investment income (Note 1):
Dividends............................. $ 457,755 $ 312,925 $ -- $ 55,826
Interest.............................. 131,251 41,523 938,185 15,397
Other................................. -- -- -- --
------------ ------------ ------------ -----------
Total investment income *............. 589,006 354,448 938,185 71,223
------------ ------------ ------------ -----------
Expenses:
Investment management and
administration fees (Note 2)........ 204,362 152,847 79,561 32,608
Amortization of organizational costs
(Note 1)............................ 6,263 6,263 6,263 --
Audit fees............................ 35,313 34,750 28,250 36,250
Custodian fees (Note 1)............... 39,820 27,622 11,017 11,255
Fund accounting fees (Note 2)......... 5,100 3,874 4,026 816
Legal fees............................ 6,361 5,875 6,675 5,475
Printing and postage expenses......... 25,931 26,121 26,887 25,828
Registration and filing fees.......... 650 650 650 650
Trustees' fees and expenses (Note
2).................................. 3,650 2,650 2,150 2,150
Other expenses........................ 1,850 1,921 2,217 --
------------ ------------ ------------ -----------
Total expenses........................ 329,300 262,573 167,696 115,032
------------ ------------ ------------ -----------
Expenses reimbursed by LGT Asset
Management, Inc. (Note 2)......... (73,848) (71,515) (48,354) (74,272)
Other expense reductions (Notes 1 &
5)................................ (22,615) (8,230) -- --
------------ ------------ ------------ -----------
Total net expenses after reimbursement
and reductions...................... 232,837 182,828 119,342 40,760
------------ ------------ ------------ -----------
Net investment income................... 356,169 171,620 818,843 30,463
------------ ------------ ------------ -----------
Net realized and unrealized gain (loss)
on investments and foreign currencies
(Note 1):
Net realized gain (loss) on
investments......................... (1,407,977) 30,329 -- (286,294)
Net realized gain (loss) on foreign
currency transactions............... (103,271) (700,534) -- (28,047)
------------ ------------ ------------ -----------
Net realized gain (loss) during
the year........................ (1,511,248) (670,205) -- (314,341)
------------ ------------ ------------ -----------
Net change in unrealized appreciation
(depreciation) on translation of
assets and liabilities in foreign
currencies.......................... 2,804 (104,599) -- 7,389
Net change in unrealized appreciation
(depreciation) of investments,
including futures................... 1,718,248 2,040,475 -- 312,493
------------ ------------ ------------ -----------
Net unrealized appreciation
(depreciation) during the
year............................ 1,721,052 1,935,876 -- 319,882
------------ ------------ ------------ -----------
Net realized and unrealized gain (loss)
on investments and foreign
currencies............................ 209,804 1,265,671 -- 5,541
------------ ------------ ------------ -----------
Net increase (decrease) in net assets
resulting from operations............. $ 565,973 $ 1,437,291 $ 818,843 $ 36,004
------------ ------------ ------------ -----------
------------ ------------ ------------ -----------
* Net of foreign withholding taxes
of.................................... $ 56,032 $ 46,006 $ -- $ 9,470
** The Variable Infrastructure and Varia
</TABLE>
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 119
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
STATEMENT OF CHANGES IN NET ASSETS
For the year ended December 31, 1995
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
GT GLOBAL
------------------------------------------------------
VARIABLE VARIABLE VARIABLE
VARIABLE GLOBAL U.S. LATIN
STRATEGIC GOVERNMENT GOVERNMENT AMERICA
INCOME FUND INCOME FUND INCOME FUND FUND
------------ ------------- ----------- ------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income (loss).......... $ 2,222,005 $ 759,147 $ 244,379 $ 805,458
Net realized gain (loss) on
investments and foreign currency
transactions........................ (462,051) 515,637 71,394 (6,500,262)
Net change in unrealized appreciation
(depreciation) on translation of
assets and liabilities in foreign
currencies.......................... (75,200) (69,644) -- (8,565)
Net change in unrealized appreciation
(depreciation) of investments....... 2,375,053 357,858 290,078 (500,292)
------------ ------------- ----------- ------------
Net increase (decrease) in net assets
resulting from operations........... 4,059,807 1,562,998 605,851 (6,203,661)
------------ ------------- ----------- ------------
Distributions to shareholders: (Note 1)
From net investment income............ (1,991,043) (722,396) (234,899) (221,575)
From net realized gain on
investments......................... -- -- -- (2,769,692)
In excess of net realized gain on
investments......................... -- -- -- --
Return of capital..................... -- -- -- --
------------ ------------- ----------- ------------
Total distributions................... (1,991,043) (722,396) (234,899) (2,991,267)
------------ ------------- ----------- ------------
Capital share transactions: (Note 4)
Increase from capital shares sold and
reinvested.......................... 24,191,843 12,649,938 20,665,939 38,533,313
Decrease from capital shares
repurchased......................... (24,283,139) (11,200,397) (17,459,191) (36,198,875)
------------ ------------- ----------- ------------
Net increase (decrease) from capital
share transactions.................. (91,296) 1,449,541 3,206,748 2,334,438
------------ ------------- ----------- ------------
Total increase (decrease) in net
assets................................ 1,977,468 2,290,143 3,577,700 (6,860,490)
Net assets:
Beginning of period................... 23,367,416 9,653,603 2,414,745 26,631,336
------------ ------------- ----------- ------------
End of period......................... $ 25,344,884 $11,943,746 $5,992,445 $ 19,770,846
------------ ------------- ----------- ------------
------------ ------------- ----------- ------------
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the year ended December 31, 1994
- ------------------------------------------------------------------------------------------------
GT GLOBAL
------------------------------------------------------
VARIABLE VARIABLE VARIABLE
VARIABLE GLOBAL U.S. LATIN
STRATEGIC GOVERNMENT GOVERNMENT AMERICA
INCOME FUND INCOME FUND INCOME FUND FUND
------------ ------------- ----------- ------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income (loss).......... $ 1,761,766 $ 636,934 $ 93,354 $ 167,407
Net realized gain (loss) on
investments and foreign currency
transactions........................ (3,861,004) (1,287,732) (71,665) 2,726,006
Net change in unrealized appreciation
(depreciation) on translation of
assets and liabilities in foreign
currencies.......................... (72,024) (15,202) (101,640) (1,004)
Net change in unrealized appreciation
(depreciation) of investments....... (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: (Note 1)
From net investment income............ (1,533,744) (604,061) (94,526) (33,315)
From 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 (decrease) 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>
- ------------------
* The Variable International and Variable Emerging Markets Funds did not
commence operations until July 5, 1994.
** The Variable Infrastructure and Variable Natural Resources Funds did
not commence operations until January 31, 1995.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 120
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
STATEMENT OF CHANGES IN NET ASSETS
For the year ended December 31, 1995
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
GT GLOBAL
----------------------------------------------------------------------------------------
VARIABLE
VARIABLE VARIABLE TELE- VARIABLE VARIABLE NATURAL VARIABLE
GROWTH & COMMUNICATIONS EMERGING INFRASTRUCTURE RESOURCES AMERICA
INCOME FUND FUND MARKETS FUND* FUND** FUND** FUND
------------ -------------- ------------- ------------ --------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income (loss).......... $ 1,076,015 $ 70,025 $ 118,171 $ 8,483 $ 64,339 $ 522,418
Net realized gain (loss) on
investments and foreign currency
transactions........................ (1,073,037) 6,258,812 (1,320,410) 14,143 (7,572) 4,769,966
Net change in unrealized appreciation
(depreciation) on translation of
assets and liabilities in foreign
currencies.......................... (6,017) (8,781) 119 (141) 600 --
Net change in unrealized appreciation
(depreciation) of investments....... 4,101,938 2,438,359 714,821 12,250 61,043 96,985
------------ -------------- ------------- ------------ --------------- ------------
Net increase (decrease) in net assets
resulting from operations........... 4,098,899 8,758,415 (487,299) 34,735 118,410 5,389,369
------------ -------------- ------------- ------------ --------------- ------------
Distributions to shareholders: (Note 1)
From net investment income............ (818,464) (80,457) (73,785) -- (62,702) (117,889)
From net realized gain on
investments......................... -- (965,478) -- -- -- (488,398)
In excess of net realized gain on
investments......................... -- -- -- -- (4,775) --
Return of capital..................... -- -- (16,304) -- -- --
------------ -------------- ------------- ------------ --------------- ------------
Total distributions................... (818,464) (1,045,935) (90,089) -- (67,477) (606,287)
------------ -------------- ------------- ------------ --------------- ------------
Capital share transactions: (Note 4)
Increase from capital shares sold and
reinvested.......................... 11,374,376 24,234,343 12,813,354 2,285,935 3,154,100 73,573,562
Decrease from capital shares
repurchased......................... (9,669,648) (17,197,275) (10,519,830) (826,452) (1,940,086) (55,970,932)
------------ -------------- ------------- ------------ --------------- ------------
Net increase (decrease) from capital
share transactions.................. 1,704,728 7,037,068 2,293,524 1,459,483 1,214,014 17,602,630
------------ -------------- ------------- ------------ --------------- ------------
Total increase (decrease) in net
assets................................ 4,985,163 14,749,548 1,716,136 1,494,218 1,264,947 22,385,712
Net assets:
Beginning of period................... 25,580,238 36,028,527 7,266,625 100,000 100,000 15,257,266
------------ -------------- ------------- ------------ --------------- ------------
End of period......................... $ 30,565,401 $ 50,778,075 $ 8,982,761 $1,594,218 $ 1,364,947 $ 37,642,978
------------ -------------- ------------- ------------ --------------- ------------
------------ -------------- ------------- ------------ --------------- ------------
<CAPTION>
- ----------------------------------------
VARIABLE VARIABLE MONEY VARIABLE
NEW PACIFIC EUROPE MARKET INTERNATIONAL
FUND FUND FUND FUND*
------------ ------------- ------------ -----------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income (loss).......... $ 356,169 $ 171,620 $ 818,843 $ 30,463
Net realized gain (loss) on
investments and foreign currency
transactions........................ (1,511,248) (670,205) -- (314,341)
Net change in unrealized appreciation
(depreciation) on translation of
assets and liabilities in foreign
currencies.......................... 2,804 (104,599) -- 7,389
Net change in unrealized appreciation
(depreciation) of investments....... 1,718,248 2,040,475 -- 312,493
------------ ------------- ------------ -----------
Net increase (decrease) in net assets
resulting from operations........... 565,973 1,437,291 818,843 36,004
------------ ------------- ------------ -----------
Distributions to shareholders: (Note 1)
From net investment income............ (90,012) (154,451) (818,843) (30,792)
From net realized gain on
investments......................... -- -- -- (5,018)
In excess of net realized gain on
investments......................... -- -- -- --
Return of capital..................... -- -- -- --
------------ ------------- ------------ -----------
Total distributions................... (90,012) (154,451) (818,843) (35,810)
------------ ------------- ------------ -----------
Capital share transactions: (Note 4)
Increase from capital shares sold and
reinvested.......................... 95,990,038 39,895,470 179,670,442 15,020,503
Decrease from capital shares
repurchased......................... (92,832,446) (40,557,920) (184,253,572) (13,587,017)
------------ ------------- ------------ -----------
Net increase (decrease) from capital
share transactions.................. 3,157,592 (662,450) (4,583,130) 1,433,486
------------ ------------- ------------ -----------
Total increase (decrease) in net
assets................................ 3,633,553 620,390 (4,583,130) 1,433,680
Net assets:
Beginning of period................... 19,391,231 15,020,487 19,473,722 2,228,920
------------ ------------- ------------ -----------
End of period......................... $ 23,024,784 $ 15,640,877 $ 14,890,592 $3,662,600
------------ ------------- ------------ -----------
------------ ------------- ------------ -----------
</TABLE>
- ------------------
* The Variable International and Variable Emerging Markets Funds did not
commence operations until July 5, 1994.
** The Variable Infrastructure and Variable Natural Resources Funds did
not commence operations until January 31, 1995.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the year ended December 31, 1994
- ----------------------------------------------------------------------------------------------------------------------------------
GT GLOBAL
----------------------------------------------------------------------------------------
VARIABLE
VARIABLE VARIABLE TELE- VARIABLE VARIABLE NATURAL VARIABLE
GROWTH & COMMUNICATIONS EMERGING INFRASTRUCTURE RESOURCES AMERICA
INCOME FUND FUND MARKETS FUND* FUND** FUND** FUND
------------ -------------- ------------- ------------ --------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income (loss).......... $ 778,934 $ 73,852 $ 40,749 -- -- $ 126,208
Net realized gain (loss) on
investments and foreign currency
transactions........................ (310,777) 913,277 (45,847) -- -- 480,878
Net change in unrealized appreciation
(depreciation) on translation of
assets and liabilities in foreign
currencies.......................... (4,932) 29,242 (194) -- -- --
Net change in unrealized appreciation
(depreciation) of investments....... (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: (Note 1)
From net investment income............ (644,305) (31,627) (40,749) -- -- (136,601)
From 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 (decrease) 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
------------ -------------- ------------- ------------ --------------- ------------
------------ -------------- ------------- ------------ --------------- ------------
<CAPTION>
- ----------------------------------------
VARIABLE VARIABLE MONEY VARIABLE
NEW PACIFIC EUROPE MARKET INTERNATIONAL
FUND FUND FUND FUND*
------------ ------------ ------------ -----------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income (loss).......... $ 129,772 $ 186,123 $ 387,604 $ 11,394
Net realized gain (loss) on
investments and foreign currency
transactions........................ (441,437) (212,500) -- (7,154)
Net change in unrealized appreciation
(depreciation) on translation of
assets and liabilities in foreign
currencies.......................... (28,748) 101,790 -- 6,134
Net change in unrealized appreciation
(depreciation) of investments....... (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: (Note 1)
From net investment income............ (51,590) (1,710) (387,604) (9,954)
From 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 (decrease) 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>
- ------------------
* The Variable International and Variable Emerging Markets Funds did not
commence operations until July 5, 1994.
** The Variable Infrastructure and Variable Natural Resources Funds did
not commence operations until January 31, 1995.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 121
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
GT GLOBAL
--------------------------------------------------
VARIABLE STRATEGIC INCOME FUND
--------------------------------------------------
FEBRUARY 10, 1993
(COM-
MENCEMENT OF
YEAR ENDED YEAR ENDED OPERATIONS)
DECEMBER 31, DECEMBER 31, TO DECEMBER 31,
1995 1994 1993
-------------- -------------- ------------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 10.82 $ 14.57 $ 12.00
-------------- -------------- --------
Net investment income (loss).......... 1.07(a) 1.71(b) 0.61
Net realized and unrealized gain
(loss) on investments............... 0.93 (4.17) 2.57
-------------- -------------- --------
Net increase (decrease) resulting
from operations.................... 2.00 (2.46) 3.18
-------------- -------------- --------
Distributions to shareholders:
From net investment income............ (0.96) (0.79) (0.61)
From net realized gain on
investments......................... -- (0.45) --
In excess of net realized gain on
investments......................... -- -- --
Return of capital..................... -- (0.05) --
-------------- -------------- --------
Total distributions................. (0.96) (1.29) (0.61)
Net asset value, end of period.......... $ 11.86 $ 10.82 $ 14.57
-------------- -------------- --------
-------------- -------------- --------
Total investment return+(e)............. 19.50 % (17.09)% 27.5 %
-------------- -------------- --------
-------------- -------------- --------
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 25,345 $ 23,367 $ 18,089
Ratio of net investment income (loss) to
average net assets:
With reimbursement by LGT and expense
reductions (Notes 1, 2, & 5)++...... 9.59 % 7.58 % 6.6 %
Without reimbursement by LGT and
expense reductions++................ 9.35 % 7.43 % 6.3 %
Without expenses assumed by LGT
(d)++............................... -- % -- % 5.2 %
Ratio of expenses to average net assets:
With reimbursement by LGT and expense
reductions (Notes 1, 2, & 5)++...... 1.00 % 1.00 % 0.5 %
Without reimbursement by LGT and
expense reductions++................ 1.24 % 1.15 % 0.9 %
Without expenses assumed by LGT
(d)++............................... -- % -- % 1.9 %
Portfolio turnover++.................... 193 % 313 % 245 %
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
GT GLOBAL
--------------------------------------------------
- --------------------------------------------------------------------------------------------
VARIABLE GROWTH & INCOME FUND
--------------------------------------------------
FEBRUARY 10, 1993
(COM-
MENCEMENT OF
YEAR ENDED YEAR ENDED OPERATIONS)
DECEMBER 31, DECEMBER 31, TO DECEMBER 31,
1995 1994 1993
-------------- -------------- ------------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 12.99 $ 13.77 $ 12.00
-------------- -------------- --------
Net investment income (loss).......... 0.52(a) 0.46(b) 0.31(c)
Net realized and unrealized gain
(loss) on investments............... 1.46 (0.85) 1.79
-------------- -------------- --------
Net increase (decrease) resulting
from operations.................... 1.98 (0.39) 2.10
-------------- -------------- --------
Distributions to shareholders:
From net investment income............ (0.40) (0.39) (0.28)
From net realized gain on
investments......................... -- -- (0.05)
In excess of net realized gain on
investments......................... -- -- --
Return of capital..................... -- -- --
-------------- -------------- --------
Total distributions................. (0.40) (0.39) (0.33)
Net asset value, end of period.......... $ 14.57 $ 12.99 $ 13.77
-------------- -------------- --------
-------------- -------------- --------
Total investment return+(e)............. 15.49 % (2.85)% 17.8 %
-------------- -------------- --------
-------------- -------------- --------
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 30,565 $ 25,580 $ 11,677
Ratio of net investment income (loss) to
average net assets:
With reimbursement by LGT and expense
reductions (Notes 1, 2, & 5)++...... 3.87 % 3.69 % 3.2 %
Without reimbursement by LGT and
expense reductions++................ 3.66 % 3.45 % 2.7 %
Without expenses assumed by LGT
(d)++............................... -- % -- % 1.1 %
Ratio of expenses to average net assets:
With reimbursement by LGT and expense
reductions (Notes 1, 2, & 5)++...... 1.23 % 1.25 % 0.6 %
Without reimbursement by LGT and
expense reductions++................ 1.44 % 1.49 % 1.2 %
Without expenses assumed by LGT
(d)++............................... -- % -- % 2.8 %
Portfolio turnover++.................... 73 % 53 % 17 %
</TABLE>
- ------------------------
(a) Includes reimbursement by LGT Asset Management, Inc. of Fund operating
expenses of $0.03 for the Variable Strategic Income Fund, $0.07 for
the Variable Global Government Income Fund, $0.14 for the Variable
U.S. Government Income Fund, $0.06 for the Variable Latin America
Fund, $0.03 for the Variable Growth & Income Fund, $0.00 for the
Variable Telecommunications Fund, $0.09 for the Variable Emerging
Markets Fund, $0.42 for the Variable Infrastructure Fund, and $0.47
for the Variable Natural Resources Fund (Note 2).
(b) Includes reimbursement by LGT Asset Management, Inc. of Fund operating
expenses of $0.04 for the Variable Strategic Income Fund, $0.08 for
the Variable Global Government Income Fund, $0.48 for the Variable
U.S. Government Income Fund, $0.04 for the Variable Latin America
Fund, $0.03 for the Variable Growth & Income Fund, $0.01 for the
Variable Telecommunications Fund, and $0.07 for the Variable Emerging
Markets Fund (Note 2).
(c) Includes reimbursement by LGT Asset Management, Inc. of Fund operating
expenses of $0.03 for the Variable Strategic Income Fund, $0.06 for
the Variable Global Government Income Fund, $0.19 for the Variable
U.S. Government Income Fund, $0.02 for the Variable Latin America
Fund, $0.05 for the Variable Growth & Income Fund, and $0.00 for the
Variable Telecommunications Fund (Note 2).
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 122
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GT GLOBAL
---------------------------------------------------
VARIABLE GLOBAL GOVERNMENT INCOME FUND
---------------------------------------------------
FEBRUARY 10, 1993
(COM-
MENCEMENT OF
YEAR ENDED YEAR ENDED OPERATIONS)
DECEMBER 31, DECEMBER 31, TO DECEMBER 31,
1995 1994 1993
-------------- -------------- -------------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 10.63 $ 12.53 $ 12.00
-------------- ------- -------
Net investment income (loss).......... 0.79(a) 0.77(b) 0.57(c)
Net realized and unrealized gain
(loss) on investments............... 0.84 (1.85) 0.52
-------------- ------- -------
Net increase (decrease) resulting
from operations.................... 1.63 (1.08) 1.09
-------------- ------- -------
Distributions to shareholders:
From net investment income............ (0.75) (0.73) (0.56)
From net realized gain on
investments......................... -- -- --
In excess of net realized gain on
investments......................... -- -- --
Return of capital..................... -- (0.09) --
-------------- ------- -------
Total distributions................. (0.75) (0.82) (0.56)
Net asset value, end of period.......... $ 11.51 $ 10.63 $ 12.53
-------------- ------- -------
-------------- ------- -------
Total investment return+(e)............. 15.85 % (8.70)% 9.5%
-------------- ------- -------
-------------- ------- -------
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 11,944 $ 9,654 $ 6,136
Ratio of net investment income (loss) to
average net assets:
With reimbursement by LGT and expense
reductions (Notes 1, 2, & 5)++...... 7.03 % 6.89 % 6.1%
Without reimbursement by LGT and
expense reductions++................ 6.37 % 6.21 % 5.5%
Without expenses assumed by LGT
(d)++............................... -- % -- % 2.4%
Ratio of expenses to average net assets:
With reimbursement by LGT and expense
reductions (Notes 1, 2, & 5)++...... 1.00 % 1.00 % 0.5%
Without reimbursement by LGT and
expense reductions++................ 1.66 % 1.68 % 1.1%
Without expenses assumed by LGT
(d)++............................... -- % -- % 4.2%
Portfolio turnover++.................... 394 % 350 % 298%
<CAPTION>
GT GLOBAL
-------------------------------------------------------
VARIABLE U.S. GOVERNMENT INCOME FUND
-------------------------------------------------------
FEBRUARY 10, 1993
(COM-
MENCEMENT OF
YEAR ENDED OPERATIONS)
YEAR ENDED DECEMBER 31, TO DECEMBER 31,
DECEMBER 31, 1995 1994 1993
----------------- -------------- -------------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $10.79 $ 12.23 $ 12.00
------- ------- -------
Net investment income (loss).......... 0.62(a) 0.63(b) 0.53(c)
Net realized and unrealized gain
(loss) on investments............... 0.93 (1.39) 0.23
------- ------- -------
Net increase (decrease) resulting
from operations.................... 1.55 (0.76) 0.76
------- ------- -------
Distributions to shareholders:
From net investment income............ (0.60) (0.62) (0.53)
From net realized gain on
investments......................... -- (0.06) --
In excess of net realized gain on
investments......................... -- -- --
Return of capital..................... -- -- --
------- ------- -------
Total distributions................. (0.60) (0.68) (0.53)
Net asset value, end of period.......... $11.74 $ 10.79 $ 12.23
------- ------- -------
------- ------- -------
Total investment return+(e)............. 14.73% (6.27)% 6.4%
------- ------- -------
------- ------- -------
Ratios and supplemental data:
Net assets, end of period (in 000's).... $5,992 $ 2,415 $ 974
Ratio of net investment income (loss) to
average net assets:
With reimbursement by LGT and expense
reductions (Notes 1, 2, & 5)++...... 5.43% 5.53 % 5.3%
Without reimbursement by LGT and
expense reductions++................ 3.87% 1.29 % 3.4%
Without expenses assumed by LGT
(d)++............................... --% -- % (6.9)%
Ratio of expenses to average net assets:
With reimbursement by LGT and expense
reductions (Notes 1, 2, & 5)++...... 1.00% 0.38 % 0.0%
Without reimbursement by LGT and
expense reductions++................ 2.56% 4.63 % 1.9%
Without expenses assumed by LGT
(d)++............................... --% -- % 12.3%
Portfolio turnover++.................... 186% 34 % 81%
<CAPTION>
GT GLOBAL
-------------------------------------------------------
VARIABLE LATIN AMERICA FUND
-------------------------------------------------------
FEBRUARY 10, 1993
(COM-
MENCEMENT OF
YEAR ENDED OPERATIONS)
YEAR ENDED DECEMBER 31, TO DECEMBER 31,
DECEMBER 31, 1995 1994 1993
----------------- -------------- -------------------
Per Share Operating Performance:
Net asset value, beginning of period.... $ 19.17 $ 17.68 $ 12.00
-------- -------------- -------
Net investment income (loss).......... 0.51(a) 0.11(b) 0.04(c)
Net realized and unrealized gain
(loss) on investments............... (5.10) 1.49 5.64
-------- -------------- -------
Net increase (decrease) resulting
from operations.................... (4.59) 1.60 5.68
-------- -------------- -------
Distributions to shareholders:
From net investment income............ (0.16) (0.04) --
From net realized gain on
investments......................... (2.00) (0.07) --
In excess of net realized gain on
investments......................... -- -- --
Return of capital..................... -- -- --
-------- -------------- -------
Total distributions................. (2.16) (0.11) --
Net asset value, end of period.......... $ 12.42 $ 19.17 $ 17.68
-------- -------------- -------
-------- -------------- -------
Total investment return+(e)............. (24.14)% 9.14 % 47.3%
-------- -------------- -------
-------- -------------- -------
Ratios and supplemental data:
Net assets, end of period (in 000's).... $19,771 $ 26,631 $ 8,240
Ratio of net investment income (loss) to
average net assets:
With reimbursement by LGT and expense
reductions (Notes 1, 2, & 5)++...... 4.43% 0.82 % 1.0%
Without reimbursement by LGT and
expense reductions++................ 3.92% 0.49 % 0.4%
Without expenses assumed by LGT
(d)++............................... --% -- % (2.5)%
Ratio of expenses to average net assets:
With reimbursement by LGT and expense
reductions (Notes 1, 2, & 5)++...... 1.18% 1.25 % 0.7%
Without reimbursement by LGT and
expense reductions++................ 1.69% 1.58 % 1.3%
Without expenses assumed by LGT
(d)++............................... --% -- % 4.2%
Portfolio turnover++.................... 140% 185 % 78%
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
GT GLOBAL
------------------------------
GT GLOBAL
------------------------------------------------ VARIABLE EMERGING MARKETS
FUND**
VARIABLE TELECOMMUNICATIONS FUND ------------------------------
------------------------------------------------ JULY 5, 1994
YEAR ENDED YEAR ENDED OCTOBER 18, 1993 YEAR ENDED TO
DECEMBER 31, DECEMBER 31, TO DECEMBER 31, DECEMBER 31, DECEMBER 31,
1995 1994 1993 1995 1994
-------------- -------------- ---------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 13.98 $ 13.07 $ 12.00 $ 11.89 $ 12.00
-------------- -------------- ------- ------- -------
Net investment income (loss).......... 0.02(a) 0.01(b) 0.04(c) 0.14(a) 0.07(b)
Net realized and unrealized gain
(loss) on investments............... 3.26 0.92 1.03 (1.04) (0.05)
-------------- -------------- ------- ------- -------
Net increase (decrease) resulting
from operations.................... 3.28 0.93 1.07 (0.90) 0.02
-------------- -------------- ------- ------- -------
Distributions to shareholders:
From net investment income............ (0.03) (0.02) -- (0.09) (0.07)
From net realized gain on
investments......................... (0.36) -- -- -- --
In excess of net realized gain on
investments......................... -- -- -- -- (0.06)
Return of capital..................... -- -- -- (0.02) --
-------------- -------------- ------- ------- -------
Total distributions................. (0.39) (0.02) -- (0.11) (0.13)
Net asset value, end of period.......... $ 16.87 $ 13.98 $ 13.07 $ 10.88 $ 11.89
-------------- -------------- ------- ------- -------
-------------- -------------- ------- ------- -------
Total investment return+(e)............. 23.66 % 7.15 % 8.9 % (7.54)% 0.12 %
-------------- -------------- ------- ------- -------
-------------- -------------- ------- ------- -------
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 50,778 $ 36,029 $ 7,903 $ 8,983 $ 7,267
Ratio of net investment income (loss) to
average net assets:
With reimbursement by LGT and expense
reductions (Notes 1, 2, & 5)++...... 0.16 % 0.31 % 2.5 % 1.55 % 4.10 %
Without reimbursement by LGT and
expense reductions++................ 0.10 % 0.07 % 2.3 % 0.51 % (0.20)%
Without expenses assumed by LGT
(d)++............................... -- % -- % 1.6 % -- % -- %
Ratio of expenses to average net assets:
With reimbursement by LGT and expense
reductions (Notes 1, 2, & 5)++...... 1.20 % 1.25 % 0.9 % 1.18 % 0.00 %
Without reimbursement by LGT and
expense reductions++................ 1.26 % 1.49 % 1.1 % 2.22 % 4.30 %
Without expenses assumed by LGT
(d)++............................... -- % -- % 1.8 % -- % -- %
Portfolio turnover++.................... 70 % 81 % 20 % 210 % 117 %
<CAPTION>
GT GLOBAL
------------------------------------------
VARIABLE
INFRASTRUCTURE VARIABLE NATURAL
FUND*** RESOURCES FUND***
-------------------- --------------------
JANUARY 31, 1995 JANUARY 31, 1995
TO DECEMBER 31, 1995 TO DECEMBER 31, 1995
-------------------- --------------------
<S> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 12.00 $ 12.00
------- -------
Net investment income (loss).......... 0.07(a) 0.73(a)
Net realized and unrealized gain
(loss) on investments............... 1.20 1.91
------- -------
Net increase (decrease) resulting
from operations.................... 1.27 2.64
------- -------
Distributions to shareholders:
From net investment income............ -- (0.71)
From net realized gain on
investments......................... -- --
In excess of net realized gain on
investments......................... -- (0.05)
Return of capital..................... -- --
------- -------
Total distributions................. -- (0.76)
Net asset value, end of period.......... $ 13.27 $ 13.88
------- -------
------- -------
Total investment return+(e)............. 10.58 % 22.20 %
------- -------
------- -------
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 1,594 $ 1,365
Ratio of net investment income (loss) to
average net assets:
With reimbursement by LGT and expense
reductions (Notes 1, 2, & 5)++...... 1.36 % 10.87 %
Without reimbursement by LGT and
expense reductions++................ (6.65)% 2.94 %
Without expenses assumed by LGT
(d)++............................... -- % -- %
Ratio of expenses to average net assets:
With reimbursement by LGT and expense
reductions (Notes 1, 2, & 5)++...... 1.34 % 1.14 %
Without reimbursement by LGT and
expense reductions++................ 9.35 % 9.07 %
Without expenses assumed by LGT
(d)++............................... -- % -- %
Portfolio turnover++.................... 38 % 875 %
</TABLE>
- ------------------------
(d) During the period ended December 31, 1993, LGT voluntarily assumed
certain expenses for the Funds (Note 2).
(e) Total return information does not reflect expenses that apply to the
Separate Accounts or the related insurance contracts, and inclusion of
these charges would reduce the total return figures for all periods
shown.
+ Not annualized for periods of less than one year.
++ Annualized for periods of less than one year.
* The Variable Telecommunications Fund did not commence operations until
October 18, 1993.
** The Variable Emerging Markets Fund did not commence operations until
July 5, 1994.
*** The Variable Infrastructure and Variable Natural Resources Funds did
not commence operations until January 31, 1995.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 123
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
GT GLOBAL
---------------------------------------------------
VARIABLE AMERICA FUND
---------------------------------------------------
FEBRUARY 10, 1993
(COM-
MENCEMENT OF
YEAR ENDED YEAR ENDED OPERATIONS)
DECEMBER 31, DECEMBER 31, TO DECEMBER 31,
1995 1994 1993
-------------- -------------- -------------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 15.81 $ 13.75 $ 12.00
-------------- -------------- -------
Net investment income (loss).......... 0.21(a) 0.48(b) 1.11(c)
Net realized and unrealized gain
(loss) on investments............... 3.80 2.08 0.64
-------------- -------------- -------
Net increase (decrease) resulting
from operations.................... 4.01 2.56 1.75
-------------- -------------- -------
Distributions to shareholders:
From net investment income............ (0.07) (0.50) --
From net realized gain on
investments......................... (0.29) -- --
In excess of net realized gain on
investments
Return of capital
-------------- -------------- -------
Total distributions................. (0.36) (0.50) --
Net asset value, end of period.......... $ 19.46 $ 15.81 $ 13.75
-------------- -------------- -------
-------------- -------------- -------
Total investment return+(c)............. 25.37 % 18.88 % 14.7%
-------------- -------------- -------
-------------- -------------- -------
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 37,643 $ 15,257 $ 1,700
Ratio of net investment income (loss) to
average net assets:
With reimbursement by LGT and expense
reductions (Notes 1, 2, & 5)++...... 1.66 % 1.83 % 14.1%
Without reimbursement by LGT and
expense reductions++................ 1.60 % 0.76 % 12.8%
Without expenses assumed by LGT
(d)++............................... -- % -- % 7.6%
Ratio of expenses to average net assets:
With reimbursement by LGT and expense
reductions (Notes 1, 2, & 5)++...... 1.00 % 0.98 % 0.0%
Without reimbursement by LGT and
expense reductions++................ 1.06 % 2.05 % 1.3%
Without expenses assumed by LGT
(d)++............................... -- % -- % 6.5%
Portfolio turnover++.................... 79 % 139 % 831%
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
- ------------------------------------------------------------------------
GT GLOBAL
------------------------------
VARIABLE INTERNATIONAL
FUND*
------------------------------
JULY 5, 1994,
YEAR ENDED TO
DECEMBER 31, DECEMBER 31,
1995 1994
-------------- --------------
<S> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 11.25 $ 12.00
------- -------
Net investment income (loss).......... 0.09(a) 0.06(b)
Net realized and unrealized gain
(loss) on investments............... (0.22) (0.76)
------- -------
Net increase (decrease) resulting
from operations.................... (0.13) (0.70)
------- -------
Distributions to shareholders:
From net investment income............ (0.09) (0.05)
From net realized gain on
investments......................... (0.02) --
In excess of net realized gain on
investments
Return of capital
------- -------
Total distributions................. (0.11) (0.05)
Net asset value, end of period.......... $ 11.01 $ 11.25
------- -------
------- -------
Total investment return+(c)............. (1.14)% (5.81)%
------- -------
------- -------
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 3,663 $ 2,229
Ratio of net investment income (loss) to
average net assets:
With reimbursement by LGT and expense
reductions (Notes 1, 2, & 5)++...... 0.93 % 3.33 %
Without reimbursement by LGT and
expense reductions++................ (1.35)% (2.56)%
Without expenses assumed by LGT
(d)++............................... -- % -- %
Ratio of expenses to average net assets:
With reimbursement by LGT and expense
reductions (Notes 1, 2, & 5)++...... 1.25 % 0.69 %
Without reimbursement by LGT and
expense reductions++................ 3.53 % 6.58 %
Without expenses assumed by LGT
(d)++............................... -- % -- %
Portfolio turnover++.................... 107 % 17 %
</TABLE>
- ------------------------
(a) Includes reimbursement by LGT Asset Management, Inc. of Fund operating
expenses of $0.01 for the Variable America Fund, $0.04 for the
Variable New Pacific Fund, $0.08 for the Variable Europe Fund, $0.00
for the Money Market Fund, and $0.22 for the Variable International
Fund (Note 2).
(b) Includes reimbursement by LGT Asset Management, Inc. of Fund operating
expenses of $0.28 for the Variable America Fund, $0.03 for the
Variable New Pacific Fund, $0.04 for the Variable Europe Fund, $0.00
for the Money Market Fund, and $0.11 for the Variable International
Fund (Note 2).
(c) Includes reimbursement by LGT Asset Management, Inc. of Fund operating
expenses of $0.10 for the Variable America Fund, $0.03 for the
Variable New Pacific Fund, $0.03 for the Variable Europe Fund, and
$0.01 for the Money Market Fund (Note 2).
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 124
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GT GLOBAL GT GLOBAL
--------------------------------------------------- ------------------------------
VARIABLE NEW PACIFIC FUND VARIABLE EUROPE FUND
--------------------------------------------------- ------------------------------
FEBRUARY 10, 1993
(COM-
MENCEMENT OF
YEAR ENDED YEAR ENDED OPERATIONS) YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, TO DECEMBER 31, DECEMBER 31, DECEMBER 31,
1995 1994 1993 1995 1994
-------------- -------------- ------------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 14.01 $ 16.07 $ 12.00 $ 15.22 $ 15.33
-------------- -------------- ------- -------------- --------------
Net investment income (loss).......... 0.20(a) 0.08(b) 0.04(c) 0.18(a) 0.16(b)
Net realized and unrealized gain
(loss) on investments............... (0.23) (2.08) 4.03 1.28 (0.25)
-------------- -------------- ------- -------------- --------------
Net increase (decrease) resulting
from operations.................... (0.03) (2.00) 4.07 1.46 (0.09)
-------------- -------------- ------- -------------- --------------
Distributions to shareholders:
From net investment income............ (0.06) (0.06) -- (0.16) --
From net realized gain on
investments......................... -- -- -- -- (0.02)
In excess of net realized gain on
investments
Return of capital
-------------- -------------- ------- -------------- --------------
Total distributions................. (0.06) (0.06) -- (0.16) (0.02)
Net asset value, end of period.......... $ 13.92 $ 14.01 $ 16.07 $ 16.52 $ 15.22
-------------- -------------- ------- -------------- --------------
-------------- -------------- ------- -------------- --------------
Total investment return+(c)............. (0.21)% (12.47)% 33.9% 9.66 % (0.59)%
-------------- -------------- ------- -------------- --------------
-------------- -------------- ------- -------------- --------------
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 23,025 $ 19,391 $ 7,945 $ 15,641 $ 15,020
Ratio of net investment income (loss) to
average net assets:
With reimbursement by LGT and expense
reductions (Notes 1, 2, & 5)++...... 1.27 % 0.83 % 0.9% 1.12 % 1.48 %
Without reimbursement by LGT and
expense reductions++................ 1.74 % 0.48 % 0.3% 0.60 % 1.07 %
Without expenses assumed by LGT
(d)++............................... -- % -- % (2.0)% -- % -- %
Ratio of expenses to average net assets:
With reimbursement by LGT and expense
reductions (Notes 1, 2, & 5)++...... 1.14 % 1.25 % 0.6% 1.20 % 1.25 %
Without reimbursement by LGT and
expense reductions++................ 1.61 % 1.60 % 1.3% 1.72 % 1.66 %
Without expenses assumed by LGT
(d)++............................... -- % -- % 3.6% -- % -- %
Portfolio turnover++.................... 67 % 30 % 15% 123 % 61 %
<CAPTION>
GT GLOBAL
---------------------------------------------------
MONEY MARKET FUND
---------------------------------------------------
FEBRUARY 10, 1993 FEBRUARY 10, 1993
(COM- (COM-
MENCEMENT OF MENCEMENT OF
OPERATIONS) YEAR ENDED YEAR ENDED OPERATIONS)
TO DECEMBER 31, DECEMBER 31, DECEMBER 31, TO DECEMBER 31,
1993 1995 1994 1993
------------------- -------------- -------------- -------------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 12.00 $ 1.00 $ 1.00 $ 1.00
------- -------------- -------------- -------
Net investment income (loss).......... 0.05(c) 0.05(a) 0.03(b) 0.03(c)
Net realized and unrealized gain
(loss) on investments............... 3.28 -- -- --
------- -------------- -------------- -------
Net increase (decrease) resulting
from operations.................... 3.33 0.05 0.03 0.03
------- -------------- -------------- -------
Distributions to shareholders:
From net investment income............ -- (0.05) (0.03) (0.03)
From net realized gain on
investments......................... -- -- -- --
In excess of net realized gain on
investments
Return of capital
------- -------------- -------------- -------
Total distributions................. -- (0.05) (0.03) (0.03)
Net asset value, end of period.......... $ 15.33 $ 1.00 $ 1.00 $ 1.00
------- -------------- -------------- -------
------- -------------- -------------- -------
Total investment return+(c)............. 27.8% 5.26 % 3.48 % 2.6%
------- -------------- -------------- -------
------- -------------- -------------- -------
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 5,410 $ 14,891 $ 19,474 $ 3,775
Ratio of net investment income (loss) to
average net assets:
With reimbursement by LGT and expense
reductions (Notes 1, 2, & 5)++...... 1.1% 5.15 % 3.70 % 2.9%
Without reimbursement by LGT and
expense reductions++................ 0.4% 4.85 % 3.64 % 2.1%
Without expenses assumed by LGT
(d)++............................... (2.8)% -- % -- % (2.6)%
Ratio of expenses to average net assets:
With reimbursement by LGT and expense
reductions (Notes 1, 2, & 5)++...... 0.7% 0.75 % 0.75 % 0.2%
Without reimbursement by LGT and
expense reductions++................ 1.4% 1.05 % 0.81 % 1.0%
Without expenses assumed by LGT
(d)++............................... 4.6% -- % -- % 5.7%
Portfolio turnover++.................... 27% N/A N/A N/A
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- ------------------------
(d) During the period ended December 31, 1993, LGT voluntarily assumed
certain expenses for the Funds (Note 2).
(e) Total return information does not reflect expenses that apply to the
Separate Accounts or the related insurance contracts, and inclusion of
these charges would reduce the total return figures for all periods
shown.
+ Not annualized for periods of less than one year.
++ Annualized for periods of less than one year.
* The Variable International Fund did not commence operations until July
5, 1994.
The accompanying notes are an integral part of the financial statements.
Statement of Additional Information Page 125
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
NOTES TO
FINANCIAL STATEMENTS
December 31, 1995
- --------------------------------------------------------------------------------
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:
GT Global Variable New Pacific Fund, GT Global Variable Europe Fund, GT Global
Variable America Fund, GT Global Variable International Fund and GT Global Money
Market Fund. G.T. Global Variable Investment Trust operates as a series company
currently issuing nine classes of shares of beneficial interest: GT Global
Variable Latin America Fund, GT Global Variable Growth & Income Fund, GT Global
Variable Strategic Income Fund, GT Global Variable Global Government Income
Fund, GT Global Variable U.S. Government Income Fund, GT Global Variable
Emerging Markets Fund, GT Global Variable Telecommunications Fund, GT Global
Variable Infrastructure Fund, and GT 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 GT Global Variable Latin
America Fund, GT Global Variable Growth & Income Fund, GT Global Variable
Strategic Income Fund and GT 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, and,
therefore, the financial statements may include certain estimates made by
management.
(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 LGT Asset Management, Inc.
("LGT", formerly known as G.T. Capital Management, Inc.) 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 LGT
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.
(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
Statement of Additional Information Page 126
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
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 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. LGT 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, unless a quotation from only one
broker is available, in which case only that broker's price will be used. If an
option expires on its stipulated expiration date or if 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" 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
Statement of Additional Information Page 127
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
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.
A Fund 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 the collection of withholding tax rebate,
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 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
GT GLOBAL FUNDS CARRYFORWARD YEAR
- ---------------------------------------- ------------- -------------
<S> <C> <C>
Variable Strategic Income $ 3,286,925 2002
820,482 2003
Variable Global Government Income 1,174,971 2002
Variable Latin America 6,286,637 2003
Variable Growth and Income 221,353 2002
1,207,812 2003
Variable Emerging Markets 1,143,261 2003
Variable New Pacific 12,288 2001
430,871 2002
1,467,506 2003
Variable Europe 75,636 2002
758,843 2003
Variable International 271,119 2003
</TABLE>
(J) DEFERRED ORGANIZATIONAL EXPENSES
Costs incurred by GT 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 LGT
has advanced certain of the Companies' organizational costs incurred to date,
the Companies may reimburse LGT for the amount of these advances. In the event
that LGT redeems any of the initial 2,083.333 shares of each of the Variable New
Pacific Fund, Variable
Statement of Additional Information Page 128
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
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 LGT'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
Certain of the Funds are permitted to invest in a limited amount of 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 for each Fund, if any.
(N) PORTFOLIO SECURITIES LOANED
At December 31, 1995, 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, 1995 YEAR/PERIOD ENDED
-------------------------------- DECEMBER 31, 1995
AGGREGATE VALUE -----------------
GT GLOBAL ON LOAN CASH COLLATERAL FEES RECEIVED
- ----------------------------------------------------------------------------- --------------- --------------- -----------------
<S> <C> <C> <C>
Variable Strategic Income Fund............................................... $ 562,655 $ 599,961 $ --
Variable Global Government Income Fund....................................... 357,643 367,840 --
Variable U.S. Government Income Fund......................................... -- -- --
Variable Latin America Fund.................................................. 1,304,075 1,447,200 7,044
Variable Growth and Income Fund.............................................. 2,512,975 2,681,946 4,092
Variable Telecommunications Fund............................................. 751,013 767,000 14,920
Variable Emerging Markets Fund............................................... -- -- --
Variable Infrastructure Fund................................................. 15,767 17,422 --
Variable Natural Resources Fund.............................................. -- -- --
Variable America Fund........................................................ -- -- --
Variable New Pacific Fund.................................................... 573,172 814,000 20,311
Variable Europe Fund......................................................... 530,737 560,213 278
Money Market Fund............................................................ -- -- --
Variable International Fund.................................................. 66,769 71,769 --
</TABLE>
For international securities, cash collateral is received by the Funds 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 Funds 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
LGT (LGT Asset Management, Inc., formerly known as G.T. Capital Management,
Inc.) is the Funds' investment manager and administrator. For these services,
the Money Market Fund pays LGT an
Statement of Additional Information Page 129
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
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 LGT 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 LGT 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.
LGT 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, LGT 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 average daily net assets.
Likewise, LGT 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 average daily net assets. From time to time, LGT 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.
GT Global, Inc. ("GT Global", formerly known as G.T. Global Financial Services,
Inc.), an affiliate of LGT, is the Funds' distributor. GT Global Investor
Services, Inc. ("GT Services"), an affiliate of LGT and GT Global, is the Funds'
transfer agent.
GT Global is the principal underwriter of the Variable Annuity Contracts.
Underwriting commissions retained by GT Global are as follows:
<TABLE>
<CAPTION>
YEAR/PERIOD ENDED
GT GLOBAL DECEMBER 31, 1995
- ---------------------------------------------------------------------------------------------------------------- ------------------
<S> <C>
Variable Strategic Income Fund.................................................................................. $ 21,536
Variable Global Government Income Fund.......................................................................... 14,502
Variable U.S. Government Income Fund............................................................................ 8,999
Variable Latin America Fund..................................................................................... 33,816
Variable Growth & Income Fund................................................................................... 16,929
Variable Telecommunications Fund................................................................................ 61,145
Variable Emerging Markets Fund.................................................................................. 33,867
Variable Infrastructure Fund.................................................................................... 4,309
Variable Natural Resources Fund................................................................................. 1,945
Variable America Fund........................................................................................... 58,480
Variable New Pacific Fund....................................................................................... 22,629
Variable Europe Fund............................................................................................ 13,066
Money Market Fund............................................................................................... 91,141
Variable International Fund..................................................................................... 3,374
</TABLE>
Effective July 1, 1995, LGT has assumed the role of pricing and accounting agent
for the Funds. The monthly fee for these services to LGT is a percentage, not to
exceed 0.03% annually, of each of the Funds' average daily net assets. The
annual fee rate is derived by applying 0.03% to the first $5 billion of assets
of all registered mutual funds advised by LGT ("GT Funds") and 0.02% to the
assets in excess of $5 billion and dividing the result by the
Statement of Additional Information Page 130
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
aggregate assets of the GT Funds. For the period ended December 31, 1995, fund
accounting fees paid to LGT are as follows:
<TABLE>
<CAPTION>
PERIOD ENDED
GT GLOBAL DECEMBER 31, 1995
- ----------------------------------------------------------------------------------------------------------------- -----------------
<S> <C>
Variable Strategic Income Fund................................................................................... $ 2,523
Variable Global Government Income Fund........................................................................... 1,197
Variable U.S. Government Income Fund............................................................................. 567
Variable Latin America Fund...................................................................................... 2,080
Variable Growth & Income Fund.................................................................................... 3,066
Variable Telecommunications Fund................................................................................. 5,248
Variable Emerging Markets Fund................................................................................... 884
Variable Infrastructure Fund..................................................................................... 124
Variable Natural Resources Fund.................................................................................. 109
Variable America Fund............................................................................................ 4,066
Variable New Pacific Fund........................................................................................ 2,215
Variable Europe Fund............................................................................................. 1,673
Money Market Fund................................................................................................ 1,633
Variable International Fund...................................................................................... 386
</TABLE>
The Companies pay each of their Trustees who is not an employee, officer or
director of LGT, GT Global or GT Services $5,000 per year.
Statement of Additional Information Page 131
<PAGE>
GT 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/period ended December 31,
1995:
PURCHASES AND SALES OF SECURITIES
<TABLE>
<CAPTION>
PURCHASES
--------------------------------
GT GLOBAL U.S. GOVERNMENT OTHER ISSUES
- ------------------------------------------------------------------------------------------------- ---------------- --------------
<S> <C> <C>
Variable Strategic Income Fund................................................................... $ 11,501,057 $ 30,863,502
Variable Global Government Income Fund........................................................... 9,478,278 30,781,156
Variable U.S. Government Income Fund............................................................. 6,230,989 217,250
Variable Latin America Fund...................................................................... -- 24,734,706
Variable Growth & Income Fund.................................................................... 3,087,404 19,986,655
Variable Telecommunications Fund................................................................. -- 29,912,113
Variable Emerging Markets Fund................................................................... -- 16,580,240
Variable Infrastructure Fund..................................................................... -- 1,464,730
Variable Natural Resources Fund.................................................................. -- 4,468,111
Variable America Fund............................................................................ -- 31,633,117
Variable New Pacific Fund........................................................................ -- 15,203,522
Variable Europe Fund............................................................................. -- 17,456,628
Money Market Fund................................................................................ -- --
Variable International Fund...................................................................... -- 4,596,400
</TABLE>
<TABLE>
<CAPTION>
SALES
--------------------------------
GT GLOBAL U.S. GOVERNMENT OTHER ISSUES
- ------------------------------------------------------------------------------------------------- ---------------- --------------
<S> <C> <C>
Variable Strategic Income Fund................................................................... $ 11,465,215 $ 30,347,033
Variable Global Government Income Fund........................................................... 8,531,882 30,747,779
Variable U.S. Government Income Fund............................................................. 5,317,980 --
Variable Latin America Fund...................................................................... -- 26,769,130
Variable Growth & Income Fund.................................................................... 570,538 18,078,696
Variable Telecommunications Fund................................................................. -- 27,856,893
Variable Emerging Markets Fund................................................................... -- 13,876,496
Variable Infrastructure Fund..................................................................... -- 231,362
Variable Natural Resources Fund.................................................................. -- 3,408,441
Variable America Fund............................................................................ -- 16,747,582
Variable New Pacific Fund........................................................................ -- 11,878,821
Variable Europe Fund............................................................................. -- 18,113,420
Money Market Fund................................................................................ -- --
Variable International Fund...................................................................... -- 3,105,340
</TABLE>
Statement of Additional Information Page 132
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
The Funds' written options activity for the year/period ended December 31, 1995,
was as follows:
GT GLOBAL VARIABLE STRATEGIC INCOME FUND
COVERED CALL OPTIONS WRITTEN
<TABLE>
<CAPTION>
UNDERLYING
PRINCIPAL AMOUNT PREMIUMS
----------------- --------------
<S> <C> <C>
Options outstanding at December 31, 1994........................................................ $ -- $ --
Options written during the year ended December 31, 1995......................................... 1,000,000 8,750
Options cancelled in closing purchase transactions.............................................. -- --
Options expired prior to exercise............................................................... (1,000,000) (8,750)
Options exercised............................................................................... -- --
----------------- --------------
Options outstanding at December 31, 1995........................................................ $ -- $ --
----------------- --------------
----------------- --------------
</TABLE>
GT GLOBAL VARIABLE GLOBAL GOVERNMENT INCOME FUND
COVERED CALL OPTIONS WRITTEN
<TABLE>
<CAPTION>
UNDERLYING
NOMINAL AMOUNT PREMIUMS
----------------- --------------
<S> <C> <C>
Options outstanding at December 31, 1994........................................................ $ -- $ --
Options written during the year ended December 31, 1995......................................... 980,000 4,508
Options cancelled in closing purchase transactions (Realized loss of $11,564)................... (980,000) (4,508)
Options expired prior to exercise............................................................... -- --
Options exercised............................................................................... -- --
----------------- --------------
Options outstanding at December 31, 1995........................................................ $ -- $ --
----------------- --------------
----------------- --------------
</TABLE>
Statement of Additional Information Page 133
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
4. CAPITAL SHARES
At December 31, 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>
YEAR ENDED DECEMBER 31, 1995 YEAR ENDED DECEMBER 31, 1994
----------------------------- -----------------------------
SHARES AMOUNT SHARES AMOUNT
------------ --------------- ------------ ---------------
<S> <C> <C> <C> <C>
GT GLOBAL VARIABLE STRATEGIC INCOME FUND
Shares sold......................................................... 1,985,281 $ 22,200,799 1,978,885 $ 24,363,028
Shares issued in connection with reinvestment of distributions...... 179,542 1,991,044 217,861 2,504,885
------------ --------------- ------------ ---------------
2,164,823 24,191,843 2,196,746 26,867,913
Shares repurchased.................................................. (2,185,897) (24,283,139) (1,279,651) (14,932,250)
------------ --------------- ------------ ---------------
Net increase (decrease)............................................. (21,074) $ (91,296) 917,095 $ 11,935,663
------------ --------------- ------------ ---------------
------------ --------------- ------------ ---------------
GT GLOBAL VARIABLE GLOBAL GOVERNMENT INCOME FUND
Shares sold......................................................... 1,119,737 $ 11,927,543 929,187 $ 10,658,737
Shares issued in connection with reinvestment of distributions...... 64,913 722,395 60,221 673,921
------------ --------------- ------------ ---------------
1,184,650 12,649,938 989,408 11,332,658
Shares repurchased.................................................. (1,054,689) (11,200,397) (571,500) (6,371,492)
------------ --------------- ------------ ---------------
Net increase........................................................ 129,961 $ 1,449,541 417,908 $ 4,961,166
------------ --------------- ------------ ---------------
------------ --------------- ------------ ---------------
GT GLOBAL VARIABLE U.S. GOVERNMENT INCOME FUND
Shares sold......................................................... 1,824,240 $ 20,431,040 423,487 $ 4,690,715
Shares issued in connection with reinvestment of distributions...... 18,588 234,899 9,399 104,492
------------ --------------- ------------ ---------------
1,842,828 20,665,939 432,886 4,795,207
Shares repurchased.................................................. (1,556,416) (17,459,191) (288,661) (3,169,722)
------------ --------------- ------------ ---------------
Net increase........................................................ 286,412 $ 3,206,748 144,225 $ 1,625,485
------------ --------------- ------------ ---------------
------------ --------------- ------------ ---------------
GT GLOBAL VARIABLE LATIN AMERICA FUND
Shares sold......................................................... 2,569,344 $ 35,542,045 1,888,080 $ 37,506,975
Shares issued in connection with reinvestment of distributions...... 236,651 2,991,268 5,690 91,834
------------ --------------- ------------ ---------------
2,805,995 38,533,313 1,893,770 37,598,809
Shares repurchased.................................................. (2,602,904) (36,198,875) (970,532) (19,435,079)
------------ --------------- ------------ ---------------
Net increase........................................................ 203,091 $ 2,334,438 923,238 $ 18,163,730
------------ --------------- ------------ ---------------
------------ --------------- ------------ ---------------
GT GLOBAL VARIABLE GROWTH & INCOME FUND
Shares sold......................................................... 776,808 $ 10,555,910 1,577,747 $ 21,179,611
Shares issued in connection with reinvestment of distributions...... 59,956 818,466 49,422 644,305
------------ --------------- ------------ ---------------
836,764 11,374,376 1,627,169 21,823,916
Shares repurchased.................................................. (708,880) (9,669,648) (505,030) (6,701,077)
------------ --------------- ------------ ---------------
Net increase........................................................ 127,884 $ 1,704,728 1,122,139 $ 15,122,839
------------ --------------- ------------ ---------------
------------ --------------- ------------ ---------------
GT GLOBAL VARIABLE TELECOMMUNICATIONS FUND
Shares sold......................................................... 1,453,558 $ 23,188,408 2,738,401 $ 36,062,278
Shares issued in connection with reinvestment of distributions...... 68,050 1,045,935 2,609 31,627
------------ --------------- ------------ ---------------
1,521,608 24,234,343 2,741,010 36,093,905
Shares repurchased.................................................. (1,087,480) (17,197,275) (769,197) (10,175,735)
------------ --------------- ------------ ---------------
Net increase........................................................ 434,128 $ 7,037,068 1,971,813 $ 25,918,170
------------ --------------- ------------ ---------------
------------ --------------- ------------ ---------------
</TABLE>
<TABLE>
<CAPTION>
JULY 5, 1994
(COMMENCEMENT OF
OPERATIONS) TO
DECEMBER 31, 1994
-----------------------------
SHARES AMOUNT SHARES AMOUNT
------------ --------------- ------------ ---------------
<S> <C> <C> <C> <C>
GT GLOBAL VARIABLE EMERGING MARKETS FUND
Shares sold......................................................... 1,173,549 $ 12,723,265 880,133 $ 11,376,969
Shares issued in connection with reinvestment of distributions...... 8,331 90,089 5,988 75,214
------------ --------------- ------------ ---------------
1,181,880 12,813,354 886,121 11,452,183
Shares repurchased.................................................. (967,577) (10,519,830) (274,767) (3,583,799)
------------ --------------- ------------ ---------------
Net increase........................................................ 214,303 $ 2,293,524 611,354 $ 7,868,384
------------ --------------- ------------ ---------------
------------ --------------- ------------ ---------------
</TABLE>
Statement of Additional Information Page 134
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
<TABLE>
<CAPTION>
JANUARY 31, 1995
(COMMENCEMENT OF OPERATIONS)
TO
DECEMBER 31, 1995
-----------------------------
SHARES AMOUNT
------------ ---------------
<S> <C> <C> <C> <C>
GT GLOBAL VARIABLE INFRASTRUCTURE FUND
Shares sold......................................................... 174,610 $ 2,285,935
Shares repurchased.................................................. (62,813) (826,452)
------------ ---------------
Net increase........................................................ 111,797 $ 1,459,483
------------ ---------------
------------ ---------------
GT GLOBAL VARIABLE NATURAL RESOURCES FUND
Shares sold......................................................... 228,814 $ 3,086,623
Shares issued in connection with reinvestment of distribution....... 4,976 67,477
------------ ---------------
233,790 3,154,100
Shares repurchased.................................................. (143,765) (1,940,086)
------------ ---------------
Net increase........................................................ 90,025 $ 1,214,014
------------ ---------------
------------ ---------------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1995 YEAR ENDED DECEMBER 31, 1994
----------------------------- -----------------------------
SHARES AMOUNT SHARES AMOUNT
------------ --------------- ------------ ---------------
<S> <C> <C> <C> <C>
GT GLOBAL VARIABLE AMERICA FUND
Shares sold......................................................... 3,800,437 $ 72,967,274 1,410,056 $ 21,334,929
Shares issued in connection with reinvestment of distributions...... 31,220 606,288 9,566 136,602
------------ --------------- ------------ ---------------
3,831,657 73,573,562 1,419,622 21,471,531
Shares repurchased.................................................. (2,862,326) (55,970,932) (578,009) (8,750,561)
------------ --------------- ------------ ---------------
Net increase........................................................ 969,331 $ 17,602,630 841,613 $ 12,720,970
------------ --------------- ------------ ---------------
------------ --------------- ------------ ---------------
GT GLOBAL VARIABLE NEW PACIFIC FUND
Shares sold......................................................... 7,058,585 $ 95,900,026 2,682,038 $ 40,297,352
Shares issued in connection with reinvestment of distributions...... 6,484 90,012 3,541 51,590
------------ --------------- ------------ ---------------
7,065,069 95,990,038 2,685,579 40,348,942
Shares repurchased.................................................. (6,795,204) (92,832,446) (1,795,774) (26,803,641)
------------ --------------- ------------ ---------------
Net increase........................................................ 269,865 $ 3,157,592 889,805 $ 13,545,301
------------ --------------- ------------ ---------------
------------ --------------- ------------ ---------------
GT GLOBAL VARIABLE EUROPE FUND
Shares sold......................................................... 2,497,482 $ 39,741,019 1,354,348 $ 21,064,089
Shares issued in connection with reinvestment of distributions...... 9,965 154,451 927 14,252
------------ --------------- ------------ ---------------
2,507,447 39,895,470 1,355,275 21,078,341
Shares repurchased.................................................. (2,547,574) (40,557,920) (721,304) (11,126,870)
------------ --------------- ------------ ---------------
Net increase (decrease)............................................. (40,127) $ (662,450) 633,971 $ 9,951,471
------------ --------------- ------------ ---------------
------------ --------------- ------------ ---------------
GT GLOBAL MONEY MARKET FUND
Shares sold......................................................... 178,846,705 $ 178,851,599 75,553,997 $ 75,553,997
Shares issued in connection with reinvestment of distributions...... 823,767 818,843 321,887 321,887
------------ --------------- ------------ ---------------
179,670,472 179,670,442 75,875,884 75,875,884
Shares repurchased.................................................. (184,253,572) (184,253,572) (60,177,597) (60,177,597)
------------ --------------- ------------ ---------------
Net increase (decrease)............................................. (4,583,100) $ (4,583,130) 15,698,287 $ 15,698,287
------------ --------------- ------------ ---------------
------------ --------------- ------------ ---------------
</TABLE>
<TABLE>
<CAPTION>
JULY 5, 1994
(COMMENCEMENT OF
OPERATIONS) TO
DECEMBER 31, 1994
-----------------------------
SHARES AMOUNT SHARES AMOUNT
------------ --------------- ------------ ---------------
<S> <C> <C> <C> <C>
GT GLOBAL VARIABLE INTERNATIONAL FUND
Shares sold......................................................... 1,403,934 $ 14,984,693 371,362 $ 4,416,954
Shares issued in connection with reinvestment of distributions...... 3,283 35,810 885 9,954
------------ --------------- ------------ ---------------
1,407,217 15,020,503 372,247 4,426,908
Shares repurchased.................................................. (1,272,826) (13,587,017) (174,075) (2,061,498)
------------ --------------- ------------ ---------------
Net increase........................................................ 134,391 $ 1,433,486 198,172 $ 2,365,410
------------ --------------- ------------ ---------------
------------ --------------- ------------ ---------------
</TABLE>
5. EXPENSE REDUCTIONS
GT Capital has directed certain portfolio trades to brokers who paid a portion
of the Funds' expenses. For the year/ period ended December 31, 1995, the Funds'
expenses were reduced by $32,284 under these arrangements.
Statement of Additional Information Page 135
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
FEDERAL TAX INFORMATION (UNAUDITED):
Pursuant to Section 852 of the Internal Revenue Code, the following Funds made
capital gain designations for the fiscal year ended December 31, 1995:
<TABLE>
<CAPTION>
GT GLOBAL FUNDS:
- ------------------------------------------
<S> <C>
Variable Latin America.................... $ 212,380
Variable Telecommunications............... 27,361
Variable America.......................... 16,400
Variable International.................... 2,394
</TABLE>
Statement of Additional Information Page 136
