GT GLOBAL VARIABLE INVESTMENT SERIES, 497, 1997-05-05

GT GLOBAL VARIABLE INVESTMENT SERIES
497, 1997-05-05

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<PAGE>
GT GLOBAL
VARIABLE
INVESTMENT
FUNDS

PROSPECTUSES
<PAGE>

[LOGO]GT GLOBAL VARIABLE INVESTMENT FUNDS
PROSPECTUS -- MAY 1, 1997, AS REVISED MAY 1, 1997

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

The GT GLOBAL VARIABLE INVESTMENT FUNDS described herein (individually, a
"Fund," and collectively, the "Funds") are mutual funds that are offered for
investment exclusively to separate accounts ("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"), and its worldwide affiliates are 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 invests up to 50% of its assets in 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 May
1, 1997, as revised May 1, 1997, has been filed with the Securities and Exchange
Commission (the "SEC") and, as supplemented or amended from time to time, is
incorporated herein by reference. The Statement of Additional Information 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........................................................ 13
Risk Factors.............................................................................. 28
Currency, Options and Futures Strategies.................................................. 34
How to Invest............................................................................. 36
Calculation of Net Asset Value............................................................ 36
Dividends, Other Distributions and Federal Income Taxation................................ 37
Management................................................................................ 38
Other Information......................................................................... 44
</TABLE>

Prospectus Page 2
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

GENERAL INFORMATION

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

Each Fund is organized as a separate series of either G.T. Global Variable
Investment Series or G.T. Global Variable Investment Trust (individually, a
"Company," and collectively, the "Companies"). 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 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'
Boards of Trustees intend 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 ("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 ("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

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

The tables below provide condensed financial information concerning income and
capital charges for one share of each Fund 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 DECEMBER 31, TO
--------------------------- DECEMBER 31,
1996 1995 1994
------------ ------------ -------------
GT GLOBAL GT GLOBAL GT GLOBAL
------------ ------------ -------------
VARIABLE VARIABLE VARIABLE
INTERNATIONAL INTERNATIONAL INTERNATIONAL
FUND FUND FUND
------------ ------------ -------------
<S> <C> <C> <C>
Net asset value, beginning of period.............. $ 11.01 $ 11.25 $ 12.00
------------ ------------ -------------
Income from investment operations
Net investment income........................... 0.05* 0.09*** 0.06**
Net gains or losses on securities (both realized
and unrealized)................................ 0.89 (0.22) (0.76)
------------ ------------ -------------
Total from investment operations.................. 0.94 (0.13) (0.70)
------------ ------------ -------------
Less distributions
From net investment income...................... (0.00) (0.09) (0.05)
From net realized gain on investments........... (0.04) (0.02) (0.00)
In excess of capital gains...................... (0.00) (0.00) (0.00)
Return of capital............................... (0.00) (0.00) (0.00)
------------ ------------ -------------
Total distributions........................... (0.04) (0.11) (0.05)
------------ ------------ -------------
Net asset value, end of period.................... $ 11.91 $ 11.01 $ 11.25
------------ ------------ -------------
------------ ------------ -------------
Total returns+ (b)................................ 8.52% (1.14)% (5.81)%
Ratios/supplemental data
Net assets, end of period (in 000's)............ $ 4,782 $ 3,663 $ 2,229
Ratio of net investment income (loss) to average
net assets:
With reimbursement by the Manager and expense
reductions (a)............................... 0.48% 0.93% 3.33%
Without reimbursement by the Manager and
expense reductions (a)....................... (0.86)% (1.35)% (2.56)%
Without expenses assumed by the Manager (a)... --% --% --%
Ratio of expenses to average net assets:
With reimbursement by the Manager and expense
reductions (a)............................... 1.15% 1.25% 0.69%
Without reimbursement by the Manager and
expense reductions (a)....................... 2.49% 3.53% 6.58%
Without expenses assumed by the Manager (a)... --% --% --%
Portfolio turnover (a).......................... 92% 107% 17%
Average commission rate per share paid on
portfolio transactions......................... $0.0156 N/A 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 International Fund operating
expenses of $0.14.

** 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, 1996 YEAR ENDED DECEMBER 31, 1995
------------------------------------------ --------------------------------
GT GLOBAL GT GLOBAL
------------------------------------------ --------------------------------
VARIABLE VARIABLE
NEW VARIABLE VARIABLE MONEY NEW VARIABLE VARIABLE
PACIFIC EUROPE AMERICA MARKET PACIFIC EUROPE AMERICA
FUND FUND FUND FUND FUND FUND FUND
----------- -------- -------- -------- ----------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.............. $ 13.92 $ 16.52 $ 19.46 $ 1.00 $ 14.01 $ 15.22 $ 15.81
----------- -------- -------- -------- ----------- -------- --------
Income from investment operations
Net investment income........................... 0.13** 0.05** 0.12** 0.05** 0.20* 0.18* 0.21*
Net gains or losses on securities (both realized
and unrealized)................................ 4.16 4.93 3.18 0.00 (0.23) 1.28 3.80
----------- -------- -------- -------- ----------- -------- --------
Total from investment operations.................. 4.29 4.98 3.30 0.05 (0.03) 1.46 4.01
----------- -------- -------- -------- ----------- -------- --------
Less distributions
From net investment income...................... (0.19) (0.16) (0.30) (0.05) (0.06) (0.16) (0.07)
From net realized gain on investments........... (0.00) (0.00) (2.75) (0.00) (0.00) (0.00) (0.29)
In excess of capital gains...................... (0.00) (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) (0.00)
----------- -------- -------- -------- ----------- -------- --------
Total distributions........................... (0.19) (0.16) (3.05) (0.05) (0.06) (0.16) (0.36)
----------- -------- -------- -------- ----------- -------- --------
Net asset value, end of period.................... $ 18.02 $ 21.34 $ 19.71 $ 1.00 $ 13.92 $ 16.52 $ 19.46
----------- -------- -------- -------- ----------- -------- --------
----------- -------- -------- -------- ----------- -------- --------
Total returns+ (b)................................ 30.97% 30.25% 18.55% 4.75% (0.21)% 9.66% 25.37%
Ratios/supplemental data
Net assets, end of period (in 000's)............ $ 32,670 $ 24,537 $ 41,647 $ 19,794 $ 23,025 $ 15,641 $ 37,643
Ratio of net investment income (loss) to average
net assets:
With reimbursement by the Manager and expense
reductions (a)............................... 0.88% 0.36% 0.52% 4.67% 1.27% 1.12% 1.66%
Without reimbursement by the Manager and
expense
reductions (a)............................... 0.60% 0.09% 0.46% 4.57% 1.74% 0.60% 1.60%
Without expenses assumed by the Manager (a)... --% --% --% --% --% --% --%
Ratio of expenses to average net assets:
With reimbursement by the Manager and expense
reductions (a)............................... 1.12% 1.20% 0.95% 0.75% 1.14% 1.20% 1.00%
Without reimbursement by the Manager and
expense
reductions (a)............................... 1.40% 1.47% 1.01% 0.85% 1.61% 1.72% 1.06%
Without expenses assumed by the Manager (a)... --% --% --% --% --% --% --%
Portfolio turnover (a).......................... 70% 56% 248% N/A 67% 123% 79%
Average commission rate per share paid on
portfolio transactions......................... $ 0.0071 $ 0.0313 $ 0.0531 N/A N/A N/A N/A

MONEY
MARKET
FUND
--------
<S> <C>
Net asset value, beginning of period.............. $ 1.00
--------
Income from investment operations
Net investment income........................... 0.05*
Net gains or losses on securities (both realized
and unrealized)................................ 0.00
--------
Total from investment operations.................. 0.05
--------
Less distributions
From net investment income...................... (0.05)
From net realized gain on investments........... (0.00)
In excess of capital gains...................... (0.00)
Return of capital............................... (0.00)
--------
Total distributions........................... (0.05)
--------
Net asset value, end of period.................... $ 1.00
--------
--------
Total returns+ (b)................................ 5.26%
Ratios/supplemental data
Net assets, end of period (in 000's)............ $ 14,891
Ratio of net investment income (loss) to average
net assets:
With reimbursement by the Manager and expense
reductions (a)............................... 5.15%
Without reimbursement by the Manager and
expense
reductions (a)............................... 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)............................... 0.75%
Without reimbursement by the Manager and
expense
reductions (a)............................... 1.05%
Without expenses assumed by the Manager (a)... --%
Portfolio turnover (a).......................... N/A
Average commission rate per share paid on
portfolio transactions......................... 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 New Pacific Fund, Europe Fund,
America Fund and Money Market Fund operating expenses for the fiscal year
ended December 31, 1996 of $0.04, $0.04, $0.00 and $0.00, respectively.

Prospectus Page 5
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

G.T. GLOBAL VARIABLE INVESTMENT SERIES (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1994
-----------------------------------------
GT GLOBAL
-----------------------------------------
VARIABLE
NEW VARIABLE VARIABLE MONEY
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 net realized gain on
investments.......................... (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
Average commission rate per share paid
on portfolio transactions............ N/A N/A N/A N/A

<CAPTION>
FEBRUARY 10, 1993 (COMMENCEMENT OF
OPERATIONS) TO DECEMBER 31, 1993
-----------------------------------------
GT GLOBAL
-----------------------------------------
VARIABLE
NEW VARIABLE VARIABLE MONEY
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 net realized gain on
investments.......................... (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
Average commission rate per share paid
on portfolio transactions............ N/A N/A N/A N/A
</TABLE>

- ------------------
(a) Annualized for periods of less than one year.

(b) Not annualized.

* 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, 1993 of $0.03, $0.03, $0.10 and $0.01, respectively.

** 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, 1994, of $0.03, $0.04, $0.28 and $0.00, respectively.

Prospectus Page 6
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

G.T. GLOBAL VARIABLE INVESTMENT TRUST

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996
-----------------------------------------
GT GLOBAL VARIABLE
-----------------------------------------
NATURAL
INFRASTRUCTURE RESOURCES EMERGING
FUND FUND MARKETS FUND
-------------- --------- ------------
<S> <C> <C> <C>
Net asset value, beginning of period........................ $13.27 $13.88 $10.88
-------------- --------- ------------
Income from investment operations
Net investment income..................................... 0.11* (0.06)* 0.11*
Net gains or losses on securities (both realized and
unrealized).............................................. 3.19 7.16 3.27
-------------- --------- ------------
Total from investment operations............................ 3.30 7.10 3.38
-------------- --------- ------------
Less distributions
From net investment income................................ (0.03) (0.00) (0.00)
From capital gain......................................... (0.07) (0.00) (0.00)
In excess of capital gains................................ (0.00) (0.00) (0.00)
Return of capital......................................... (0.00) (0.00) (0.00)
-------------- --------- ------------
Total distributions......................................... (0.10) (0.00) (0.00)
-------------- --------- ------------
Net asset value, end of period.............................. $ 16.47 $ 20.98 $ 14.26
-------------- --------- ------------
-------------- --------- ------------
Total returns+ (b) 24.88% 51.15% 31.07%
Ratios/supplemental data
Net assets, end of period (in 000's)...................... $ 6,054 $16,308 $17,604
Ratio of net investment income to average net assets:
With reimbursement by the Manager and expense reductions
(a).................................................... 1.35% (0.60)% 0.89%
Without reimbursement by the Manager and expense
reductions (a)......................................... 0.03% (1.30)% 0.39%
Without expenses assumed by the Manager (a)............. --% --% --%
Ratio of expenses to average net assets:
With reimbursement by the Manager and expense reductions
(a).................................................... 1.21% 1.19% 1.18%
Without reimbursement by the Manager and expense
reductions (a)......................................... 2.53% 1.89% 1.68%
Without expenses assumed by the Manager (a)............. --% --% --%
Portfolio turnover (a).................................... 76% 199% 216%
Average commission rate per share paid on portfolio
transactions............................................. $0.0101 $0.0164 $0.0021
</TABLE>

- ------------------
(a) Annualized for periods of less than one year.

(b) Not annualized.

* Includes reimbursement by the Manager of Infrastructure Fund, Natural
Resources Fund and Emerging Markets Fund of operating expenses for the
fiscal year ended December 31, 1996 of $0.19, $0.11 and $0.05, respectively.

Prospectus Page 7
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

G.T. GLOBAL VARIABLE INVESTMENT TRUST (CONTINUED)

<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 EMERGING
INFRASTRUCTURE RESOURCES EMERGING MARKETS
FUND FUND MARKETS FUND 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%
Average commission rate per share paid on portfolio
transactions............................................. N/A N/A N/A N/A
</TABLE>

- ------------------
(a) Annualized for periods of less than one year.

(b) Not annualized.

* 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.

Prospectus Page 8
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

G.T. GLOBAL VARIABLE INVESTMENT TRUST (CONTINUED)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996
----------------------------------------------------------------------------------
GT GLOBAL VARIABLE
----------------------------------------------------------------------------------
LATIN GLOBAL U.S. TELECOM-
AMERICA GROWTH & STRATEGIC GOVERNMENT GOVERNMENT MUNICATIONS
FUND INCOME FUND INCOME FUND INCOME FUND INCOME FUND FUND
----------- ----------- ----------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period............ $ 12.42 $ 14.57 $ 11.86 $ 11.51 $ 11.74 $ 16.87
----------- ----------- ----------- ------------- ------------- -------------
Income from investment operations
Net investment income......................... 0.27* 0.53* 0.95* 0.72* 0.60* (0.05)*
Net gains or losses on securities (both
realized and unrealized)..................... 2.49 1.81 1.50 (0.06) (0.35) 3.31
----------- ----------- ----------- ------------- ------------- -------------
Total from investment operations................ 2.76 2.34 2.45 0.66 0.25 3.26
----------- ----------- ----------- ------------- ------------- -------------
Less distributions
From net investment income.................... (0.37) (0.35) (0.85) (0.74) (0.58) (0.02)
From net realized gain or investments......... (0.00) (0.05) (0.08) (0.00) (0.00) (1.97)
In excess of capital gains.................... (0.01) (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............................. (0.38) (0.40) (0.93) (0.74) (0.58) (1.99)
----------- ----------- ----------- ------------- ------------- -------------
Net asset value, end of period.................. $ 14.80 $ 16.51 $ 13.38 $ 11.43 $ 11.41 $ 18.14
----------- ----------- ----------- ------------- ------------- -------------
----------- ----------- ----------- ------------- ------------- -------------
Total returns+(b)............................... 22.48% 16.33% 21.58% 6.17% 2.23% 19.34%
Ratios/supplemental data
Net assets, end of period (in 000's).......... $ 22,928 $ 36,433 $ 31,718 $ 10,397 $ 5,483 $ 63,252
Ratio of net investment income to average net
assets:
With reimbursement by the Manager and
expense reductions (a)..................... 1.94% 3.58% 7.74% 6.32% 5.24% (0.26)%
Without reimbursement by the Manager and
expense reductions (a)..................... 1.69% 3.48% 7.59% 5.80% 4.49% (0.31)%
Without expenses assumed by the
Manager (a)................................ --% --% --% --% --% --%
Ratio of expenses to average net assets:
With reimbursement by the Manager and
expense reductions (a)..................... 1.17% 1.20% 0.99% 0.95% 1.00% 1.12%
Without reimbursement by the Manager and
expense reductions (a)..................... 1.42% 1.30% 1.14% 1.47% 1.75% 1.17%
Without expenses assumed by the
Manager (a)................................ --% --% --% --% --% --%
Portfolio turnover (a)........................ 102% 57% 210% 235% 49% 77%
Average commission rate per share paid on
portfolio transactions....................... $ 0.0002 $ 0.0147 N/A N/A N/A $ 0.0068
</TABLE>

- ------------------
(a) Annualized for periods of less than one year.

(b) Not annualized.

* Includes reimbursement by the Manager of operating expenses for the fiscal
year ended December 31, 1996 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 $0.02, $0.01,
$0.02, $0.06, $0.08 and $0.00, respectively.

Prospectus Page 9
<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. TELECOM-
AMERICA GROWTH & STRATEGIC GOVERNMENT GOVERNMENT MUNICATIONS
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%
Average commission rate per share paid on
portfolio transactions....................... N/A N/A N/A N/A N/A N/A
</TABLE>

- ------------------
(a) Annualized for periods of less than one year.

(b) Not annualized.

* 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.

Prospectus Page 10
<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. TELECOM-
AMERICA GROWTH & STRATEGIC GOVERNMENT GOVERNMENT MUNICATIONS
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) (0.00) (0.45) (0.00) (0.06) (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) (0.05) (0.09) (0.00) (0.00)
----------- ----------- ----------- ------------- ------------- -------------
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+ (b)............................. 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 $ 25,580 $ 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 (a)....................... 185% 53% 313% 350% 34% 81%
Average commission rate per share paid on
portfolio transactions...................... N/A N/A N/A N/A N/A N/A
</TABLE>

- ------------------
(a) Annualized for periods of less than one year.

(b) Not annualized.

* 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.

Prospectus Page 11
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

G.T. GLOBAL VARIABLE INVESTMENT TRUST (CONTINUED)

<TABLE>
<CAPTION>
OCTOBER 18,
1993
(COMMENCEMENT
OF OPERATIONS) TO
FEBRUARY 10, 1993 (COMMENCEMENT OF DECEMBER 31,
OPERATIONS) TO DECEMBER 31, 1993 1993
------------------------------------------------------------------- -----------------
GT GLOBAL VARIABLE
--------------------------------------------------------------------------------------
LATIN GLOBAL U.S. TELECOM-
AMERICA GROWTH & STRATEGIC GOVERNMENT GOVERNMENT MUNICATIONS
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%
Average commission rate per share paid on
portfolio transactions................... N/A N/A N/A N/A N/A N/A
</TABLE>

- ------------------
(a) Annualized for periods of less than one year.

(b) Not annualized.

* 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.

Prospectus Page 12
<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. The New Pacific Fund, the Europe Fund and the
International Fund each seeks its 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. The America Fund
seeks its objective by investing, under normal circumstances, at least 65% of
its total assets in equity securities of companies domiciled in the United
States that, at the time of purchase, have market capitalizations of $1 billion
to $5 billion ("U.S. mid cap companies"). 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 Investment Series' Board of Trustees may add or delete
countries from a Global Growth Fund's Primary Investment Area.

For purposes of this Prospectus, an issuer typically is considered as domiciled
in a particular country if it is (a) organized under the laws of, or has its
principal office in, a particular country or (b) normally derives 50% or more of
its total revenues from business in that country, provided that, in the
Manager's view, the value of such issuer's securities tends to reflect such
country's development to a greater extent than developments elsewhere. 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 foreign operations or subsidiaries and/or export sales
exceeding in size the assets or sales in that country.

Each Global Growth Fund may invest up to 35% of its assets in the equity
securities of issuers domiciled outside of its Primary Investment Area,
including: (a) securities of issuers not domiciled in the Primary Investment
Area but which are domiciled in countries that are linked by tradition, economic
markets, cultural similarities or geography to such Primary Investment Area; and
(b) securities of issuers domiciled elsewhere in the world that have operations
in the Primary Investment Area or that stand to benefit from political and
economic events in the Primary Investment Area. In addition, the America Fund
may invest up to 35% of its total assets in equity securities of issuers
domiciled in the United States that are not U.S. mid cap companies.

Up to 35% of each Global Growth Fund's assets may be invested in debt securities
of issuers that may or may not be domiciled in such Fund's Primary Investment
Area. The Global Growth Funds will limit their purchases of debt securities to
obligations rated no lower than investment grade, or if unrated, deemed by the
Manager to be of equivalent quality. See "Risk Factors."

In managing the New Pacific Fund, the Europe Fund and the International 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 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

Prospectus Page 13
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
markets 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 countries, and their economies and markets are
less developed and more prone to uncertainty, instability and risk than the
other markets in which such 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.

In selecting equity securities for the America Fund, the Manager uses a
multi-stage process to identify companies that possess sustainable above average
growth at an attractive offering price. The process for selecting mid cap growth
stocks consists of four components: asset allocation, industry diversification,
stock selection and quality control. The Manager tracks individual companies and
categorizes them into industry groups. Purchases and sales of individual
securities are based on the ratings established by the Manager on a weekly
basis. Stocks ranked in the top 30% are buys, and the bottom 30% are sells. The
quality control process ensures consistency with the industry and asset
allocation guidelines as well as stock guidelines. There is no assurance that
this process will produce better or more consistent results than other
investment processes.

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 that, 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 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. 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 equity 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 Infrastructure Fund's total assets.

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 that will enable the companies to compete successfully in their
respective markets.

For purposes of the Infrastructure Fund's policy of normally investing at least
65% of its total assets in the equity 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

Prospectus Page 14
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
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 Pacific Rim,
the Manager 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 certain 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 invests in natural resource companies
that, 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. 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 equity 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 Natural Resources Fund's total assets.

The Natural Resources Fund may invest in securities of companies in those
natural resource industries and commodity groups that, 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; effective research and product development and
marketing; development of new technologies; efficient service; strong
management; and general operating characteristics which will enable the
companies to compete successfully in their respective markets.

For purposes of the Natural Resources Fund's policy of normally investing at
least 65% of its total assets in the equity 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, 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 also evaluate, among other factors, their capabilities for expanded
exploration and production, superior exploration programs and

Prospectus Page 15
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
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 that 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'S investment objective is long-term growth of
capital. The Telecommunications Fund seeks its objective by investing primarily
in equity securities of companies throughout the world engaged in the
development, manufacture or sale of telecommunications services or equipment.

At least 65% of the Telecommunication Fund's total assets normally will be
invested in common and preferred stocks and warrants to acquire such stocks
issued by telecommunications companies. A "telecommunications company" is an
entity in which (i) at least 50% of either its revenues or earnings was derived
from telecommunications activities, or (ii) at least 50% of its assets was
devoted to telecommunications activities, based on the company's most recent
fiscal year. The remainder of the assets of the Telecommunications Fund may be
invested in debt securities issued by telecommunications companies and/or 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 industries.

The Telecommunications Fund may invest substantially in securities denominated
in one or more currencies. Under normal conditions, the Telecommunications Fund
invests in the equity 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 Telecommunications Fund's total assets.

Telecommunications companies cover 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 normally investing at
least 65% of its total assets in the equity securities of telecommunications
companies, the companies in which the Telecommunications Fund will principally
invest will be 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 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 Manager expects that, from time to time, a significant portion of the
Telecommunications Fund's 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 that comprise the telecommunications industry are headquartered
outside of the United States.

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
Liechtenstein Global Trust in attempting to identify those countries and
telecommunications companies then providing the

Prospectus Page 16
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GT GLOBAL VARIABLE INVESTMENT FUNDS
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.
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 Telecommunications Fund's investment objective are
expected to be the most attractive.

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 technologies 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
Telecommunication's Fund's portfolio. Older technologies, such as photography
and print, also may be represented, however.

LATIN AMERICA FUND

The LATIN AMERICA FUND'S investment objective is capital appreciation. The Fund
normally invests at least 65% of its total assets in the securities of a broad
range of Latin American issuers. 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 securities with
comparable risk characteristics, as well as bonds, notes, debentures or other
forms of indebtedness that may be developed in the future. 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.

For purposes of this Prospectus, unless otherwise indicated, the Latin America
Fund defines Latin America to include the following countries: Argentina, the
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. Under
current market conditions, the Latin America Fund expects to invest primarily in
securities issued by companies and governments in Mexico, Chile, Brazil and
Argentina. 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.

Under normal circumstances, the Latin America Fund may invest up to 50% of its
assets in debt securities. Capital appreciation in debt securities may arise as
a result of a favorable change in relative foreign exchange rates, in relative
interest rate levels and/or in the creditworthiness of issuers. The receipt of
income from such debt securities owned by the Fund is incidental to the Fund's
objective of capital appreciation. 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. 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 below investment grade
securities. See "Risk Factors."

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 50% or more
of their total 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.

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. In allocating
assets between equity and debt securities, the Manager will consider, among
other

Prospectus Page 17
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GT GLOBAL VARIABLE INVESTMENT FUNDS
factors: the level and anticipated direction of interest rates; expected rates
of economic growth and corporate profits growth; changes in Latin American
government policy including regulation governing industry, trade, financial
markets, and foreign and domestic investment; substance and likely development
of government finances; and the condition of the balance of payments and changes
in the terms of trade. In evaluating investments in securities of U.S. issuers,
the Manager will consider, among other factors, the issuer's Latin American
business activities and the impact that developments in Latin America may have
on the issuer's operations and financial condition.

Certain sectors of the economies of certain Latin American countries are closed
to equity investments by foreigners. Further, due to the absence of securities
markets and publicly owned corporations and due to restrictions on direct
investment by foreign entities in certain Latin American countries, the Latin
America Fund may be able to invest in such countries solely or primarily through
governmentally approved investment vehicles or companies. In addition, the
portion of the Latin America Fund's assets invested directly in Chile may be
less than the portion invested in other Latin American countries because, at
present, capital directly invested in Chile normally cannot be repatriated for
at least one year. As a result, the Latin America Fund currently intends to
limit most of its Chilean investments to indirect investments through American
Depositary Receipts ("ADRs") and established Chilean investment companies, the
shares of which are not subject to repatriation restrictions.

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.

For purposes of the Emerging Markets 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 located in Western Europe. See "Investment Objectives and
Policies" in the Statement of Additional Information for a complete list of all
the countries that the Emerging Markets Fund does not consider to be emerging
markets.

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 Fund will consider investment in the following
emerging markets:

<TABLE>
<S> <C> <C>
Algeria Hong Kong Peru
Argentina Hungary Philippines
Bolivia India Poland
Botswana Indonesia Portugal
Brazil Israel Republic of
Bulgaria Ivory Coast Slovakia
Chile Jamaica Russia
China Jordan Singapore
Colombia Kazakhstan Slovenia
Costa Rica Kenya South Africa
Cyprus Lebanon South Korea
Czech Malaysia Sri Lanka
Republic Mauritius Swaziland
Dominican Mexico Taiwan
Republic Morocco Thailand
Ecuador Nicaragua Turkey
Egypt Nigeria Ukraine
El Salvador Oman Uruguay
Finland Pakistan Venezuela
Ghana Panama Zambia
Greece Paraguay Zimbabwe
</TABLE>

Although the Emerging Markets Fund considers each of the above-listed countries
eligible for investment, it 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.

For purposes of 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.

The Emerging Markets Fund may also invest up to 35% of its total assets in: (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

Prospectus Page 18
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
investing therein becomes feasible and desirable subsequent to the date of this
Prospectus; and (iv) cash and money market instruments.

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. The Emerging Markets Fund will not invest more
than 20% of its total assets in debt securities rated below investment grade.
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,
the Fund will dispose of any such security as soon as practicable and consistent
with the best interests of the Emerging Markets Fund and its shareholders.

Growth of capital 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 its objective of long-term growth of capital.

The Emerging Markets Fund invests in those emerging markets that the Manager
believes have strongly developing economies and in which the markets are
becoming more sophisticated. In selecting investments, 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 invests 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. 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.

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.

Equity securities that the Growth & Income Fund may purchase 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 and 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

Prospectus Page 19
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
up to 100% of its assets in either equity securities or debt securities.

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 invests in debt securities of issuers in: (1) the
United States; (2) developed foreign countries; and (3) emerging markets. The
Strategic Income Fund selects debt securities from those issued by 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
(including mortgage-backed and asset-backed securities). The Strategic Income
Fund normally invests at least 50% of its net 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 total assets may be invested in securities rated below investment grade.

The Strategic Income Fund considers "emerging markets" to 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 will consider investment in the
following emerging markets:

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, 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 (described below) and other sovereign 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, the substantial majority of emerging market debt
securities are considered to have a credit quality below investment grade. The
Strategic Income Fund also may invest in below investment grade debt securities
of corporate issuers in the United States and in developed foreign countries,
subject to the overall 50% limitation.

GLOBAL GOVERNMENT INCOME FUND

The GLOBAL GOVERNMENT INCOME FUND 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. At
least 65% of the Fund's total assets normally are invested in debt obligations
issued or guaranteed by the U.S. or foreign governments (including foreign
states, provinces or municipalities) or their agencies, authorities or
instrumentalities, including mortgage-backed securities issued by agencies or
instrumentalities of the U.S. government. 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
debt securities. High quality debt securities are those securities rated in the
top two 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 issuers of not less than three different countries. Investments
in

Prospectus Page 20
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
securities of issuers in any one country, other than the United States, normally
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).

The Global Government Income Fund also may invest up to 35% of its total assets
in: (a) foreign government securities that are not 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 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; (c) privately issued mortgage-backed
and asset-backed securities rated in the highest rating category by Moody's or
S&P, or if unrated, determined by the Manager to be of comparable quality; and
(d) common stocks, preferred stocks and warrants to acquire such securities,
provided that the Global Government Income Fund will not invest more than 20% of
its total assets in such securities.

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 ("FHLBs"), 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 issuers and in currency denominations where the combination of
fixed income market returns, the price appreciation potential of fixed income
securities and currency exchange rate movements will present opportunities for
meeting its investment objectives. 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 GNMA certificates),
securities that are supported by the right of the issuer to borrow from the U.S.
Treasury (such as securities of the FHLBs) and securities supported primarily or
solely by the creditworthiness of the issuer (such as securities of Fannie Mae,
FHLMC, SLMA and TVA).

U.S. government securities in which the U.S. Government Income Fund may invest
include mortgage-backed securities. Such securities are issued or guaranteed as
to principal and interest by GNMA, Fannie Mae, FHLMC or other government-
sponsored enterprises. Such securities include fixed-rate mortgage obligations,
collateralized mortgage obligations and adjustable rate mortgage obligations.

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, securities issued or guaranteed by Fannie Mae 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, FHLBs, 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

Prospectus Page 21
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
higher yields than U.S. Treasury securities having similar maturities but may
have greater principal risk.

The U.S. Government Income Fund may invest in bonds issued by the Resolution
Funding Corporation ("Refcorp") whose interest payments are guaranteed by U.S.
Treasury zero coupon bonds. 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.

The U.S. Government Income Fund may also invest up to 35% of its total assets
in: (a) foreign government securities that are at least of investment grade
quality; (b) 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 comparable quality; and (c) privately issued
mortgage-backed and asset-backed securities rated in the highest rating category
by Moody's or S&P, or if unrated, determined by the Manager to be of comparable
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.

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.

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 Investment Series' 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 security), or, if unrated, determined
by the Manager to be of equivalent quality. 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 that 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:

(1) 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 Fannie Mae, FHLMC and TVA; and similar U.S. dollar-denominated
instruments of foreign governments, their agencies, authorities and
instrumentalities;

(2) 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;

(3) 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

Prospectus Page 22
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of such deposits (including interest earned) does not exceed 5% of the Money
Market Fund's assets;

(4) 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. 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; and

(5) Repurchase agreements secured by any of the foregoing.

In addition to the foregoing 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.

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.

OTHER INVESTMENT INFORMATION

TEMPORARY DEFENSIVE STRATEGIES. In the interest of preserving shareholders'
capital, the Manager may employ a temporary defensive investment strategy if it
determines such a strategy to be warranted due to market, economic or political
conditions. Under a defensive strategy, a Fund may invest up to 100% of its
total assets in cash (U.S. dollars, foreign currencies or multinational currency
units) and/or high quality debt securities or money market instruments of U.S.
or foreign issuers. In addition, for temporary defensive purposes, 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 cash (U.S. dollars, foreign
currencies or multinational currency units) and may invest in foreign or
domestic high quality money market instruments.

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, Ivory Coast, Jordan, Mexico, Nigeria, Philippines,
Poland, Russia, Uruguay, Venezuela and Vietnam, and are expected to be issued by
other emerging market countries. 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. In addition,
Brady Bonds are often rated below investment grade.

The Latin America Fund and 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

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GT GLOBAL VARIABLE INVESTMENT FUNDS
owned or controlled by them or that privatization programs will be successful.

LOAN PARTICIPATIONS AND ASSIGNMENTS. The Strategic Income Fund may invest in
fixed and 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 from third parties ("Assignments").
Participations typically will result in the Strategic Income Fund's having a
contractual relationship only with the Lender, not with the borrower 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,
since 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.

BORROWING AND LENDING. From time to time, it may be advantageous for a Fund 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 and "roll" transactions 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. 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.

Each Fund (except for the Money Market Fund) may enter into reverse repurchase
agreements. A reverse repurchase agreement is a borrowing transaction in which
the 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. Each Fund
(except for the Money Market Fund) may also engage in "roll" borrowing
transactions, which involve the sale of GNMA certificates or other securities
together with a commitment (for which the Fund may receive a fee) to purchase
similar, but not identical, securities at a future date. Each Fund will
maintain, in a segregated account with a custodian, cash or liquid securities in
an amount sufficient to cover its obligations under "roll" transactions and
reverse repurchase agreements with broker/dealers. No segregation is required
for reverse repurchase agreements with banks.

The Strategic Income Fund may 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 for
investment purposes only when the Manager believes that such borrowings will
benefit the Strategic Income 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, involves 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 realized by
the Fund's 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. By leveraging the

Prospectus Page 24
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GT GLOBAL VARIABLE INVESTMENT FUNDS
Fund, changes in net asset values, higher or lower, may be greater in degree
than if leverage was not employed. 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 a dividend will be reduced. The Strategic Income Fund expects
that some of its borrowings may be made on a secured basis.

SECURITIES LENDING. Each Fund (except the Money Market Fund) may lend its
portfolio securities to broker/dealers or to other institutional investors.
Securities lending allows the Fund to retain ownership of the securities loaned
and, at the same time, earn additional income that may be used to offset a
Fund's custody fees. At all times a loan is outstanding, the borrower must
maintain with the Fund's custodian collateral consisting of cash, U.S.
government securities or certain irrevocable letters of credit equal to at least
the value of the borrowed securities, plus any accrued interest. Each Fund
limits 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 loaned
securities and possible loss of rights in the collateral should the borrower
fail financially.

INVESTMENT IN OTHER INVESTMENT COMPANIES OR VEHICLES. The Funds may be able to
invest in certain countries solely or primarily through governmentally
authorized investment vehicles or companies. 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, as long as each investment does not represent more than 3%
of the voting stock of the acquired investment company at the time of
investment.

Investment in other investment companies may involve the payment of substantial
premiums above the value of such investment companies' portfolio securities and
is subject to limitations under the 1940 Act and market availability. The Funds
do not intend to invest in investment companies 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.

WHEN-ISSUED OR 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, 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 purchase
or sell when-issued securities or enter into 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 with its
custodian and will be marked to market daily. There is a risk that the
securities may not be delivered and that the Fund may incur a loss. The Growth
and Income Fund will not invest more than 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 Strategic Income Fund may also sell securities on a "when, as and if issued"
basis for hedging purposes. Under such a transaction, the Strategic Income 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 Strategic Income 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 Strategic Income Fund can receive if the "when, as and if issued"
security is in fact issued.

REPURCHASE AGREEMENTS. A repurchase agreement is a transaction 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

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GT GLOBAL VARIABLE INVESTMENT FUNDS
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 will
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 will review and monitor the
creditworthiness of such institutions under the Boards' general supervision.

A Fund will not enter into a repurchase agreement with a maturity of more than
seven days if, as a result, more than 15% (10% with respect to the Money Market
Fund) of the value of its net assets would be invested in repurchase agreements
with maturities of more than seven days and other illiquid securities.

MORTGAGE-BACKED AND ASSET-BACKED SECURITIES. The U.S. Government Income Fund may
invest a significant portion of its assets in mortgage-backed and asset-backed
securities. In addition, the Strategic Income Fund and the Global Government
Income Fund is each authorized to invest in mortgage-backed and asset-backed
securities. Such securities are bonds backed by specific types of assets.
Mortgage-backed securities represent direct or indirect interests in pools of
underlying mortgage loans that are secured by real property. U.S. government
mortgage-backed securities are issued or guaranteed as to principal and interest
(but not as to market value) by GNMA, Fannie Mae, FHLMC or other
government-sponsored enterprises. Other mortgage-backed securities and the
secondary mortgage market in which they are traded has helped to keep mortgage
money available for home financing.

Mortgage-backed securities may be composed of one or more classes and may be
structured either as pass-through securities or collateralized debt obligations.
Multiple-class mortgage-backed securities are referred to in this prospectus as
"CMOs." Some CMOs are directly supported by other CMOs, which in turn are
supported by mortgage pools. Investors typically receive payments out of the
interest and principal on the underlying mortgages. The portions of these
payments that investors receive, as well as the priority of their rights to
receive payments, are determined by the specific terms of the CMO class.

When interest rates go down and homeowners refinance their mortgages,
mortgage-backed bonds may be paid off more quickly than investors expect. When
interest rates rise, mortgage-backed bonds may be paid off more slowly than
originally expected. Changes in the rate or "speed" of these prepayments can
cause the value of mortgage-backed securities to fluctuate to a greater degree
and more rapidly than ordinary fixed income securities.

Other asset-backed securities are similar to mortgage-backed securities, except
that the underlying assets are different. These underlying assets may be nearly
any type of financial asset or receivable, such as motor vehicle installment
sales contracts, home equity loans, leases of various types of real and personal
property and receivables from credit cards. Like mortgage-backed securities,
asset-backed securities can change in value in response to interest rate changes
to a greater degree and more rapidly than ordinary fixed income securities.

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 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.

INDEXED SECURITIES. The Strategic Income Fund may invest without limitation in
commercial paper which is indexed to certain specific foreign

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GT GLOBAL VARIABLE INVESTMENT FUNDS
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
seeking to provide an attractive money market rate of return. The Strategic
Income Fund will not purchase such commercial paper for speculation.

The Strategic Income Fund and the Global Government Income Fund may invest in
certain other indexed securities, 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. The Strategic Income Fund and the
Global Government Income Fund may invest in such securities to the extent
consistent with its investment objectives.

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. A "majority of the outstanding voting securities" of a Fund means the
lesser of: (i) 67% or more of the shares represented at a meeting at which more
than 50% of the outstanding shares are represented, or (ii) more than 50% of the
outstanding shares. In addition, each Fund has adopted certain investment
limitations that may not be changed without shareholder approval. A complete
description of these limitations is included in the Statement of Additional
Information. Each Fund's other investment policies described herein and in the
Statement of Additional Information may be changed by the Board of Trustees of
the relevant Company, without shareholder approval.

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GT GLOBAL VARIABLE INVESTMENT FUNDS

RISK FACTORS

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

GENERAL. There can be no assurance that any Fund will achieve its investment
objective. In addition, there can be no assurance that the Money Market Fund
will be able to maintain a stable net asset value of $1.00 per share.

The net asset value of each Fund (other than the Money Market Fund) will
fluctuate reflecting fluctuations in the market value of the Funds' portfolio
positions. Equity securities, particularly common stocks, generally represent
the most junior position in an issuer's capital structure and entitle holders to
an interest in the assets of an issuer, if any, remaining after all more senior
claims are satisfied. In addition, the value of debt securities held by a Fund
generally will fluctuate with changes in the perceived creditworthiness of the
issuers of such securities and interest rates.

GENERAL RISKS OF FOREIGN INVESTING. All of the Funds (including, to a lesser
extent, the America Fund) are authorized to invest in foreign securities.
Investing in foreign securities entails certain risks. The securities of
non-U.S. issuers 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 domestic 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 domestic companies. Securities of some foreign companies are less liquid and
their prices may be more volatile than securities of comparable domestic
companies. In addition, certain costs attributable to foreign investing, such as
custody charges, are higher than those attributable to domestic investing. The
respective Funds' interest and dividends 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 increased
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 Funds will also be affected favorably or unfavorably by exchange control
regulations or changes in the exchange rates between foreign currencies and the
U.S. dollar. Changes in currency exchange rates will influence 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 them.

SPECIAL RISKS OF THE INFRASTRUCTURE FUND, THE NATURAL RESOURCES FUND AND THE
TELECOMMUNICATION FUND. Because these Funds focus their investments on
particular industries, an investment in any of them may be more volatile than an
investment in an investment company that does not concentrate its investments in
such a manner. Moreover, the value of the shares of each such Fund will be
specially susceptible to factors affecting the industries in which it focuses.
Accordingly, these Funds should not be considered a complete investment program.

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 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 also 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.

INFRASTRUCTURE FUND. Infrastructure industries may be subject to greater
political, environmental and other governmental regulation than many other
industries. The nature of such regulation continues

Prospectus Page 28
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GT GLOBAL VARIABLE INVESTMENT FUNDS
to evolve in both the United States and foreign countries, and changes in
governmental policy and the need for regulatory approvals may have a material
effect on the products and services offered by companies in the infrastructure
industries. 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. Governmental regulation may also hamper the development of new
technologies.

In addition, many infrastructure 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. 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, and 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. 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.

NATURAL RESOURCES FUND. Natural resource 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 both the United
States and foreign countries, and changes in governmental policies and the need
for regulatory approvals may have a material effect on the products and services
offered by companies in the natural resource industries. 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. Governmental regulations may also hamper the development of new
technologies.

In addition, many natural resource companies historically have been subject to
significant costs associated with compliance with environmental and other safety
regulations. 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 Natural Resources Fund's portfolio securities 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.

TELECOMMUNICATIONS FUND. Telecommunications industries 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 offered by companies in the telecommunications industries.
Telephone operating 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. Certain types of companies in the
telecommunications industries are engaged in fierce competition for market share
that could result in increased share price volatility.

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.

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GT GLOBAL VARIABLE INVESTMENT FUNDS

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 foreign markets around the world.

Many emerging market countries have experienced substantial, and in some periods
extremely high, rates of inflation for many years. Inflation and rapid
fluctuations in inflation rates have had and may continue to have very negative
effects on the economies and securities markets of certain emerging market
countries.

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 more developed countries. Disclosure and regulatory
standards in many respects are less stringent than in the United States and
other major markets. There also may be a lower level of monitoring and
regulation of emerging securities markets and the activities of investors in
such markets, and enforcement of existing regulations has been extremely
limited. In addition, the securities of non-U.S. issuers generally are not
registered with the SEC, nor are the issuers thereof usually subject to the
SEC's reporting requirements. Accordingly, there may be less publicly available
information about foreign securities and issuers than is available with respect
to 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 the U.S. companies. A Fund's net
investment income and/or capital gains from its foreign investment activities
also may be subject to non-U.S. withholding taxes.

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 portfolio securities 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 appropriate circumstances warrant, it will promptly
apply to the SEC for a determination that 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
portfolio securities in the affected markets will be valued at fair value as
determined in good faith by or under the direction of the relevant Company's
Board of Trustees.

In addition, brokerage commissions, custodial services and other costs relating
to investment in foreign markets generally are more expensive than in the United
States particularly with respect to emerging markets. 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 forego 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, could result in possible liability to the purchaser.

SPECIAL RISKS OF PACIFIC REGION COUNTRIES. The New Pacific Fund invests
primarily in equity securities of issuers located in Pacific region countries
other than Japan. Certain of the risks associated with international investments
are heightened for investments in these countries. For example, some of the
currencies of these countries have experienced steady devaluations relative to
the U.S. dollar, and major adjustments have been made periodically in certain of
such currencies. Certain countries, such as India, face serious exchange
constraints. Jurisdictional disputes also exist between South Korea and North
Korea.

In addition, Hong Kong will revert to Chinese Administration on July 1, 1997.
Investments in Hong Kong may become subject to expropriation, nationalization or
confiscation, in which case New Pacific Fund could lose its entire investment in
Hong Kong. In addition, the reversion of Hong Kong also presents a risk that the
Hong Kong dollar will be devalued and a risk of possible loss of investor
confidence in Hong Kong's currency, stock market and economy.

LOWER QUALITY DEBT SECURITIES. There are no credit quality limitations placed on
the debt securities in which the Latin America Fund may invest. In

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GT GLOBAL VARIABLE INVESTMENT FUNDS

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 below investment grade debt
securities. Finally, each Global Growth Fund may invest up to 35% of its assets
in debt securities rated no lower than investment grade. Investment grade debt
securities are debt securities rated BBB or higher by S&P or Baa or higher by
Moody's or, if unrated, deemed to be of equivalent quality in the judgment of
the Manager.

Debt rated Baa by Moody's is considered by Moody's to have speculative
characteristics. Debt rated BB, B, CCC, CC and C by S & P or debt securities
rated Ba, B, Caa, Ca or C by Moody's is regarded, on balance, as predominantly
speculative with respect to the issuer's capacity to pay interest and repay
principal in accordance with the terms of the obligation. While such lower
quality 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. Lower quality debt 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 lower quality debt
securities are the equivalent of high yield, high risk bonds, commonly known as
"junk bonds." The Infrastructure Fund and the Natural Resources Fund will not
invest in securities in default as to principal and interest.

Ratings of debt securities represent the rating agency's opinion regarding their
quality and are not a guarantee of quality. Rating agencies 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 a rating indicates. See
"Description of Debt Ratings" in the Statement of Additional Information for a
full discussion of Moody's and S&P's ratings.

The market values of lower quality debt securities tend to reflect individual
developments of the issuer to a greater extent than do higher quality
securities, which react primarily to fluctuations in the general level of
interest rates. In addition, lower quality debt securities tend to be more
sensitive to economic conditions and generally have more volatile prices than
higher quality securities. Issuers of lower quality 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 quality 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. The risk of loss due to default by the issuer is significantly
greater for the holders of lower quality securities because such securities are
generally unsecured and may be subordinated to the claims of other creditors of
the issuer.

Lower quality debt securities of corporate issuers frequently have call or
buy-back features which would permit an issuer to call or repurchase the
security from a Fund. If an 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 lower quality securities because they may
have a thin trading market. There may be no established retail secondary market
for many of these securities, and each of the Funds anticipates that such
securities could be sold only to a limited number of dealers or institutional
investors. The lack of a liquid secondary market also 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 Fund's
portfolio investments. The Infrastructure Fund, the Natural Resources Fund, the
Telecommunications Fund and the Strategic Income Fund may also acquire lower
quality debt 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 in which the Funds may invest
include: (i) potential adverse publicity; (ii) heightened sensitivity to general
economic or political conditions; and (iii) the likely adverse impact of a major
economic recession. The Funds may also

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GT GLOBAL VARIABLE INVESTMENT FUNDS
incur additional expenses to the extent they are required to seek recovery upon
a default in the payment of principal or interest on portfolio holdings, and the
Funds may have limited legal recourse in the event of a default.

As of December 31, 1996, the Strategic Income Fund had 80.9% of its total net
assets invested in debt securities that received a rating from Moody's and 15.0%
of its total net assets invested in debt securities that were not so rated. In
addition, the Strategic Income Fund had 2.9% of its total net assets in cash and
net receivables. The Strategic Income Fund had the following percentages of its
total net assets invested in rated securities: Aaa--32.9%, Aa--17.9%, A--4.1%,
Baa--2.8%, Ba--10.1%, B--13.1%, Caa--0%, Ca--0%, C--0%. Included under the
unrated category are securities composing 16.2% 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 in the following rating categories: Baa--0%,
BA--7.5%, B--8.7%. 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.

SOVEREIGN DEBT. The Latin America Fund, the Emerging Markets Fund and the
Strategic Income Fund may invest in sovereign debt securities of emerging market
governments, including Brady Bonds. Investments in such securities 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. Periods of
economic uncertainty may result in the volatility of market prices of sovereign
debt obligations and, in turn, a Fund's net asset value, to a greater extent
than the volatility inherent in domestic fixed income securities.

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 economy as a whole, the sovereign debtor's policy toward
principal international lenders and the political constraints to which the
sovereign debtor may be subject. Emerging market governments could default on
their Sovereign Debt. Such sovereign debtors also may be dependent on expected
disbursements from foreign governments, multilateral agencies and other entities
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.
Emerging markets 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' 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 expect
to invest have encountered difficulties in servicing their sovereign debt
obligations. 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 emerging market sovereign debt securities 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

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GT GLOBAL VARIABLE INVESTMENT FUNDS
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. As noted above, sovereign debt
obligations issued by emerging market governments generally are 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 securities with respect to which the issuer
currently may not be paying interest 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.

RISKS OF MORTGAGE-BACKED AND ASSET-BACKED SECURITIES. The yield characteristics
of mortgage-backed and asset-backed securities differ from those of traditional
bonds. Among the major differences are that interest and principal payments are
made more frequently (usually monthly) and that principal may be prepaid at any
time because the underlying mortgage loans or other assets generally may be
prepaid at any time. Generally, prepayments on fixed-rate mortgage loans will
increase during a period of falling interest rates and decrease during a period
of rising interest rates. Mortgage-backed and asset-backed securities may also
decrease in value as a result of increases in interest rates and, because of
prepayments, may benefit less than other bonds from declining interest rates.
Reinvestments of prepayments may occur at lower interest rates than the original
investment, thus adversely affecting a Fund's yield. Actual prepayment
experience may cause the yield of a mortgage-backed security to differ from what
was assumed when the Fund purchased the security. The market for privately
issued mortgage-backed and asset-backed securities is smaller and less liquid
than the market for U.S. government mortgage-backed securities.

CMO classes may be specially structured in a manner that provides any of a wide
variety of investment characteristics, such as yield, effective maturity and
interest rate sensitivity. As market conditions change, however, and especially
during periods of rapid or unanticipated changes in market interest rates, the
attractiveness of some CMO classes and the ability of the structure to provide
the anticipated investment characteristics may be significantly reduced. These
changes can result in volatility in the market value, and in some instances
reduced liquidity, of the CMO class.

Certain classes of CMOs are structured in a manner that makes them extremely
sensitive to changes in prepayment rates. Interest-only ("IO") and
principal-only ("PO") classes are examples of this. IOs are entitled to receive
all or a portion of the interest, but none (or only a nominal amount) of the
principal payments, from the underlying mortgage assets. If the mortgage assets
underlying an IO experience greater than anticipated principal prepayments, then
the total amount of interest payments allocable to the IO class, and therefore
the yield to investors, generally will be reduced. In some instances, an
investor in an IO may fail to recoup all of his or her initial investment, even
if the security is government guaranteed or is considered to be of the highest
credit quality. Conversely, PO classes are entitled to receive all or a portion
of the principal payments, but none of the interest, from the underlying
mortgage assets. PO classes are purchased at substantial discounts from par, and
the yield to investors will be reduced if principal payments are slower than
expected. Some IOs and POs, as well as other CMO classes, are structured to have
special protections against the effects of prepayments. These structural
protections, however, normally are effective only within certain ranges of
prepayment rates and thus will not protect investors in all circumstances.

Inverse floating rate CMO classes also may be extremely volatile. These classes
pay interest at a rate that decreases when a specified index of market rates
increases.

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GT GLOBAL VARIABLE INVESTMENT FUNDS

During 1994, the value and liquidity of many mortgage-backed securities declined
sharply due primarily to increases in interest rates. There can be no assurance
that such declines will not recur. The market value of certain mortgage-backed
securities, including IO and PO classes of mortgage-backed securities, can be
extremely volatile and these securities may become illiquid.

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 new money flowing into the Money Market Fund from the net sale
of its shares likely will be invested by the Fund in instruments producing lower
yields than the balance of the securities held by the Fund's portfolio, thereby
reducing its 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 a
portfolio of high quality money market instruments; the Money Market Fund's
yield may be lower than that produced by funds investing in lower quality and/or
longer-term securities.

ILLIQUID SECURITIES. Each Fund may invest up to 15% (10% in the case of the
Money Market Fund) of its net assets in securities for which no readily
available market exists, so-called "illiquid securities." The Money Market Fund
may invest up to 10% of its net assets in illiquid securities. The
Infrastructure Fund, the Natural Resources Fund, the Telecommunications Fund and
the Latin America Fund may invest in joint ventures, cooperatives, partnerships
and state enterprises which are illiquid (collectively, "Special Situations").
The Manager believes that investments by these Funds in Special Situations could
enable them 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, each of these Funds will invest no
more than 5% of its total assets in Special Situations.

Illiquid securities may be more difficult to value than liquid securities and
the sale of illiquid securities generally will require more time and result in
higher brokerage charges or dealer discounts and other selling expenses than the
sale of liquid securities. Moreover, illiquid restricted securities often sell
at a price lower than similar securities that are not subject to restrictions on
resale.

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CURRENCY, OPTIONS AND
FUTURES STRATEGIES

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Each Fund (except the Money Market Fund) may use forward currency contracts,
futures contracts, options on securities, options on indices, options on
currencies and options on futures contracts to attempt to hedge against the
overall level of investment and currency 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. See "Options, Futures and Forward Currency Strategies"
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 call options on securities. 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 put options to
attempt to enhance return, although they don't have the current intention of so
doing.

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 that Fund's portfolio positions. Each
Fund also may purchase and sell put and call options on currencies to hedge
against movements in exchange rates.

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GT GLOBAL VARIABLE INVESTMENT FUNDS

In addition, each Fund (except the Money Market Fund) may purchase and sell 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 that the Manager
intends to include in the Fund's portfolio. Each such Fund, except for the
Strategic Income Fund, the Global Government Income Fund and the U.S. Government
Income Fund, also may purchase and sell put and call options on stock indexes to
hedge against overall fluctuations in the securities markets generally or in a
specific market sector.

Further, each Fund (except the Strategic Income Fund, the Global Government
Income Fund, the U.S. Government Income Fund and the Money Market Fund) may sell
stock index futures contracts and may purchase put options or write call options
on such futures contracts to protect against a general stock market decline or a
decline in a specific market sector that could affect adversely the Fund's
holdings. Such Funds also may purchase stock index futures contracts and
purchase call options or write put 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. Each Fund (except the Money Market Fund)
may use interest rate futures contracts and options thereon to hedge the debt
portion of its portfolio against changes in the general level of interest rates.

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
foreign currency transactions, options and futures involve certain risks which
include: (1) dependence on the Manager's ability to predict movements in the
prices of individual securities, fluctuations in the general securities markets
or in the appropriate market sector and movements in interest rates and currency
markets; (2) imperfect correlation or even no correlation between movements in
the price of options, forward contracts, futures contracts or options thereon
and movements in the price of the currency or security hedged or used for cover;
(3) 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 invests; (4) lack
of assurance that a liquid secondary market will exist for any particular
option, futures contract or option thereon at any particular time; (5) the
possible loss of principal under certain conditions; (6) the possible inability
of a Fund to purchase or sell a portfolio security at a time when it would
otherwise be favorable for it to do so, or the possible need for a Fund to sell
a security at a disadvantageous time, due to the need for a Fund to maintain
"cover" or to set aside securities in connection with hedging transactions; and
(7) the possible need to defer closing out certain options, futures contracts,
forward currency contracts and/or foreign currency positions in order to
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 technique for managing the portfolio's
duration (i.e., the price sensitivity to changes in interest rates) or to
protect against any increase in the price of securities it 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 an income stream roughly
equivalent to what it may become 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.

The purchase of a 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.

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GT GLOBAL VARIABLE INVESTMENT FUNDS

HOW TO INVEST

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Shares of the Funds currently are offered to Separate Accounts pursuant to the
insurance laws of the Participating Insurance Companies' respective
jurisdictions.

The owners of VA Contracts may allocate premium payments among the general
accounts of the Participating Insurance Companies and the divisions of the
Separate Accounts that correspond to the Funds. Individuals may not pay variable
annuity premiums directly to the Funds. The 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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CALCULATION OF NET ASSET VALUE

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

Each Fund calculates its net asset value as of the close of regular 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. Each Fund's net asset value per share is computed by
determining the value of its total assets, subtracting all of its liabilities,
and dividing the result by the total number of shares outstanding at such time.

Equity securities held by the Funds are valued at the last sale price on the
exchange or in the over-the-counter ("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. Long-term
debt obligations are valued at the mean of representative quoted bid or 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 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 and market fluctuations, provided such
valuations represent fair value. When market quotations for futures and options
positions held by a Fund are readily available, those positions are valued based
upon such quotations.

Securities and other assets for which market quotations are not readily
available are valued at fair value 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.

Certain of the Funds' portfolio securities from time to time may be listed
primarily on foreign exchanges that trade on days when the NYSE is closed (such
as Saturday). As a result, the net asset value of a Fund's shares 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 price of $1.00 per share.

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GT GLOBAL VARIABLE INVESTMENT FUNDS

DIVIDENDS, OTHER DISTRIBUTIONS
AND FEDERAL INCOME TAXATION

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DIVIDENDS AND OTHER DISTRIBUTIONS. The Money Market Fund declares dividends from
net investment income on each day it 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 Money Market 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 its net asset value per
share. The Money Market 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 Money Market
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 Fund declare and pay dividends from net investment income, if
any, and may distribute net short-term capital gain, 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.

All Funds (except the Money Market Fund) 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 (in the case of the Strategic Income Fund, the Global Government Income
Fund, the U.S. Government Income Fund and the Growth & Income Fund, not
previously distributed) and net gains from foreign currency transactions, if
any. 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 (defined
below) is instructed otherwise.

TAXES. 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 its shareholders. Each Fund will annually distribute to its
shareholders at least 90% of its investment company taxable income.

Fund shares are offered only to Separate Accounts established to fund VA
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.

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 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

Prospectus Page 37
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
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 Contracts prospectus.

The foregoing is only a summary of some of the important federal income tax
considerations generally affecting the Funds and the Separate Accounts. For
further information, see the Statement of Additional Information and the
applicable VA Contract prospectus.

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

MANAGEMENT

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

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 certain services required by its Funds. See "Trustees
and Executive Officers" in the Statement of Additional Information for a
complete description of the Trustees of the Funds.

INVESTMENT MANAGEMENT AND ADMINISTRATION. 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 investment 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 of the other Funds 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.

The Manager also serves as each Fund's pricing and accounting agent. For these
services the Manager receives a fee at an annual rate derived by applying 0.03%
to the first $5 billion of assets of GT Global Mutual Funds and 0.02% to the
assets in excess of $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, compose 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 December 31, 1996, the Manager and its worldwide asset management
affiliates managed approximately $62 billion. In the United States, as of
December 31, 1996, the Manager managed or administered approximately $10 billion
of GT Global Mutual Funds. As of December 31, 1996, assets entrusted to
Liechtenstein Global Trust totalled approximately $84 billion.

On October 31, 1996, Chancellor Capital Management, Inc. ("Chancellor Capital")
merged with LGT Asset Management, Inc. and the resulting entity was named
Chancellor 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.

Prospectus Page 38
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

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 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

EUROPE FUND

LATIN AMERICA FUND

EMERGING MARKETS FUND

<TABLE>
<CAPTION>
RESPONSIBILITIES FOR
NAME/OFFICE THE FUND BUSINESS EXPERIENCE
- ----------------------- ------------------------ --------------------------------------------------------------------
<S> <C> <C>
Allan Conway Portfolio Manager since Head of Global Emerging Markets for the Manager since 1997. Director
London 1997 of International Equities at Hermes Investment Management from 1992
to 1997. From 1982 to 1992, Mr. Conway was a Portfolio Manager, and
eventually Head of Overseas Equities, at Provident Mutual. Mr.
Conway is a Chartered Accountant and a member of the Securities
Institute.
Christine Rowley Portfolio Manager since Portfolio Manager for the Manager and LGT Asset Management Ltd.
Hong Kong 1997 (Hong Kong) since 1991. From 1989 to 1990, Ms. Rowley was an
Analyst with the Bank of England.
</TABLE>

Prospectus Page 39
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

AMERICA FUND

<TABLE>
<CAPTION>
RESPONSIBILITIES FOR
NAME/OFFICE THE FUND BUSINESS EXPERIENCE
- ----------------------- ------------------------ --------------------------------------------------------------------
<S> <C> <C>
Ellen H. Adams* Portfolio Manager since Ms. Adams has been the Head of North American Equity for the Manager
New York 1997 since 1995, Director of Equity Research for the Manager from May
1993 until 1995, and a Portfolio Manager and Analyst for the
Manager from 1992 until May 1993. Prior thereto, Ms. Adams was a
Portfolio Manager for Neuberger and Berman from 1987 until 1992.
Brent W. Clum* Portfolio Manager since Senior Equity Research Analyst for the Manager since 1995. Prior
New York 1997 thereto, Mr. Clum was a Vice President and Analyst at T. Rowe Price
from 1990 to 1995. Mr. Clum is a Chartered Financial Analyst and a
Certified Public Accountant.
</TABLE>

INFRASTRUCTURE FUND

<TABLE>
<CAPTION>
RESPONSIBILITIES FOR
NAME/OFFICE THE FUND BUSINESS EXPERIENCE
- ----------------------- ------------------------ --------------------------------------------------------------------
<S> <C> <C>
Derek H. Webb Portfolio Manager since Head of the Theme Funds since 1996 and Portfolio Manager for the
San Francisco 1997 Manager since 1994. Prior thereto, Mr. Webb was an Analyst for the
Manager from 1992 to 1994.
Michael J. Mahoney Portfolio Manager since Portfolio Manager for the Manager since 1993. From 1991 to 1993, Mr.
San Francisco Fund inception in 1995 Mahoney was an Investment Analyst for the
Manager.
Steven Berexa Portfolio Manager since Senior Investment Analyst for U.S. equities for the Manager since
San Francisco 1997 1995. From 1987 to 1995, Mr. Berexa was an Investment Analyst for
U.S. equities for Prudential Investment Corp.
</TABLE>

NATURAL RESOURCES FUND

TELECOMMUNICATIONS FUND

- --------------
*Employees of Chancellor Capital prior to October 31, 1996.

Prospectus Page 40
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

GROWTH & INCOME FUND

STRATEGIC INCOME FUND

<TABLE>
<CAPTION>
RESPONSIBILITIES FOR
NAME/OFFICE THE FUND BUSINESS EXPERIENCE
- ----------------------- ------------------------ --------------------------------------------------------------------
<S> <C> <C>
Michael Mabbutt Portfolio Manager since Head of Emerging Market Debt for the Manager since April 1997, and
London 1997 Portfolio Manager for LGT Asset Management PLC (London) since
December 1996. Prior thereto, Mr. Mabbutt was a Senior Portfolio
Manager for Emerging Market Debt at Baring Asset Management
(London) from 1992 to December 1996. From 1986 to 1991, Mr. Mabbutt
was a fixed income Investment Manager for Norwich Union Life
Insurance Society.
Cheng-Hock Lau* Portfolio Manager since Mr. Lau has been Chief Investment Officer for Developed Market Debt
New York 1996 for the Manager since November 1996, and was a Senior Portfolio
Manager for global/international fixed income for the Manager from
July 1995 to November 1996. Prior thereto, Mr. Lau was a Senior
Vice President and Senior Portfolio Manager for Fiduciary Trust
Company International from 1993 to 1995, and Vice President at
Bankers Trust Company from 1991 to 1993.
</TABLE>

INTERNATIONAL FUND

<TABLE>
<CAPTION>
RESPONSIBILITIES FOR
NAME/OFFICE THE FUND BUSINESS EXPERIENCE
- ----------------------- ------------------------ --------------------------------------------------------------------
<S> <C> <C>
Roger Yates Portfolio Manager since Mr. Yates has been International Chief Investment Officer for the
London 1996 Manager since September 1996. From 1994 to 1996, Mr. Yates was the
Chief Investment Officer and Portfolio Manager for Europe and the
United Kingdom for the Manager. From 1988 to 1994, Mr. Yates was an
Investment Manager for Morgan Grenfell Asset Management.
Michael Lindsell Portfolio Manager since Head of Investment Strategy for Global Equities for the Manager
London 1997 since 1996. From 1992 to 1996, Mr. Lindsell was Chief Investment
Officer for Japan for LGT Asset Management Ltd. (Hong Kong) as well
as Portfolio Manager for the Manager. Prior thereto, Mr. Lindsell
was a Director of Warburg Asset Management (Tokyo).
</TABLE>

- --------------
*Employees of Chancellor Capital prior to October 31, 1996.

Prospectus Page 41
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

U.S. GOVERNMENT INCOME FUND

GLOBAL GOVERNMENT INCOME FUND

<TABLE>
<CAPTION>
RESPONSIBILITIES FOR
NAME/OFFICE THE FUND BUSINESS EXPERIENCE
- ----------------------- ------------------------ --------------------------------------------------------------------
<S> <C> <C>
Cheng-Hock Lau* Portfolio Manager since Mr. Lau has been Chief Investment Officer for Developed Market Debt
New York 1996 for the Manager since November 1996, and was a Senior Portfolio
Manager for global/international fixed income for the Manager from
July 1995 to November 1996. Prior thereto, Mr. Lau was a Senior
Vice President and Senior Portfolio Manager for Fiduciary Trust
Company International from 1993 to 1995, and Vice President at
Bankers Trust Company from 1991 to 1993.
Michael Mabbutt Portfolio Manager since Head of Emerging Market Debt for the Manager since April 1997, and
London 1997 Portfolio Manager for LGT Asset Management PLC (London) since
December 1996. Prior thereto, Mr. Mabbutt was a Senior Portfolio
Manager for Emerging Market Debt at Baring Asset Management
(London) from 1992 to December 1996. From 1986 to 1991, Mr. Mabbutt
was a fixed income Investment Manager for Norwich Union Life
Insurance Society.
</TABLE>

MONEY MARKET FUND

- --------------
*Employees of Chancellor Capital prior to October 31, 1996.

Prospectus Page 42
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

In placing orders for the Funds' securities transactions, the Manager seeks to
obtain the best net results. Brokerage transactions for the Funds may be
executed through affiliates of Liechtenstein Global Trust. High portfolio
turnover (over 100%) involves correspondingly greater brokerage commissions and
other transaction costs that the Funds will bear directly and could result in
the realization of net capital gains which would be taxable when distributed to
shareholders.

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. These undertakings may be changed or eliminated in the future.

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.

Prospectus Page 43
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

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 OF THE COMPANIES. Each Company 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, except the Telecommunications
Fund, the Emerging Markets Fund, the International Fund, the Infrastructure Fund
and the Natural Resources Fund, 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.

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 each Fund 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, such as approval of its investment
management arrangements. 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 in any
year, 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. Shares of either Company's Funds do not have cumulative voting
rights, which means that the holders of a majority of the shares 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

Prospectus Page 44
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
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 at the discretion of 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 one-, 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.

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 capital appreciation or depreciation) and
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-

Prospectus Page 45
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
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.

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 46
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

NOTES

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

Prospectus Page 47
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

NOTES

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

Prospectus Page 48
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

NOTES

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

Prospectus Page 49
<PAGE>
GENERAL AMERICAN

GA0597/VARPR705028M.228

SELIC

SELPR705002M.229
<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
May 1, 1997

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

This Statement of Additional Information relates to the GT Global Variable
Investment Funds (individually a "Fund," and collectively, the "Funds"). Each
Fund is organized as a separate series of either G.T. Global Variable Investment
Series ("Investment Series") or G.T. Global Variable Investment Trust
("Investment Trust") (individually, the "Company," and collectively, the
"Companies"). This Statement of Additional Information which is not a
prospectus, supplements and should be read in conjunction with the Funds'
current Prospectus dated May 1, 1997, 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 ("Separate Accounts") that fund certain 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 the "Transfer Agent").

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

TABLE OF CONTENTS

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

<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Investment Objectives and Policies....................................................................................... 2
Options, Futures and Currency Strategies................................................................................. 11
Risk Factors............................................................................................................. 20
Investment Limitations................................................................................................... 26
Execution of Portfolio Transactions...................................................................................... 37
Trustees and Executive Officers.......................................................................................... 40
Management............................................................................................................... 42
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
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Statement of Additional Information Page 1
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GT GLOBAL VARIABLE INVESTMENT FUNDS

INVESTMENT OBJECTIVES
AND POLICIES

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INVESTMENT OBJECTIVES
The investment objective of each of the following 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") seeks high
current income as its primary investment objective. 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.

SELECTION OF INVESTMENTS
GENERAL. 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.

In certain countries, governmental and other restrictions on investment may
affect a Fund's ability to invest in such countries. In addition, in some
instances only special classes of securities may be purchased by foreigners and
the market price, liquidity and rights with respect to those securities may vary
from shares owned by nationals. 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. Restrictions may in the future,
however, make it undesirable to invest in certain countries. None of the Funds
has a present intention of making any significant investment in any country or
stock market in which the Manager considers the politicial or economic situation
to threaten a Fund with substantial or total loss of its investment in such
country or market.

THE EMERGING MARKETS FUND. 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

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GT GLOBAL VARIABLE INVESTMENT FUNDS
published or disseminated by the International Bank for Reconstruction and
Development (commonly known as the World Bank) and the International Finance
Corporation.

THE NATURAL RESOURCES FUND. With respect to the Natural Resources Fund, the
Manager has identified four areas that it expects will create investment
opportunities: (i) improving supply/demand fundamentals, which may result in
higher commodity prices; (ii) privatization of state-owned natural resource
businesses; (iii) management which can improve production efficiencies without
correspondingly increasing commodity prices; and (iv) service companies with
emerging technologies that can enhance productivity or reduce production costs.
Of course, there is no certainty that these factors will produce the anticipated
results.

THE TELECOMMUNICATIONS FUND. With respect to the Telecommunications Fund,
the Manager has identified four areas that it expects will create investment
opportunities and lead to growth in the sector: (i) the deregulation of
companies in the industry, which will allow competition to promote greater
efficiencies; (ii) the privatization of state-owned telecommunications
businesses; (iii) the development of infrastructure in underdeveloped countries
and upgrading of services in other countries; and (iv) 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 GROWTH & INCOME FUND. With respect to the Growth & Income Fund, 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 seeks to avoid investing in 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 a 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 LATIN AMERICA FUND. 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.

MORTGAGE-BACKED AND ASSET-BACKED SECURITIES

The Strategic Income Fund, Global Government Income Fund and U.S. Government
Income Fund may invest in mortgage-backed securities, including fixed-rate
mortgage obligations, adjustable rate mortgage obligations ("ARMs") and
collateralized mortgage obligations ("CMOs"). Each of these Funds may also
invest in asset-backed securities.

Mortgage-backed securities represent direct or indirect participations in, or
are secured by and payable from, mortgage loans secured by real property and
include single- and multi-class pass-through securities and collateralized
mortgage obligations. Multi-class pass-through securities and collateralized
mortgage obligations are collectively referred to herein as CMOs. The U.S.
government mortgage-backed securities in which the Funds may invest include
mortgage-backed securities issued or guaranteed as to the payment of principal
and interest (but not as to market value) by the Government National Mortgage
Association ("GNMA"), Fannie Mae, or the Federal Home Loan Mortgage Corporation
("Freddie

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GT GLOBAL VARIABLE INVESTMENT FUNDS

Mac"). Other mortgage-backed securities are issued by private issuers, generally
originators of and investors in mortgage loans, including savings associations,
mortgage bankers, commercial banks, investment bankers and special purpose
entities (collectively "Private Mortgage Lenders"). Payments of principal and
interest (but not the market value) of such private mortgage-backed securities
may be supported by pools of mortgage loans or other mortgage-backed securities
that are guaranteed, directly or indirectly, by the U.S. government or one of
its agencies or instrumentalities, or they may be issued without any government
guarantee of the underlying mortgage assets but with some form of non-government
credit enhancement. New types of mortgage-backed securities are developed and
marketed from time to time and, consistent with its investment limitations, a
Fund expects to invest in those new types of mortgage-backed securities that the
Manager believes may assist a Fund in achieving its investment objective.
Similarly, a Fund may invest in mortgage-backed securities issued by new or
existing governmental or private issuers other than those identified herein.

Asset-backed securities have structural characteristics similar to
mortgage-backed securities. However, the underlying assets are not first lien
mortgage loans or interests therein, but include assets such as motor vehicle
installment sale contracts, other installment sale contracts, home equity loans,
leases of various types of real and personal property and receivables from
revolving credit (credit card) agreements. Such assets are securitized through
the use of trusts or special purpose corporations. Payments or distributions of
principal and interest may be guaranteed up to a certain amount and for a
certain time period by a letter of credit or pool insurance policy issued by a
financial institution unaffiliated with the issuer, or other credit enhancements
may be present.

The yield characteristics of mortgage-backed and asset-backed securities differ
from those of traditional debt securities. Among the major differences are that
interest and principal payments are made more frequently, usually monthly, and
that principal may be prepaid at any time because the underlying mortgagee loans
or other obligations generally may be prepaid at any time. Prepayments on a pool
of mortgage loans are influenced by a variety of economic, geographic, social
and other factors, including changes in mortgagors' housing needs, job
transfers, unemployment, mortgagors' net equity in the mortgaged properties and
servicing decisions. Generally, however, prepayments on fixed-rate mortgage
loans will increase during a period of falling interest rates and decrease
during a period of rising interest rates. Similar factors apply to prepayments
on asset-backed securities, but the receivables underlying asset-backed
securities generally are of a shorter maturity and thus are less likely to
experience substantial prepayments. Such securities, however, often provide that
for a specified time period the issuers will replace receivables in the pool
that are repaid with comparable obligations. If the issuer is unable to do so,
repayment of principal on the asset-backed securities may commence at an earlier
date. Mortgage-backed and asset-backed securities may decrease in value as a
result of increases in interest rates and may benefit less than other
fixed-income securities from declining interest rates because of the risk of
prepayment.

The rate of interest on mortgage-backed securities is lower than the interest
rates paid on the mortgages included in the underlying pool due to the annual
fees paid to the servicer of the mortgage pool for passing through monthly
payments to certificateholders and to any guarantor, and due to any yield
retained by the issuer. Actual yield to the holder may vary from the coupon
rate, even if adjustable, if the mortgage-backed securities are purchased or
traded in the secondary market at a premium or discount. In addition, there is
normally some delay between the time the issuer receives mortgage payments from
the servicer and the time the issuer makes the payments on the mortgage-backed
securities, and this delay reduces the effective yield to the holder of such
securities.

Yields on pass-through securities are typically quoted by investment dealers and
vendors based on the maturity of the underlying instruments and the associated
average life assumption. The average life of a pass-through pool varies with the
maturities of the underlying mortgage loans. A pool's term may be shortened by
unscheduled or early payments of principal on the underlying mortgages. Because
prepayment rates of individual pools vary widely, it is not possible to predict
accurately the average life of a particular pool. In the past, a common industry
practice was to assume that prepayments on pools of fixed rate 30-year mortgages
would result in a 12-year average life for the pool. At present, mortgage pools,
particularly those with loans with other maturities or different
characteristics, are priced on an assumption of average life determined for each
pool. In periods of declining interest rates, the rate of prepayment tends to
increase, thereby shortening the actual average life of a pool of
mortgage-related securities. Conversely, in periods of rising interest rates,
the rate of prepayment tends to decrease, thereby lengthening the actual average
life of the pool. However, these effects may not be present, or may differ in
degree, if the mortgage loans in the pools have adjustable interest rates or
other special payment terms, such as a prepayment charge. Actual prepayment
experience may cause the yield of mortgage-backed securities to differ from the
assumed average life yield. Reinvestment of prepayments may occur at lower
interest rates than the original investment, thus adversely affecting the yield
of a Fund.

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GNMA CERTIFICATES. GNMA guarantees certain mortgage pass-through certificates
("GNMA certificates"), issued by Private Mortgage Lenders and representing
ownership interests in individual pools of residential mortgage loans. These
securities are designed to provide monthly payments of interest and principal to
the investor. Timely payment of interest and principal is backed by the full
faith and credit of the U.S. government. Each mortgagor's monthly payments to
his lending institution on his residential mortgage are "passed through" to
certificateholders such as the Funds. Mortgage pools consist of whole mortgage
loans or participations in loans. The terms and characteristics of the mortgage
instruments are generally uniform within a pool but may vary among pools.
Lending institutions that originate mortgages for the pools are subject to
certain standards, including credit and other underwriting criteria for
individual mortgages included in the pools.

FANNIE MAE CERTIFICATES. Fannie Mae facilitates a national secondary market in
residential mortgagee loans insured or guaranteed by U.S. government agencies
and in privately insured or uninsured residential mortgage loans (sometimes
referred to as "conventional mortgage loans" or "conventional loans") through
its mortgage purchase and mortgage-backed securities sales activities. Fannie
Mae issues guaranteed mortgage pass-through certificates ("Fannie Mae
certificates"), which represent pro rata shares of all interest and principal
payments made and owed on the underlying pools. Fannie Mae guarantees timely
payment of interest and principal on Fannie Mae certificates. The Fannie Mae
guarantee is not backed by the full faith and credit of the U.S. government.

FREDDIE MAC CERTIFICATES. Freddie Mac also facilitates a secondary market for
conventional residential and U.S. government-insured mortgage loans through its
mortgage purchase and mortgage-backed securities sales activities. Freddie Mac
issues two types of mortgage pass-through securities: mortgage participation
certificates ("PCs") and guaranteed mortgage certificates ("GMCs"). Each PC
represents a pro rata share of all interest and principal payments made and owed
on the underlying pool. Freddie Mac generally guarantees timely monthly payment
of interest on PCs and the ultimate payment of principal, but it also has a PC
program under which it guarantees timely payment of both principal and interest.
GMCs also represent a pro rata interest in a pool of mortgages. These
instruments, however, pay interest semi-annually and return principal once a
year in guaranteed minimum payments. The Freddie Mac guarantee is not backed by
the full faith and credit of the U.S. government.

PRIVATE, RTC AND SIMILAR MORTGAGE-BACKED SECURITIES. Mortgage-backed securities
issued by Private Mortgage Lenders are structured similarly to the pass-through
certificates and collateralized mortgage obligations ("CMOs") issued or
guaranteed by GNMA, Fannie Mae and Freddie Mac. Such mortgage-backed securities
may be supported by pools of U.S. government or agency insured or guaranteed
mortgage loans or by other mortgage-backed securities issued by a government
agency or instrumentality; but they generally are supported by pools of
conventional (i.e., non-government guaranteed or insured) mortgage loans. Since
such mortgage-backed securities normally are not guaranteed by an entity having
the credit standing of GNMA, Fannie Mae and Freddie Mac, they normally are
structured with one or more types of credit enhancement. See "--Types of Credit
Enhancement." These credit enhancements do not protect investors from changes in
market value.

The Resolution Trust Corporation ("RTC"), which was organized by the U.S.
government in connection with the savings and loan crisis, held assets of failed
savings associations as either a conservator or receiver for such associations,
or it acquired such assets in its corporate capacity. These assets included,
among other things, single family and multifamily mortgage loans, as well as
commercial mortgage loans. In order to dispose of such assets in an orderly
manner, RTC established a vehicle registered with the SEC through which it sold
mortgage-backed securities. RTC mortgage-backed securities represent pro rata
interests in pools of mortgage loans that RTC held or acquired, as described
above, and are supported by one or more of the types of private credit
enhancements used by Private Mortgage Lenders.

COLLATERALIZED MORTGAGE OBLIGATIONS AND MULTI-CLASS MORTGAGE PASS-THROUGHS. CMOs
are debt obligations that are collateralized by mortgage loans or mortgage
pass-through securities (such collateral collectively being called "Mortgage
Assets"). CMOs may be issued by Private Mortgage Lenders or by government
entities such as Fannie Mae or Freddie Mac. Multi-class mortgage pass-through
securities are interests in trusts that are comprised of Mortgage Assets and
that have multiple classes similar to those in CMOs. Unless the context
indicates otherwise, references herein to CMOs include multi-class mortgage
pass-through securities. Payments of principal of, and interest on, the Mortgage
Assets (and in the case of CMOs, any reinvestment income thereon) provide the
funds to pay debt service on the CMOs or to make scheduled distributions on the
multi-class mortgage pass-through securities.

In a CMO, a series of bonds or certificates is issued in multiple classes. Each
class of CMO, also referred to as a "tranche," is issued at a specific fixed or
floating coupon rate and has a stated maturity or final distribution date.
Principal prepayments on the Mortgage Assets may cause CMOs to be retired
substantially earlier than their stated maturities or final distribution dates.
Interest is paid or accrues on all classes of a CMO (other than any PO class) on
a monthly, quarterly

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or semi-annual basis. The principal and interest on the Mortgage Assets may be
allocated among the several classes of a CMO in many ways. In one structure,
payments of principal, including any principal prepayments, on the Mortgage
Assets are applied to the classes of a CMO in the order of their respective
stated maturities or final distribution dates so that no payment of principal
will be made on any class of the CMO until all other classes having an earlier
stated maturity or final distribution date have been paid in full. In some CMO
structures, all or a portion of the interest attributable to one or more of the
CMO classes may be added to the principal amounts attributable to such classes,
rather than passed through to certificateholders on a current basis, until other
classes of the CMO are paid in full.

Parallel pay CMOs are structured to provide payments of principal on each
payment date to more than one class. These simultaneous payments are taken into
account in calculating the stated maturity date or final distribution date of
each class, which, as with other CMO structures, must be retired by its stated
maturity date or final distribution date but may be retired earlier.

Some CMO classes are structured to pay interest at rates that are adjusted in
accordance with a formula, such as a multiple or fraction of the change in a
specified interest rate index, so as to pay at a rate that will be attractive in
certain interest rate environments but not in others. For example, an inverse
floating rate CMO class pays interest at a rate that increases as a specified
interest rate index decreases but decreases as that index increases. For other
CMO classes, the yield may move in the same direction as market interest rates
- -- i.e., the yield may increase as rates increase and decrease as rates decrease
- -- but may do so more rapidly or to a greater degree. The market value of such
securities generally is more volatile than that of a fixed rate obligation. Such
interest rate formulas may be combined with other CMO characteristics. For
example, a CMO class may be an "inverse IO," on which the holders are entitled
to receive no payments of principal and are entitled to receive interest at a
rate that will vary inversely with a specified index or a multiple thereof.

ARM AND FLOATING RATE MORTGAGE-BACKED SECURITIES. ARM mortgage-backed securities
are mortgage-backed securities that represent a right to receive interest
payments at a rate that is adjusted to reflect the interest earned on a pool of
mortgage loans bearing variable or adjustable rates of interest (such mortgage
loans are referred to as "ARMs"). Floating rate mortgage-backed securities are
classes of mortgage-backed securities that have been structured to represent the
right to receive interest payments at rates that fluctuate in accordance with an
index but that generally are supported by pools comprised of fixed-rate mortgage
loans. Because the interest rates on ARM and floating rate mortgage-backed
securities are reset in response to changes in a specified market index, the
values of such securities tend to be less sensitive to interest rate
fluctuations than the values of fixed-rate securities.

ARMs generally specify that the borrower's mortgage interest rate may not be
adjusted above a specified lifetime maximum rate or, in some cases, below a
minimum lifetime rate. In addition, certain ARMs specify for limitations on the
maximum amount by which the mortgage interest rate may adjust for any single
adjustment period. ARMs also may limit changes in the maximum amount by which
the borrower's monthly payment may adjust for any single adjustment period. In
the event that a monthly payment is not sufficient to pay the interest accruing
on the ARM, any such excess interest is added to the mortgage loan ("negative
amortization"), which is repaid through future payments. If the monthly payment
exceeds the sum of the interest accrued at the applicable mortgage interest rate
and the principal payment that would have been necessary to amortize the
outstanding principal balance over the remaining term of the loan, the excess
reduces the principal balance of the ARM. Borrowers under ARMs experiencing
negative amortization may take longer to build up their equity in the underlying
property and may be more likely to default interest. ARMs also may be subject to
a greater rate of prepayments in a declining interest rate environment.

The rates of interest payable on certain ARMs are based on indices, such as the
one-year constant maturity Treasury rate, that reflect changes in market
interest rates. Others are based on indices that tend to lag behind changes in
market interest rates. The values of ARM mortgage-backed securities supported by
ARMs that adjust based on lagging indices tend to be somewhat more sensitive to
interest rate fluctuations than those reflecting current interest rate levels,
although the value of such ARM mortgage-backed securities still tends to be less
sensitive to interest rate fluctuations than fixed-rate securities.

As with ARM mortgage-backed securities, interest rate adjustments on floating
rate mortgage-backed securities may be based on indices that lag behind market
interest rates. Interest rates on floating rate mortgage-backed securities
generally are adjusted monthly. Floating rate mortgage-backed securities are
subject to lifetime interest rate caps, but they generally are not subject to
limitations on monthly or other periodic changes in interest rates or monthly
payments.

TYPES OF CREDIT ENHANCEMENT. To lessen the effect of failures by obligors on
Mortgage Assets to make payments, mortgage-backed securities may contain
elements of credit enhancement. Such credit enhancement falls into two
categories: (1) liquidity protection and (2) protection against losses resulting
after default by an obligor on the underlying assets and

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collection of all amounts recoverable directly from the obligor and through
liquidation of the collateral. Liquidity protection refers to the provision of
advances, generally by the entity administering the pool of assets (usually the
bank, savings association or mortgage banker that transferred the underlying
loans to the issuer of the security), to ensure that the receipt of payments on
the underlying pool occurs in a timely fashion. Protection against losses
resulting after default and liquidation ensures ultimate payment of the
obligations on at least a portion of the assets in the pool. Such protection may
be provided through guarantees, insurance policies or letters of credit obtained
by the issuer or sponsor, from third parties, through various means of
structuring the transaction or through a combination of such approaches. The
Funds will not pay any additional fees for such credit enhancement, although the
existence of credit enhancement may increase the price of a security. Credit
enhancements do not provide protection against changes in the market value of
the security. Examples of credit enhancement arising out of the structure of the
transaction include "senior-subordinated securities" (multiple class securities
with one or more classes subordinate to other classes as to the payment of
principal thereof and interest thereon, with the result that defaults on the
underlying assets are borne first by the holders of the subordinated class),
creation of "spread accounts" or "reserve funds" (where cash or investments,
sometimes funded from a portion of the payments on the underlying assets, are
held in reserve against future losses) and "over-collateralization" (where the
scheduled payments on, or the principal amount of, the underlying assets exceed
that required to make payment of the securities and pay any servicing or other
fees). The degree of credit enhancement provided for each issue generally is
based on historical information regarding the level of credit risk associated
with the underlying assets. Delinquency or loss in excess of that anticipated
could adversely affect the return on an investment in such a security.

VARIABLE AND FLOATING RATE SECURITES
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 Securities and Exchange Commission (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.

DEPOSITORY RECEIPTS
Each Fund, except for the Global Government Income Fund, the U.S. Government
Income Fund and the Money Market Fund, may hold securities of foreign issuers in
the form of American Depository Receipts ("ADRs"), American Depository Shares
("ADSs") and European Depository Receipts ("EDRs") or other securities
convertible into securities of eligible issuers. These securities may not
necessarily be denominated in the same currency 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

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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
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"). 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.

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.

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. Each Fund may pay reasonable administrative and custodial fees in
connection with loans of its securities. 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 within the stated settlement period.
The Fund will not 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. 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

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GT GLOBAL VARIABLE INVESTMENT FUNDS
securities to restore the 300% asset coverage, even though from an investment
standpoint such sales might be disadvantageous. Each Fund also may borrow up to
5% of its total assets for temporary or emergency purposes other than to provide
cash to meet redemptions of Fund shares. Any borrowing by a Fund may cause
greater fluctuation in its net asset value than would be the case if the Fund
did not borrow.

Each Fund (except the Money Market Fund and the Strategic Income Fund) currently
is prohibited from borrowing money in order to purchase securities. In the event
that a Fund is permitted to employ leverage in the future, it would be subject
to certain additional risks. Use of leverage creates an opportunity for greater
growth of capital but would exaggerate any increases or decreases in the Fund's
net asset value. When the income and gains on securities purchased with the
proceeds of borrowings exceed the costs of such borrowings, the Fund's earnings
or net asset value will increase faster than otherwise would be the case;
conversely if such income and gains fail to exceed such costs, the Fund's
earnings or net asset value would decline faster than would otherwise be the
case.

Excluding the Money Market Fund, each Fund may enter into reverse repurchase
agreements. A reverse repurchase agreement is a borrowing transaction in which a
Fund transfers possession of a security to another party, such as a bank or
broker/dealer in return for cash, and agrees to repurchase the security in the
future at an agreed upon price, which includes an interest component. Reverse
repurchase agreements involve the risk that the market value of the securities
retained in lieu of sale by a Fund may decline below the price of the securities
the Fund had sold but is obligated to repurchase. In the event the buyer of
securities under a reverse repurchase agreement files for bankruptcy or becomes
insolvent, such buyer or its trustee or receiver may receive an extension of
time to determine whether to enforce the Fund's obligation to repurchase the
securities, and the Fund's use of the proceeds of the reverse repurchase
agreement may effectively be restricted pending such decision.

The Funds (except for the Latin America Fund and the Money Market Fund) also may
engage in "roll" borrowing transactions, which involve the sale of GNMA
certificates or other securities together with a commitment (for which a Fund
may receive a fee) to purchase similar, but not identical, securities at a
future date. Each Fund will set aside cash or liquid securities in an amount
sufficient to cover its obligations under "roll" transactions and reverse
repurchase agreements with broker/dealers. 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 deposited with the intermediary.
The Fund also will be required to deposit 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.

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GT GLOBAL VARIABLE INVESTMENT FUNDS

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.

A Fund 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 the Fund or a security
convertible into or exchangeable for such security, or when the Manager wants to
sell the security the Fund owns at a current attractive price, but also wishes
to defer recognition of gain or loss for federal income tax purposes. In such
case, any future losses in the 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 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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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.

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

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GT GLOBAL VARIABLE INVESTMENT FUNDS
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 Company'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 Company'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 or 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 SEC 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.

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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 or liquid securities 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 Investors Service,
Inc. ("Moody's") or Standard & Poor's Ratings Group ("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

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

ILLIQUID SECURITIES

Each Fund may invest up to 15% of its net assets (except for the Money Market
Fund, which 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 securities for 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 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, 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.

Statement of Additional Information Page 20
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GT GLOBAL VARIABLE INVESTMENT FUNDS

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 have
developed as a result of Rule 144A, providing 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 the Funds might be unable to dispose of such securities promptly
or at favorable prices.

With respect to liquidity determinations generally, a Company'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. Each Board has delegated the function of making
day-to-day determinations of liquidity to the Manager, in accordance with
procedures approved by that Board. 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 that 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). The
Manager monitors the liquidity of securities held by each Fund and periodically
reports such determination to the Company's Boards of Trustees.

FOREIGN SECURITIES
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.

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.

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

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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 in foreign jurisdictions are generally not subject to the
same degree of regulation as are U.S. issuers with respect to such matters as
restrictions on 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 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 shareholders 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 relative movement of
interest rates, the pace of business activity in the other countries, and the
United States, 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 buy and sell 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 the 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.

Each 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 determining and monitoring the foreign custodian's financial
strength, reputation and standing; maintaining appropriate safeguards concerning
the Fund's investments; and 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."

CONCENTRATION. To the extent a Fund invests a significant portion of its
assets in securities of issuers located in a particular country or region of the
world, such Fund may be subject to greater risks and may experience greater
volatility than a fund that is more broadly diversified geographically.

SPECIAL CONSIDERATIONS AFFECTING WESTERN EUROPEAN COUNTRIES. 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 and other trade barriers

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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
Western 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 what the exact
form or effect of these Common Market reforms will be on business in Western
Europe, it is impossible to predict the long-term impact of the implementation
of these programs on the securities owned by a Fund.

SPECIAL CONSIDERATIONS AFFECTING RUSSIA AND EASTERN EUROPEAN COUNTRIES.
Investing in Russia and Eastern European countries involves a high degree of
risk and special considerations not typically associated with investing in the
United States securities markets, and should be considered highly speculative.
Such risks include: (1) delays in settling portfolio transactions and risk of
loss arising out of the system of share registration and custody; (2) the risk
that it may be impossible or more difficult than in other countries to obtain
and/or enforce a judgement; (3) pervasiveness of corruption and crime in the
economic system; (4) currency exchange rate volatility and the lack of available
currency hedging instruments; (5) higher rates of inflation (including the risk
of social unrest associated with periods of hyper-inflation) and high
unemployment; (6) controls on foreign investment and local practices disfavoring
foreign investors and limitations on repatriation of invested capital, profits
and dividends, and on a fund's ability to exchange local currencies for U.S.
dollars; (7) political instability and social unrest and violence; (8) the risk
that the governments of Russia and Eastern European countries may decide not to
continue to support the economic reform programs implemented recently and could
follow radically different political and/or economic policies to the detriment
of investors, including non-market-oriented policies such as the support of
certain industries at the expense of other sectors or investors, or a return to
the centrally planned economy that existed when such countries had a communist
form of government; (9) the financial condition of companies in these countries,
including large amounts of inter-company debt which may create a payments crisis
on a national scale; (10) dependency on exports and the corresponding importance
of international trade; (11) the risk that the tax system in these countries
will not be reformed to prevent inconsistent, retroactive and/or exorbitant
taxation; and (12) the underdeveloped nature of the securities markets.

SPECIAL CONSIDERATIONS AFFECTING JAPAN. Japan's economic growth has declined
significantly since 1990. The general government position has deteriorated as a
result of weakening economic growth and stimulative measures taken to support
economic activity and to restore financial stability. Although the decline in
interest rates and fiscal stimulation packages have helped to contain
recessionary forces, uncertainties remain. Japan is also heavily dependent upon
international trade, so its economy is especially sensitive to trade barriers
and disputes. Japan has had difficult relations with its trading partners,
particularly the United States, where the trade imbalance is the greatest. It is
possible that trade sanctions and other protectionist measures could impact
Japan adversely in both the short and the long term.

The common stocks of many Japanese companies trade at high price-earnings
ratios. Differences in accounting methods make it difficult to compare the
earnings of Japanese companies with those of companies in other countries,
especially in the U.S. In general, however, reported net income in Japan is
understated relative to U.S. accounting standards and this is one reason why
price-earnings ratios of the stocks of Japanese companies have tended
historically to be higher than those for U.S. stocks. In addition, Japanese
companies have tended to have higher growth rates than U.S. companies and
Japanese interest rates have generally been lower than in the U.S., both of
which factors tend to result in lower discount rates and higher price-earnings
ratios in Japan than in the U.S.

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. In addition, Japan's banking industry is undergoing problems related
to bad loans and declining values in real estate.

SPECIAL CONSIDERATIONS AFFECTING PACIFIC REGION COUNTRIES. Many of the Asia
Pacific region countries may be subject to a greater degree of social, political
and economic instability than is the case in the United States. Such instability
may result from, among other things, the following: (i) authoritarian
governments or military involvement in political and economic decision making,
and changes in government through extra-constitutional means; (ii) popular
unrest associated with demands for improved political, economic and social
conditions; (iii) internal insurgencies; (iv) hostile relations with neighboring
countries; and (v) ethnic, religious and racial disaffection. Such social,
political and economic instability could significantly disrupt the principal
financial markets in which a Fund invests and adversely affect the value of a
Fund's assets. In addition, there may be the possibility of asset expropriations
or future confiscatory levels of taxation affecting the Funds.

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GT GLOBAL VARIABLE INVESTMENT FUNDS

Several of the Asia Pacific region countries have or in the past have had
hostile relationships with neighboring nations or have experienced internal
insurgency. Thailand has experienced border conflicts with Laos and Cambodia,
and India is engaged in border disputes with several of its neighbors, including
China and Pakistan. An uneasy truce exists between North Korea and South Korea,
and the recurrence of hostilities remains possible. Reunification of North Korea
and South Korea could have a detrimental effect on the economy of South Korea.
Also, China continues to claim sovereignty over Taiwan and recently has
conducted military maneuvers near Taiwan.

The economies of most of the Asia Pacific region countries are heavily dependent
upon international trade and are accordingly affected by protective trade
barriers and the economic conditions of their trading partners, principally the
United States, Japan, China and the European Community. The enactment by the
United States or other principal trading partners of protectionist trade
legislation, reduction of foreign investment in the local economies and general
declines in the international securities markets could have a significant
adverse effect upon the securities markets of the Asia Pacific region countries.
In addition, the economies of some of the Asia Pacific region countries,
Australia and Indonesia, for example, are vulnerable to weakness in world prices
for their commodity exports, including crude oil.

China is scheduled to assume sovereignty over Hong Kong on July 1997. Although
China has committed by treaty to preserve the economic and social freedoms
enjoyed in Hong Kong for fifty years after regaining control of Hong Kong, the
continuation of the current form of the economic system in Hong Kong after the
reversion will depend on the actions of the government of China. In addition,
such reversion has increased sensitivity in Hong Kong to political developments
and statements by public figures in China. Business confidence in Hong Kong,
therefore, can be significantly affected by such developments and statements,
which in turn can affect markets and business performance.

In addition, the reversion of Hong Kong also presents a risk that the Hong Kong
dollar will be devaluated and a risk of possible loss of investor confidence in
the Hong Kong markets and dollar. However, factors exist that are likely to
mitigate this risk. First, China has stated its intention to implement a "one
country, two systems" policy, which would preserve monetary sovereignty and
leave control in the hands of the Hong Kong Monetary Authority ("HKMA").

Second, fixed rate parity with the U.S. dollar is seen as critical to
maintaining investors' confidence in the transition to Chinese rule and,
therefore, it is anticipated that, in the event international investors lose
confidence in Hong Kong dollar assets, the HKMA would intervene to support the
currency, though such intervention cannot be assured. Third, Hong Kong's and
China's sizable combined foreign exchange reserve may be used to support the
value of the Hong Kong dollar, provided that China does not appropriate such
reserves for other uses, which is not anticipated, but cannot be assured.
Finally, China would be likely to experience significant adverse political and
economic consequences if confidence in the Hong Kong dollar and the territory
assets were to be endangered.

SPECIAL CONSIDERATIONS AFFECTING LATIN AMERICAN COUNTRIES. Most Latin
American countries have experienced substantial, and in some periods extremely
high, rates of inflation for many years. Inflation and rapid fluctuations in
inflation rates have had and may continue to have very negative effects on the
economies and securities markets of certain Latin American countries. Certain
Latin American countries are also among the largest debtors to commercial banks
and foreign governments. At times certain Latin American countries have declared
moratoria on the payment of principal and/or interest on external debt. In
addition, certain Latin American securities markets have experienced high
volatility in recent years.

Latin American countries may also close certain sectors of their economies to
equity investments by foreigners. Further due to the absence of securities
markets and publicly owned corporations and due to restrictions on direct
investment by foreign entities, investments may only be made in certain Latin
American countries solely or primarily through governmentally approved
investment vehicles or companies.

Certain Latin American countries may have managed currencies that are maintained
at artificial levels to the U.S. dollar rather than at levels determined by the
market. This type of system can lead to sudden and large adjustments in the
currency which, in turn, can have a disruptive and negative effect on foreign
investors. For example, in late 1994, the value of the Mexican peso lost more
than one-third of its value relative to the U.S. dollar.

SPECIAL CONSIDERATIONS AFFECTING EMERGING MARKETS. Investing in the
securities of companies in emerging markets may entail special risks relating to
potential political and economic instability and the risks of expropriation,
nationalization, confiscation or the imposition of restrictions on foreign
investment, convertibility 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.

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GT GLOBAL VARIABLE INVESTMENT FUNDS

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 value 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, especially in these markets. In addition,
securities traded in certain emerging markets may be subject to risks due to the
inexperience of financial intermediaries, a lack of modern technology, the lack
of a sufficient capital base to expand business operations, and the possibility
of permanent or temporary termination of trading.

Settlement mechanisms in emerging securities markets may be less efficient and
reliable than in more developed markets. In such emerging securities there may
be share registration and delivery delays or failures.

Many emerging market countries have experienced substantial, and in some periods
extremely high, rates of inflation for many years. Inflation and rapid
fluctuations in inflation rates and corresponding currency devaluations have had
and may continue to have negative effects on the economies and securities
markets of certain emerging market countries.

Statement of Additional Information Page 25
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GT GLOBAL VARIABLE INVESTMENT FUNDS

INVESTMENT LIMITATIONS

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

Each Fund is subject to certain fundamental investment limitations which 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.
Each Fund is also subject to nonfundamental limitations which may be changed by
vote of the applicable Company's Board of Trustees without shareholder approval.

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; or

(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

NONFUNDAMENTAL INVESTMENT LIMITATIONS.

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) 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; or

(3) 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 AND 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 1933 Act;

(4) Make loans, except that each Fund may purchase debt securities and
enter into repurchase agreements and may make loans of portfolio securities;

(5) Purchase securities on margin, provided that each Fund may obtain
such short-term credits as may be necessary for the clearance of purchases
and sales of securities; except that it may make margin deposits in
connection with futures contracts;

(6) Borrow money except from banks not in excess of 33-1/3% of the value
of each Fund's total assets, (including the amount borrowed), less all
liabilities and indebtedness (other than the borrowing). This restriction
shall not prevent either Fund from entering into reverse repurchase
agreements, provided that reverse repurchase agreements, and any other
transactions constituting borrowing by a Fund may not exceed one-third of
that Fund's total assets. Transactions involving options, futures contracts,
options on futures contracts and forward currency contracts, as described in
the Prospectus and Statement of Additional Information, and collateral
arrangements relating thereto will not be deemed to be borrowings;

(7) Mortgage, pledge, or hypothecate any of its assets, provided that
this restriction shall not apply to the transfer of securities in connection
with any permissible borrowing or to collateral arrangements in connection
with permissible activities; or

(8) Invest in direct interests or leases in oil, gas, or other mineral
exploration or development programs; however, each Fund may invest in the
securities of companies that engage in these activities.

Statement of Additional Information Page 27
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GT GLOBAL VARIABLE INVESTMENT FUNDS

NONFUNDAMENTAL INVESTMENT LIMITATIONS.

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) Enter into a futures contract, an option on a futures contract, or
an option on foreign currency traded on a CFTC-regulated exchange, in each
case other than for bona fide hedging purposes (as defined by the CFTC), if
the aggregate initial margin and premiums required to establish all of those
positions (excluding the amount by which options are "in-the-money") exceeds
5% of the liquidation value of a Fund's portfolio, after taking into account
unrealized profits and unrealized losses on any contracts the Fund has
entered into;

(5) Borrow money except for temporary or emergency purposes (not for
leveraging) 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; or

(6) 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 1933 Act;

(5) Make loans, except that the Fund may purchase debt securities and
enter into repurchase agreements and may make loans of securities;

(6) Purchase securities on margin, provided that the Fund may obtain
such short-term credits as may be necessary for the clearance of purchases
and sales of securities except that it may make margin deposits in
connection with futures contracts;

(7) Borrow money except from banks not in excess of 33-1/3% of the value
of the Fund's total assets, including the amount borrowed, less all
liabilities and indebtedness (other than the borrowing). This restriction
shall not prevent the Fund from entering into reverse repurchase agreements,
provided that reverse repurchase agreements, and any other transactions
constituting borrowing by the Fund may not exceed one-third of the Fund's
total assets, respectively. Transactions involving options, futures
contracts, options on futures contracts and forward currency contracts, as
described in the Funds' Prospectus and Statement of Additional Information,
and collateral arrangements relating thereto will not be deemed to be
borrowings;

Statement of Additional Information Page 28
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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 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.

NONFUNDAMENTAL INVESTMENT LIMITATIONS.

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) 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 the Fund's portfolio, after taking into
account unrealized profits and unrealized losses on any contracts the Fund
has entered into; or

(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. 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;

(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;

Statement of Additional Information Page 29
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

(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.

NONFUNDAMENTAL INVESTMENT LIMITATIONS.

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) 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 the Fund's portfolio, after taking into
account unrealized profits and unrealized losses on any contracts the Fund
has entered into; or

(4) 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.

LATIN AMERICA FUND

FUNDAMENTAL INVESTMENT LIMITATIONS.

The Fund may not:

(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 1933 Act;

(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;

Statement of Additional Information Page 30
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

(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.

NONFUNDAMENTAL INVESTMENT LIMITATIONS.

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; 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 the 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:

(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 1933 Act;

(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

Statement of Additional Information Page 31
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
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.

NONFUNDAMENTAL INVESTMENT LIMITATIONS.

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; or

(3) 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:

(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

Statement of Additional Information Page 32
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
Fund's total assets. In the event that the asset coverage for the Fund's
borrowings fall below 300%, the Fund, as the case may be, will reduce,
within three days (excluding Sundays and holidays), the amount of its
borrowings in order to provide for 300% asset coverage. Transactions
involving options, futures contracts, options on futures contracts and
forward currency contracts, and collateral arrangements relating thereto
will not be deemed to be borrowings;

(9) Mortgage or hypothecate any of its assets, provided that this
restriction shall not apply to the transfer of securities in connection with
any permissible borrowing;

(10) Invest in interests in oil, gas or other mineral exploration or
development programs;

(11) Invest more than 5% of its total assets in securities of companies
having, together with predecessors, a record of less than three years of
continuous operation;

(12) Purchase or retain the securities of any issuer, if those individual
officers and Trustees of the Company, the Fund or the Fund's investment
adviser, or distributor, each owning beneficially more than 1/2 of 1% of the
securities of such issuer, together own more than 5% of the securities of
such issuer; or

(13) Enter into a futures contract if, as a result thereof, more than 5%
of the Fund's total assets (taken at market value at the time of entering
into the contract), would be committed to margin on such futures contracts.

NONFUNDAMENTAL INVESTMENT LIMITATIONS.

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:

(2) Invest in companies for the purpose of exercising control or
management;

(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;

(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;

Statement of Additional Information Page 33
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

(9) Borrow money, except from banks or for temporary or emergency
purposes not in excess of 30% of the value of the Fund's total assets. The
Fund will not purchase securities while such borrowings are outstanding.
This restriction shall not prevent the Fund from entering into reverse
repurchase agreements and engaging in "roll" transactions, provided that
reverse repurchase agreements, "roll" transactions and any other
transactions constituting borrowing by the Fund may not exceed one-third of
the Fund's total assets. In the event that the asset coverage for the Fund's
borrowings falls below 300%, the Fund will reduce, within three days
(excluding Sundays and holidays), the amount of its borrowings in order to
provide for 300% asset coverage;

(10) Mortgage, pledge, or hypothecate any of its assets, provided that
this restriction shall not apply to the transfer of securities in connection
with any permissible borrowing;

(11) Invest in interests in oil, gas, or other mineral exploration or
development programs;

(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.

NONFUNDAMENTAL INVESTMENT LIMITATIONS.

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:

(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;

(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

Statement of Additional Information Page 34
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
provide for 300% asset coverage. Transactions involving options, futures
contracts, options on futures contracts and forward currency contracts, and
collateral arrangements relating thereto will not be deemed to be
borrowings;

(8) Mortgage, pledge or hypothecate any of its assets, provided that
this restriction shall not apply to the transfer of securities in connection
with any permissible borrowing; or

(9) Invest in interests in oil, gas or other mineral exploration or
development programs.

NONFUNDAMENTAL INVESTMENT LIMITATIONS.

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; 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 the 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.

NONFUNDAMENTAL INVESTMENT LIMITATIONS

The Fund may not invest more than 10% of its net assets in illiquid securities.

ALL FUNDS

For purposes of each Fund's concentration policy (except with respect to Growth
& Income Fund), 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.

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.

Statement of Additional Information Page 35
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

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 Internal Revenue Code of 1986, as amended (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.

Statement of Additional Information Page 36
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

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 in OTC markets.

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.

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.

Statement of Additional Information Page 37
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

The Funds contemplate that, consistent with the policy of obtaining the best net
results, brokerage transactions may be conducted through affiliates 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, 1996, the Growth & Income Fund paid LGT
Bank in Liechtenstein (Deutschland) Gmbh, an "affiliated" broker as defined in
the 1940 Act, aggregate brokerage commissions of $611.63 for transactions
involving purchases and sales of portfolio securities, which represented .04% of
the total brokerage commissions paid by the Growth & Income Fund and 0% of the
aggregate dollar amount of transactions involving payment of commissions by the
Growth & Income Fund. For the fiscal year ended December 31, 1995, the Europe
Fund paid LGT Bank in Liechtenstein (Zurich) brokerage commissions of $565 for
transactions involving purchases and sales of portfolio securities, which
represented 2.22% of the total 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, 1994, 1995 and 1996, are as follows:

YEAR ENDED DECEMBER 31, 1994

<TABLE>
<CAPTION>
GT GLOBAL

<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>
<CAPTION>
GT GLOBAL

<S> <C>
Variable International Fund............................................................................................ $ 9,920
Variable Emerging Markets Fund......................................................................................... 33,112
</TABLE>

YEAR ENDED DECEMBER 31, 1995

<TABLE>
<CAPTION>
GT GLOBAL

<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 Fund......................................................................................... 100,931
</TABLE>

Statement of Additional Information Page 38
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

JANUARY 31, 1995 (COMMENCEMENT OF OPERATIONS)
THROUGH DECEMBER 31, 1995

<TABLE>
<CAPTION>
GT GLOBAL

<S> <C>
Variable Infrastructure Fund........................................................................................... $ 4,412
Variable Natural Resources Fund........................................................................................ 8,399
</TABLE>

YEAR ENDED DECEMBER 31, 1996

<TABLE>
<CAPTION>
GT GLOBAL

<S> <C>
Variable America Fund.................................................................................................. $ 149,008
Variable Europe Fund................................................................................................... 97,808
Variable New Pacific Fund.............................................................................................. 196,708
Variable International Fund............................................................................................ 29,787
Money Market Fund...................................................................................................... 0
Variable Growth & Income Fund.......................................................................................... 15,766
Variable Strategic Income Fund......................................................................................... 3,923
Variable Global Government Income Fund................................................................................. 496
Variable U.S. Government Income Fund................................................................................... 237
Variable Latin America Fund............................................................................................ 134,264
Variable Telecommunications Fund....................................................................................... 69,333
Variable Emerging Markets Fund......................................................................................... 174,892
Variable Infrastructure Fund........................................................................................... 11,718
Variable Natural Resources Fund........................................................................................ 68,778
</TABLE>

TRADING AND TURNOVER
Although each Fund does not intend generally to trade for short-term profits,
the securities held by that Fund will be sold whenever management believes it is
appropriate to do so, without regard to the length of time a particular security
may have been held. Portfolio turnover rate is calculated by dividing the lesser
of sales or purchases of portfolio securities by each Fund's average month-end
portfolio value, excluding short-term investments. The portfolio turnover rate
will note a limiting factor when management deems portfolio changes appropriate.
Higher portfolio turnover involves correspondingly greater brokerage commissions
and other transaction costs that the Fund will bear directly, and may result in
the realization of net capital gains that are taxable when distributed to each
Fund's shareholders. The portfolio turnover rates for the Funds for the fiscal
year ended December 31, 1996 and the portfolio turnover rates for 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,
1995
(COMMENCEMENT
OF
YEAR ENDED OPERATIONS)
DECEMBER 31, TO DECEMBER
--------------------------- 31,
GT GLOBAL VARIABLE 1996 1995 1995
- -------------------------------------------------- ------------ ------------ -------------
<S> <C> <C> <C>
America Fund...................................... 248% 79% N/A
Europe Fund....................................... 56% 123% N/A
New Pacific Fund.................................. 70% 67% N/A
International Fund................................ 92% 107% N/A
Money Market Fund................................. N/A N/A N/A
Growth & Income Fund.............................. 57% 73% N/A
Strategic Income Fund............................. 210% 193% N/A
Global Government Income Fund..................... 235% 394% N/A
U.S. Government Income Fund....................... 49% 186% N/A
Latin America Fund................................ 102% 140% N/A
Telecommunications Fund........................... 77% 70% N/A
Emerging Markets Fund............................. 216% 210% N/A
Infrastructure Fund............................... 76% N/A 38%
Natural Resources Fund............................ 199% N/A 875%
</TABLE>

Statement of Additional Information Page 39
<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>
William J. Guilfoyle*, 38 Director, LGT Asset Management, Inc. since 1996; Director, G.T. Insurance Agency ("G.T.
Trustee, Chairman of the Board and Insurance") since 1996; Director, Liechtenstein Global Trust AG (holding company of the
President various international LGT companies) Advisory Board since January 1996; President, GT
50 California Street Global since 1995; President and Chief Executive Officer, G.T. Insurance since 1995;
San Francisco, CA 94111 Director, Liechtenstein Global Trust AG from 1995 to January 1996; Senior Vice President
and Director, Sales and Marketing, G.T. Insurance from April 1995 to November 1995; Vice
President and Director of Marketing, GT Global from 1987 to 1995; Senior Vice President,
Retail Marketing, G.T. Insurance from 1993 to 1995; and Vice President, G.T. Insurance
from 1992 to 1993. Mr. Guilfoyle 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, 55 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, 57 Partner with Baker & McKenzie (a law firm); Director and Chairman, C.D. Stimson Company (a
Trustee private investment company). Mr. Bayley also is a director or trustee of each of the other
Two Embarcadero Center investment companies registered under the 1940 Act that is managed or administered by the
Suite 2400 Manager.
San Francisco, CA 94111

Arthur C. Patterson, 53 Managing Partner, Accel Partners (a venture capital firm). He also serves as a director of
Trustee 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, 61 Private investor; and President, Quigley Friedlander & Co., Inc. (a financial advisory
Trustee services firm) from 1984 to 1986. Ms. Quigley also is a director or trustee of 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.

Robert G. Wade, Jr.*, 69 Consultant to the Manager; Chairman of the Board of Chancellor Capital Management, Inc.
Trustee from January 1995 to October 1996; President, Chief Executive Officer and Chairman of the
1166 Avenue of the Americas Board of Chancellor Capital Management, Inc. from 1988 to January 1995.
New York, NY 10036
</TABLE>

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

* Mr. Guilfoyle and Mr. Wade are "interested persons" of each Company as
defined by the 1940 Act due to their affiliation with the LGT companies.

Statement of Additional Information Page 40
<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, 38 Chief Information Officer for the Manager since October 1996; President,
Vice President and Chief GT Services since 1995; Senior Vice President -- Finance and
Financial Officer Administration, GT Global, GT Services and G.T. Insurance, from 1994 to
50 California Street 1995; Senior Vice President -- Finance and Administration, the Manager
San Francisco, CA 94111 from 1994 to October 1996; Vice President -- Finance, the Manager, GT
Global and GT Services from 1990 to 1994; Vice President -- Finance,
G.T. Insurance from 1992 to 1994; and Director of the Manager, GT Global
and GT Services since 1991.

Kenneth W. Chancey, 51 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, 50 Executive Vice President, Asset Management Division, Liechtenstein
Vice President and Secretary Global Trust since October 1996; Senior Vice President, the Manager, GT
1166 Avenue of the Americas Global, GT Services and G.T. Insurance from February 1996 to October
New York, NY 10036 1996; Vice President, the Manager, LGT Asset Management, Inc., GT
Global, GT Services and G.T. Insurance from May 1994 to February 1996;
General Counsel, the Manager, LGT Asset Management, Inc., GT Global, GT
Services and G.T. Insurance from May 1994 to October 1996; Secretary,
the Manager, LGT Asset Management, Inc., GT Global, GT Services and G.T.
Insurance from May 1994 to October 1996; General Counsel and Secretary,
Strong/Corneliuson Management, Inc. and Secretary, each of the Strong
Funds from October 1991 through May 1994.
</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., G.T. Global Developing Markets Fund, Inc. and G.T. Global Floating Rate
Fund, Inc. and a Trustee and Officer of G.T. Global Growth Series, G.T. Global
Eastern Europe Fund, Global High Income Portfolio, Global Investment Portfolio,
Growth Portfolio and Floating Rate Portfolio, which also are registered
investment companies managed or administered by the Manager. Each Trustee and
Officer serves in total as a Director and or Trustee and Officer, respectively,
of 12 registered investment companies and 41 series 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, 1996,
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 $2,000 and $3,000, $2,000 and $3,000,
$2,000 and $3,000 and $2,000 and $3,000, respectively. For the fiscal year ended
December 31, 1996, Mr. Anderson, Mr. Bayley, Mr. Patterson and Ms. Quigley
received total compensation of $87,600, $87,600, $80,100 and $87,600,
respectively, from the investment companies managed or administered by the
Manager 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 the date of this Statement of Additional Information, the
officers and Trustees and their families as a group do not own beneficially or
of record any of the outstanding shares of any Fund.

Statement of Additional Information Page 41
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

MANAGEMENT

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

INVESTMENT MANAGEMENT AND ADMINISTRATION SERVICES
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, 1994, 1995 and 1996 were as follows:

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1994
-----------------------------
INVESTMENT
MANAGEMENT REIMBURSEMENT
GT GLOBAL FEES AMOUNT
- ---------------------------------------------------------------------------------------------------- ------------ ---------------
<S> <C> <C>
Variable America Fund............................................................................... $ 51,664 $ 0
Variable Europe Fund................................................................................ 125,533 0
Variable New Pacific Fund........................................................................... 155,724 0
Variable International Fund
(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
</TABLE>

Statement of Additional Information Page 42
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1995
-----------------------------
INVESTMENT
MANAGEMENT REIMBURSEMENT
GT GLOBAL FEES AMOUNT
- ---------------------------------------------------------------------------------------------------- ------------ ---------------
Variable America Fund............................................................................... $ 236,272 $ 18,927
<S> <C> <C>
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
<CAPTION>

YEAR ENDED
DECEMBER 31, 1996
-----------------------------
INVESTMENT
MANAGEMENT REIMBURSEMENT
GT GLOBAL FEES AMOUNT
- ---------------------------------------------------------------------------------------------------- ------------ ---------------
<S> <C> <C>
Variable America Fund............................................................................... $ 290,233 $ 3,077
Variable Europe Fund................................................................................ 200,116 43,852
Variable New Pacific Fund........................................................................... 291,308 43,012
Variable International Fund......................................................................... 45,476 45,476
Money Market Fund................................................................................... 76,778 15,508
Variable Strategic Income Fund...................................................................... 201,749 36,678
Variable Global Government Income Fund.............................................................. 81,007 51,249
Variable U.S. Government Income Fund................................................................ 39,093 39,093
Variable Latin America Fund......................................................................... 224,901 38,459
Variable Emerging Markets Fund...................................................................... 149,042 63,577
Variable Growth & Income Fund....................................................................... 317,655 15,992
Variable Telecommunications Fund.................................................................... 599,839 --
Variable Infrastructure Fund........................................................................ 35,043 35,043
Variable Natural Resources Fund..................................................................... 75,133 47,923
</TABLE>

Statement of Additional Information Page 43
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

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, 1996 and 1995 were as follows:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1996
----------------------------
OTHER
EXPENSES REIMBURSEMENT
GT GLOBAL PAID AMOUNT
- ------------------------------------------------------------------------------------------------------ ----------- ---------------
<S> <C> <C>
Variable America Fund................................................................................. $ 99,786 $ 0
Variable Europe Fund.................................................................................. 93,881 0
Variable New Pacific Fund............................................................................. 115,841 0
Variable International Fund........................................................................... 67,753 10,908
Money Market Fund..................................................................................... 53,896 0
Variable Strategic Income Fund........................................................................ 103,927 0
Variable Global Government Income Fund................................................................ 78,263 0
Variable U.S. Government Income Fund.................................................................. 52,137 11
Variable Latin America Fund........................................................................... 94,685 0
Variable Emerging Markets Fund........................................................................ 100,828 0
Variable Telecommunications Fund...................................................................... 100,108 0
Variable Growth & Income Fund......................................................................... 95,407 0
Variable Infrastructure Fund.......................................................................... 53,612 9,807
Variable Natural Resources Fund....................................................................... 66,706 0

YEAR ENDED
DECEMBER 31, 1995
----------------------------
OTHER
EXPENSES REIMBURSEMENT
GT GLOBAL PAID AMOUNT
- ------------------------------------------------------------------------------------------------------ ----------- ---------------
<S> <C> <C>
Variable America Fund................................................................................. $ 97,684 $ 0
Variable Europe Fund.................................................................................. 109,726 0
Variable New Pacific Fund............................................................................. 124,938 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........................................................................... 140,403 0
Variable Emerging Markets Fund........................................................................ 92,884 0
Variable Telecommunications Fund...................................................................... 115,396 0
Variable Growth & Income Fund......................................................................... 123,407 0
Variable Infrastructure Fund
(from January 31, 1995, commencement of operations).................................................. 51,789 43,241
Variable Natural Resources Fund
(from January 31, 1995, commencement of operations).................................................. 47,798 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.

Statement of Additional Information Page 44
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

The Manager also serves as each Fund's pricing and accounting agent. For the
fiscal years ended December 31, 1996 and December 31, 1995, the pricing and
accounting services fees for the Funds were:

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
--------------
GT GLOBAL 1996 1995
- -------------------------------------------------- ------ ------
<S> <C> <C>
Variable Strategic Income Fund.................... $6,725 $2,523
Variable Global Government Income Fund............ 2,707 1,197
Variable U.S. Government Income Fund.............. 1,305 567
Variable Latin America Fund....................... 5,629 2,080
Variable Growth & Income Fund..................... 7,952 3,066
Variable Telecommunications Fund.................. 14,996 5,248
Variable Emerging Markets Fund.................... 3,728 884
Variable Infrastructure Fund...................... 877 124
Variable Natural Resources Fund................... 1,878 109
Variable America Fund............................. 9,687 4,066
Variable New Pacific Fund......................... 7,289 2,215
Variable Europe Fund.............................. 4,997 1,673
Money Market Fund................................. 3,883 1,633
Variable International Fund....................... 1,137 386
</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 and other assets of the Funds, other than those of the
Money Market Fund, 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 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.

Statement of Additional Information Page 46
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

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 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.

Statement of Additional Information Page 47
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

TAXES

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

GENERAL
Shares of the Funds are offered only to Separate Accounts that fund certain VA
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)(the "Distribution Requirement") 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 or Futures, (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 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.

Statement of Additional Information Page 48
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

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 would 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 by the Fund to satisfy the distribution
requirements described above -- even if those earnings and gain were not
received by the Fund from the QEF. 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 selling (writing) and purchasing
options and Futures, and entering into Forward Contracts 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/or 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 currencies,
foreign currency-denominated debt securities, and options, Futures, and Forward
Contracts on foreign currencies ("Section 988 gains and 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 AG, 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, in Zurich.

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., in
Singapore; LGT Asset Management Ltd., formerly G.T. Management (Australia) Ltd.,
in Sydney; and LGT Asset Management GmbH, formerly BIL Asset Management GmbH, in
Frankfurt.

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 the Fund's Financial Statements, 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 that 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

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

Each Fund's "Standardized Returns", as referred to in the Prospectus (see "Other
Information -- Performance Information" in the Prospectus), is calculated as
follows: Standardized Return Standardized Return (average annual total return
("T")) is computed by using the ending redeeming value ("ERV") 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) to the (n)th power = ERV. 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 Companies' 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.

Each Fund's Standardized Returns, stated as average annualized total returns for
the periods shown, were:

<TABLE>
<CAPTION>
AVERAGE
ANNALIZED
STANDARDIZED
GT GLOBAL RETURN
- -------------------------------------------------------------------------------- ---------
<S> <C>
Variable America Fund
- -- Year ended December 31, 1996................................................. 16.91%
- -- From inception on February 10, 1993 to December 31, 1996..................... 18.23%
Variable Europe Fund
- -- Year ended December 31, 1996................................................. 28.44%
- -- From inception on February 10, 1993 to December 31, 1996..................... 14.92%
Variable New Pacific Fund
- -- Year ended December 31, 1996................................................. 29.15%
- -- From inception on February 10, 1993 to December 31, 1996..................... 10.04%
Variable Growth & Income Fund
- -- Year ended December 31, 1996................................................. 14.71%
- -- From inception on February 10, 1993 to December 31, 1996..................... 10.13%
Variable Strategic Income Fund
- -- Year ended December 31, 1996................................................. 19.90%
- -- From inception on February 10, 1993 to December 31, 1996..................... 10.12%
Variable Global Government Income Fund
- -- Year ended December 31, 1996................................................. 4.70%
- -- From inception on February 10, 1993 to December 31, 1996..................... 3.95%
Variable U.S. Government Income Fund
- -- Year ended December 31, 1996................................................. 0.81%
- -- From inception on February 10, 1993 to December 31, 1996..................... 2.66%
Variable Latin America Fund
- -- Year ended December 31, 1996................................................. 20.77%
- -- From inception on February 10, 1993 to December 31, 1996..................... 9.34%
Money Market Fund
- -- Year ended December 31, 1996................................................. 3.33%
- -- From inception on February 10, 1993 to December 31, 1996..................... 2.68%
Variable Telecommunications Fund
- -- Year ended December 31, 1996................................................. 17.69%
- -- From inception on October 18, 1993 to December 31, 1996...................... 16.86%
</TABLE>

Statement of Additional Information Page 51
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
<TABLE>
<S> <C>
Variable Emerging Markets Fund
- -- Year ended December 31, 1996................................................. 29.24%
- -- From inception on July 5, 1994 to December 31, 1996.......................... 6.57%
Variable International Fund
- -- Year ended December 31, 1996................................................. 7.01%
- -- From inception on July 5, 1994 to December 31, 1996.......................... -1.00%
Variable Infrastructure Fund
- -- Year ended December 31, 1996................................................. 23.14%
- -- From inception on January 31, 1995 to December 31, 1996...................... 16.69%
Variable Natural Resources Fund
- -- Year ended December 31, 1996................................................. 49.05%
- -- From inception on January 31, 1995 to December 31, 1996...................... 33.76%
</TABLE>

In addition to Standardized Returns, each Fund also may include in
advertisements, sales literature and shareholder reports other total return
performance data ("Non-Standardized Return"). Non-Standardized Return 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.

Aggregate Non-Standardized Return ("T") is computed by using the ending value of
the account ("VOA") of a hypothetical initial investment of $1,000 ("P")
according to the following formula: T=(VOA/P)-1. Aggregate Non-Standardized
Return assumes reinvestment of dividends and other distributions.

Each Fund's aggregate Non-Standardized Returns, stated as aggregate total
returns for the periods shown, were:

<TABLE>
<CAPTION>
AGGREGATE
NON-STANDARDIZED
GT GLOBAL RETURN
- -------------------------------------------------------------------------------- ---------
<S> <C>
Variable America Fund
- -- From inception on February 10, 1993 to December 31, 1996..................... 91.84%
Variable Europe Fund
- -- From inception on February 10, 1993 to December 31, 1996..................... 71.80%
Variable New Pacific Fund
- -- From inception on February 10, 1993 to December 31, 1996..................... 45.10%
Variable Growth & Income Fund
- -- From inception on February 10, 1993 to December 31, 1996..................... 45.57%
Variable Strategic Income Fund
- -- From inception on February 10, 1993 to December 31, 1996..................... 45.52%
Variable Global Government Income Fund
- -- From inception on February 10, 1993 to December 31, 1996..................... 16.28%
Variable U.S. Government Income Fund
- -- From inception on February 10, 1993 to December 31, 1996..................... 10.75%
Variable Latin America Fund
- -- From inception on February 10, 1993 to December 31, 1996..................... 41.53%
Money Market Fund
- -- From inception on February 10, 1993 to December 31, 1996..................... 10.83%
Variable Telecommunications Fund
- -- From inception on October 18, 1993 to December 31, 1996...................... 64.70%
</TABLE>

Statement of Additional Information Page 52
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
<TABLE>
<S> <C>
Variable Emerging Markets Fund
- -- From inception on July 5, 1994 to December 31, 1996.......................... 17.18%
Variable International Fund
- -- From inception on July 5, 1994 to December 31, 1996.......................... -2.46%
Variable Infrastructure Fund
- -- From inception on January 31, 1995 to December 31, 1996...................... 34.44%
Variable Natural Resources Fund
- -- From inception on January 31, 1995 to December 31, 1996...................... 79.73%
</TABLE>

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 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, 1996, the Fund's yield was 4.67% and
effective yield was 4.78%. 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, 1996:.................................................. $ 1.000895661
</TABLE>

- ------------------
* Value includes additional shares acquired with dividends paid on the
original shares.

<TABLE>
<S> <C>
Calculation:
Ending account value:.............................................................. $ 1.000895661
Less beginning account value:...................................................... $ 1.000000000
Net change in account value:....................................................... $ 0.000895661
Seven-day yield = $1.000895661 X 365/7 = 4.67%
Effective yield** = [1 + 1.000895661] 365/7 - 1 = 4.78%
</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 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 the Fund, so that any performance 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

Statement of Additional Information Page 53
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
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 believed 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.

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 relevant indices. 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 Gross National Product ("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.

Statement of Additional Information Page 54
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

(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 in Europe, Australia and the Far East.

(12) Salomon Brothers World Government Bond Index and Salomon Brothers
World Government Bond Index-Non-U.S. are each a widely used index composed
of world government bonds.

(13) The World Bank Publication of Trends in Developing Countries
("TIDE"). TIDE provides brief reports on most of the World Bank's borrowing
members. The World Development Report is published annually and looks at
global and regional economic trends and their implications for the
developing economies.

(14) Salomon Brothers Global Telecommunications Index is composed of
telecommunications companies in the developing and emerging countries.

(15) Datastream and Worldscope each is an on-line database retrieval
service for information including, but not limited to, international
financial and economic data.

(16) International Financial Statistics, which is produced by the
International Monetary Fund.

(17) Various publications and annual reports such as the World
Development Report, produced by the World Bank and its affiliates.

(18) Various publications from the International Bank for Reconstruction
and Development.

(19) Various publications including, but not limited to ratings agencies
such as Moody's Investors Service, Inc. ("Moody's"), Fitch Investors
Service, Inc. ("Fitch") and Standard & Poor's ("S&P").

(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 ("IFC") 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, MUTUAL FUND 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.

Statement of Additional Information Page 55
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

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.

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.

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, liquidity risk and inflation
risk. Risk represents the possibility that you may lose some or all of your
investment over a period of time. A basic tenet of investing is the greater the
potential reward, the greater the risk.

From time to time, the GT Global Variable Investment Funds and GT Global will
quote data regarding: industries, companies, 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, IFC and Datastream.

2) Stock market trading volume: Morgan Stanley Capital International World
Indices, IFC.

3) The number of listed companies: IFC, LGT Guide to World Equity Markets,
Salomon Brothers, Inc. and S.G. Warburg.

Statement of Additional Information Page 56
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

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, IFC 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: IFC, 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: IFC, The World Bank and Datastream.

14) Top three companies by country or market: IFC, 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.

GT GLOBAL ADVANTAGE
As part of Liechtenstein Global Trust, GT Global continues a 75-year tradition
of service to individuals and institutions. Today we bring investors a
combination of experience, worldwide resources, a global perspective, investment
talent and a time tested investment discipline. With investment professionals in
nine offices worldwide, we witness world events and economic developments
firsthand.

Statement of Additional Information Page 57
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

The key to achieving consistent results is following a disciplined investment
process. Our approach to asset allocation takes advantage of GT Global's
worldwide presence and global perspective. Our "macroeconomic" worldview
determines our overall strategy of regional, country and sector allocations. Our
bottom up process of security selection combines fundamental research with
quantitative analysis through our proprietary models.

Built in checks and balances strengthen the process, enhancing professional
experience and judgment with an objective assessment of risk. Ultimately, each
security we select has passed a ranking system that helps our portfolio teams
determine when to buy and when to sell.

In addition, the GT Global Variable Strategic Income Fund, from time to time,
may quote yields and total returns of representative debt instruments from
emerging market countries in its advertising and sales literature.

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.

Statement of Additional Information Page 58
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

DESCRIPTION OF DEBT RATINGS

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

DESCRIPTION OF COMMERCIAL PAPER RATINGS
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 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.

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.

Statement of Additional Information Page 59
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GT GLOBAL VARIABLE INVESTMENT FUNDS

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 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.

Statement of Additional Information Page 60
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

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 as of December 31, 1996 and for
the fiscal year then ended appear on the following pages.

Statement of Additional Information Page 63
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

REPORT OF INDEPENDENT ACCOUNTANTS

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

ANNUAL REPORT
To the Shareholders and Board of Trustees of the GT 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 the GT 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, 1996, the
related statements of operations for the year then ended, the related statements
of changes in net assets and the 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 the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1996 by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements and the financial highlights referred
to above present fairly, in all material respects, the financial positions of
the Funds as of December 31, 1996, the results of their operations for the year
then ended, the related 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 14, 1997

F1
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GT GLOBAL VARIABLE STRATEGIC INCOME FUND

PORTFOLIO OF INVESTMENTS

December 31, 1996

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

<TABLE>
<CAPTION>
PRINCIPAL VALUE % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Government & Government Agency Obligations (72.0%)
Argentina (5.7%)
Republic of Argentina:
Discount Bond, 6.375% due 3/31/23+ .................... USD 950,000 $ 733,281 2.3
BOCON Pre 4, 5.375% due 9/1/02[.] + ................... USD 480,000 516,120 1.6
Par Bond, 5.25% due 3/31/23++ ......................... USD 760,000 484,500 1.5
Floating Rate Bond, 6.625% due 3/31/05+ ............... USD 118,580 103,387 0.3
Australia (2.1%)
Commonwealth of Australia, 9.5% due 8/15/03 ............. AUD 760,000 673,838 2.1
Brazil (3.5%)
Federal Republic of Brazil:
C Bond, 4.5% due 4/15/14 (Effective rate at year end is
7.08125%, including "payment-in-kind" bonds.)[.]
++ ................................................... USD 1,333,759 983,647 3.1
Multi-Year Deposit Financing Agreement (MYDFA) Floating
Rate Note, 6.6875% due 9/15/07 - 144A+ {.} ............. USD 167,000 143,203 0.4
Bulgaria (1.5%)
Bulgaria, Discount Bond Series A, 6.6875% due 7/28/24 -
EURO+ .................................................. USD 858,000 487,451 1.5
Canada (2.4%)
Canadian Government:
8.75% due 12/1/05 ..................................... CAD 586,000 497,663 1.6
8% due 11/1/98 ........................................ CAD 340,000 264,697 0.8
Costa Rica (0.3%)
Banco Central de Costa Rica, Principal Bond Series A,
6.25% due 5/21/10 ...................................... USD 100,000 81,750 0.3
Denmark (2.6%)
Kingdom of Denmark, 7% due 12/15/04 ..................... DKK 4,700,000 832,868 2.6
Ecuador (2.8%)
Ecuador:
Past Due Interest Bond, 3% due 2/27/15 - EURO
Registered (Effective rate at year end is 5.1525%,
including "payment-in-kind" bonds.)[.] + ............. USD 687,304 422,692 1.3
Past Due Interest Bond, 3% due 2/27/15 - EURO Bearer
(Effective rate at year end is 5.1525%, including
"payment-in-kind" bonds.)[.] + ....................... USD 404,980 249,063 0.8
Discount Bond, 6.5% due 2/28/25 - EURO+ ............... USD 330,000 227,700 0.7
France (1.5%)
French O.A.T., 7.25% due 4/25/06 ........................ FRF 2,200,000 469,050 1.5
Germany (12.2%)
Deutschland Republic:
8.25% due 9/20/01 ..................................... DEM 2,250,000 1,673,748 5.3
6% due 1/5/06 ......................................... DEM 2,380,000 1,569,593 4.9
Treuhandanstalt, 7.125% due 1/29/03 ..................... DEM 896,000 638,968 2.0
Italy (3.5%)
Italian Buoni Poliennali del Tesoro (BTPS):
10.5% due 11/1/00 ..................................... ITL 650,000,000 483,317 1.5
9.5% due 2/1/99 ....................................... ITL 460,000,000 322,000 1.0
Republic of Italy, 0.56259% due 7/26/99+ ................ JPY 35,000,000 303,922 1.0
</TABLE>

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

F2
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GT GLOBAL VARIABLE STRATEGIC INCOME FUND

PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1996

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Government & Government Agency Obligations (Continued)
Kazahkstan (0.3%)
Republic of Kazakhstan, 9.25% due 12/20/99 - 144A{.} .... USD 100,000 $ 100,813 0.3
Mexico (4.6%)
United Mexican States:
Discount Bond Series C, 6.375% due 12/31/19+ +/+ ...... USD 525,000 452,813 1.4
Discount Bond Series B, 6.375% due 12/31/19+ +/+ ...... USD 500,000 431,250 1.4
Global Bond, 11.5% due 5/15/26 ........................ USD 200,000 211,500 0.7
11.375% due 9/15/16 - 144A{.} ......................... USD 170,000 177,650 0.6
Banco Nacional de Comercio Exterior, S.N.C. (BNCE) Trust
Division, 11.25% due 5/30/06 - 144A{.} ................. USD 154,000 164,010 0.5
New Zealand (1.1%)
New Zealand Government, 8% due 2/15/01 .................. NZD 460,000 336,415 1.1
Nigeria (0.5%)
Central Bank of Nigeria, Par Bond, 6.25% due
11/15/20+/+ ............................................ USD 250,000 172,500 0.5
Panama (1.8%)
Panama, Interest Reduction Bond, 3.5% due 7/17/14 -
144A++ {.} ............................................. USD 824,000 570,620 1.8
Philippines (1.5%)
Republic of Philippines, 8.75% due 10/7/16 - 144A{.} .... USD 470,000 489,094 1.5
Poland (1.3%)
Poland, Past Due Interest Bond, 4% due 10/27/14 -
EURO++ ................................................. USD 500,000 422,500 1.3
Russia (0.7%)
Russian Ministry of Finance:
3% due 5/14/11 - GDR - 144A{.} ........................ USD 390,000 142,350 0.4
3% due 5/14/06 - GDR - 144A{.} ........................ USD 229,000 109,920 0.3
Spain (2.1%)
Kingdom of Spain, 10.1% due 2/28/01{./} ................. ESP 75,000,000 665,209 2.1
Supranational (1.4%)
International Bank of Reconstruction & Development, 4.75%
due 12/20/04 ........................................... JPY 43,000,000 432,043 1.4
Sweden (1.3%)
Swedish Government, 13% due 6/15/01 ..................... SEK 2,100,000 397,348 1.3
United Kingdom (3.5%)
United Kingdom Treasury:
7.5% due 12/7/06 ...................................... GBP 350,000 598,754 1.9
7% due 11/6/01{./} .................................... GBP 300,000 508,241 1.6
United States (9.8%)
United States Treasury:
6.875% due 3/31/00{./} ................................ USD 2,500,000 2,557,418 8.1
6.875% due 8/15/25 .................................... USD 525,000 535,018 1.7
Uruguay (0.7%)
Banco Central del Uruguay, Par Bond Series B, 6.75% due
2/19/21+/ + ............................................ USD 250,000 207,500 0.7
</TABLE>

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

F3
<PAGE>
GT GLOBAL VARIABLE STRATEGIC INCOME FUND

PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1996

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Government & Government Agency Obligations (Continued)
Venezuela (3.3%)
Republic of Venezuela:
Debt Conversion Bond, 6.5% due 12/18/07+ .............. USD 500,000 $ 441,250 1.4
Par Bond Series A, 6.75% due 3/31/20+/+ ............... USD 500,000 382,500 1.2
Front Loaded Interest Reduction Bond Series B, 6.4375%
due 3/31/07+ ......................................... USD 250,000 223,125 0.7
------------
Total Government & Government Agency Obligations (cost
$21,469,723) ............................................... 22,892,299
------------
Corporate Bonds (9.1%)
Argentina (0.5%)
Industrias Metallurgicas Pescarmona S.A. (IMPSA), 11.75%
due 3/27/98 - 144A{.} .................................. USD 100,000 103,000 0.3
Central Termica Guemes S.A., 12% due 11/26/01 -
144A{.} ................................................ USD 72,000 73,260 0.2
Brazil (0.2%)
Tevecap S.A., 12.625% due 11/26/04 - 144A{.} ............ USD 61,000 62,373 0.2
China (0.4%)
AES China Generating Co., Ltd., 10.125% due 12/15/06 .... USD 110,000 113,850 0.4
Indonesia (1.8%)
PT Polysindo International Finance, 13% due 6/15/01:
EURO .................................................. USD 113,000 126,843 0.4
DTC ................................................... USD 20,000 22,450 0.1
PT Tjiwi Kimia, 13.25% due 8/1/01 ....................... USD 130,000 147,550 0.5
Tri Polyta Finance BV, 11.375% due 12/1/03 .............. USD 115,000 120,463 0.4
FSW International Finance Co., 12.5% due 11/1/06 -
144A{.} ................................................ USD 96,000 102,120 0.3
Rapp International Finance, 13.25% due 12/15/05 ......... USD 30,000 33,225 0.1
Jamaica (0.3%)
Mechala Group Jamaica Ltd., 12.75% due 12/30/99 -
144A{.} ................................................ USD 95,000 95,119 0.3
Luxembourg (0.2%)
Millicom International Cellular, effective yield 13.5%,
due 6/1/06 - 144A{.} ................................... USD 100,000 62,500 0.2
Mexico (0.8%)
Grupo Industrial Durango, S.A., 12.625% due 8/1/03 ...... USD 141,000 153,514 0.5
Cemex, S.A. de C.V. "B", 12.75% due 7/15/06 - 144A{.} ... USD 85,000 95,413 0.3
Philippines (0.1%)
Filinvest Capital, Convertible Bond, 3.75% due 2/1/02 -
144A{.} ................................................ USD 34,000 32,810 0.1
Poland (0.2%)
Poland Communications, Inc., 9.875% due 11/01/03 -
144A{.} ................................................ USD 60,000 60,000 0.2
Qatar (3.4%)
Ras Laffan Liquefied Natural Gas, 8.294% due 3/15/14 .... USD 1,047,000 1,070,024 3.4
Turkey (0.3%)
Sultan Ltd., 8.33984% due 6/11/99+ ...................... USD 100,000 96,250 0.3
United States (0.9%)
Chase Manhattan Corp., 6.25% due 1/15/06 ................ USD 152,000 144,102 0.5
</TABLE>

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

F4
<PAGE>
GT GLOBAL VARIABLE STRATEGIC INCOME FUND

PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1996

TOTAL FIXED INCOME INVESTMENTS (cost $25,841,549) ........... 27,916,372 88.0
------------ -----
<CAPTION>

UNDERLYING VALUE % OF NET
OPTIONS CURRENCY AMOUNT (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Brazil C Bond, due 4/15/14, Call Options, strike price
$74.1875, expire 3/3/97-/- ............................... USD 3,588,019 55,708 0.2
GOVERNMENT & GOVERNMENT AGENCY OBLIGATIONS
Venezuela Debt Conversion Bond, due 12/18/07, Call Options,
strike price $87.188, expire 3/5/97-/- ................... USD 750,000 14,817 --
GOVERNMENT & GOVERNMENT AGENCY OBLIGATIONS
------------ -----

TOTAL OPTIONS (cost $100,826) ............................... 70,525 0.2
------------ -----
<CAPTION>

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

F5
<PAGE>
GT GLOBAL VARIABLE STRATEGIC INCOME FUND

PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1996

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE % OF NET
SHORT-TERM INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Structured Notes (1.4%)
Russia (1.4%)
Russian Federation GKO (Treasury Bills) linked notes with
cancellable currency forwards attached: ................ USD -- -- 1.4
Due 7/2/97 ............................................ -- 258,048 $ 218,172 --
Due 7/30/97 ........................................... -- 253,691 209,559 --
(Notes issued by Credit Suisse First Boston (Cayman)
Ltd. These notes are linked to the local price in
Russian rubles of 1,427 and 1,402 Titles of Russian
treasury bills maturing 7/2/97 and 7/30/97,
respectively. These 7/2/97 and 7/30/97 notes include
options to sell the Russian ruble proceeds at maturity
for US dollars at the contracted forward rates of
6,333.41 and 6,399.46, respectively.)
------------
Total Structured Notes (cost $425,457) ...................... 427,731
------------
Commercial Paper - Indexed (0.6%)
Philippines (0.6%)
National Westminster Bank PLC, Currency-Linked CD,
12.3798% due 2/28/97 (cost $194,500) ................... USD 194,500 190,279 0.6
------------ -----

TOTAL SHORT-TERM INVESTMENTS (cost $1,100,466) .............. 1,107,545 3.5
------------ -----

VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated December 31, 1996 with State Street Bank & Trust Co.,
due January 2, 1997, for an effective yield of 6.25%
collateralized by $2,950,000 U.S. Treasury Notes, 6.125%
due 3/31/98 (market value of collateral is $3,012,381,
including accrued interest). (cost $2,951,512) ........... 2,951,512 9.3
------------ -----

TOTAL INVESTMENTS (cost $29,994,353) * ..................... 32,045,954 101.0
Other Assets and Liabilities ................................ (328,033) (1.0)
------------ -----

NET ASSETS .................................................. $ 31,717,921 100.0
------------ -----
------------ -----
</TABLE>

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

+ The coupon rate shown on floating rate note represents the rate at
period end.
-/- Non-income producing security.
** Underlying loan agreement currently in default.
{./} All or part of the Fund's holdings in this security is segregated
as collateral for when-issued securities or forward currency
contracts held by the Fund. See Note 1 to the Financial Statements.
{.} 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 coupon rate shown on step-up coupon bond represents the rate at
period end.
[.] Bond pays stated or additional interest with "payment-in-kind"
(PIK) bonds.
+/+ Issued with detachable warrants or value recovery rights. The
current market value of each warrant or right is zero.
* For Federal income tax purposes, cost is $30,113,639 and
appreciation (depreciation) is as follows:

<TABLE>
<S> <C>
Unrealized appreciation: $ 2,061,810
Unrealized depreciation: (129,495)
-------------
Net unrealized appreciation: $ 1,932,315
-------------
-------------
</TABLE>

Abbreviation:
GDR--Global Depository Receipt

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

F6
<PAGE>
GT GLOBAL VARIABLE STRATEGIC INCOME FUND

PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1996

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

FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
DECEMBER 31, 1996
<TABLE>
<CAPTION>
UNREALIZED
MARKET VALUE CONTRACT DELIVERY APPRECIATION
CONTRACTS TO BUY: (U.S. DOLLARS) PRICE DATE (DEPRECIATION)
- ---------------------------------------- -------------- ----------- -------- --------------
<S> <C> <C> <C> <C>
British Pounds.......................... 871,344 0.61514 02/05/97 $ 42,259
Canadian Dollars........................ 304,246 1.34183 02/28/97 (5,034)
Deutsche Marks.......................... 538,419 1.53950 02/05/97 1,826
Spanish Pesetas......................... 340,043 130.53000 03/19/97 1,424
Swedish Kronor.......................... 279,000 6.81090 01/21/97 36
-------------- --------------
Total Contracts to Buy (Payable amount
$2,292,541).......................... 2,333,052 40,511
-------------- --------------
THE VALUE OF CONTRACTS TO BUY AS
PERCENTAGE OF NET ASSETS IS 7.36%.

CONTRACTS TO SELL:
- ----------------------------------------
<S> <C> <C> <C> <C>
Australian Dollars...................... 381,141 1.26264 02/12/97 (986)
British Pounds.......................... 555,268 0.60853 02/05/97 (21,195)
Canadian Dollars........................ 799,105 1.33598 02/28/97 16,779
Deutsche Marks.......................... 1,042,835 1.54337 02/05/97 (6,143)
Deutsche Marks.......................... 397,781 1.48850 02/13/97 12,028
Deutsche Marks.......................... 1,143,046 1.54773 03/11/97 (12,358)
Italian Liras........................... 824,705 1546.70000 01/21/97 (16,532)
Japanese Yen............................ 364,090 111.93000 02/28/97 9,358
Japanese Yen............................ 391,962 111.70000 02/28/97 10,903
New Zealand Dollars..................... 169,244 1.43771 03/10/97 (2,312)
New Zealand Dollars..................... 172,770 1.42005 03/10/97 (241)
Swedish Kronor.......................... 543,317 6.61090 01/21/97 16,365
-------------- --------------
Total Contracts to Sell (Receivable
amount $6,790,930)................... 6,785,264 5,666
-------------- --------------
THE VALUE OF CONTRACTS TO SELL AS
PERCENTAGE OF NET ASSETS IS 21.39%.
Total Open Forward Foreign Currency
Contracts, Net....................... $ 46,177
--------------
--------------
</TABLE>

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

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

F7
<PAGE>
GT GLOBAL VARIABLE GLOBAL GOVERNMENT INCOME FUND

PORTFOLIO OF INVESTMENTS

December 31, 1996

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

<TABLE>
<CAPTION>
PRINCIPAL VALUE % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Government & Government Agency Obligations (82.3%)
Australia (4.6%)
Commonwealth of Australia, 9.5% due 8/15/03 ............. AUD 540,000 $ 478,780 4.6
Canada (8.0%)
Canadian Government:
7% due 12/01/06 ....................................... CAD 600,000 456,924 4.4
8.75% due 12/1/05 ..................................... CAD 445,000 377,918 3.6
Colombia (1.2%)
Republic of Colombia, 7.25% due 2/23/04 ................. USD 125,000 120,873 1.2
Denmark (1.9%)
Kingdom of Denmark, 7% due 12/15/04 ..................... DKK 1,100,000 194,927 1.9
Germany (19.7%)
Deutschland Republic, 6% due 1/5/06 ..................... DEM 3,100,000 2,043,964 19.7
Italy (12.1%)
Italian Buoni Poliennali del Tesoro (BTPS):
8.25% due 7/1/01 ...................................... ITL 600,000,000 422,178 4.1
8.75% due 7/1/06 ...................................... ITL 440,000,000 317,366 3.1
10.5% due 11/1/00{z} .................................. ITL 410,000,000 304,861 2.9
9.5% due 2/1/01 ....................................... ITL 290,000,000 210,504 2.0
Mexico (0.4%)
United Mexican States:
7.5625% due 8/6/01 - 144A+ {.} ........................ USD 25,000 25,059 0.2
7.5625% due 8/6/01 - Reg S+ {c} ....................... USD 25,000 25,059 0.2
Netherlands (3.1%)
Netherlands Government, 7.5% due 1/15/23 ................ NLG 500,000 326,970 3.1
Poland (1.2%)
Republic of Poland, Past Due Interest, 4.0% due 10/27/14
- Registered++ ......................................... USD 145,000 122,525 1.2
South Africa (2.8%)
Republic of South Africa, 9.625% due 12/15/99 ........... USD 270,000 288,225 2.8
Spain (4.3%)
Kingdom of Spain, 10.1% due 2/28/01 ..................... ESP 50,000,000 443,473 4.3
Sweden (2.5%)
Swedish Government, 13% due 6/15/01 ..................... SEK 1,400,000 264,899 2.5
United Kingdom (6.8%)
United Kingdom Treasury:
7.5% due 12/7/06 ...................................... GBP 285,000 487,556 4.7
7% due 11/6/01 ........................................ GBP 130,000 220,237 2.1
</TABLE>

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

F8
<PAGE>
GT GLOBAL VARIABLE GLOBAL GOVERNMENT INCOME FUND

PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1996

TOTAL FIXED INCOME INVESTMENTS (cost $8,361,550) ............ 8,553,041 82.3
------------ -----
<CAPTION>

PRINCIPAL VALUE % OF NET
SHORT-TERM INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Treasury Bills (11.1%)
Mexico (4.0%)
Mexican Cetes: .......................................... MXN -- -- 4.0
Current yield 24.56% due 2/6/97 ....................... -- 118,000 146,398 --
Current yield 24.56% due 2/27/97 ...................... -- 90,452 110,150 --
Current yield 24.96% due 2/20/97 ...................... -- 80,000 98,284 --
Current yield 24.21% due 1/30/97 ...................... -- 49,000 61,094 --
Philippines (3.8%)
Philippine Treasury Bill, 17.21% due 2/19/97 ............ PHP 10,600,000 397,587 3.8
New Zealand (3.3%)
New Zealand Government: ................................. NZD -- -- 3.3
Current yield 8.44% due 1/17/97 ....................... -- 380,000 267,524 --
Current yield 8.51% due 1/15/97 ....................... -- 100,000 70,431 --
------------
Total Treasury Bills (cost $1,140,015) ...................... 1,151,468
------------
Commercial Paper - Discounted (0.9%)
Indonesia (0.9%)
PT Bank Dagang Negara, 16.02% due 9/12/97 (cost
$93,051) ............................................... IDR 250,000,000 96,331 0.9
------------ -----

TOTAL SHORT-TERM INVESTMENTS (cost $1,233,066) .............. 1,247,799 12.0
------------ -----
</TABLE>

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

F9
<PAGE>
GT GLOBAL VARIABLE GLOBAL GOVERNMENT INCOME FUND

PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1996

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated December 31, 1996, with State Street Bank & Trust
Co., due January 2, 1997, for an effective yield of 6.25%,
collateralized by $55,000 U.S. Treasury Bonds, 6.125% due
3/31/98 (market value of collateral is $56,162, including
accrued interest). (cost $52,009) ........................ $ 52,009 0.5
------------ -----

TOTAL INVESTMENTS (cost $9,646,625) * ...................... 9,852,849 94.8
Other Assets and Liabilities ................................ 544,520 5.2
------------ -----

NET ASSETS .................................................. $ 10,397,369 100.0
------------ -----
------------ -----
</TABLE>

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

{z} Security is segregated as collateral for written futures. See Note
1 of Notes to Financial Statements.
{c} Security issued under Regulation S. Rule 144A and additional
restrictions may apply in the resale of such securities.
{.} 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 coupon rate shown on floating rate note represents the rate at
period end.
++ The coupon rate shown on step-up coupon bond represents the rate at
period end.
* For Federal income tax purposes, cost is $9,669,379 and
appreciation (depreciation) is as follows:

<TABLE>
<S> <C>
Unrealized appreciation: $ 224,007
Unrealized depreciation: (40,537)
-------------
Net unrealized appreciation: $ 183,470
-------------
-------------
</TABLE>

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

FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
DECEMBER 31, 1996

<TABLE>
<CAPTION>
UNREALIZED
MARKET VALUE CONTRACT DELIVERY APPRECIATION
CONTRACTS TO BUY: (U.S. DOLLARS) PRICE DATE (DEPRECIATION)
- ---------------------------------------- -------------- ----------- -------- --------------
<S> <C> <C> <C> <C>
Australian Dollars...................... 27,792 1.22474 02/12/97 $ (786)
British Pounds.......................... 205,022 0.61177 02/05/97 8,870
British Pounds.......................... 273,363 0.60942 02/05/97 10,819
Canadian Dollars........................ 439,874 1.34850 02/28/97 (5,065)
Danish Kroner........................... 196,281 5.78160 01/17/97 (3,570)
Danish Kroner........................... 101,924 5.81700 01/17/97 (1,222)
Danish Kroner........................... 5,096 5.95770 01/17/97 60
Italian Liras........................... 109,389 1545.30003 01/21/97 2,096
Italian Liras........................... 208,591 1531.30998 01/21/97 2,127
New Zealand Dollars..................... 497,708 1.41990 01/31/97 1,194
New Zealand Dollars..................... 163,603 1.42046 03/10/97 275
Swedish Kronor.......................... 95,448 6.62000 01/21/97 (2,739)
Swedish Kronor.......................... 91,042 6.62350 01/21/97 (2,564)
Swiss Francs............................ 97,160 1.26257 01/03/97 (5,805)
Swiss Francs............................ 284,006 1.35070 01/03/97 2,670
Swiss Francs............................ 45,530 1.26015 02/07/97 (2,619)
-------------- --------------
Total Contracts to Buy (Payable amount
$2,838,088).......................... 2,841,829 3,741
-------------- --------------
THE VALUE OF CONTRACTS TO BUY AS
PERCENTAGE OF NET ASSETS IS 27.33%.
</TABLE>

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

F10
<PAGE>
GT GLOBAL VARIABLE GLOBAL GOVERNMENT INCOME FUND

PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1996

- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING (CONTINUED)
DECEMBER 31, 1996

<TABLE>
<CAPTION>
UNREALIZED
MARKET VALUE CONTRACT DELIVERY APPRECIATION
CONTRACTS TO SELL: (U.S. DOLLARS) PRICE DATE (DEPRECIATION)
- ---------------------------------------- -------------- ----------- -------- --------------
<S> <C> <C> <C> <C>
Australian Dollars...................... 317,618 1.28041 02/12/97 $ (5,218)
British Pounds.......................... 58,602 0.59666 02/05/97 (1,115)
British Pounds.......................... 57,235 0.59693 02/05/97 (1,114)
Canadian Dollars........................ 106,303 1.35975 02/28/97 334
Canadian Dollars........................ 98,239 1.35880 02/28/97 377
Canadian Dollars........................ 109,969 1.35015 02/28/97 1,130
Canadian Dollars........................ 645,149 1.33598 02/28/97 13,546
Danish Kroner........................... 122,309 5.87270 01/17/97 292
Danish Kroner........................... 378,045 5.81074 01/17/97 4,946
Deutsche Marks.......................... 261,268 1.54773 03/11/97 (2,825)
Deutsche Marks.......................... 130,634 1.54580 03/11/97 (1,251)
Italian Liras........................... 488,753 1546.70002 01/21/97 (9,798)
Italian Liras........................... 208,591 1528.00004 01/21/97 (1,680)
Italian Liras........................... 82,470 1524.92006 01/21/97 (498)
New Zealand Dollars..................... 497,708 1.42847 01/31/97 (4,173)
New Zealand Dollars..................... 502,092 1.43031 03/10/97 (4,297)
Swedish Kronor.......................... 146,842 6.59927 01/21/97 4,690
Swedish Kronor.......................... 308,369 6.61090 01/21/97 9,288
Swiss Francs............................ 97,160 1.24171 01/03/97 7,534
Swiss Francs............................ 142,003 1.24608 01/03/97 10,475
Swiss Francs............................ 142,003 1.24205 01/03/97 10,970
Swiss Francs............................ 105,055 1.34529 02/07/97 (988)
Swiss Francs............................ 105,055 1.34162 02/07/97 (704)
Swiss Francs............................ 105,055 1.34015 02/07/97 (589)
Swiss Francs............................ 93,799 1.33072 02/07/97 135
Swiss Francs............................ 102,978 1,32687 02/07/97 447
Swiss Francs............................ 444,609 1.26520 02/07/97 23,696
Swiss Francs............................ 294,316 1.33865 04/03/97 (2,978)
-------------- --------------
Total Contracts to Sell (Receivable
amount $6,202,861)................... 6,152,229 50,632
-------------- --------------
THE VALUE OF CONTRACTS TO SELL AS
PERCENTAGE OF NET ASSETS IS 59.17%.
Total Open Forward Foreign Currency
Contracts, Net....................... $ 54,373
--------------
--------------
</TABLE>

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

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

WRITTEN FUTURES CONTRACTS OUTSTANDING
DECEMBER 31, 1996

<TABLE>
<CAPTION>
EXPIRATION NO. OF MARKET
DESCRIPTION DATE CONTRACTS CURRENCY VALUE
- ---------------------------------------- ---------- --------- -------- -----------
<S> <C> <C> <C> <C>
Italian 10-Year Bond Future (face
$168,714).............................. 03/20/97 1 ITL $ 170,164
</TABLE>

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

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

F11
<PAGE>
GT GLOBAL VARIABLE U.S. GOVERNMENT INCOME FUND

PORTFOLIO OF INVESTMENTS

December 31, 1996

TOTAL FIXED INCOME INVESTMENTS (cost $5,289,663) ............ 5,285,366 96.4
------------ -----

VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated December 31, 1996, with State Street Bank & Trust
Company, due January 2, 1997, for an effective yield of
6.25%, collateralized by $30,000 U.S. Treasury Note,
6.125% due 3/31/98 (market value of collateral is $30,634,
including accrued interest). (cost $27,005) .............. 27,005 0.5
------------ -----

TOTAL INVESTMENTS (cost $5,316,668) * ...................... 5,312,371 96.9
Other Assets and Liabilities ................................ 170,555 3.1
------------ -----

NET ASSETS .................................................. $ 5,482,926 100.0
------------ -----
------------ -----
</TABLE>

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

{z} Security is completely or partially segregated as collateral for
written futures. See Note 1 to the Financial Statements.
* For Federal income tax purposes, cost is $5,328,811 and
appreciation (depreciation) is as follows:

<TABLE>
<S> <C>
Unrealized appreciation: $ 65,059
Unrealized depreciation: (81,499)
-------------
Net unrealized depreciation: $ (16,440)
-------------
-------------
</TABLE>

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

F12
<PAGE>
GT GLOBAL VARIABLE U.S. GOVERNMENT INCOME FUND

PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1996

- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
DECEMBER 31, 1996

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

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

WRITTEN FUTURES CONTRACTS OUTSTANDING
DECEMBER 31, 1996

<TABLE>
<CAPTION>
EXPIRATION NO. OF MARKET
DESCRIPTION DATE CONTRACTS CURRENCY VALUE
- ---------------------------------------- ---------- --------- -------- -----------
<S> <C> <C> <C> <C>
U.S. 10-Year Treasury Note Futures (face
$875,500).............................. 03/03/97 8 USD $ 873,000
</TABLE>

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

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

F13
<PAGE>
GT GLOBAL VARIABLE LATIN AMERICA FUND

PORTFOLIO OF INVESTMENTS

December 31, 1996

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

<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Materials/Basic Industry (25.2%)
Cemex, S.A. de C.V. "CPO" ................................. MEX 215,000 $ 770,688 3.4
CEMENT
Kimberly-Clark de Mexico, S.A. de C.V. "A" ................ MEX 38,000 751,112 3.3
PAPER/PACKAGING
La Cementos Nacional, C.A. 144A - GDR{.} {\/} ............. ECDR 3,040 687,040 3.0
CEMENT
Grupo Mexico S.A. "B"-/- .................................. MEX 218,000 678,912 3.0
METALS - NON-FERROUS
Siderurgica Venezolana Sivensa (Sivensa) - ADR{\/} ........ VENZ 136,200 490,320 2.1
METALS - STEEL
Cia de Minas Buenaventura: ................................ PERU -- -- 2.1
GOLD
"A" ..................................................... -- 53,464 389,500 --
"B" ..................................................... -- 10,200 84,283 --
Apasco S.A. ............................................... MEX 68,000 466,760 2.0
CEMENT
Industrias Penoles S.A. "CP" .............................. MEX 107,000 379,471 1.7
METALS - NON-FERROUS
Caemi Mineracao e Metalurgia S.A. Preferred-/- {z} ........ BRZL 6,790,000 333,193 1.5
METALS - STEEL
Angel Estrada y Cia S.A.-/- ............................... ARG 93,000 255,801 1.1
PAPER/PACKAGING
Companhia de Acos Especiais Itabira - Acesita-/- .......... BRZL 81,000,000 166,850 0.7
METALS - STEEL
Venezolana de Cementos, S.A.C.A. "A" ...................... VENZ 54,310 148,400 0.6
CEMENT
Companhia de Acos Especiais Itabira - Acesita Preferred-/-
{z} ...................................................... BRZL 34,300,000 80,888 0.4
METALS - STEEL
Siderurgica Venezolana Sivensa, Saica S.A.C.A. "B" - 144A
ADR{.} ................................................... VENZ 19,545 63,676 0.3
METALS - STEEL
------------
5,746,894
------------
Energy (22.9%)
Centrais Electricas Brasileiras S.A. (Electrobras)-/- ..... BRZL 2,660,000 952,469 4.2
ELECTRICAL & GAS UTILITIES
Enron Global Power & Pipelines L.L.C. ..................... US 26,800 723,600 3.2
ELECTRICAL & GAS UTILITIES
C.A. La Electricidad de Caracas ........................... VENZ 702,678 713,371 3.1
ELECTRICAL & GAS UTILITIES
Companhia Energetica de Sao Paulo (CESP) Preferred-/- ..... BRZL 16,200,000 631,689 2.8
ELECTRICAL & GAS UTILITIES
Companhia Energetica de Minas Gerais (Cemig) - ADR{\/} .... BRZL 17,000 561,000 2.4
ELECTRICAL & GAS UTILITIES
YPF S.A. - ADR{\/} ........................................ ARG 18,800 474,700 2.1
OIL
Transportadora de Gas del Sur S.A. (TGS) - ADR{\/} ........ ARG 38,200 467,950 2.0
GAS
Light - Participacoes S.A.-/- ............................. BRZL 1,910,000 463,298 2.0
ELECTRICAL & GAS UTILITIES
</TABLE>

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

F14
<PAGE>
GT GLOBAL VARIABLE LATIN AMERICA FUND

PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1996

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Energy (Continued)
Edelnor S.A. "A" .......................................... PERU 241,588 $ 240,847 1.1
ELECTRICAL & GAS UTILITIES
------------
5,228,924
------------
Finance (16.5%)
Grupo Financiero Banorte "B"-/- ........................... MEX 796,500 789,717 3.4
BANKS-REGIONAL
Uniao Bancos Brasileiras "A" Preferred{z} ................. BRZL 21,200,000 691,770 3.0
BANKS-MONEY CENTER
Grupo Financiero Banamex Accival, S.A. de C.V. "B"-/- ..... MEX 295,000 623,224 2.7
BANKS-MONEY CENTER
First Financial Caribbean Corp. ........................... US 17,600 488,400 2.1
SAVINGS&LOANS
Banco BHIF - ADR-/- {\/} .................................. CHLE 27,800 455,225 2.0
BANKS-MONEY CENTER
Suramericana de Seguros S.A. .............................. COL 24,200 442,580 1.9
INSURANCE - MULTI-LINE
Administradora de Fondos de Pensiones Provida S.A. -
ADR{\/} .................................................. CHLE 16,500 309,375 1.4
INVESTMENT MANAGEMENT
------------
3,800,291
------------
Services (15.9%)
Lojas Americanas S.A. Preferred-/- {z} .................... BRZL 59,100,000 779,353 3.4
RETAILERS-OTHER
Telecommunicacoes Brasileiras S.A. (Telebras)-/- .......... BRZL 9,600,000 688,420 3.0
TELEPHONE NETWORKS
Cifra, S.A. de C.V. "C"-/- ................................ MEX 420,000 512,521 2.2
RETAILERS-OTHER
Gran Cadena de Almacenes Colombianos S.A. ................. COL 545,123 456,752 2.0
RETAILERS-OTHER
Ceteco Holding N.V. ....................................... NETH 7,830 451,382 2.0
RETAILERS-OTHER
Telecomunicacoes de Sao Paulo S.A. (TELESP)
Preferred{z} ............................................. BRZL 2,050,000 443,978 1.9
TELECOM - OTHER
Compania Anonima Nacional Telefonos de Venezuela (CANTV) -
ADR-/- {\/ } ............................................. VENZ 10,900 306,563 1.3
TELEPHONE NETWORKS
Grupo Situr, S.A. de C.V. "B"-/- .......................... MEX 416,000 22,738 0.1
LEISURE & TOURISM
------------
3,661,707
------------
Consumer Non-Durables (9.2%)
Bavaria ................................................... COL 193,527 788,650 3.4
BEVERAGES - ALCOHOLIC
Grupo Industrial Maseca, S.A. de C.V. "B" ................. MEX 541,000 686,307 3.0
FOOD
Grupo Industrial Bimbo, S.A. de C.V. "A" .................. MEX 93,000 531,969 2.3
FOOD
Industrias J B Duarte S.A. Preferred ...................... BRZL 215,600,000 51,882 0.2
FOOD
</TABLE>

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

F15
<PAGE>
GT GLOBAL VARIABLE LATIN AMERICA FUND

PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1996

TOTAL EQUITY INVESTMENTS (cost $20,093,695) ................. 20,633,346 90.0
------------ -----
<CAPTION>

PRINCIPAL VALUE % OF NET
SHORT-TERM INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Government & Government Agency Obligations (4.7%)
Mexico (4.7%)
Mexican Cetes, current yield 25.60%, due 9/4/97 (cost
$1,103,839) ............................................ MXN 10,000,000 1,081,848 4.7
------------ -----

TOTAL INVESTMENTS (cost $21,197,534) * ..................... 21,715,194 94.7
Other Assets and Liabilities ................................ 1,212,459 5.3
------------ -----

NET ASSETS .................................................. $ 22,927,653 100.0
------------ -----
------------ -----
</TABLE>

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

-/- Non-income producing security.
{\/} U.S. currency denominated.
{z} All or part of the Fund's holdings in this security is segregated
as collateral for written futures. See Note 1 to the Financial
Statements.
{.} Security exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers.
* For Federal income tax purposes, cost is $21,198,596 and
appreciation (depreciation) is as follows:

<TABLE>
<S> <C>
Unrealized appreciation: $ 3,570,450
Unrealized depreciation: (3,053,852)
-------------
Net unrealized appreciation: $ 516,598
-------------
-------------
</TABLE>

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

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

F16
<PAGE>
GT GLOBAL VARIABLE LATIN AMERICA FUND

PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1996

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

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

{d} Percentages indicated are based on net assets of $22,927,653.

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

SHORT FUTURES CONTRACTS OUTSTANDING
DECEMBER 31, 1996

<TABLE>
<CAPTION>
EXPIRATION NO. OF MARKET
DESCRIPTION DATE CONTRACTS CURRENCY VALUE
- ---------------------------------------- ---------- --------- -------- -----------
<S> <C> <C> <C> <C>
Brazilian Real Currency Futures, strike
rate 1.0510 (face $2,378,750).......... 01/31/97 25 USD $ 2,385,500
</TABLE>

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

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

F17
<PAGE>
GT GLOBAL VARIABLE GROWTH & INCOME FUND

PORTFOLIO OF INVESTMENTS

December 31, 1996

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

<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (23.0%)
Schweizerischer Bankverein (Swiss Bank Corp.) ............. SWTZ 3,910 $ 743,718 2.0
BANKS-MONEY CENTER
Royal & Sun Alliance Insurance Group PLC .................. UK 95,000 725,514 2.0
INSURANCE - MULTI-LINE
CS Holding AG - Registered ................................ SWTZ 6,095 626,355 1.7
BANKS-MONEY CENTER
Union Bank of Switzerland - Bearer ........................ SWTZ 642 562,830 1.5
BANKS-MONEY CENTER
Fortis Amev N.V. .......................................... NETH 14,800 518,772 1.4
OTHER FINANCIAL
AEGON N.V. ................................................ NETH 7,562 482,373 1.3
INSURANCE-LIFE
ING Groep N.V. ............................................ NETH 12,787 460,806 1.3
OTHER FINANCIAL
ABN AMRO Holding N.V. ..................................... NETH 6,948 452,465 1.2
BANKS-REGIONAL
First Tennessee National Corp. ............................ US 10,800 405,000 1.1
BANKS-REGIONAL
Commonwealth Bank of Australia ............................ AUSL 38,250 365,877 1.0
BANKS-SUPER REGIONAL
Deutsche Bank AG .......................................... GER 6,750 315,556 0.9
BANKS-MONEY CENTER
American General Corp. .................................... US 7,400 302,475 0.8
INSURANCE-LIFE
Generale de Banque S.A.: .................................. BEL -- -- 0.8
BANKS-MONEY CENTER
Common .................................................. -- 829 297,285 --
Strip VVPR .............................................. -- 75 43 --
National Westminster Bank PLC ............................. UK 22,700 266,647 0.7
BANKS-MONEY CENTER
IKB Deutsche Industriebank AG ............................. GER 1,382 251,150 0.7
BANKS-REGIONAL
General Accident PLC ...................................... UK 16,970 222,005 0.6
INSURANCE - PROPERTY-CASUALTY
Mercury Asset Management Group PLC ........................ UK 10,211 217,421 0.6
INVESTMENT MANAGEMENT
LLoyds TSB Group PLC ...................................... UK 26,571 195,873 0.5
BANKS-REGIONAL
Commercial Union PLC ...................................... UK 13,382 156,620 0.4
INSURANCE - MULTI-LINE
Banco Popular Espanol S.A. ................................ SPN 710 139,527 0.4
BANKS-MONEY CENTER
Commerzbank AG ............................................ GER 5,400 137,282 0.4
BANKS-MONEY CENTER
Dresdner Bank AG .......................................... GER 4,540 136,082 0.4
BANKS-MONEY CENTER
Banco de Santander S.A. ................................... SPN 1,915 122,639 0.3
BANKS-MONEY CENTER
Kredietbank N.V. .......................................... BEL 315 103,279 0.3
BANKS-REGIONAL
</TABLE>

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

F18
<PAGE>
GT GLOBAL VARIABLE GROWTH & INCOME FUND

PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1996

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (Continued)
M & G Group PLC ........................................... UK 5,000 $ 94,606 0.3
INVESTMENT MANAGEMENT
Societe Generale Paris .................................... FR 475 51,443 0.1
BANKS-MONEY CENTER
Compagnie Financiere de Paribas S.A. ...................... FR 524 35,496 0.1
OTHER FINANCIAL
Axa Group ................................................. FR 526 33,510 0.1
INSURANCE - MULTI-LINE
Gerrard & National Holdings PLC ........................... UK 7,080 32,369 0.1
SECURITIES BROKER
------------
8,455,018
------------
Energy (11.5%)
Elektrowatt AG-/- ......................................... SWTZ 2,440 971,988 2.7
ELECTRICAL & GAS UTILITIES
Royal Dutch Petroleum Co. ................................. NETH 3,268 573,509 1.6
OIL
Electrabel S.A. ........................................... BEL 1,880 445,107 1.2
ELECTRICAL & GAS UTILITIES
Exxon Corp. ............................................... US 4,000 392,000 1.1
OIL
Reunies Electrobel & Tractebel S.A. ....................... BEL 763 355,401 1.0
ELECTRICAL & GAS UTILITIES
Mobil Corp. ............................................... US 2,900 354,525 1.0
OIL
RWE AG .................................................... GER 8,170 346,349 0.9
ELECTRICAL & GAS UTILITIES
Pacific Gas and Electric Co. .............................. US 9,550 200,550 0.5
ELECTRICAL & GAS UTILITIES
Elf Aquitaine ............................................. FR 1,920 175,061 0.5
OIL
Groupe Bruxelles Lambert S.A. ............................. BEL 1,050 135,222 0.4
OIL
Shell Transport & Trading Co., PLC ........................ UK 6,530 112,821 0.3
OIL
Union Electrica Fenosa S.A. ............................... SPN 5,000 53,753 0.1
ELECTRICAL & GAS UTILITIES
British Gas PLC ........................................... UK 11,000 42,380 0.1
GAS PRODUCTION & DISTRIBUTION
Iberdrola S.A. ............................................ SPN 2,000 28,360 0.1
ELECTRICAL & GAS UTILITIES
------------
4,187,026
------------
Services (8.3%)
Telecom Corporation of New Zealand Ltd. ................... NZ 133,160 679,349 1.9
TELEPHONE NETWORKS
Woolworths Ltd. ........................................... AUSL 280,000 674,029 1.8
RETAILERS-OTHER
Mannesmann AG ............................................. GER 770 333,934 0.9
WIRELESS COMMUNICATIONS
</TABLE>

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

F19
<PAGE>
GT GLOBAL VARIABLE GROWTH & INCOME FUND

PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1996

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (Continued)
McGraw-Hill, Inc. ......................................... US 6,980 $ 321,953 0.9
BROADCASTING & PUBLISHING
United News & Media PLC ................................... UK 21,918 261,590 0.7
BROADCASTING & PUBLISHING
Royal PTT Nederland N.V. .................................. NETH 5,915 225,839 0.6
TELEPHONE NETWORKS
Cognizant Corp. ........................................... US 4,800 158,400 0.4
CONSUMER SERVICES
EMI Group PLC ............................................. UK 6,300 149,409 0.4
LEISURE & TOURISM
Granada Group PLC, Convertible Preferred, 7.5% till
4/30/03 .................................................. UK 23,482 114,193 0.3
LEISURE & TOURISM
Dun & Bradstreet Corp. .................................... US 4,800 114,000 0.3
BROADCASTING & PUBLISHING
AC Nielsen Corp.-/- ....................................... US 1,600 24,200 0.1
CONSUMER SERVICES
------------
3,056,896
------------
Materials/Basic Industry (7.4%)
BASF AG ................................................... GER 15,500 597,425 1.6
CHEMICALS
Solvay S.A. "A" ........................................... BEL 751 459,905 1.3
CHEMICALS
Western Mining Corporation Holdings Ltd. .................. AUSL 72,600 457,391 1.3
METALS - NON-FERROUS
CSR Ltd. .................................................. AUSL 121,450 424,549 1.2
BUILDING MATERIALS & COMPONENTS
Akzo Nobel N.V. ........................................... NETH 3,069 419,632 1.2
CHEMICALS
Monsanto Co. .............................................. US 7,500 291,563 0.8
CHEMICALS
------------
2,650,465
------------
Consumer Non-Durables (6.3%)
EMAIL Ltd. ................................................ AUSL 164,800 532,880 1.5
HOUSEHOLD PRODUCTS
Avon Products, Inc. ....................................... US 8,000 457,000 1.3
PERSONAL CARE/COSMETICS
Philip Morris Cos., Inc. .................................. US 3,700 416,713 1.1
FOOD
Universal Corp. ........................................... US 12,200 391,925 1.1
TOBACCO
Brown-Forman Corp. "B" .................................... US 6,200 283,650 0.8
BEVERAGES - ALCOHOLIC
Bass PLC .................................................. UK 6,600 92,784 0.3
BEVERAGES - ALCOHOLIC
Associated British Foods Group PLC ........................ UK 8,400 69,688 0.2
FOOD
------------
2,244,640
------------
</TABLE>

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

F20
<PAGE>
GT GLOBAL VARIABLE GROWTH & INCOME FUND

PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1996

TOTAL EQUITY INVESTMENTS (cost $17,804,251) ................. 23,845,652 65.5
------------ -----
<CAPTION>

PRINCIPAL VALUE % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Government & Government Agency Obligations (25.6%)
Australia (2.6%)
Australian Government:
8.75% due 8/15/08 ..................................... AUD 774,000 672,999 1.9
7% due 4/15/00 ........................................ AUD 324,000 259,764 0.7
Canada (0.6%)
Canadian Government, 8.75% due 12/1/05 .................. CAD 250,000 212,314 0.6
Denmark (0.9%)
Kingdom of Denmark, 7% due 11/15/07 ..................... DKK 1,921,000 331,982 0.9
Germany (3.9%)
Deutschland Republic, 6.75% due 4/22/03 ................. DEM 1,500,000 1,050,098 2.9
Treuhandanstalt, 6.375% due 7/1/99 ...................... DEM 500,000 344,896 1.0
</TABLE>

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

F21
<PAGE>
GT GLOBAL VARIABLE GROWTH & INCOME FUND

PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1996

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Government & Government Agency Obligations (Continued)
Italy (3.1%)
Italian Buoni Poliennali del Tesoro (BTPS):
10.5% due 4/15/98 ..................................... ITL 865,000,000 $ 597,792 1.6
10.5% due 9/1/05 ...................................... ITL 710,000,000 560,502 1.5
Spain (1.2%)
Kingdom of Spain, 10.3% due 6/15/02 ..................... ESP 47,430,000 433,946 1.2
Sweden (1.4%)
Swedish Government, 6% due 2/9/05 ....................... SEK 3,700,000 526,379 1.4
United Kingdom (5.4%)
United Kingdom Treasury:
7% due 6/7/02 ......................................... GBP 821,000 1,388,329 3.8
7.75% due 9/8/06 ...................................... GBP 325,000 565,029 1.6
United States (6.5%)
United States Treasury:
7.25% due 5/15/04 ..................................... USD 1,060,000 1,115,754 3.1
6.25% due 8/15/23 ..................................... USD 400,000 374,969 1.0
6.5% due 8/15/05 ...................................... USD 360,000 362,496 1.0
7.5% due 2/15/05 ...................................... USD 250,000 267,417 0.7
6% due 2/15/26 ........................................ USD 270,000 245,589 0.7
------------
Total Government & Government Agency Obligations (cost
$8,704,356) ................................................ 9,310,255
------------
Corporate Bonds (4.5%)
Germany (1.6%)
Siemens Capital Corp., 8% due 6/24/02+/+ ................ USD 180,000 230,130 0.6
Commerzbank AG, Convertible Bond, 9.45% due 12/31/00+ ... DEM 187,000 210,101 0.6
Deutsche Bank AG, 9.00% due 12/31/02 .................... DEM 175,000 136,313 0.4
IKB Deutsche Industriebank, 6.45% due 3/31/06 ........... DEM 1,500 975 --
United Kingdom (2.9%)
Daily Mail & General Trust, Convertible Bond, 5.75% due
9/26/03 ................................................ GBP 167,000 448,955 1.2
MBNA Chester Asset Receivable #3, effective yield 6.517%
due 11/17/03+ .......................................... GBP 200,000 342,466 0.9
Land Securities PLC, Convertible Bond, 9.375% due
7/31/04 ................................................ GBP 140,000 285,279 0.8
------------
Total Corporate Bonds (cost $1,447,319) ..................... 1,654,219
------------ -----

TOTAL FIXED INCOME INVESTMENTS (cost $10,151,675) ........... 10,964,474 30.1
------------ -----

VALUE % OF NET
WARRANTS CURRENCY (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ------------ -------------
<S> <C> <C> <C> <C>
Societe Generale Banque put, strike 14,500, due 11/15/99
Tractebel (cost $0)-/- ................................... BEF 11,065 --
------------ -----
BANKS-MONEY CENTER
</TABLE>

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

F22
<PAGE>
GT GLOBAL VARIABLE GROWTH & INCOME FUND

PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1996

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated December 31, 1996, with State Street Bank & Trust
Co., due January 2, 1997, for an effective yield of 6.25%,
collateralized by $1,155,000 U.S. Treasury Notes, 6.125%
due 3/31/98 (market value of collateral is $1,179,391,
including accrued interest).
(cost $1,156,201) ....................................... $ 1,156,201 3.2
------------ -----

TOTAL INVESTMENTS (cost $29,112,127) * ..................... 35,977,392 98.8
Other Assets and Liabilities ................................ 455,371 1.2
------------ -----

NET ASSETS .................................................. $ 36,432,763 100.0
------------ -----
------------ -----
</TABLE>

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

-/- Non-income producing security.
+ 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.
* For Federal income tax purposes, cost is $29,117,202 and
appreciation (depreciation) is as follows:

<TABLE>
<S> <C>
Unrealized appreciation: $ 7,268,819
Unrealized depreciation: (408,629)
-------------
Net unrealized appreciation: $ 6,860,190
-------------
-------------
</TABLE>

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

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

<TABLE>
<CAPTION>
PERCENTAGE OF NET ASSETS {D}
-------------------------------------------
FIXED INCOME,
RIGHTS & SHORT-TERM
COUNTRY (COUNTRY CODE/CURRENCY CODE) EQUITY WARRANTS & OTHER TOTAL
- -------------------------------------- ------ ------------- ---------- -----
<S> <C> <C> <C> <C>
Australia (AUSL/AUD) ................. 6.8 2.6 9.4
Belgium (BEL/BEF) .................... 5.0 5.0
Canada (CAN/CAD) ..................... 0.6 0.6
Denmark (DEN/DKK) .................... 0.9 0.9
France (FR/FRF) ...................... 1.4 1.4
Germany (GER/DEM) .................... 8.7 5.5 14.2
Italy (ITLY/ITL) ..................... 3.1 3.1
Netherlands (NETH/NLG) ............... 8.6 8.6
New Zealand (NZ/NZD) ................. 1.9 1.9
Spain (SPN/ESP) ...................... 0.9 1.2 2.1
Sweden (SWDN/SEK) .................... 1.4 1.4
Switzerland (SWTZ/CHF) ............... 7.9 7.9
United Kingdom (UK/GBP) .............. 10.5 8.3 18.8
United States & Other (US/USD) ....... 13.8 6.5 4.4 24.7
------ ----- --- -----
Total ............................... 65.5 30.1 4.4 100.0
------ ----- --- -----
------ ----- --- -----
</TABLE>

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

{d} Percentages indicated are based on net assets of $36,432,763.

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

F23
<PAGE>
GT GLOBAL VARIABLE GROWTH & INCOME FUND

PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1996

- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
DECEMBER 31, 1996

<TABLE>
<CAPTION>
MARKET VALUE CONTRACT DELIVERY UNREALIZED
CONTRACTS TO SELL: (U.S. DOLLARS) PRICE DATE APPRECIATION
- ---------------------------------------- -------------- ----------- -------- --------------
<S> <C> <C> <C> <C>
Deutsche Marks.......................... 1,403,284 1.51860 02/28/97 $ 12,494
French Francs........................... 38,697 5.09700 02/06/97 542
French Francs........................... 174,260 5.07000 02/19/97 3,255
Netherland Guilders..................... 598,703 1.67760 02/18/97 15,269
Swiss Francs............................ 399,312 1.31000 03/19/97 5,268
-------------- --------------
Total Contracts to Sell (Receivable
amount $2,651,084)................... 2,614,256 36,828
-------------- --------------
THE VALUE OF CONTRACTS TO SELL AS A
PERCENTAGE OF NET ASSETS IS 7.18%.
Total Open Forward Foreign Currency
Contracts, Net....................... $ 36,828
--------------
--------------
</TABLE>

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

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

F24
<PAGE>
GT GLOBAL VARIABLE TELECOMMUNICATIONS FUND

PORTFOLIO OF INVESTMENTS

December 31, 1996

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

<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Wireless Communications (19.3%)
WinStar Communications, Inc.-/- ........................... US 80,000 $ 1,680,000 2.7
Paging Network, Inc.-/- ................................... US 100,000 1,525,000 2.4
Rural Cellular Corp. "A"-/- ............................... US 150,000 1,443,750 2.3
DDI Corp. ................................................. JPN 187 1,237,405 2.0
Korea Mobile Telecommunications: .......................... KOR -- -- 1.8
ADR{\/} ................................................. -- 63,860 822,198 --
Common .................................................. -- 320 323,882 --
Cellularvision USA, Inc.-/- ............................... US 140,000 980,000 1.5
Metro One Telecommunications-/- ........................... US 117,000 921,375 1.5
Centennial Cellular Corp. "A"-/- .......................... US 71,500 866,938 1.4
Telephone and Data Systems, Inc. .......................... US 19,200 696,000 1.1
Clearnet Communications, Inc. "A"-/- {\/} ................. CAN 63,000 693,000 1.1
Advanced Radio Telecom Corp.-/- ........................... US 47,500 534,375 0.8
Netcom ASA-/- ............................................. NOR 35,000 331,414 0.5
Telecel - Comunicacaoes Pessoais, S.A.-/- ................. PORT 1,650 105,387 0.2
------------
12,160,724
------------
Telecom Equipment (15.1%)
Nokia AB Preferred - ADR{\/} .............................. FIN 37,000 2,127,500 3.4
U.S. Robotics Corp. ....................................... US 28,500 2,052,000 3.2
Tadiran Telecommunications Ltd.{\/} ....................... ISRL 65,000 1,454,375 2.3
Superior Telecom, Inc. .................................... US 70,000 1,426,250 2.3
Gilat Satellite Networks Ltd.-/- {\/} ..................... ISRL 50,000 1,231,250 1.9
EIS International, Inc.-/- ................................ US 80,000 690,000 1.1
Allen Group, Inc.-/- ...................................... US 25,000 556,250 0.9
------------
9,537,625
------------
Telephone Networks (13.5%)
Telefonica de Espana - ADR{\/} ............................ SPN 27,000 1,869,750 3.0
Telecomunicacoes Brasileiras S.A. (Telebras) - ADR{\/} .... BRZL 20,876 1,597,014 2.5
SPT Telecom-/- ............................................ CZCH 11,000 1,370,245 2.2
Hellenic Telecommunications - 144A{.} ..................... GREC 60,600 1,036,391 1.6
Telefonica De Peru - ADR{\/} .............................. PERU 47,200 890,900 1.4
Portugal Telecom S.A. - ADR{\/} ........................... PORT 22,000 621,500 1.0
Compania Anonima Nacional Telefonos de Venezuela
(CANTV) - ADR-/- {\/} .................................... VENZ 10,400 292,500 0.5
Hellenic Telecommunications Organization S.A. ............. GREC 14,400 246,271 0.4
Matav (Hungarian Telecommunications Co., Ltd.)-/- ......... HGRY 1,000 216,584 0.3
Pakistan Telecommunications Co., Ltd. - GDR-/- {\/} ....... PAK 3,300 198,000 0.3
Advanced Fibre Communications ............................. US 3,000 166,875 0.3
------------
8,506,030
------------
Telephone - Long Distance (10.6%)
Call-Net Enterprises, Inc. "B"-/- ......................... CAN 179,000 2,189,782 3.5
Tel-Save Holdings, Inc.-/- ................................ US 70,000 2,030,000 3.2
PT Indonesia Satellite (Indosat) - ADR{\/} ................ INDO 45,000 1,231,875 1.9
Philippine Long Distance Telephone Co. - ADR{\/} .......... PHIL 20,000 1,020,000 1.6
</TABLE>

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

F25
<PAGE>
GT GLOBAL VARIABLE TELECOMMUNICATIONS FUND

PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1996

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Telephone - Long Distance (Continued)
TeleBermuda International Ltd. ............................ BDA 33,200 $ 265,600 0.4
------------
6,737,257
------------
Telecom Technology (6.1%)
DSP Communications, Inc.-/- ............................... US 89,800 1,739,875 2.7
Vitesse Semiconductor Corp.-/- ............................ US 33,000 1,501,500 2.4
Spectrian Corp.-/- ........................................ US 80,000 620,000 1.0
------------
3,861,375
------------
Semiconductors (5.4%)
Analog Devices, Inc.-/- ................................... US 55,000 1,863,125 2.9
LSI Logic Corp. ........................................... US 60,000 1,605,000 2.5
------------
3,468,125
------------
Cable Television (5.4%)
General Cable PLC - ADR-/- ................................ UK 80,000 1,320,000 2.1
Comcast UK Cable Partners Ltd. "A"{\/} .................... UK 85,000 1,158,125 1.8
United International Holdings, Inc. "A"-/- ................ US 55,000 673,750 1.1
International CableTel, Inc.-/- ........................... UK 10,000 252,500 0.4
------------
3,404,375
------------
Telephone - Regional/Local (4.9%)
ICG Communications, Inc.-/- ............................... US 120,000 2,115,000 3.3
McLeod, Inc.-/- ........................................... US 40,000 1,020,000 1.6
------------
3,135,000
------------
Networking (4.8%)
Cisco Systems, Inc.-/- .................................... US 20,000 1,272,500 2.0
Performance Technologies, Inc.-/- ......................... US 100,000 965,625 1.5
Cabletron Systems, Inc.-/- ................................ US 22,000 731,500 1.2
Dimension Data Holdings Ltd.-/- ........................... SAFR 17,500 51,460 0.1
------------
3,021,085
------------
Wholesale & International Trade (4.3%)
CellStar Corp.-/- ......................................... US 150,000 2,700,000 4.3
------------
Multi-Industry (3.1%)
Mannesmann AG ............................................. GER 4,500 1,951,560 3.1
------------
Telecom Technology (2.9%)
Mitec Telecom, Inc.-/- .................................... CAN 315,000 1,817,485 2.9
------------
Consumer Electronics (1.3%)
Three-Five Systems, Inc.-/- ............................... US 61,800 795,675 1.3
Unitech Industries, Inc.(.) -/- ........................... US 100,000 18,750 --
------------
814,425
------------
</TABLE>

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

F26
<PAGE>
GT GLOBAL VARIABLE TELECOMMUNICATIONS FUND

PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1996

TOTAL EQUITY INVESTMENTS (cost $55,839,502) ................. 61,788,028 97.7
------------ -----
<CAPTION>

VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated December 31, 1996, with State Street Bank and Trust
Co., due January 2, 1997, for an effective yield of 6.25%,
collateralized by $985,000 U.S. Treasury Notes, 6.125% due
3/31/98 (market value of collateral is $1,021,049,
including accrued interest). (cost $982,170) ............. 982,170 1.5
------------ -----

TOTAL INVESTMENTS (cost $56,821,672) * ..................... 62,770,198 99.2
Other Assets and Liabilities ................................ 487,631 0.8
------------ -----

NET ASSETS .................................................. $ 63,257,829 100.0
------------ -----
------------ -----
</TABLE>

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

{\/} U.S. currency denominated.
-/- Non-income producing security.
(.) Restricted securities: At December 31, 1996, the Fund owned the
following restricted security constituting 0.03% of net assets
which may not be publicly sold without registration under the
Securities Act of 1933.

<TABLE>
<CAPTION>
VALUE
PER
SHARE
ACQUISITION (NOTE
DESCRIPTION ACQUISITION DATE SHARES COST 1)
----------------------------------------------- ----------------- ------ ----------- ------
<S> <C> <C> <C> <C>
Unitech Industries, Inc........................ 08/24/95 100,000 $ 1,200,000 $0.19
</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.
* For Federal income tax purposes, cost is $56,821,672 and
appreciation (depreciation) is as follows:

<TABLE>
<S> <C>
Unrealized appreciation: $ 14,015,000
Unrealized depreciation: (8,066,474)
-------------
Net unrealized appreciation: $ 5,948,526
-------------
-------------
</TABLE>

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

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

F27
<PAGE>
GT GLOBAL VARIABLE TELECOMMUNICATIONS FUND

PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1996

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

<TABLE>
<CAPTION>
PERCENTAGE OF NET ASSETS {D}
------------------------------
SHORT-TERM
COUNTRY (COUNTRY CODE/CURRENCY CODE) EQUITY & OTHER TOTAL
- -------------------------------------- ------ ------------- -----
<S> <C> <C> <C>
Bermuda (BDA/BMD) .................... 0.4 0.4
Brazil (BRZL/BRL) .................... 2.5 2.5
Canada (CAN/CAD) ..................... 7.5 7.5
Czech Republic (CZCH/CSK) ............ 2.2 2.2
Finland (FIN/FIM) .................... 3.4 3.4
Germany (GER/DEM) .................... 3.1 3.1
Greece (GREC/GRD) .................... 2.0 2.0
Hungary (HGRY/HUF) ................... 0.3 0.3
Indonesia (INDO/IDR) ................. 2.9 2.9
Israel (ISRL/ILS) .................... 4.2 4.2
Japan (JPN/JPY) ...................... 2.0 2.0
Korea (KOR/KRW) ...................... 1.8 1.8
Norway (NOR/NOK) ..................... 0.5 0.5
Pakistan (PAK/PKR) ................... 0.3 0.3
Peru (PERU/PES) ...................... 1.4 1.4
Philippines (PHIL/PHP) ............... 1.6 1.6
Portgual (PORT/PTE) .................. 1.2 1.2
South Africa (SAFR/ZAR) .............. 0.1 0.1
Spain (SPN/ESP) ...................... 3.0 3.0
United Kingdom (UK/GBP) .............. 4.3 4.3
United States & Other (US/USD) ....... 52.5 2.3 54.8
Venezuela (VENZ/VEB) ................. 0.5 0.5
------ --- -----
Total ............................... 97.7 2.3 100.0
------ --- -----
------ --- -----
</TABLE>

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

{d} Percentages indicated are based on net assets of $63,257,829.

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

FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
DECEMBER 31, 1996

<TABLE>
<CAPTION>
MARKET VALUE CONTRACT DELIVERY UNREALIZED
CONTRACTS TO SELL: (U.S. DOLLARS) PRICE DATE APPRECIATION
- ---------------------------------------- -------------- ----------- -------- --------------
<S> <C> <C> <C> <C>
Deutsche Marks.......................... 522,152 1.51860 02/28/97 $ 4,649
Japanese Yen............................ 168,366 110.00000 01/07/97 8,816
Japanese Yen............................ 113,776 111.74500 02/06/97 3,455
Japanese Yen............................ 94,745 110.48000 02/12/97 3,915
Japanese Yen............................ 130,654 111.20000 02/28/97 4,238
-------------- --------------
Total Contracts to Sell (Receivable
amount $1,054,766)................... 1,029,693 25,073
-------------- --------------
THE VALUE OF CONTRACTS TO SELL AS A
PERCENTAGE OF NET ASSETS IS 1.63%.
Total Open Forward Foreign Currency
Contracts............................ $ 25,073
--------------
--------------
</TABLE>

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

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

F28
<PAGE>
GT GLOBAL VARIABLE EMERGING MARKETS FUND

PORTFOLIO OF INVESTMENTS

December 31, 1996

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

<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (20.9%)
Banco Totta & Acores "B" - Registered ..................... PORT 32,293 $ 609,192 3.5
BANKS-MONEY CENTER
First Financial Caribbean Corp. ........................... US 20,500 568,875 3.2
SAVINGS&LOANS
Banco Commercial S.A. - 144A ADR{.} -/- {\/} .............. URGY 34,700 563,875 3.2
BANKS-REGIONAL
Peregrine Investment Holdings Ltd. ........................ HK 305,000 522,530 3.0
INVESTMENT MANAGEMENT
Banco LatinoAmericano de Exportaciones S.A. (Bladex)
"E"{\/} .................................................. PAN 10,200 517,652 2.9
OTHER FINANCIAL
Global Menkul Degerler AS ................................. TRKY 29,723,700 322,486 1.8
SECURITIES BROKER
Winsor Properties Holdings Ltd.-/- ........................ HK 200,000 321,955 1.8
REAL ESTATE INVESTMENT TRUST
State Bank of India Ltd. - GDR-/- {\/} .................... IND 13,500 234,495 1.3
BANKS-MONEY CENTER
Shinhan Bank-/- ........................................... KOR 2,740 43,946 0.2
BANKS-REGIONAL
------------
3,705,006
------------
Materials/Basic Industry (19.4%)
Gujarat Ambuja Cements - GDR{\/} .......................... IND 142,000 1,171,500 6.7
CEMENT
Caemi Mineracao e Metalurgia S.A. Preferred-/- ............ BRZL 14,950,000 733,613 4.2
METALS - STEEL
General Mining Union Corp. (Gencor) ....................... SAFR 142,900 519,525 3.0
METALS - NON-FERROUS
Grupo Mexico S.A. "B"-/- .................................. MEX 140,000 435,998 2.5
METALS - NON-FERROUS
Industrias Penoles S.A. "CP" .............................. MEX 110,000 390,111 2.2
METALS - NON-FERROUS
Oryx Gold Holdings Ltd.-/- ................................ SAFR 84,700 122,449 0.7
GOLD
Corporacion Financiera del Valle S.A. - ADR{\/} ........... COL 2,652 9,282 0.1
MISC. MATERIALS & COMMODITIES
------------
3,382,478
------------
Multi-Industry/Miscellaneous (17.4%)
John Keells Holdings Ltd. - 144A GDR{.} {\/} .............. SLNKA 132,214 826,338 4.7
CONGLOMERATE
Orogen Minerals Ltd. - 144A ADR{.} -/- {\/} ............... AUSL 35,000 800,800 4.5
MISCELLANEOUS
Banco Comercial Portgues "A", Convertible Preferred, 8%
until 6/30/03{\/ } ....................................... PORT 10,800 557,550 3.2
MISCELLANEOUS
Anglo American Corporation of South African Ltd. -
ADR{\/} .................................................. SAFR 7,000 381,500 2.2
CONGLOMERATE
Koor Industries Ltd. - ADR{\/} ............................ ISRL 20,100 341,700 1.9
CONGLOMERATE
</TABLE>

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

F29
<PAGE>
GT GLOBAL VARIABLE EMERGING MARKETS FUND

PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1996

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Multi-Industry/Miscellaneous (Continued)
Mahindra & Mahindra Ltd. - GDR{\/} ........................ IND 13,333 $ 156,663 0.9
MISCELLANEOUS
------------
3,064,551
------------
Services (10.8%)
Zag Industries Ltd.-/- .................................... ISRL 51,300 846,450 4.8
MISC. MATERIALS & COMMODITIES
Matav-Cable Systems Media Ltd.-/- ......................... ISRL 25,000 390,625 2.2
CABLE TELEVISION
SPT Telecom-/- ............................................ CZCH 2,980 371,212 2.1
TELEPHONE NETWORKS
Grand Hotel Holdings Ltd. "A" ............................. HK 710,000 298,358 1.7
LEISURE & TOURISM
------------
1,906,645
------------
Energy (9.5%)
Samchully Co.: ............................................ KOR -- -- 3.0
ENERGY SOURCES
Common .................................................. -- 6,700 469,199 --
Bonus-/- ................................................ -- 620 43,418 --
New 2-/- ................................................ -- 248 17,515 --
Basic Petroleum International Ltd.-/- ..................... US 13,800 455,400 2.6
OIL
Gazprom - 144A ADR{.} -/- {\/} ............................ RUS 21,600 383,400 2.2
GAS PRODUCTION & DISTRIBUTION
Czeske Energeticke Zavody (CEZ AS)-/- ..................... CZCH 6,920 249,234 1.4
ELECTRICAL & GAS UTILITIES
LUKoil Holding - ADR-/- {\/} .............................. RUS 1,300 59,800 0.3
GAS PRODUCTION & DISTRIBUTION
------------
1,677,966
------------
Consumer Non-Durables (4.9%)
Vitasoy International Holdings Ltd. ....................... HK 600,000 261,831 1.5
BEVERAGES - NON-ALCOHOLIC
NU Skin Asia Pacific, Inc.-/- ............................. US 7,200 222,300 1.3
PERSONAL CARE/COSMETICS
Gruma S.A. "B"-/- ......................................... MEX 35,000 213,550 1.2
FOOD
Noble China-/- {/\} ....................................... CHNA 80,000 159,509 0.9
BEVERAGES - ALCOHOLIC
------------
857,190
------------
Health Care (2.8%)
Eczacibasi Ilac Sanayi ve Ticaret AS-/- ................... TRKY 9,988,600 498,047 2.8
------------
HEALTH CARE SERVICES
Capital Goods (0.7%)
Hindalco Industries Ltd. - 144A GDR{.} {\/} ............... IND 5,250 128,625 0.7
------------
INDUSTRIAL COMPONENTS
</TABLE>

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

F30
<PAGE>
GT GLOBAL VARIABLE EMERGING MARKETS FUND

PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1996

TOTAL EQUITY INVESTMENTS (cost $14,294,997) ................. 15,305,508 86.9
------------ -----
<CAPTION>

NO. OF VALUE % OF NET
WARRANTS COUNTRY WARRANTS (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Peregrine Investment Holdings Ltd. Warrants, expires
5/15/98 (cost $0)-/- ..................................... HK 30,500 9,760 0.1
------------ -----
INVESTMENT MANAGEMENT
<CAPTION>

VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated December 31, 1996, with State Street Bank & Trust
Co., due January 2, 1997, for an effective yield of 6.25%,
collateralized by $2,540,000 U.S. Treasury Bonds, 8.125%
due 8/15/19 (market value of collateral is $3,046,973,
including accrued interest). (cost $2,981,518) ........... 2,981,518 16.9
------------ -----

TOTAL INVESTMENTS (cost $17,276,515) * ..................... 18,296,786 103.9
Other Assets and Liabilities ................................ (692,862) (3.9)
------------ -----

NET ASSETS .................................................. $ 17,603,924 100.0
------------ -----
------------ -----
</TABLE>

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

{\/} U.S. currency denominated.
{.} Security exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers.
{/\} Security is denominated in CAD.
-/- Non-income producing security.
* For Federal income tax purposes, cost is $17,280,886 and
appreciation (depreciation) is as follows:

<TABLE>
<S> <C>
Unrealized appreciation: $ 1,558,518
Unrealized depreciation: (542,618)
-------------
Net unrealized appreciation: $ 1,015,900
-------------
-------------
</TABLE>

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

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

F31
<PAGE>
GT GLOBAL VARIABLE EMERGING MARKETS FUND

PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1996

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

<TABLE>
<CAPTION>
PERCENTAGE OF NET ASSETS {D}
-------------------------------------------
SHORT-TERM
COUNTRY (COUNTRY CODE/CURRENCY CODE) EQUITY WARRANTS & OTHER TOTAL
- -------------------------------------- ------ ------------- ---------- -----
<S> <C> <C> <C> <C>
Australia (AUSL/AUD) ................. 4.5 4.5
Brazil (BRZL/BRL) .................... 4.2 4.2
China (CHNA/RMB) ..................... 0.9 0.9
Colombia (COL/COP) ................... 0.1 0.1
Czech Republic (CZCH/CSK) ............ 3.5 3.5
Hong Kong (HK/HKD) ................... 8.0 0.1 8.1
India (IND/INR) ...................... 10.1 10.1
Israel (ISRL/ILS) .................... 8.9 8.9
Korea (KOR/KRW) ...................... 3.2 3.2
Mexico (MEX/MXN) ..................... 5.9 5.9
Panama (PAN/PND) ..................... 2.9 2.9
Portugal (PORT/PTE) .................. 6.7 6.7
Russia (RUS/SUR) ..................... 2.5 2.5
South Africa (SAFR/ZAR) .............. 5.9 5.9
Sri Lanka (S LNKA/LKR) ............... 4.7 4.7
Turkey (TRKY/TRL) .................... 4.6 4.6
United States & Other (US/USD) ....... 7.1 13.0 20.1
Uruguay (URGY/UYP) ................... 3.2 3.2
------ --- ----- -----
Total ............................... 86.9 0.1 13.0 100.0
------ --- ----- -----
------ --- ----- -----
</TABLE>

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

{d} Percentages indicated are based on net assets of $17,603,924.

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

F32
<PAGE>
GT GLOBAL VARIABLE INFRASTRUCTURE FUND

PORTFOLIO OF INVESTMENTS

December 31, 1996

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

<TABLE>
<CAPTION>
% OF NET
EQUITY INVESTMENTS COUNTRY SHARES VALUE ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Electrical & Gas Utilities (28.0%)
Empresa Nacional de Electridad S.A. - ADR{\/} ............. SPN 2,500 $ 175,000 2.9
EVN Energie-Versorgung Niederoesterreich AG ............... ASTRI 1,100 165,650 2.7
Companhia Energetica de Minas Gerais (Cemig) - ADR{\/} .... BRZL 4,989 164,637 2.7
Light - Participacoes S.A.-/- ............................. BRZL 650,000 157,667 2.6
Edison S.p.A. ............................................. ITLY 24,000 151,493 2.5
IES Industries, Inc. ...................................... US 5,000 149,375 2.5
AES China Generating Co., Ltd. "A"-/- ..................... CHNA 10,000 127,500 2.1
Enron Global Power & Pipelines L.L.C. ..................... US 4,400 118,800 2.0
Hub Power Co.-/- .......................................... PAK 151,000 117,922 2.0
BSES Ltd. - GDR-/- {\/} ................................... IND 5,000 102,500 1.7
Korea Electric Power Corp. - ADR{\/} ...................... KOR 4,300 88,150 1.5
Capex S.A. ................................................ ARG 10,500 87,167 1.4
Hafslund ASA "A" .......................................... NOR 5,000 36,479 0.6
MetroGas S.A. - ADR{\/} ................................... ARG 3,600 33,300 0.6
Chilgener S.A. - ADR{\/} .................................. CHLE 700 14,613 0.2
------------
1,690,253
------------
Telephone Networks (9.5%)
SPT Telecom-/- ............................................ CZCH 1,200 149,481 2.5
Telefonica de Espana - ADR{\/} ............................ SPN 2,100 145,425 2.4
Hellenic Telecommunications - 144A{.} ..................... GREC 6,800 116,295 1.9
Philippine Long Distance Telephone Co. - ADR{\/} .......... PHIL 1,700 86,700 1.4
CDT Telefonica De Peru - ADR{\/} .......................... PERU 2,600 49,075 0.8
Compania Anonima Nacional Telefonos de Venezuela (CANTV) -
ADR-/- {\/ } ............................................. VENZ 900 25,313 0.4
Pakistan Telecommunications Co., Ltd. - GDR-/- {\/} ....... PAK 100 6,000 0.1
------------
578,289
------------
Cement (8.4%)
La Cementos Nacional, C.A. 144A - GDR{.} {\/} ............. ECDR 923 208,598 3.4
Giant Cement Holding, Inc.-/- ............................. US 10,200 164,472 2.7
Suez Cement Co. - GDR-/- {\/} ............................. EGYPT 4,900 76,440 1.3
Siam Cement Co., Ltd. - Foreign ........................... THAI 1,800 56,722 0.9
HI Cement Corp. ........................................... PHIL 15,000 4,970 0.1
------------
511,202
------------
Metals - Steel (8.0%)
Shaw Group, Inc.-/- ....................................... US 7,700 179,988 3.0
Mannesmann AG ............................................. GER 400 173,472 2.9
Northwest Pipe Co.-/- ..................................... US 8,000 130,000 2.1
Grupo Simec, S.A. de C.V. - ADR-/- {\/} ................... MEX 500 1,563 --
------------
485,023
------------
Transportation - Road & Rail (7.6%)
Canadian National Railway Co. ............................. CAN 4,300 163,400 2.7
Tranz Rail Holdings Ltd. - ADR-/- {\/} .................... NZ 9,000 159,188 2.6
</TABLE>

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

F33
<PAGE>
GT GLOBAL VARIABLE INFRASTRUCTURE FUND

PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1996

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
% OF NET
EQUITY INVESTMENTS COUNTRY SHARES VALUE ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Transportation - Road & Rail (Continued)
ABC Rail Products Corp.-/- ................................ US 7,000 $ 139,124 2.3
------------
461,712
------------
Machinery & Engineering (3.5%)
Caterpillar, Inc. ......................................... US 1,700 127,925 2.1
KCI Konecranes International-/- ........................... FIN 2,700 85,155 1.4
------------
213,080
------------
Telecom Equipment (3.3%)
Tadiran Telecommunications Ltd.{\/} ....................... ISRL 8,900 199,138 3.3
------------
Construction (3.1%)
United Engineers Ltd. ..................................... MAL 17,000 153,505 2.5
Cheung Kong Infrastructure Holdings-/- .................... HK 12,000 31,808 0.5
C & P Homes, Inc. ......................................... PHIL 7,950 4,087 0.1
------------
189,400
------------
Metals - Non-Ferrous (3.0%)
RMI Titanium Co.-/- ....................................... US 6,500 182,813 3.0
------------
Wireless Communications (3.0%)
DDI Corp. ................................................. JPN 13 86,023 1.4
Paging Network, Inc.-/- ................................... US 5,400 82,350 1.4
Telecel - Comunicacaoes Pessoais, S.A.-/- ................. PORT 150 9,581 0.2
------------
177,954
------------
Multi-Industry (2.9%)
Hylsamex, S.A. de C.V. 144A - ADR{.} {\/} ................. MEX 4,200 97,650 1.6
E.R.G. Ltd. ............................................... AUSL 60,117 76,418 1.3
------------
174,068
------------
Telecom Technology (2.5%)
DSP Communications, Inc.-/- ............................... US 7,800 151,125 2.5
------------
Electrical Plant/Equipment (2.4%)
ABB AB "B" ................................................ SWDN 1,300 147,315 2.4
------------
Consumer Electronics (0.9%)
Three-Five Systems, Inc.-/- ............................... US 4,000 51,500 0.9
------------
Telephone - Long Distance (0.9%)
PT Indonesia Satellite (Indosat) - ADR{\/} ................ INDO 2,000 54,750 0.9
------------
Energy Equipment & Services (0.6%)
Metzler Group, Inc.-/- .................................... US 1,100 34,925 0.6
------------
</TABLE>

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

F34
<PAGE>
GT GLOBAL VARIABLE INFRASTRUCTURE FUND

PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1996

TOTAL EQUITY INVESTMENTS (cost $5,102,840) .................. 5,326,153 88.0
------------ -----
<CAPTION>

% OF NET
REPURCHASE AGREEMENT VALUE ASSETS
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated December 31, 1996, with State Street Bank & Turst
Co., due January 2, 1997, for an effective yield of 6.25%,
collateralized by $630,000 U.S. Treasury Bonds, 8.125% due
8/15/19 (market value of collateral is $755,884, including
accrued interest). (cost $740,128) ....................... 740,128 12.2
------------ -----

TOTAL INVESTMENTS (cost $5,842,968) * ...................... 6,066,281 100.2
Other Assets and Liabilities ................................ (12,311) (0.2)
------------ -----

NET ASSETS .................................................. $ 6,053,970 100.0
------------ -----
------------ -----
</TABLE>

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

-/- Non-income producing security.
{\/} 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.
* For Federal income tax purposes, cost is $5,843,560 and
appreciation (depreciation) is as follows:

<TABLE>
<S> <C>
Unrealized appreciation: $ 508,024
Unrealized depreciation: (285,303)
-------------
Net unrealized appreciation: $ 222,721
-------------
-------------
</TABLE>

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

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

F35
<PAGE>
GT GLOBAL VARIABLE INFRASTRUCTURE FUND

PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1996

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

<TABLE>
<CAPTION>
PERCENTAGE OF NET ASSETS
{D}
---------------------------
SHORT-TERM
COUNTRY (COUNTRY CODE/CURRENCY CODE) EQUITY & OTHER TOTAL
- -------------------------------------- ------ ---------- -----
<S> <C> <C> <C>
Argentina (ARG/ARS) .................. 2.0 2.0
Australia (AUSL/AUD) ................. 1.3 1.3
Austria (ASTRI/ATS) .................. 2.7 2.7
Brazil (BRZL/BRL) .................... 5.3 5.3
Canada (CAN/CAD) ..................... 2.7 2.7
Chile (CHLE/CLP) ..................... 0.2 0.2
China (CHNA/RMB) ..................... 2.1 2.1
Czech Republic (CZCH/CSK) ............ 2.5 2.5
Ecuador (ECDR/ECS) ................... 3.4 3.4
Egypt (EGYPT) ........................ 1.3 1.3
Finland (FIN/FIM) .................... 1.4 1.4
Germany (GER/DEM) .................... 2.9 2.9
Greece (GREC/GRD) .................... 1.9 1.9
Hong Kong (HK/HKD) ................... 0.5 0.5
India (IND/INR) ...................... 1.7 1.7
Indonesia (INDO/IDR) ................. 1.2 1.2
Israel (ISRL/ILS) .................... 3.3 3.3
Italy (ITLY/ITL) ..................... 2.5 2.5
Japan (JPN/JPY) ...................... 1.4 1.4
Korea (KOR/KRW) ...................... 1.5 1.5
Malaysia (MAL/MYR) ................... 2.5 2.5
Mexico (MEX/MXN) ..................... 1.6 1.6
New Zealand (NZ/NZD) ................. 2.6 2.6
Norway (NOR/NOK) ..................... 0.6 0.6
Pakistan (PAK/PKR) ................... 2.1 2.1
Peru (PERU/PES) ...................... 0.8 0.8
Philippines (PHIL/PHP) ............... 1.7 1.7
Portugal (PORT/PTE) .................. 0.2 0.2
Spain (SPN/ESP) ...................... 5.3 5.3
Sweden (SWDN/SEK) .................... 2.4 2.4
Thailand (THAI/THB) .................. 0.9 0.9
United States & Other (US/USD) ....... 25.1 12.0 37.1
Venezuela (VENZ/VEB) ................. 0.4 0.4
------ ----- -----
Total ............................... 88.0 12.0 100.0
------ ----- -----
------ ----- -----
</TABLE>

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

{d} Percentages indicated are based on net assets of $6,053,970.

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

F36
<PAGE>
GT GLOBAL VARIABLE NATURAL RESOURCES FUND

PORTFOLIO OF INVESTMENTS

December 31, 1996

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

<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Energy Equipment & Services (33.4%)
Trico Marine Services, Inc.-/- ............................ US 14,100 $ 676,800 4.2
Cooper Cameron Corp.-/- ................................... US 7,300 558,450 3.4
Global Marine, Inc.-/- .................................... US 24,500 505,313 3.1
Global Industries Ltd.-/- ................................. US 26,600 495,425 3.0
Energy Ventures, Inc.-/- .................................. US 9,600 488,400 3.0
Seacor Holdings, Inc.-/- .................................. US 7,600 478,800 2.9
Rowan Cos., Inc.-/- ....................................... US 17,300 391,413 2.4
BJ Services Co.-/- ........................................ US 7,500 382,500 2.4
Atwood Oceanics, Inc.-/- .................................. US 4,900 311,150 1.9
Reading & Bates Corp.-/- .................................. US 10,700 283,550 1.7
Marine Drilling Co., Inc.-/- .............................. US 13,800 271,688 1.7
Veritas DGC, Inc.-/- {/\} ................................. US 14,080 249,372 1.5
Tuboscope Vetco International Corp.-/- .................... US 12,300 190,650 1.2
Falcon Drilling Co., Inc.-/- .............................. US 4,000 157,000 1.0
------------
5,440,511
------------
Oil (19.0%)
Ente Nazionale Idrocarburi (ENI) S.p.A. - ADR{\/} ......... ITLY 15,000 774,375 4.8
Abacan Resource Corp.-/- .................................. CAN 61,800 532,603 3.3
Benton Oil & Gas Co.-/- ................................... US 19,600 443,450 2.7
Triton Energy Ltd.-/- ..................................... US 8,000 388,000 2.4
Petroleo Brasileiro S.A. (Petrobras) Preferred ............ BRZL 2,100,000 334,537 2.1
Nuevo Energy Co.-/- ....................................... US 5,400 280,800 1.7
Petroleum Securities Australia Ltd. ....................... AUSL -- -- 0.6
Common-/- ............................................... -- 21,750 94,347 --
ADR-/- {\/} ............................................. AUSL 3,000 68,250 0.4
Monterey Resources, Inc.-/- ............................... US 4,000 64,500 0.4
HarCor Energy, Inc.-/- .................................... US 13,000 63,375 0.4
Jerez Energy International, Inc.-/- ....................... CAN 19,200 23,839 0.2
------------
3,068,076
------------
Gold (17.4%)
Bre-X Minerals Ltd.-/- .................................... CAN 92,700 1,469,172 9.0
Barrick Gold Corp.: ....................................... CAN -- -- 4.4
Common{\/} .............................................. -- 15,900 457,125 --
Common .................................................. -- 9,300 266,597 --
Getchell Gold Corp.-/- .................................... US 7,000 268,625 1.7
Lihir Gold Ltd.-/- ........................................ AUSL 71,900 137,094 0.8
Oryx Gold Holdings Ltd.-/- ................................ SAFR 60,000 86,741 0.5
Dayton Mining Corp.-/- .................................... CAN 10,900 72,444 0.4
Asquith Resources, Inc.-/- ................................ CAN 35,900 47,195 0.3
Yamana Resources, Inc.-/- ................................. CAN 13,700 42,525 0.3
Dayton Mining Corp.-/- .................................... US 800 5,350 --
------------
2,852,868
------------
</TABLE>

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

F37
<PAGE>
GT GLOBAL VARIABLE NATURAL RESOURCES FUND

PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1996

TOTAL EQUITY INVESTMENTS (cost $12,132,208) ................. 13,952,809 85.6
------------ -----
<CAPTION>

NO. OF VALUE % OF NET
WARRANTS COUNTRY WARRANTS (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Yamana Resources, Inc. Warrants, expire 12/31/98 (cost
$5,491)-/- ............................................... CAN 6,850 6,751 --
------------ -----
GOLD
<CAPTION>

VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated December 31, 1996, with State Street Bank & Trust
Co., due January 2, 1997, for an effective yield of 6.25%,
collateralized by $2,080,000 U.S. Treasury Bonds, 8.125%
due 8/15/19 (market value of collateral is $2,495,158,
including accrued interest). (cost $2,441,424) ........... 2,441,424 15.0
------------ -----

TOTAL INVESTMENTS (cost $14,579,123) * ..................... 16,400,984 100.6
Other Assets and Liabilities ................................ (93,031) (0.6)
------------ -----

NET ASSETS .................................................. $ 16,307,953 100.0
------------ -----
------------ -----
</TABLE>

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

-/- Non-income producing security.
{/\} Security is denominated in CAD.
{\/} 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.
* For Federal income tax purposes, cost is $14,625,429 and
appreciation (depreciation) is as follows:

<TABLE>
<S> <C>
Unrealized appreciation: $ 1,863,587
Unrealized depreciation: (88,032)
-------------
Net unrealized appreciation: $ 1,775,555
-------------
-------------
</TABLE>

Abbreviation:
ADR--American Depository Receipt

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

F38
<PAGE>
GT GLOBAL VARIABLE NATURAL RESOURCES FUND

PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1996

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

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

{d} Percentages indicated are based on net assets of $16,307,953.

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

F39
<PAGE>
GT GLOBAL VARIABLE AMERICA FUND

PORTFOLIO OF INVESTMENTS

December 31, 1996

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

<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Energy (24.1%)
Rowan Cos., Inc.-/- ....................................... US 48,800 $ 1,104,100 2.7
ENERGY EQUIPMENT & SERVICES
Cooper Cameron Corp.-/- ................................... US 14,300 1,093,950 2.6
ENERGY EQUIPMENT & SERVICES
ENSCO International, Inc.-/- .............................. US 19,700 955,450 2.3
ENERGY EQUIPMENT & SERVICES
Seacor Holdings, Inc.-/- .................................. US 14,900 938,700 2.3
ENERGY EQUIPMENT & SERVICES
Global Marine, Inc.-/- .................................... US 43,800 903,375 2.2
ENERGY EQUIPMENT & SERVICES
Western Atlas, Inc.-/- .................................... US 12,600 893,025 2.1
ENERGY EQUIPMENT & SERVICES
Marine Drilling Co., Inc.-/- .............................. US 43,100 848,531 2.0
ENERGY EQUIPMENT & SERVICES
Ente Nazionale Idrocarburi (ENI) S.p.A. - ADR{\/} ......... ITLY 16,300 841,488 2.0
OIL
Benton Oil & Gas Co.-/- ................................... US 31,300 708,163 1.7
OIL
Triton Energy Ltd.-/- ..................................... US 12,800 620,800 1.5
OIL
Reading & Bates Corp.-/- .................................. US 17,400 461,100 1.1
ENERGY EQUIPMENT & SERVICES
Chesapeake Energy Corp.-/- ................................ US 6,000 333,750 0.8
GAS PRODUCTION & DISTRIBUTION
Atwood Oceanics, Inc.-/- .................................. US 5,100 323,850 0.8
ENERGY EQUIPMENT & SERVICES
------------
10,026,282
------------
Technology (19.5%)
Microsoft Corp.-/- ........................................ US 18,200 1,503,775 3.6
SOFTWARE
Intel Corporation ......................................... US 10,600 1,387,938 3.3
SEMICONDUCTORS
3Com Corp.-/- ............................................. US 14,200 1,041,925 2.5
NETWORKING
American Power Conversion Corp.-/- ........................ US 29,700 809,320 1.9
NETWORKING
Dynatech Corp.-/- ......................................... US 15,100 668,175 1.6
INSTRUMENTATION & TEST
DSP Communications, Inc.-/- ............................... US 34,000 658,750 1.6
TELECOM TECHNOLOGY
Cisco Systems, Inc.-/- .................................... US 9,700 617,163 1.5
NETWORKING
Comverse Technology, Inc.-/- .............................. US 16,300 616,344 1.5
COMPUTERS & PERIPHERALS
Computer Products, Inc.-/- ................................ US 22,000 429,000 1.0
COMPUTERS & PERIPHERALS
Cognos, Inc.-/- {\/} ...................................... CAN 14,700 413,438 1.0
SOFTWARE
------------
8,145,828
------------
</TABLE>

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

F40
<PAGE>
GT GLOBAL VARIABLE AMERICA FUND

PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1996

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (18.2%)
TJX Cos., Inc. ............................................ US 24,700 $ 1,170,163 2.8
RETAILERS-APPAREL
Loewen Group, Inc.{\/} .................................... CAN 27,000 1,056,375 2.5
CONSUMER SERVICES
Ross Stores, Inc. ......................................... US 20,600 1,030,000 2.5
RETAILERS-APPAREL
Safeway, Inc.-/- .......................................... US 21,500 919,125 2.2
RETAILERS-FOOD
Paychex, Inc. ............................................. US 14,500 745,844 1.8
CONSUMER SERVICES
Tiffany & Co. ............................................. US 20,100 736,163 1.8
RETAILERS-OTHER
Outdoor Systems, Inc.-/- .................................. US 17,850 502,031 1.2
BUSINESS & PUBLIC SERVICES
USAir Group, Inc.-/- ...................................... US 20,100 469,838 1.1
TRANSPORTATION - AIRLINES
HFS, Inc.-/- .............................................. US 6,700 400,325 1.0
LEISURE & TOURISM
Universal Outdoor Holdings, Inc.-/- ....................... US 14,000 329,000 0.8
BUSINESS & PUBLIC SERVICES
Footstar, Inc.-/- ......................................... US 5,800 144,275 0.3
RETAILERS-APPAREL
Claire's Stores, Inc. ..................................... US 5,300 68,900 0.2
RETAILERS-APPAREL
------------
7,572,039
------------
Consumer Non-Durables (13.3%)
Philip Morris Cos., Inc. .................................. US 14,200 1,599,275 3.8
FOOD
Nike, Inc. "B" ............................................ US 22,200 1,326,450 3.2
TEXTILES & APPAREL
Liz Claiborne, Inc. ....................................... US 16,000 618,000 1.5
TEXTILES & APPAREL
Foodmaker, Inc.-/- ........................................ US 61,000 541,375 1.3
FOOD
Nautica Enterprises, Inc.-/- .............................. US 18,700 472,175 1.1
TEXTILES & APPAREL
Richfood Holdings, Inc. ................................... US 15,900 385,575 0.9
FOOD
Rexall Sundown, Inc.-/- ................................... US 14,000 380,625 0.9
PERSONAL CARE/COSMETICS
Tommy Hilfiger Corp.-/- ................................... US 5,100 244,800 0.6
TEXTILES & APPAREL
------------
5,568,275
------------
Finance (9.0%)
BankAmerica Corp. ......................................... US 16,100 1,605,975 3.8
BANKS-SUPER REGIONAL
Union Planters Corp. ...................................... US 23,180 904,020 2.2
BANKS-REGIONAL
</TABLE>

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

F41
<PAGE>
GT GLOBAL VARIABLE AMERICA FUND

PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1996

TOTAL EQUITY INVESTMENTS (cost $32,982,916) ................. 38,249,964 91.8
------------ -----
<CAPTION>

VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated December 31, 1996, with State Street Bank & Trust
Co., due January 2, 1997, for an effective yield of 6.25%,
collateralized by $3,375,000 U.S. Treasury Notes, 6.125%
due 3/31/98 (market value of collateral is $3,446,273,
including accrued interest). (cost $3,375,586) ........... 3,375,586 8.1
------------ -----

TOTAL INVESTMENTS (cost $36,358,502) * ..................... 41,625,550 99.9
Other Assets and Liabilities ................................ 21,059 0.1
------------ -----

NET ASSETS .................................................. $ 41,646,609 100.0
------------ -----
------------ -----
</TABLE>

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

-/- Non-income producing security.
{\/} U.S. currency denominated.
* For Federal income tax purposes, cost is $36,538,768 and
appreciation (depreciation) is as follows:

<TABLE>
<S> <C>
Unrealized appreciation: $ 5,627,767
Unrealized depreciation: (540,985)
-------------
Net unrealized appreciation: $ 5,086,782
-------------
-------------
</TABLE>

Abbreviation:
ADR--American Depository Receipt

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

F42
<PAGE>
GT GLOBAL VARIABLE NEW PACIFIC FUND

PORTFOLIO OF INVESTMENTS

December 31, 1996

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

<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (44.2%)
Henderson Land Development Co., Ltd. ...................... HK 175,000 $ 1,764,934 5.4
REAL ESTATE
HSBC Holdings PLC ......................................... HK 80,000 1,711,921 5.2
BANKS-MONEY CENTER
New World Development Co., Ltd. ........................... HK 246,000 1,661,947 5.1
REAL ESTATE
Cheung Kong (Holdings) Ltd. ............................... HK 160,000 1,422,291 4.4
REAL ESTATE
Metropolitan Bank & Trust Co. ............................. PHIL 50,000 1,237,624 3.8
BANKS-REGIONAL
Wheelock & Co., Ltd. ...................................... HK 300,000 855,314 2.6
REAL ESTATE
Malaysian Resources Corp., Bhd. ........................... MAL 192,000 756,594 2.3
REAL ESTATE
Straits Steamship Land Ltd. ............................... SING 220,000 704,604 2.2
REAL ESTATE
Rashid Hussain Bhd. ....................................... MAL 100,000 661,386 2.0
SECURITIES BROKER
PT Lippo Life Insurance - Foreign ......................... INDO 600,000 552,732 1.7
INSURANCE-LIFE
Ayala Land, Inc. "B" ...................................... PHIL 468,750 535,510 1.6
REAL ESTATE
United Overseas Bank Ltd. - Foreign ....................... SING 46,000 513,011 1.6
BANKS-MONEY CENTER
Wharf (Holdings) Ltd. ..................................... HK 100,000 499,095 1.5
REAL ESTATE
Megaworld Properties & Holdings, Inc.-/- .................. PHIL 866,000 346,268 1.1
REAL ESTATE
Singapore Land Ltd. ....................................... SING 50,000 277,023 0.8
REAL ESTATE
Gadek Capital Bhd.-/- ..................................... MAL 100,000 263,366 0.8
OTHER FINANCIAL
DCB Holdings Bhd. ......................................... MAL 75,000 256,931 0.8
BANKS-REGIONAL
Bank of East Asia Ltd. .................................... HK 45,793 203,682 0.6
BANKS-MONEY CENTER
Hang Seng Bank ............................................ HK 16,030 194,831 0.6
BANKS-MONEY CENTER
Empire East Land Holdings, Inc.-/- ........................ PHIL 100,000 45,697 0.1
REAL ESTATE
------------
14,464,761
------------
Consumer Durables (12.5%)
Gadek (Malaysia) Bhd. ..................................... MAL 300,000 2,281,189 7.0
AUTOMOBILES
Edaran Otomobil Nasional Bhd. ............................. MAL 178,000 1,780,000 5.4
AUTOMOBILES
</TABLE>

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

F43
<PAGE>
GT GLOBAL VARIABLE NEW PACIFIC FUND

PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1996

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Consumer Durables (Continued)
Samsung Electronics Co.: .................................. KOR -- -- 0.1
CONSUMER ELECTRONICS
GDR 1/2 Non-voting-/- {\/} .............................. -- 2,527 $ 30,324 --
144A GDR{.} -/- {\/} .................................... -- 258 10,385 --
Bonus - GDR 1/2 Voting-/- {\/} .......................... -- 77 1,964 --
------------
4,103,862
------------
Multi-Industry/Miscellaneous (9.6%)
Hutchison Whampoa ......................................... HK 225,000 1,767,358 5.4
MULTI-INDUSTRY
Citic Pacific Ltd. ........................................ HK 200,000 1,161,107 3.6
CONGLOMERATE
Korea Fund, Inc.{\/} ...................................... KOR 13,107 196,605 0.6
COUNTRY FUNDS
------------
3,125,070
------------
Services (9.4%)
Guangnan Holdings ......................................... HK 2,530,000 2,175,394 6.7
WHOLESALE & INTERNATIONAL TRADE
Waterfront Philippines, Inc.-/- ........................... PHIL 2,998,000 570,830 1.7
LEISURE & TOURISM
News Corp., Ltd. .......................................... AUSL 40,358 212,900 0.6
BROADCASTING & PUBLISHING
Philippine Long Distance Telephone Co. - ADR{\/} .......... PHIL 1,500 76,500 0.2
TELEPHONE - LONG DISTANCE
International Engineering PLC - Foreign ................... THAI 24,000 55,224 0.2
WIRELESS COMMUNICATIONS
------------
3,090,848
------------
Capital Goods (7.6%)
United Engineers Ltd.: .................................... MAL -- -- 4.3
CONSTRUCTION
Common .................................................. -- 150,300 1,357,164 --
Convertible Unsecured Loan Stock, 4% expires 5/22/99 .... -- 21,000 17,050 --
PWE Industries Bhd. ....................................... MAL 42,000 815,050 2.5
ELECTRICAL PLANT/EQUIPMENT
E.R.G. Ltd. ............................................... AUSL 200,264 254,566 0.8
ELECTRICAL PLANT/EQUIPMENT
------------
2,443,830
------------
Materials/Basic Industry (4.9%)
PT Semen Gresik - Foreign ................................. INDO 214,000 688,861 2.1
CEMENT
Western Mining Corporation Holdings Ltd. .................. AUSL 72,000 453,611 1.4
METALS - NON-FERROUS
Broken Hill Proprietary Co., Ltd. ......................... AUSL 21,164 301,310 0.9
MISC. MATERIALS & COMMODITIES
</TABLE>

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

F44
<PAGE>
GT GLOBAL VARIABLE NEW PACIFIC FUND

PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1996

TOTAL EQUITY INVESTMENTS (cost $23,530,845) ................. 31,039,233 95.0
------------ -----
<CAPTION>

NO. OF VALUE % OF NET
WARRANTS COUNTRY WARRANTS (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Gadek (Malaysia) Bhd. Warrants, expire 12/19/00-/- ........ MAL 150,000 570,297 1.7
MISC. MATERIALS & COMMODITIES
Waterfront Philippines, Inc. Warrants, expire 5/3/99-/- ... PHIL 2,000,000 182,788 0.6
LEISURE & TOURISM
Petronas Gas Bhd. Warrants, expire 8/17/00-/- ............. MAL 35,000 71,386 0.2
GAS PRODUCTION & DISTRIBUTION
Straits Steamship Land Ltd. Warrants, expire
12/12/00-/- .............................................. SING 55,000 59,372 0.2
CONGLOMERATE
Development & Commercial Bank Warrants, expire
12/28/99-/- .............................................. MAL 37,500 56,436 0.2
BANKS-MONEY CENTER
------------ -----

TOTAL WARRANTS (cost $317,124) .............................. 940,279 2.9
------------ -----
</TABLE>

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

F45
<PAGE>
GT GLOBAL VARIABLE NEW PACIFIC FUND

PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1996

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- ------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Dated December 31, 1996, with State Street Bank & Trust
Co., due January 2, 1997, for an effective yield of 6.25%,
collateralized by $2,080,000 U.S. Treasury Notes, 6.125%
due 3/31/98 (market value of collateral is $2,123,925,
including accrued interest). (cost $2,081,361) ........... $ 2,081,361 6.4
------------ -----

TOTAL INVESTMENTS (cost $25,929,330) * ..................... 34,060,873 104.3
Other Assets and Liabilities ................................ (1,390,673) (4.3)
------------ -----

NET ASSETS .................................................. $ 32,670,200 100.0
------------ -----
------------ -----
</TABLE>

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

{\/} U.S. currency denominated.
-/- Non-income producing security.
{.} Security exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers.
* For Federal income tax purposes, cost is $26,082,315 and
appreciation (depreciation) is as follows:

<TABLE>
<S> <C>
Unrealized appreciation: $ 8,590,778
Unrealized depreciation: (612,220)
-------------
Net unrealized appreciation: $ 7,978,558
-------------
-------------
</TABLE>

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

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

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

<TABLE>
<CAPTION>
PERCENTAGE OF NET ASSETS {D}
-------------------------------------------
FIXED INCOME,
RIGHTS & SHORT-TERM
COUNTRY (COUNTRY CODE/CURRENCY CODE) EQUITY WARRANTS & OTHER TOTAL
- -------------------------------------- ------ ------------- ---------- -----
<S> <C> <C> <C> <C>
Australia (AUSL/AUD) ................. 6.2 6.2
Hong Kong (HK/HKD) ................... 44.3 44.3
Indonesia (INDO/IDR) ................. 3.8 3.8
Korea (KOR/KRW) ...................... 0.7 0.7
Malaysia (MAL/MYR) ................... 25.1 2.1 27.2
Philippines (PHIL/PHP) ............... 9.6 0.6 10.2
Singapore (SING/SGD) ................. 4.6 0.2 4.8
Thailand (THAI/THB) .................. 0.7 0.7
United States & Other (US/USD) ....... 2.1 2.1
------ --- --- -----
Total ............................... 95.0 2.9 2.1 100.0
------ --- --- -----
------ --- --- -----
</TABLE>

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

{d} Percentages indicated are based on net assets of $32,670,200.

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

F46
<PAGE>
GT GLOBAL VARIABLE EUROPE FUND

PORTFOLIO OF INVESTMENTS

December 31, 1996

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

<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (34.7%)
Reed International PLC .................................... UK 65,500 $ 1,239,340 5.1
BUSINESS & PUBLIC SERVICES
Koninklijke Ahold N.V.-/- ................................. NETH 13,130 821,576 3.4
RETAILERS-FOOD
Telecel - Comunicacaoes Pessoais, S.A.-/- ................. PORT 10,907 696,641 2.8
TELECOM - OTHER
M6 - Metropole Television ................................. FR 7,800 650,502 2.7
BROADCASTING & PUBLISHING
Stet Societa' Finanziaria Telefonica S.p.A.-/- ............ ITLY 123,900 563,725 2.3
TELEPHONE NETWORKS
Adecco S.A. ............................................... SWTZ 2,129 539,648 2.2
CONSUMER SERVICES
Sol Melia S.A.-/- ......................................... SPN 14,000 501,695 2.0
LEISURE & TOURISM
Galeries Lafayette-/- ..................................... FR 1,319 470,053 1.9
RETAILERS-OTHER
EMAP PLC .................................................. UK 36,200 456,529 1.9
BROADCASTING & PUBLISHING
Comptoirs Modernes ........................................ FR 838 452,973 1.8
RETAILERS-FOOD
Apcoa Parking AG .......................................... GER 4,160 446,294 1.8
CONSUMER SERVICES
Reuters Holdings PLC ...................................... UK 33,000 424,649 1.7
BROADCASTING & PUBLISHING
Assystem .................................................. FR 5,477 418,705 1.7
BUSINESS & PUBLIC SERVICES
Sodexho S.A. .............................................. FR 585 326,380 1.3
RESTAURANTS
Falck AS .................................................. DEN 900 269,045 1.1
CONSUMER SERVICES
Kuoni Reisen Holdings "B" - Registered .................... SWTZ 90 218,610 0.9
LEISURE & TOURISM
Kobenhavns Lufthavne AS ................................... DEN 165 16,815 0.1
TRANSPORTATION - AIRLINES
------------
8,513,180
------------
Health Care (11.0%)
Astra AB "A" Free ......................................... SWDN 19,800 979,450 4.0
PHARMACEUTICALS
Schering AG ............................................... GER 5,760 486,492 2.0
PHARMACEUTICALS
Nearmedic Ltd.-/- ......................................... ASTRI 2,952 422,727 1.7
PHARMACEUTICALS
Tamro OY AB ............................................... FIN 56,400 375,387 1.5
PHARMACEUTICALS
Biotest AG ................................................ GER 7,900 277,373 1.1
BIOTECHNOLOGY
M.L. Laboratories PLC-/- .................................. UK 52,200 182,342 0.7
PHARMACEUTICALS
------------
2,723,771
------------
</TABLE>

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

F47
<PAGE>
GT GLOBAL VARIABLE EUROPE FUND

PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1996

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Materials/Basic Industry (10.4%)
SGL Carbon AG ............................................. GER 6,200 $ 782,055 3.2
METALS - NON-FERROUS
Bayer AG .................................................. GER 13,800 563,485 2.3
CHEMICALS
Castorama Dubois Investisse ............................... FR 3,100 534,421 2.2
BUILDING MATERIALS & COMPONENTS
Degussa AG ................................................ GER 780 353,231 1.4
MISC. MATERIALS & COMMODITIES
Saes Getters - di Risp .................................... ITLY 23,680 289,474 1.2
CHEMICALS
Nokian Renkaat Oy ......................................... FIN 800 17,227 0.1
MISC. MATERIALS & COMMODITIES
------------
2,539,893
------------
Finance (9.1%)
3I Group PLC .............................................. UK 63,000 525,360 2.1
OTHER FINANCIAL
Unidanmark AS "A" ......................................... DEN 9,100 471,423 1.9
BANKS-REGIONAL
Jyske Bank ................................................ DEN 6,060 455,980 1.9
BANKS-REGIONAL
M & G Group PLC ........................................... UK 17,000 321,661 1.3
INVESTMENT MANAGEMENT
Lloyds TSB Group PLC ...................................... UK 40,560 298,991 1.2
BANKS-REGIONAL
Invesco PLC ............................................... UK 32,700 145,022 0.6
INVESTMENT MANAGEMENT
Invesco Funding LLC - F/P-/- .............................. UK 6,540 29,004 0.1
OTHER FINANCIAL
------------
2,247,441
------------
Capital Goods (9.1%)
Cardo "AB" ................................................ SWDN 30,960 858,914 3.5
MACHINERY & ENGINEERING
Premier Farnell PLC ....................................... UK 58,126 747,476 3.1
INDUSTRIAL COMPONENTS
Altran Technologies S.A. .................................. FR 1,083 348,525 1.4
MACHINERY & ENGINEERING
Pricer AB-/- .............................................. SWDN 11,057 272,668 1.1
INDUSTRIAL COMPONENTS
------------
2,227,583
------------
Technology (7.8%)
TT Tieto Oy "B" ........................................... FIN 9,700 803,850 3.3
SOFTWARE
Dassault Systemes S.A.-/- ................................. FR 12,470 576,075 2.4
COMPUTERS & PERIPHERALS
</TABLE>

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

F48
<PAGE>
GT GLOBAL VARIABLE EUROPE FUND

PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1996

TOTAL EQUITY INVESTMENTS (cost $20,558,111) ................. 24,726,922 100.8
------------ -----
</TABLE>

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

F49
<PAGE>
GT GLOBAL VARIABLE EUROPE FUND

PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1996

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NO. OF VALUE % OF NET
WARRANTS COUNTRY WARRANTS (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Sandoz AG Warrants, expire 9/26/97 (cost $209,964)-/- ..... SWTZ 6,850 $ 175,346 0.7
PHARMACEUTICALS
------------ -----

TOTAL INVESTMENTS (cost $20,768,075) * ..................... 24,902,268 101.5
Other Assets and Liabilities ................................ (365,219) (1.5)
------------ -----

NET ASSETS .................................................. $ 24,537,049 100.0
------------ -----
------------ -----
</TABLE>

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

-/- Non-income producing security.
{\/} U.S. currency denominated.
* For Federal income tax purposes, cost is $20,860,702 and
appreciation (depreciation) is as follows:

<TABLE>
<S> <C>
Unrealized appreciation: $ 4,431,340
Unrealized depreciation: (389,774)
-------------
Net unrealized appreciation: $ 4,041,566
-------------
-------------
</TABLE>

Abbreviation:
ADR--American Depository Receipt

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

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

<TABLE>
<CAPTION>
PERCENTAGE OF NET ASSETS {D}
-------------------------------------------
COUNTRY (COUNTRY CODE/CURRENCY CODE) EQUITY WARRANTS OTHER TOTAL
- -------------------------------------- ------ ------------- ---------- -----
<S> <C> <C> <C> <C>
Austria (ASTRI/ATS) .................. 1.7 1.7
Denmark (DEN/DKK) .................... 5.0 5.0
Finland (FIN/FIM) .................... 4.9 4.9
France (FR/FRF) ...................... 19.9 19.9
Germany (GER/DEM) .................... 14.2 14.2
Italy (ITLY/ITL) ..................... 10.5 10.5
Netherlands (NETH/NLG) ............... 8.2 8.2
Portugal (PORT/PTE) .................. 2.8 2.8
Spain (SPN/ESP) ...................... 2.0 2.0
Sweden (SWDN/SEK) .................... 8.6 8.6
Switzerland (SWTZ/CHF) ............... 5.2 0.7 5.9
United Kingdom (UK/GBP) .............. 17.8 17.8
United States & Other (US/USD) ....... (1.5) (1.5)
------ ----- ----- -----
Total ............................... 100.8 0.7 (1.5) 100.0
------ ----- ----- -----
------ ----- ----- -----
</TABLE>

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

{d} Percentages indicated are based on net assets of $24,537,049.

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

F50
<PAGE>
GT GLOBAL MONEY MARKET FUND

PORTFOLIO OF INVESTMENTS

December 31, 1996

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MATURITY PRINCIPAL VALUE % OF NET
SHORT-TERM INVESTMENTS YIELD DATE AMOUNT (NOTE 1) ASSETS
- ----------------------------------------------------------------- --------- --------- ----------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Commercial Paper - Discounted (37.2%)
Merrill Lynch & Co., Inc ...................................... 6.60% 02-Jan-97 750,000 $ 749,864 3.8
Coca Cola Co. ................................................. 5.31% 10-Jan-97 700,000 699,076 3.6
Schering Corp. ................................................ 5.35% 08-Apr-97 700,000 690,079 3.5
Transamerica Finance Corp. .................................... 5.42% 27-Jun-97 700,000 681,897 3.5
General Electric Capital Corp. ................................ 5.37% 09-Jan-97 600,000 599,293 3.0
Toronto - Dominion Holdings USA, Inc. ......................... 5.31% 13-Jan-97 600,000 598,948 3.0
AIG Funding, Inc. ............................................. 5.30% 15-Jan-97 600,000 598,770 3.0
Motorola, Inc. ................................................ 5.31% 17-Jan-97 600,000 598,605 3.0
Metlife Funding, Inc. ......................................... 5.35% 17-Jan-97 600,000 598,587 3.0
Ford Motor Credit Corp. ....................................... 5.55% 17-Jan-97 600,000 598,547 3.0
E.I. DuPont de Nemours & Co. .................................. 5.33% 30-Jan-97 600,000 597,448 3.0
Bear Stearns Cos., Inc. ....................................... 5.46% 18-Feb-97 350,000 347,503 1.8
------------ -----
Total Commercial Paper - Discounted (amortized cost
$7,358,617) .................................................... 7,358,617 37.2
------------ -----
Treasury Bills (12.6%)
United States Treasury Bills .................................. 5.04% 16-Jan-97 2,500,000 2,494,812 12.6
------------ -----
Total Treasury Bills (amortized cost $2,494,812) ................ 2,494,812 12.6
------------ -----
Government & Government Agency Obligations (12.5%)
Federal Home Loan Mortgage Corp. .............................. 5.29% 10-Mar-97 700,000 693,098 3.5
Federal Home Loan Bank ........................................ 5.24% 24-Mar-97 700,000 691,773 3.5
International Bank of Reconstruction and Development (World
Bank) ........................................................ 5.62% 18-Feb-97 600,000 595,640 3.0
Federal National Mortgage Association ......................... 5.47% 13-Feb-97 500,000 499,955 2.5
------------ -----
Total Government & Government Agency Obligations (amortized cost
$2,480,466) .................................................... 2,480,466 12.5
------------ -----
Medium-Term Notes (4.3%)
Morgan Stanley Group, Inc.+ ................................... 5.62% 26-Aug-97 600,000 600,000 3.0
Bear Stearns Cos., Inc.+ ...................................... 5.89% 14-Nov-97 250,000 250,000 1.3
------------ -----
Total Medium-Term Notes (amortized cost $850,000) ............... 850,000 4.3
------------ -----
TOTAL SHORT-TERM INVESTMENTS (cost $13,183,895) ................. 13,183,895 66.6
------------ -----

VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- ----------------------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Dated December 31, 1996, with State Street Bank & Trust Co.,
due January 2, 1997, for an effective yield of 6.25%,
collateralized by $3,715,000 U.S. Treasury Notes, 6.125% due
3/31/98 (market value of collateral is $3,793,454, including
accrued interest).
(cost $3,717,645) ........................................... 3,717,645 18.8
------------ -----
TOTAL SHORT-TERM INVESTMENTS (cost $16,901,540) * .............. 16,901,540 85.4
Other Assets and Liabilities .................................... 2,892,520 14.6
------------ -----
NET ASSETS ...................................................... $ 19,794,060 100.0
------------ -----
------------ -----
</TABLE>

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

+ The coupon rate shown on floating rate note represents the rate at
period end.
* For Federal income tax purposes, cost is $16,901,540

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

F51
<PAGE>
GT GLOBAL VARIABLE INTERNATIONAL FUND

PORTFOLIO OF INVESTMENTS

December 31, 1996

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

<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (26.3%)
DDI Corp. ................................................. JPN 14 $ 92,640 1.9
WIRELESS COMMUNICATIONS
Amway Japan Ltd. .......................................... JPN 2,600 83,552 1.7
RETAILERS-OTHER
Aoyama Trading Co., Ltd. .................................. JPN 3,000 79,820 1.7
RETAILERS-APPAREL
Koninklijke Ahold N.V.-/- ................................. NETH 1,200 75,087 1.6
RETAILERS-FOOD
Elsevier N.V. ............................................. NETH 4,100 69,363 1.5
BROADCASTING & PUBLISHING
Carrefour Supermarche ..................................... FR 105 68,432 1.4
RETAILERS-FOOD
Vodafone Group PLC ........................................ UK 15,127 63,979 1.3
WIRELESS COMMUNICATIONS
Addeco - Bearer-/- ........................................ SWTZ 230 57,758 1.2
CONSUMER SERVICES
Fielmann AG Preferred ..................................... GER 1,800 56,177 1.2
RETAILERS-OTHER
Portugal Telecom S.A. - Registered-/- ..................... PORT 1,930 55,036 1.2
TELEPHONE NETWORKS
Compass Group PLC ......................................... UK 5,000 53,082 1.1
RESTAURANTS
Sol Melia S.A.-/- ......................................... SPN 1,460 52,320 1.1
LEISURE & TOURISM
Stet Societa' Finanziaria Telefonica S.p.A.-/- ............ ITLY 11,000 50,048 1.0
TELEPHONE NETWORKS
Telecom Corporation of New Zealand Ltd. - ADR{\/} ......... NZ 600 48,600 1.0
TELEPHONE NETWORKS
Burton Group PLC .......................................... UK 17,350 46,346 1.0
RETAILERS-APPAREL
Rentokil Group PLC ........................................ UK 6,000 45,308 0.9
CONSUMER SERVICES
Cordiant PLC-/- ........................................... UK 25,000 44,735 0.9
BROADCASTING & PUBLISHING
Hotel Properties Ltd. ..................................... SING 26,000 42,007 0.9
LEISURE & TOURISM
International CableTel, Inc.-/-{\/} ....................... UK 1,500 37,875 0.8
CABLE TELEVISION
Telecom Italia Mobile S.p.A. - Di Risp .................... ITLY 20,000 29,056 0.6
TELEPHONE NETWORKS
PMP Communications Ltd. ................................... AUSL 10,000 27,012 0.6
BROADCASTING & PUBLISHING
Fast Retailing Co., Ltd. .................................. JPN 1,040 26,683 0.6
RETAILERS-APPAREL
Woolworths Ltd. ........................................... AUSL 10,500 25,276 0.5
RETAILERS-OTHER
Nissen Co. ................................................ JPN 2,800 19,592 0.4
RETAILERS-OTHER
Telecel - Comunicacaoes Pessoais, S.A.-/- ................. PORT 170 10,858 0.2
TELECOM - OTHER
</TABLE>

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

F52
<PAGE>
GT GLOBAL VARIABLE INTERNATIONAL FUND

PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1996

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Services (Continued)
Dixons Group PLC .......................................... UK 146 $ 1,358 --
RETAILERS-OTHER
------------
1,262,000
------------
Capital Goods (17.0%)
General Electric PLC-/- ................................... UK 37,670 247,048 5.2
AEROSPACE/DEFENSE
Siebe PLC ................................................. UK 7,063 131,101 2.7
INDUSTRIAL COMPONENTS
Telefonaktiebolaget LM Ericsson "B" ....................... SWDN 2,640 81,766 1.7
TELECOM EQUIPMENT
Murata Manufacturing Co., Ltd. ............................ JPN 2,000 66,517 1.4
ELECTRICAL PLANT/EQUIPMENT
Canon, Inc. ............................................... JPN 3,000 66,344 1.4
OFFICE EQUIPMENT
Premier Farnell PLC ....................................... UK 4,500 57,868 1.2
INDUSTRIAL COMPONENTS
Smiths Industries PLC ..................................... UK 4,100 56,305 1.2
AEROSPACE/DEFENSE
NBM-Amstelland N.V. ....................................... NETH 2,376 48,456 1.0
CONSTRUCTION
British Aerospace PLC ..................................... UK 1,700 37,260 0.8
AEROSPACE/DEFENSE
Cheung Kong Infrastructure Holdings-/- .................... HK 6,000 15,904 0.3
CONSTRUCTION
Kurita Water Industries ................................... JPN 200 4,043 0.1
ELECTRICAL PLANT/EQUIPMENT
------------
812,612
------------
Finance (13.9%)
Nichiei Co., Ltd. ......................................... JPN 1,000 73,860 1.5
INVESTMENT MANAGEMENT
Axa Group ................................................. FR 1,142 72,753 1.5
INSURANCE - MULTI-LINE
Peregrine Investment Holdings Ltd. ........................ HK 40,000 68,529 1.4
INVESTMENT MANAGEMENT
Invesco PLC ............................................... UK 10,500 46,567 1.0
INVESTMENT MANAGEMENT
LLoyds TSB Group PLC ...................................... UK 6,300 46,441 1.0
BANKS-REGIONAL
Norbanken AB-/- ........................................... SWDN 1,500 45,467 1.0
BANKS-REGIONAL
Amoy Properties Ltd. ...................................... HK 31,000 44,692 0.9
REAL ESTATE
Sparbanken Sverige AB "A" ................................. SWDN 2,500 42,935 0.9
INVESTMENT MANAGEMENT
Bank of Montreal .......................................... CAN 1,300 41,396 0.9
BANKS-REGIONAL
PT Bank Internasional Indonesia - Foreign ................. INDO 41,386 40,755 0.9
BANKS-MONEY CENTER
</TABLE>

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

F53
<PAGE>
GT GLOBAL VARIABLE INTERNATIONAL FUND

PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1996

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Finance (Continued)
Henderson Land Development Co., Ltd. ...................... HK 4,000 $ 40,341 0.8
REAL ESTATE
Bangkok Bank Co., Ltd. - Foreign .......................... THAI 4,000 38,688 0.8
BANKS-MONEY CENTER
Diamond Lease Co., Ltd. ................................... JPN 3,000 38,096 0.8
OTHER FINANCIAL
Siam City Bank Ltd. - Foreign ............................. THAI 16,500 15,444 0.3
BANKS-REGIONAL
Invesco Funding LLC-/- .................................... UK 2,100 9,313 0.2
OTHER FINANCIAL
------------
665,277
------------
Health Care (12.6%)
Novartis AG-/- ............................................ SWTZ 95 108,845 2.3
PHARMACEUTICALS
Takeda Chemical Industries ................................ JPN 5,000 104,959 2.2
PHARMACEUTICALS
Astra AB "B" Free ......................................... SWDN 1,730 83,547 1.7
PHARMACEUTICALS
Schering AG ............................................... GER 880 74,325 1.6
PHARMACEUTICALS
Bayer AG .................................................. GER 1,450 59,207 1.2
PHARMACEUTICALS
Sanofi S.A. ............................................... FR 540 53,792 1.1
PHARMACEUTICALS
Zeneca Group PLC .......................................... UK 1,900 53,600 1.1
PHARMACEUTICALS
Siemens AG - New-/- ....................................... GER 900 42,425 0.9
MEDICAL TECHNOLOGY & SUPPLIES
M.L. Laboratories PLC-/- .................................. UK 7,430 25,954 0.5
PHARMACEUTICALS
------------
606,654
------------
Consumer Non-Durables (8.4%)
Hoya Corp. ................................................ JPN 3,000 117,916 2.5
OTHER CONSUMER GOODS
Gucci Group - NY Registered Shares{\/} .................... ITLY 1,800 114,975 2.4
TEXTILES & APPAREL
Parmalat Finanziaria S.p.A. ............................... ITLY 36,000 55,129 1.2
FOOD
Giordano International Ltd. ............................... HK 54,000 46,082 1.0
TEXTILES & APPAREL
PT Hanjaya Mandala Sampoerna .............................. INDO 7,000 37,357 0.8
TOBACCO
EMAIL Ltd. ................................................ AUSL 8,000 25,868 0.5
HOUSEHOLD PRODUCTS
------------
397,327
------------
</TABLE>

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

F54
<PAGE>
GT GLOBAL VARIABLE INTERNATIONAL FUND

PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1996

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Materials/Basic Industry (7.6%)
Kimberly-Clark de Mexico, S.A. de C.V. "A" ................ MEX 5,000 $ 98,831 2.1
PAPER/PACKAGING
Zag Industries Ltd.-/-{\/} ................................ ISRL 4,000 66,000 1.4
MISC. MATERIALS & COMMODITIES
SGL Carbon AG ............................................. GER 400 50,455 1.1
METALS - NON-FERROUS
Broken Hill Proprietary Co., Ltd. ......................... AUSL 2,000 28,474 0.6
MISC. MATERIALS & COMMODITIES
QNI Ltd. .................................................. AUSL 14,000 28,140 0.6
METALS - NON-FERROUS
Fletcher Challenge Paper .................................. NZ 13,000 26,543 0.6
PAPER/PACKAGING
Pohang Iron & Steel Co., Ltd.-/- .......................... KOR 450 26,124 0.5
METALS - STEEL
Leighton Holdings Ltd. .................................... AUSL 6,000 25,741 0.5
BUILDING MATERIALS & COMPONENTS
TPI Polene Co., Ltd. - Foreign ............................ THAI 5,250 9,664 0.2
CHEMICALS
------------
359,972
------------
Multi-Industry/Miscellaneous (3.4%)
Pricer AB-/- .............................................. SWDN 2,594 63,969 1.3
MISCELLANEOUS
Parkway Holdings Ltd. ..................................... SING 13,000 51,115 1.1
MULTI-INDUSTRY
Keppel Corp., Ltd. ........................................ SING 3,000 23,377 0.5
CONGLOMERATE
Wrightson Ltd. ............................................ NZ 25,000 21,728 0.5
MULTI-INDUSTRY
------------
160,189
------------
Energy (2.8%)
Petroleo Brasileiro S.A. (Petrobras) - ADR-/- {\/} ........ BRZL 3,000 46,500 1.0
GAS PRODUCTION & DISTRIBUTION
Astec (BSR) PLC ........................................... UK 17,300 46,485 1.0
ENERGY EQUIPMENT & SERVICES
China Light & Power Co., Ltd. ............................. HK 8,500 37,807 0.8
ELECTRICAL & GAS UTILITIES
------------
130,792
------------
Consumer Durables (2.6%)
Volkswagen AG ............................................. GER 170 70,741 1.5
AUTOMOBILES
Sharp Corp. ............................................... JPN 3,000 42,761 0.9
CONSUMER ELECTRONICS
</TABLE>

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

F55
<PAGE>
GT GLOBAL VARIABLE INTERNATIONAL FUND

PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1996

TOTAL EQUITY INVESTMENTS (cost $4,312,269) .................. 4,617,149 96.6
------------ -----
<CAPTION>

NO. OF VALUE % OF NET
WARRANTS COUNTRY WARRANTS (NOTE 1) ASSETS
- ------------------------------------------------------------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Peregrine Investment Holdings Ltd. Warrants, expire 5/15/98
(cost $0)-/- ............................................. HK 4,000 1,280 --
INVESTMENT MANAGEMENT
------------ -----

TOTAL INVESTMENTS (cost $4,312,269) * ...................... 4,618,429 96.6
Other Assets and Liabilities ................................ 163,419 3.4
------------ -----

NET ASSETS .................................................. $ 4,781,848 100.0
------------ -----
------------ -----
</TABLE>

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

-/- Non-income producing security.
{\/} 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.
* For Federal income tax purposes, cost is $4,324,828 and
appreciation (depreciation) is as follows:

<TABLE>
<S> <C>
Unrealized appreciation: $ 593,220
Unrealized depreciation: (299,619)
-------------
Net unrealized appreciation: $ 293,601
-------------
-------------
</TABLE>

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

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

F56
<PAGE>
GT GLOBAL VARIABLE INTERNATIONAL FUND

PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1996

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

<TABLE>
<CAPTION>
PERCENTAGE OF NET ASSETS {D}
------------------------------
COUNTRY (COUNTRY CODE/CURRENCY CODE) EQUITY OTHER TOTAL
- -------------------------------------- ------ ------------- -----
<S> <C> <C> <C>
Australia (AUSL/AUD) ................. 3.3 3.3
Brazil (BRZL/BRL) .................... 1.0 1.0
Canada (CAN/CAD) ..................... 0.9 0.9
France (FR/FRF) ...................... 5.0 5.0
Germany (GER/DEM) .................... 7.5 7.5
Hong Kong (HK/HKD) ................... 5.2 5.2
Indonesia (INDO/IDR) ................. 1.7 1.7
Israel (ISRL/ILS) .................... 1.4 1.4
Italy (ITLY/ITL) ..................... 5.2 5.2
Japan (JPN/JPY) ...................... 18.1 18.1
Korea (KOR/KRW) ...................... 0.7 0.7
Mexico (MEX/MXN) ..................... 2.1 2.1
Netherlands (NETH/NLG) ............... 4.1 4.1
New Zealand (NZ/NZD) ................. 2.1 2.1
Portugal (PORT/PTE) .................. 1.4 1.4
Singapore (SING/SGD) ................. 2.5 2.5
Spain (SPN/ESP) ...................... 1.1 1.1
Sweden (SWDN/SEK) .................... 6.6 6.6
Switzerland (SWTZ/CHF) ............... 3.5 3.5
Thailand (THAI/THB) .................. 1.3 1.3
United Kingdom (UK/GBP) .............. 21.9 21.9
Other................ ................ 3.4 3.4
------ --- -----
Total ............................... 96.6 3.4 100.0
------ --- -----
------ --- -----
</TABLE>

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

{d} Percentages indicated are based on net assets of $4,781,848.

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

FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
DECEMBER 31, 1996

<TABLE>
<CAPTION>
MARKET VALUE CONTRACT DELIVERY UNREALIZED
CONTRACTS TO SELL: (U.S. DOLLARS) PRICE DATE APPRECIATION
- ---------------------------------------- -------------- ----------- -------- --------------
<S> <C> <C> <C> <C>
French Francs........................... 58,045 5.09700 02/06/97 $ 813
French Francs........................... 67,768 5.07000 02/19/97 1,266
Japanese Yen............................ 62,198 109.99999 01/07/97 3,257
Japanese Yen............................ 88,589 111.74500 02/06/97 2,690
Japanese Yen............................ 28,684 110.40002 02/12/97 1,207
Japanese Yen............................ 181,668 110.48000 02/12/97 7,507
Swiss Francs............................ 33,904 1.31200 03/19/97 395
-------------- --------------
Total Contracts to Sell (Receivable
amount $537,991)..................... 520,856 17,135
-------------- --------------
THE VALUE OF CONTRACTS TO SELL AS
PERCENTAGE OF NET ASSETS IS 10.89%.
Total Open Forward Foreign Currency
Contracts............................ $ 17,135
--------------
--------------
</TABLE>

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

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

F57
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

STATEMENTS OF ASSETS
AND LIABILITIES
December 31, 1996

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

<TABLE>
<CAPTION>
GT GLOBAL
-------------------------------------------------
VARIABLE VARIABLE
VARIABLE GLOBAL U.S. VARIABLE
STRATEGIC GOVERNMENT GOVERNMENT LATIN
INCOME INCOME INCOME AMERICA
FUND FUND FUND FUND
---------- ---------- ------------- ----------
<S> <C> <C> <C> <C>
Assets:
Investments in securities: (Note 1)
At identified cost.................. $27,042,841 $9,594,616 $5,289,663 $21,197,534
---------- ---------- ------------- ----------
---------- ---------- ------------- ----------
At value............................ $29,094,442 $9,800,840 $5,285,366 $21,715,194
Repurchase agreement, at value and
cost (Note 1)........................ 2,951,512 52,009 27,005 --
U.S. currency......................... 9,975 254 752 153,753
Foreign currencies (cost $9,902;
$6,763; $0; $254,956; $9,189; $114;
$0; $62,133; $50,152; $0; $11,455;
$929,692; $0; $331,686,
respectively)........................ 10,015 6,764 -- 253,450
Dividends and dividend withholding tax
reclaims receivable.................. -- -- -- 7,434
Interest and interest withholding tax
reclaims receivable.................. 643,653 301,107 116,284 --
Receivable for Fund shares sold....... 29,228 381 55,298 290,344
Receivable for initial & variation
margin (Note 1)...................... -- 3,600 16,650 25,000
Receivable for open forward foreign
currency contracts, net (Note 1)..... 46,177 54,373 2,608 --
Receivable for securities sold........ 485,963 220,051 -- 826,793
Unamortized organizational costs (Note
1)................................... 6,984 6,984 6,984 6,984
Miscellaneous receivable.............. -- -- -- 2,398
Cash held as collateral for securities
loaned (Note 1)...................... 2,082,839 2,625,278 -- 512,900
---------- ---------- ------------- ----------
Total assets........................ 35,360,788 13,071,641 5,510,947 23,794,250
---------- ---------- ------------- ----------
Liabilities:
Payable for loan outstanding (Note
1)................................... -- -- -- --
Distribution payable (Note 1)......... -- -- -- --
Payable for custodian fees (Note 1)... 3,614 150 1,018 644
Payable for forward foreign currency
contracts -- closed (Note 1)......... -- 13,962 -- --
Payable for fund accounting fees (Note
2)................................... 607 204 107 439
Payable for Fund shares repurchased... 1,237,459 359 350 4,641
Payable for investment management and
administration fees (Note 2)......... 39,729 2,995 -- 40,855
Payable for printing and postage
expenses............................. 10,953 13,109 15,061 11,170
Payable for professional fees......... 15,496 11,753 7,108 13,736
Payable for registration and filing
fees................................. 64 964 965 965
Payable for securities purchased...... 249,763 -- -- 275,907
Payable for Trustees' fees and
expenses (Note 2).................... 1,701 2,404 1,815 1,713
Payable for variation margin (Note
1)................................... -- 1,122 -- --
Other accrued expenses................ 642 1,972 1,597 3,627
Collateral for securities loaned (Note
1)................................... 2,082,839 2,625,278 -- 512,900
---------- ---------- ------------- ----------
Total liabilities................... 3,642,867 2,674,272 28,021 866,597
---------- ---------- ------------- ----------
Net assets.............................. $31,717,921 $10,397,369 $5,482,926 $22,927,653
---------- ---------- ------------- ----------
---------- ---------- ------------- ----------
Shares outstanding...................... 2,370,983 909,292 480,489 1,549,190
Net asset value per share............... $ 13.38 $ 11.43 $ 11.41 $ 14.80
---------- ---------- ------------- ----------
---------- ---------- ------------- ----------
Net assets consist of:
Paid in capital (Note 4).............. $31,469,300 $10,919,335 $5,435,790 $25,957,235
Undistributed/Accumulated net
investment income (loss)............. 461,426 427,910 21,121 --
Accumulated net realized gain (loss)
on investments and foreign currency
transactions......................... (2,308,126) (1,209,346) 25,209 (3,538,441)
Net unrealized appreciation
(depreciation) on translation of
assets and liabilities in foreign
currencies........................... 43,720 54,383 2,603 (2,051)
Net unrealized appreciation
(depreciation) of investments........ 2,051,601 205,087 (1,797) 510,910
---------- ---------- ------------- ----------
Total -- representing net assets
applicable to capital shares
outstanding............................ $31,717,921 $10,397,369 $5,482,926 $22,927,653
---------- ---------- ------------- ----------
---------- ---------- ------------- ----------
</TABLE>

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

F58
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

STATEMENTS OF ASSETS
AND LIABILITIES (cont'd)
December 31, 1996

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>

GT GLOBAL
-----------------------------------------------------------------------------------
VARIABLE VARIABLE VARIABLE VARIABLE VARIABLE
GROWTH & TELECOM- EMERGING VARIABLE NATURAL VARIABLE NEW
INCOME MUNICATIONS MARKETS INFRASTRUCTURE RESOURCES AMERICA PACIFIC
FUND FUND FUND FUND FUND FUND FUND
---------- ---------- ---------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Assets:
Investments in securities: (Note 1)
At identified cost.................. $27,955,926 $55,839,502 $14,294,997 $5,102,840 $12,137,699 $32,982,916 $23,847,969
---------- ---------- ---------- ----------- ---------- ---------- ----------
---------- ---------- ---------- ----------- ---------- ---------- ----------
At value............................ $34,821,191 $61,788,028 $15,315,268 $5,326,153 $13,959,560 $38,249,964 $31,979,512
Repurchase agreement, at value and
cost (Note 1)........................ 1,156,201 982,170 2,981,518 740,128 2,441,424 3,375,586 2,081,361
U.S. currency......................... 46 142 80 337 930 497 661
Foreign currencies (cost $9,902;
$6,763; $0; $254,956; $9,189; $114;
$0; $62,133; $50,152; $0; $11,455;
$929,692; $0; $331,686,
respectively)........................ 9,205 114 -- 62,394 48,489 -- 10,690
Dividends and dividend withholding tax
reclaims receivable.................. 81,774 43,179 5,968 7,445 -- 29,580 35,242
Interest and interest withholding tax
reclaims receivable.................. 248,848 -- -- -- -- -- --
Receivable for Fund shares sold....... 11,452 586,347 767 19,350 38,162 78,876 298,514
Receivable for initial & variation
margin (Note 1)...................... -- -- -- -- -- -- --
Receivable for open forward foreign
currency contracts, net (Note 1)..... 36,828 25,073 -- -- -- -- --
Receivable for securities sold........ 132,705 -- -- -- 7,106 106,451 183,491
Unamortized organizational costs (Note
1)................................... 6,984 11,273 -- -- -- 6,984 6,984
Miscellaneous receivable.............. 28 -- 1,256 217 -- -- 1,820
Cash held as collateral for securities
loaned (Note 1)...................... 3,009,362 3,293,000 14,400 151,200 330,600 1,695,100 3,588,044
---------- ---------- ---------- ----------- ---------- ---------- ----------
Total assets........................ 39,514,624 66,729,326 18,319,257 6,307,224 16,826,271 43,543,038 38,186,319
---------- ---------- ---------- ----------- ---------- ---------- ----------
Liabilities:
Payable for loan outstanding (Note
1)................................... -- -- -- -- -- -- --
Distribution payable (Note 1)......... -- -- -- -- -- -- --
Payable for custodian fees (Note 1)... 1,832 3,240 17,598 2,152 2,233 4,490 2,166
Payable for forward foreign currency
contracts -- closed (Note 1)......... -- -- -- -- -- -- --
Payable for fund accounting fees (Note
2)................................... 700 2,295 334 118 309 838 665
Payable for Fund shares repurchased... 30 19,698 522,616 10,850 21,301 144,476 1,841,743
Payable for investment management and
administration fees (Note 2)......... 41,954 52,933 22,609 85 27,211 23,729 58,019
Payable for printing and postage
expenses............................. 10,323 12,603 11,154 14,050 14,071 11,277 10,007
Payable for professional fees......... 15,956 13,625 10,607 10,891 9,773 13,765 13,661
Payable for registration and filing
fees................................. 129 334 142 697 698 959 75
Payable for securities purchased...... -- 50,566 110,000 59,049 109,500 -- --
Payable for Trustees' fees and
expenses (Note 2).................... 1,566 1,537 3,092 2,457 2,594 1,511 1,516
Payable for variation margin (Note
1)................................... -- -- -- -- -- -- --
Other accrued expenses................ 9 21,666 2,781 1,705 28 284 223
Collateral for securities loaned (Note
1)................................... 3,009,362 3,293,000 14,400 151,200 330,600 1,695,100 3,588,044
---------- ---------- ---------- ----------- ---------- ---------- ----------
Total liabilities................... 3,081,861 3,471,497 715,333 253,254 518,318 1,896,429 5,516,119
---------- ---------- ---------- ----------- ---------- ---------- ----------
Net assets.............................. $36,432,763 $63,257,829 $17,603,924 $6,053,970 $16,307,953 $41,646,609 $32,670,200
---------- ---------- ---------- ----------- ---------- ---------- ----------
---------- ---------- ---------- ----------- ---------- ---------- ----------
Shares outstanding...................... 2,206,150 3,488,076 1,234,282 367,560 777,307 2,112,869 1,812,998
Net asset value per share............... $ 16.51 $ 18.14 $ 14.26 $ 16.47 $ 20.98 $ 19.71 $ 18.02
---------- ---------- ---------- ----------- ---------- ---------- ----------
---------- ---------- ---------- ----------- ---------- ---------- ----------
Net assets consist of:
Paid in capital (Note 4).............. $29,649,056 $49,539,563 $15,220,114 $5,354,662 $13,806,302 $34,829,411 $24,962,501
Undistributed/Accumulated net
investment income (loss)............. 745,652 -- 83,731 45,357 -- 196,399 163,089
Accumulated net realized gain (loss)
on investments and foreign currency
transactions......................... (868,301) 7,745,096 1,277,173 430,634 681,472 1,353,751 (586,837)
Net unrealized appreciation
(depreciation) on translation of
assets and liabilities in foreign
currencies........................... 41,091 24,644 2,635 4 (1,682) -- (96)
Net unrealized appreciation
(depreciation) of investments........ 6,865,265 5,948,526 1,020,271 223,313 1,821,861 5,267,048 8,131,543
---------- ---------- ---------- ----------- ---------- ---------- ----------
Total -- representing net assets
applicable to capital shares
outstanding............................ $36,432,763 $63,257,829 $17,603,924 $6,053,970 $16,307,953 $41,646,609 $32,670,200
---------- ---------- ---------- ----------- ---------- ---------- ----------
---------- ---------- ---------- ----------- ---------- ---------- ----------

VARIABLE MONEY VARIABLE
EUROPE MARKET INTERNATIONAL
FUND FUND FUND
---------- ---------- -----------
<S> <C> <C> <C>
Assets:
Investments in securities: (Note 1)
At identified cost.................. $20,768,075 $13,183,895 $4,312,269
---------- ---------- -----------
---------- ---------- -----------
At value............................ $24,902,268 $13,183,895 $4,618,429
Repurchase agreement, at value and
cost (Note 1)........................ -- 3,717,645 --
U.S. currency......................... 985 160 47,661
Foreign currencies (cost $9,902;
$6,763; $0; $254,956; $9,189; $114;
$0; $62,133; $50,152; $0; $11,455;
$929,692; $0; $331,686,
respectively)........................ 942,215 -- 336,085
Dividends and dividend withholding tax
reclaims receivable.................. 32,516 -- 2,619
Interest and interest withholding tax
reclaims receivable.................. -- 12,813 --
Receivable for Fund shares sold....... 141,981 3,616,093 3,103
Receivable for initial & variation
margin (Note 1)...................... -- -- --
Receivable for open forward foreign
currency contracts, net (Note 1)..... -- -- 17,135
Receivable for securities sold........ 235,058 -- 119,198
Unamortized organizational costs (Note
1)................................... 6,984 6,984 --
Miscellaneous receivable.............. 2,725 -- --
Cash held as collateral for securities
loaned (Note 1)...................... 1,859,691 -- 37,400
---------- ---------- -----------
Total assets........................ 28,124,423 20,537,590 5,181,630
---------- ---------- -----------
Liabilities:
Payable for loan outstanding (Note
1)................................... 239,000 -- --
Distribution payable (Note 1)......... -- 77,247 --
Payable for custodian fees (Note 1)... 4,518 1,616 2,966
Payable for forward foreign currency
contracts -- closed (Note 1)......... -- -- --
Payable for fund accounting fees (Note
2)................................... 479 390 94
Payable for Fund shares repurchased... 558,699 619,060 106,327
Payable for investment management and
administration fees (Note 2)......... 49,361 23,866 57
Payable for printing and postage
expenses............................. 12,039 9,288 11,817
Payable for professional fees......... 13,240 10,699 11,977
Payable for registration and filing
fees................................. 959 591 75
Payable for securities purchased...... 848,135 -- 225,661
Payable for Trustees' fees and
expenses (Note 2).................... 559 254 2,621
Payable for variation margin (Note
1)................................... -- -- --
Other accrued expenses................ 694 519 787
Collateral for securities loaned (Note
1)................................... 1,859,691 -- 37,400
---------- ---------- -----------
Total liabilities................... 3,587,374 743,530 399,782
---------- ---------- -----------
Net assets.............................. $24,537,049 $19,794,060 $4,781,848
---------- ---------- -----------
---------- ---------- -----------
Shares outstanding...................... 1,149,548 19,794,060 401,631
Net asset value per share............... $ 21.34 $ 1.00 $ 11.91
---------- ---------- -----------
---------- ---------- -----------
Net assets consist of:
Paid in capital (Note 4).............. $18,097,291 $19,794,060 $4,559,117
Undistributed/Accumulated net
investment income (loss)............. 67,215 -- 6,759
Accumulated net realized gain (loss)
on investments and foreign currency
transactions......................... 2,235,969 -- (106,863)
Net unrealized appreciation
(depreciation) on translation of
assets and liabilities in foreign
currencies........................... 2,381 -- 16,675
Net unrealized appreciation
(depreciation) of investments........ 4,134,193 -- 306,160
---------- ---------- -----------
Total -- representing net assets
applicable to capital shares
outstanding............................ $24,537,049 $19,794,060 $4,781,848
---------- ---------- -----------
---------- ---------- -----------
</TABLE>

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

F59
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

STATEMENTS OF OPERATIONS

Year ended December 31, 1996

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

<TABLE>
<CAPTION>
GT GLOBAL
-------------------------------------------------
VARIABLE VARIABLE
VARIABLE GLOBAL U.S. VARIABLE
STRATEGIC GOVERNMENT GOVERNMENT LATIN
INCOME INCOME INCOME AMERICA
FUND FUND FUND FUND
---------- ---------- ------------- ----------
<S> <C> <C> <C> <C>
Investment income:* (Note 1)
Dividend income....................... -- -- -- $ 464,786
Interest income....................... $2,347,212 $ 786,214 $ 325,028 208,454
Other income.......................... -- -- -- 25,934
---------- ---------- ------------- ----------
Total investment income............. 2,347,212 786,214 325,028 699,174
---------- ---------- ------------- ----------
Expenses:
Amortization of organization costs
(Note 1)............................. 6,280 6,280 6,280 6,280
Audit fees............................ 33,620 27,594 16,470 27,424
Custodian fees (Note 1)............... 30,501 14,598 1,156 26,301
Fund accounting fees (Note 2)......... 6,725 2,707 1,305 5,629
Investment management and
administration fees (Note 2)......... 201,749 81,007 39,093 224,901
Legal fees............................ 2,844 2,856 2,720 2,720
Printing and postage expenses......... 19,040 19,040 19,040 19,040
Registration and filing fees.......... 366 366 366 366
Trustees' fees and expenses (Note
2)................................... 1,830 1,830 1,830 1,830
Other expenses........................ 2,721 2,992 2,970 5,095
---------- ---------- ------------- ----------
Total expenses before reimbursement
and reductions..................... 305,676 159,270 91,230 319,586
---------- ---------- ------------- ----------
Expenses reimbursed by Chancellor
LGT Asset Management, Inc. (Note
2)............................... (36,678) (51,249) (39,104) (38,459)
Expense reductions (Notes 1 &
5)............................... (3,554) (5,008) -- (17,907)
---------- ---------- ------------- ----------
Total net expenses.................. 265,444 103,013 52,126 263,220
---------- ---------- ------------- ----------
Net investment income (loss)............ 2,081,768 683,201 272,902 435,954
---------- ---------- ------------- ----------
Net realized and unrealized gain (loss)
on investments and foreign currencies:
(Note 1)
Net realized gain on investments...... 2,173,468 46,107 26,712 2,246,738
Net realized gain (loss) on foreign
currency transactions................ (248,534) (187,249) (479) (257,557)
---------- ---------- ------------- ----------
Net realized gain (loss) during the
year............................... 1,924,934 (141,142) 26,233 1,989,181
---------- ---------- ------------- ----------
Net change in unrealized appreciation
(depreciation) on translation of
assets and liabilities in foreign
currencies........................... 137,267 120,434 2,603 5,649
Net change in unrealized appreciation
(depreciation) of investments........ 1,136,746 (38,711) (183,973) 2,060,350
---------- ---------- ------------- ----------
Net unrealized appreciation
(depreciation) during the year..... 1,274,013 81,723 (181,370) 2,065,999
---------- ---------- ------------- ----------
Net realized and unrealized gain
(loss) on investments and foreign
currencies........................... 3,198,947 (59,419) (155,137) 4,055,180
---------- ---------- ------------- ----------
Net increase in net assets resulting
from operations........................ $5,280,715 $ 623,782 $ 117,765 $4,491,134
---------- ---------- ------------- ----------
---------- ---------- ------------- ----------
*Net of foreign withholding tax of...... $ 0 $ 3,270 $ 0 $ 14,005
---------- ---------- ------------- ----------
---------- ---------- ------------- ----------
</TABLE>

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

F60
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

STATEMENTS OF OPERATIONS (cont'd)

Year ended December 31, 1996

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>

GT GLOBAL
-----------------------------------------------------------------------------------
VARIABLE VARIABLE VARIABLE VARIABLE VARIABLE
GROWTH & TELECOM- EMERGING VARIABLE NATURAL VARIABLE NEW
INCOME MUNICATIONS MARKETS INFRASTRUCTURE RESOURCES AMERICA PACIFIC
FUND FUND FUND FUND FUND FUND FUND
---------- ---------- ---------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Investment income:* (Note 1)
Dividend income....................... $ 711,290 $ 287,416 $ 256,601 $ 54,052 $ 17,205 $ 228,357 $ 469,393
Interest income....................... 805,722 220,472 51,010 35,764 27,103 340,363 112,331
Other income.......................... -- 3,795 -- -- -- -- --
---------- ---------- ---------- ----------- ---------- ---------- ----------
Total investment income............. 1,517,012 511,683 307,611 89,816 44,308 568,720 581,724
---------- ---------- ---------- ----------- ---------- ---------- ----------
Expenses:
Amortization of organization costs
(Note 1)............................. 6,280 6,368 -- -- -- 6,280 6,280
Audit fees............................ 34,175 27,424 29,576 17,568 23,424 24,572 26,594
Custodian fees (Note 1)............... 20,947 21,455 39,444 8,085 17,808 32,750 48,714
Fund accounting fees (Note 2)......... 7,952 14,996 3,728 877 1,878 9,687 7,289
Investment management and
administration fees (Note 2)......... 317,655 599,839 149,042 35,043 75,133 290,233 291,308
Legal fees............................ 2,569 2,720 2,854 2,856 2,569 2,567 2,870
Printing and postage expenses......... 19,040 19,040 19,040 19,040 19,040 18,950 19,040
Registration and filing fees.......... 366 571 384 366 366 384 366
Trustees' fees and expenses (Note
2)................................... 1,921 1,830 1,830 1,830 1,466 1,931 1,830
Other expenses........................ 2,157 5,704 3,972 2,990 155 2,665 2,858
---------- ---------- ---------- ----------- ---------- ---------- ----------
Total expenses before reimbursement
and reductions..................... 413,062 699,947 249,870 88,655 141,839 390,019 407,149
---------- ---------- ---------- ----------- ---------- ---------- ----------
Expenses reimbursed by Chancellor
LGT Asset Management, Inc. (Note
2)............................... (15,992) -- (63,577) (44,850) (47,923) (3,077) (43,012)
Expense reductions (Notes 1 &
5)............................... (17,191) (29,085) (11,622) (1,263) (4,405) (19,314) (38,639)
---------- ---------- ---------- ----------- ---------- ---------- ----------
Total net expenses.................. 379,879 670,862 174,671 42,542 89,511 367,628 325,498
---------- ---------- ---------- ----------- ---------- ---------- ----------
Net investment income (loss)............ 1,137,133 (159,179) 132,940 47,274 (45,203) 201,092 256,226
---------- ---------- ---------- ----------- ---------- ---------- ----------
Net realized and unrealized gain (loss)
on investments and foreign currencies:
(Note 1)
Net realized gain on investments...... 331,192 7,950,400 2,631,325 433,070 734,600 1,558,862 1,271,333
Net realized gain (loss) on foreign
currency transactions................ 253,048 131,767 (47,388) (210) (1,978) (330) (23,252)
---------- ---------- ---------- ----------- ---------- ---------- ----------
Net realized gain (loss) during the
year............................... 584,240 8,082,167 2,583,937 432,860 732,622 1,558,532 1,248,081
---------- ---------- ---------- ----------- ---------- ---------- ----------
Net change in unrealized appreciation
(depreciation) on translation of
assets and liabilities in foreign
currencies........................... 20,456 3,633 2,710 145 (2,282) -- (2,246)
Net change in unrealized appreciation
(depreciation) of investments........ 3,228,349 1,763,783 826,703 211,063 1,760,818 4,688,367 7,190,989
---------- ---------- ---------- ----------- ---------- ---------- ----------
Net unrealized appreciation
(depreciation) during the year..... 3,248,805 1,767,416 829,413 211,208 1,758,536 4,688,367 7,188,743
---------- ---------- ---------- ----------- ---------- ---------- ----------
Net realized and unrealized gain
(loss) on investments and foreign
currencies........................... 3,833,045 9,849,583 3,413,350 644,068 2,491,158 6,246,899 8,436,824
---------- ---------- ---------- ----------- ---------- ---------- ----------
Net increase in net assets resulting
from operations........................ $4,970,178 $9,690,404 $3,546,290 $ 691,342 $2,445,955 $6,447,991 $8,693,050
---------- ---------- ---------- ----------- ---------- ---------- ----------
---------- ---------- ---------- ----------- ---------- ---------- ----------
*Net of foreign withholding tax of...... $ 74,410 $ 19,315 $ 11,959 $ 3,008 $ 920 $ 1,044 $ 30,313
---------- ---------- ---------- ----------- ---------- ---------- ----------
---------- ---------- ---------- ----------- ---------- ---------- ----------

VARIABLE MONEY VARIABLE
EUROPE MARKET INTERNATIONAL
FUND FUND FUND
---------- ---------- -----------
<S> <C> <C> <C>
Investment income:* (Note 1)
Dividend income....................... $ 264,104 -- $ 69,571
Interest income....................... 47,426 $ 832,921 4,764
Other income.......................... -- -- --
---------- ---------- -----------
Total investment income............. 311,530 832,921 74,335
---------- ---------- -----------
Expenses:
Amortization of organization costs
(Note 1)............................. 6,280 6,280 --
Audit fees............................ 27,396 15,807 28,568
Custodian fees (Note 1)............... 27,411 4,968 11,829
Fund accounting fees (Note 2)......... 4,997 3,883 1,137
Investment management and
administration fees (Note 2)......... 200,116 76,778 45,476
Legal fees............................ 2,567 2,569 2,844
Printing and postage expenses......... 19,040 16,040 19,040
Registration and filing fees.......... 384 166 366
Trustees' fees and expenses (Note
2)................................... 1,840 2,030 1,830
Other expenses........................ 3,966 2,153 2,139
---------- ---------- -----------
Total expenses before reimbursement
and reductions..................... 293,997 130,674 113,229
---------- ---------- -----------
Expenses reimbursed by Chancellor
LGT Asset Management, Inc. (Note
2)............................... (43,852) (15,508) (56,384)
Expense reductions (Notes 1 &
5)............................... (9,946) -- (4,131)
---------- ---------- -----------
Total net expenses.................. 240,199 115,166 52,714
---------- ---------- -----------
Net investment income (loss)............ 71,331 717,755 21,621
---------- ---------- -----------
Net realized and unrealized gain (loss)
on investments and foreign currencies:
(Note 1)
Net realized gain on investments...... 3,023,234 -- 144,521
Net realized gain (loss) on foreign
currency transactions................ 51,785 -- 73,839
---------- ---------- -----------
Net realized gain (loss) during the
year............................... 3,075,019 -- 218,360
---------- ---------- -----------
Net change in unrealized appreciation
(depreciation) on translation of
assets and liabilities in foreign
currencies........................... (10,428) -- 3,152
Net change in unrealized appreciation
(depreciation) of investments........ 2,087,986 -- 130,577
---------- ---------- -----------
Net unrealized appreciation
(depreciation) during the year..... 2,077,558 -- 133,729
---------- ---------- -----------
Net realized and unrealized gain
(loss) on investments and foreign
currencies........................... 5,152,577 -- 352,089
---------- ---------- -----------
Net increase in net assets resulting
from operations........................ $5,223,908 $ 717,755 $ 373,710
---------- ---------- -----------
---------- ---------- -----------
*Net of foreign withholding tax of...... $ 48,261 $ 0 $ 9,034
---------- ---------- -----------
---------- ---------- -----------
</TABLE>

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

F61
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

STATEMENTS OF CHANGES IN NET ASSETS

For the year ended December 31, 1996

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

<TABLE>
<CAPTION>
For the year ended December 31, 1995
GT GLOBAL
-------------------------------------------------
VARIABLE VARIABLE
VARIABLE GLOBAL U.S. VARIABLE
STRATEGIC GOVERNMENT GOVERNMENT LATIN
INCOME INCOME INCOME AMERICA
FUND FUND 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
---------- ---------- ------------- ----------
---------- ---------- ------------- ----------
**Includes undistributed net
investment income of:................ $ 230,962 $ 36,751 $ 10,272 $ 619,523
---------- ---------- ------------- ----------
---------- ---------- ------------- ----------
</TABLE>

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

+ 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.

F62
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

STATEMENTS OF CHANGES IN NET ASSETS (cont'd)
For the year ended December 31, 1996

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>

GT GLOBAL
------------------------------------------------------------------------------------
VARIABLE VARIABLE VARIABLE VARIABLE VARIABLE
GROWTH & TELECOM- EMERGING VARIABLE NATURAL VARIABLE NEW
INCOME MUNICATIONS MARKETS INFRASTRUCTURE RESOURCES AMERICA PACIFIC
FUND FUND FUND FUND FUND FUND FUND
---------- ---------- ---------- ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Increase (Decrease) in net assets
Operations:
Net investment income (loss).......... $1,137,133 $ (159,179) $ 132,940 $ 47,274 $ (45,203) $ 201,092 $ 256,226
Net realized gain (loss) on
investments and foreign currency
transactions......................... 584,240 8,082,167 2,583,937 432,860 732,622 1,558,532 1,248,081
Net change in unrealized appreciation
(depreciation) on translation of
assets and liabilities in foreign
currencies........................... 20,456 3,633 2,710 145 (2,282) -- (2,246)
Net change in unrealized appreciation
(depreciation) of investments........ 3,228,349 1,763,783 826,703 211,063 1,760,818 4,688,367 7,190,989
---------- ---------- ---------- ----------- ---------- ---------- -----------
Net increase (decrease) in net
assets resulting from operations... 4,970,178 9,690,404 3,546,290 691,342 2,445,955 6,447,991 8,693,050
---------- ---------- ---------- ----------- ---------- ---------- -----------
Distributions to shareholders: (Note 1)
From net investment income............ (736,222) (70,025) -- (9,314) -- (526,781) (329,817)
From net realized gain on
investments.......................... (103,267) (6,373,965) -- (17,455) -- (4,953,885) --
In excess of net investment income.... -- -- -- -- -- -- --
---------- ---------- ---------- ----------- ---------- ---------- -----------
Total distributions............... (839,489) (6,443,990) -- (26,769) -- (5,480,666) (329,817)
---------- ---------- ---------- ----------- ---------- ---------- -----------
Capital share transactions: (Note 4)
Increase from capital shares sold and
reinvested........................... 29,950,604 43,828,906 32,771,217 7,252,525 33,416,057 60,951,545 177,020,035
Decrease from capital shares
repurchased.......................... (28,213,931) (34,595,566) (27,696,344) (3,457,346) (20,919,006) (57,915,239) (175,737,852)
---------- ---------- ---------- ----------- ---------- ---------- -----------
Net increase (decrease) from capital
share transactions................. 1,736,673 9,233,340 5,074,873 3,795,179 12,497,051 3,036,306 1,282,183
---------- ---------- ---------- ----------- ---------- ---------- -----------
Total increase (decrease) in net
assets................................. 5,867,362 12,479,754 8,621,163 4,459,752 14,943,006 4,003,631 9,645,416
Net assets:
Beginning of period................... 30,565,401 50,778,075 8,982,761 1,594,218 1,364,947 37,642,978 23,024,784
---------- ---------- ---------- ----------- ---------- ---------- -----------
End of period**....................... $36,432,763 $63,257,829 $17,603,924 $6,053,970 $16,307,953 $41,646,609 $32,670,200
---------- ---------- ---------- ----------- ---------- ---------- -----------
---------- ---------- ---------- ----------- ---------- ---------- -----------
**Includes undistributed net
investment income of:................ $ 745,652 $ 0 $ 83,731 $ 45,357 $ 0 $ 196,399 $ 163,089
---------- ---------- ---------- ----------- ---------- ---------- -----------
---------- ---------- ---------- ----------- ---------- ---------- -----------

VARIABLE MONEY VARIABLE
EUROPE MARKET INTERNATIONAL
FUND FUND FUND
---------- ----------- ----------
<S> <C> <C> <C>
Increase (Decrease) in net assets
Operations:
Net investment income (loss).......... $ 71,331 $ 717,755 $ 21,621
Net realized gain (loss) on
investments and foreign currency
transactions......................... 3,075,019 -- 218,360
Net change in unrealized appreciation
(depreciation) on translation of
assets and liabilities in foreign
currencies........................... (10,428) -- 3,152
Net change in unrealized appreciation
(depreciation) of investments........ 2,087,986 -- 130,577
---------- ----------- ----------
Net increase (decrease) in net
assets resulting from operations... 5,223,908 717,755 373,710
---------- ----------- ----------
Distributions to shareholders: (Note 1)
From net investment income............ (155,793) (717,755) (526)
From net realized gain on
investments.......................... -- -- (14,157)
In excess of net investment income.... -- -- --
---------- ----------- ----------
Total distributions............... (155,793) (717,755) (14,683)
---------- ----------- ----------
Capital share transactions: (Note 4)
Increase from capital shares sold and
reinvested........................... 77,988,956 316,808,464 9,136,580
Decrease from capital shares
repurchased.......................... (74,160,899) (311,904,996) (8,376,359)
---------- ----------- ----------
Net increase (decrease) from capital
share transactions................. 3,828,057 4,903,468 760,221
---------- ----------- ----------
Total increase (decrease) in net
assets................................. 8,896,172 4,903,468 1,119,248
Net assets:
Beginning of period................... 15,640,877 14,890,592 3,662,600
---------- ----------- ----------
End of period**....................... $24,537,049 $19,794,060 $4,781,848
---------- ----------- ----------
---------- ----------- ----------
**Includes undistributed net
investment income of:................ $ 67,215 $ 0 $ 6,759
---------- ----------- ----------
---------- ----------- ----------
</TABLE>

- ----------------
+ The Variable Infrastructure and Variable Natural Resources Funds did
not commence operations until January 31, 1995.

For the year ended December 31, 1995
GT GLOBAL
------------------------------------------------------------------------------------
VARIABLE VARIABLE VARIABLE VARIABLE VARIABLE
GROWTH & TELECOM- EMERGING VARIABLE NATURAL VARIABLE NEW
INCOME MUNICATIONS MARKETS INFRASTRUCTURE RESOURCES AMERICA PACIFIC
FUND FUND FUND FUND+ FUND+ FUND FUND
---------- ---------- ---------- ----------- ---------- ---------- -----------
<S> <C> <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 $ 356,169
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 (1,511,248)
Net change in unrealized appreciation
(depreciation) on translation of
assets and liabilities in foreign
currencies........................... (6,017) (8,781) 119 (141) 600 -- 2,804
Net change in unrealized appreciation
(depreciation) of investments........ 4,101,938 2,438,359 714,821 12,250 61,043 96,985 1,718,248
---------- ---------- ---------- ----------- ---------- ---------- -----------
Net increase (decrease) in net
assets resulting from operations... 4,098,899 8,758,415 (487,299) 34,735 118,410 5,389,369 565,973
---------- ---------- ---------- ----------- ---------- ---------- -----------
Distributions to shareholders: (Note 1)
From net investment income............ (818,464) (80,457) (73,785) -- (62,702) (117,889) (90,012)
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) (90,012)
---------- ---------- ---------- ----------- ---------- ---------- -----------
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 95,990,038
Decrease from capital shares
repurchased.......................... (9,669,648) (17,197,275) (10,519,830) (826,452) (1,940,086) (55,970,932) (92,832,446)
---------- ---------- ---------- ----------- ---------- ---------- -----------
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 3,157,592
---------- ---------- ---------- ----------- ---------- ---------- -----------
Total increase (decrease) in net
assets................................. 4,985,163 14,749,548 1,716,136 1,494,218 1,264,947 22,385,712 3,633,553
Net assets:
Beginning of period................... 25,580,238 36,028,527 7,266,625 100,000 100,000 15,257,266 19,391,231
---------- ---------- ---------- ----------- ---------- ---------- -----------
End of period......................... $30,565,401 $50,778,075 $8,982,761 $1,594,218 $1,364,947 $37,642,978 $23,024,784
---------- ---------- ---------- ----------- ---------- ---------- -----------
---------- ---------- ---------- ----------- ---------- ---------- -----------
Includes undistributed net investment
income of:........................... $ 344,740 $ 70,025 $ 0 $ 7,607 $ 0 $ 522,417 $ 314,449
---------- ---------- ---------- ----------- ---------- ---------- -----------
---------- ---------- ---------- ----------- ---------- ---------- -----------

VARIABLE MONEY VARIABLE
EUROPE MARKET INTERNATIONAL
FUND FUND FUND
---------- ----------- ----------
<S> <C> <C> <C>
Increase (Decrease) in net assets
Operations:
Net investment income (loss).......... $ 171,620 $ 818,843 $ 30,463
Net realized gain (loss) on
investments and foreign currency
transactions......................... (670,205) -- (314,341)
Net change in unrealized appreciation
(depreciation) on translation of
assets and liabilities in foreign
currencies........................... (104,599) -- 7,389
Net change in unrealized appreciation
(depreciation) of investments........ 2,040,475 -- 312,493
---------- ----------- ----------
Net increase (decrease) in net
assets resulting from operations... 1,437,291 818,843 36,004
---------- ----------- ----------
Distributions to shareholders: (Note 1)
From net investment income............ (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............... (154,451) (818,843) (35,810)
---------- ----------- ----------
Capital share transactions: (Note 4)
Increase from capital shares sold and
reinvested........................... 39,895,470 179,670,442 15,020,503
Decrease from capital shares
repurchased.......................... (40,557,920) (184,253,572) (13,587,017)
---------- ----------- ----------
Net increase (decrease) from capital
share transactions................. (662,450) (4,583,130) 1,433,486
---------- ----------- ----------
Total increase (decrease) in net
assets................................. 620,390 (4,583,130) 1,433,680
Net assets:
Beginning of period................... 15,020,487 19,473,722 2,228,920
---------- ----------- ----------
End of period......................... $15,640,877 $14,890,592 $3,662,600
---------- ----------- ----------
---------- ----------- ----------
Includes undistributed net investment
income of:........................... $ 151,677 $ 0 $ 0
---------- ----------- ----------
---------- ----------- ----------
</TABLE>

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

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

F63
<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
YEAR ENDED DECEMBER 31, (COMMENCEMENT OF
--------------------------------------------------------- OPERATIONS) TO
1996 1995 1994 DECEMBER 31, 1993
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of
period............................ $ 11.86 $ 10.82 $ 14.57 $ 12.00
----------------- ----------------- ----------------- -----------------
Net investment income (loss)..... 0.95(a) 1.07(b) 1.71(c) 0.61(d)
Net realized and unrealized gain
(loss) on investments........... 1.50 0.93 (4.17) 2.57
----------------- ----------------- ----------------- -----------------
Net increase (decrease)
resulting from operations..... 2.45 2.00 (2.46) 3.18
----------------- ----------------- ----------------- -----------------
Distributions to shareholders:
From net investment income....... (0.85) (0.96) (0.79) (0.61)
From net realized gain on
investments..................... (0.08) -- (0.45) --
In excess of net realized gain on
investments..................... -- -- -- --
Return of capital................ -- -- (0.05) --
----------------- ----------------- ----------------- -----------------
Total distributions............ (0.93) (0.96) (1.29) (0.61)
----------------- ----------------- ----------------- -----------------
Net asset value, end of period..... $ 13.38 $ 11.86 $ 10.82 $ 14.57
----------------- ----------------- ----------------- -----------------
----------------- ----------------- ----------------- -----------------
Total investment return (f) +..... 21.58% 19.50% (17.09)% 27.5%
----------------- ----------------- ----------------- -----------------
----------------- ----------------- ----------------- -----------------
Ratios and supplemental data:
Net assets, end of period (in
000's)............................ $ 31,718 $ 25,345 $ 23,367 $ 18,089
Ratio of net investment income
(loss) to average net assets:
With reimbursement by Chancellor
LGT and expense reductions
(Notes 1, 2, & 5) ++............ 7.74% 9.59% 7.58% 6.6%
Without reimbursement by
Chancellor LGT and expense
reductions ++................... 7.59% 9.35% 7.43% 6.3%
Without expenses assumed by
Chancellor LGT (e) ++.......... --% --% --% 5.2%
Ratio of expenses to average net
assets:
With reimbursement by Chancellor
LGT and expense reductions
(Notes 1, 2, & 5) ++............ 0.99% 1.00% 1.00% 0.5%
Without reimbursement by
Chancellor LGT and expense
reductions ++................... 1.14% 1.24% 1.15% 0.9%
Without expenses assumed by
Chancellor LGT (e) ++.......... --% --% --% 1.9%
Portfolio turnover ++.............. 210% 193% 313% 245%
Average commission rate per share
paid on portfolio transactions.... N/A N/A N/A N/A
</TABLE>

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

<TABLE>
<CAPTION>
GT GLOBAL
-----------------------------------------------------------------------------
VARIABLE LATIN AMERICA FUND
-----------------------------------------------------------------------------
FEBRUARY 10, 1993
YEAR ENDED DECEMBER 31, (COMMENCEMENT OF
--------------------------------------------------------- OPERATIONS) TO
1996 1995 1994 DECEMBER 31, 1993
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of
period............................ $ 12.42 $ 19.17 $ 17.68 $ 12.00
----------------- ----------------- ----------------- --------
Net investment income (loss)..... 0.27(a) 0.51(b) 0.11(c) 0.04(d)
Net realized and unrealized gain
(loss) on investments........... 2.49 (5.10) 1.49 5.64
----------------- ----------------- ----------------- --------
Net increase (decrease)
resulting from operations..... 2.76 (4.59) 1.60 5.68
----------------- ----------------- ----------------- --------
Distributions to shareholders:
From net investment income....... (0.37) (0.16) (0.04) --
From net realized gain on
investments..................... -- (2.00) (0.07) --
In excess of net investment
income.......................... (0.01) -- -- --
Return of capital................ -- -- -- --
----------------- ----------------- ----------------- --------
Total distributions............ (0.38) (2.16) (0.11) --
----------------- ----------------- ----------------- --------
Net asset value, end of period..... $ 14.80 $ 12.42 $ 19.17 $ 17.68
----------------- ----------------- ----------------- --------
----------------- ----------------- ----------------- --------
Total investment return (f) +..... 22.48% (24.14)% 9.14% 47.3%
----------------- ----------------- ----------------- --------
----------------- ----------------- ----------------- --------
Ratios and supplemental data:
Net assets, end of period (in
000's)............................ $ 22,928 $ 19,771 $ 26,631 $ 8,240
Ratio of net investment income
(loss) to average net assets:
With reimbursement by Chancellor
LGT and expense reductions
(Notes 1, 2, & 5) ++............ 1.94% 4.43% 0.82% 1.0%
Without reimbursement by
Chancellor LGT and expense
reductions ++................... 1.69% 3.92% 0.49% 0.4%
Without expenses assumed by
Chancellor LGT (e) ++.......... --% --% --% (2.5)%
Ratio of expenses to average net
assets:
With reimbursement by Chancellor
LGT and expense reductions
(Notes 1, 2, & 5) ++............ 1.17% 1.18% 1.25% 0.7%
Without reimbursement by
Chancellor LGT and expense
reductions ++................... 1.42% 1.69% 1.58% 1.3%
Without expenses assumed by
Chancellor LGT (e) ++.......... --% --% --% 4.2%
Portfolio turnover ++.............. 102% 140% 185% 78%
Average commission rate per share
paid on portfolio transactions.... $ 0.0002 N/A N/A N/A
</TABLE>

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

(a) Includes reimbursement by Chancellor LGT Asset Management, Inc. of
Fund operating expenses of $0.02 for the Variable Strategic Income
Fund, $0.06 for the Variable Global Government Income Fund, $0.08 for
the Variable U.S. Government Income Fund, $0.02 for the Variable Latin
America Fund, and $0.01 for the Variable Growth & Income Fund (Note
2).
(b) Includes reimbursement by Chancellor 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, and $0.00
for the Variable Telecommunications Fund (Note 2).
(c) Includes reimbursement by Chancellor 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, and $0.01
for the Variable Telecommunications Fund (Note 2).

The accompanying notes are an integral part of the financial statements.
F64
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

FINANCIAL HIGHLIGHTS (cont'd)

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GT GLOBAL
-----------------------------------------------------------------------------
VARIABLE GLOBAL GOVERNMENT INCOME FUND
-----------------------------------------------------------------------------
FEBRUARY 10, 1993
YEAR ENDED DECEMBER 31, (COMMENCEMENT OF
--------------------------------------------------------- OPERATIONS) TO
1996 1995 1994 DECEMBER 31, 1993
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of
period............................ $ 11.51 $ 10.63 $ 12.53 $ 12.00
----------------- ----------------- -------- --------
Net investment income (loss)..... 0.72(a) 0.79(b) 0.77(c) 0.57(d)
Net realized and unrealized gain
(loss) on investments........... (0.06) 0.84 (1.85) 0.52
----------------- ----------------- -------- --------
Net increase (decrease)
resulting from operations..... 0.66 1.63 (1.08) 1.09
----------------- ----------------- -------- --------
Distributions to shareholders:
From net investment income....... (0.74) (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............ (0.74) (0.75) (0.82) (0.56)
----------------- ----------------- -------- --------
Net asset value, end of period..... $ 11.43 $ 11.51 $ 10.63 $ 12.53
----------------- ----------------- -------- --------
----------------- ----------------- -------- --------
Total investment return (f) +..... 6.17% 15.85% (8.70)% 9.5%
----------------- ----------------- -------- --------
----------------- ----------------- -------- --------
Ratios and supplemental data:
Net assets, end of period (in
000's)............................ $ 10,397 $ 11,944 $ 9,654 $ 6,136
Ratio of net investment income
(loss) to average net assets:
With reimbursement by Chancellor
LGT and expense reductions
(Notes 1, 2, & 5) ++............ 6.32% 7.03% 6.89% 6.1%
Without reimbursement by
Chancellor LGT and expense
reductions ++................... 5.80% 6.37% 6.21% 5.5%
Without expenses assumed by
Chancellor LGT (e) ++.......... --% --% --% 2.4%
Ratio of expenses to average net
assets:
With reimbursement by Chancellor
LGT and expense reductions
(Notes 1, 2, & 5) ++............ 0.95% 1.00% 1.00% 0.5%
Without reimbursement by
Chancellor LGT and expense
reductions ++................... 1.47% 1.66% 1.68% 1.1%
Without expenses assumed by
Chancellor LGT (e) ++.......... --% --% --% 4.2%
Portfolio turnover ++.............. 235% 394% 350% 298%
Average commission rate per share
paid on portfolio transactions.... N/A N/A N/A N/A

<CAPTION>
GT GLOBAL
-----------------------------------------------------------------------------

VARIABLE U.S. GOVERNMENT INCOME FUND
-----------------------------------------------------------------------------
FEBRUARY 10, 1993
YEAR ENDED DECEMBER 31, (COMMENCEMENT OF
--------------------------------------------------------- OPERATIONS) TO
1996 1995 1994 DECEMBER 31, 1993
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of
period............................ $ 11.74 $ 10.79 $ 12.23 $ 12.00
-------- -------- -------- --------
Net investment income (loss)..... 0.60(a) 0.62(b) 0.63(c) 0.53(d)
Net realized and unrealized gain
(loss) on investments........... (0.35) 0.93 (1.39) 0.23
-------- -------- -------- --------
Net increase (decrease)
resulting from operations..... 0.25 1.55 (0.76) 0.76
-------- -------- -------- --------
Distributions to shareholders:
From net investment income....... (0.58) (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............ (0.58) (0.60) (0.68) (0.53)
-------- -------- -------- --------
Net asset value, end of period..... $ 11.41 $ 11.74 $ 10.79 $ 12.23
-------- -------- -------- --------
-------- -------- -------- --------
Total investment return (f) +..... 2.23% 14.73% (6.27)% 6.4%
-------- -------- -------- --------
-------- -------- -------- --------
Ratios and supplemental data:
Net assets, end of period (in
000's)............................ $ 5,483 $ 5,992 $ 2,415 $ 974
Ratio of net investment income
(loss) to average net assets:
With reimbursement by Chancellor
LGT and expense reductions
(Notes 1, 2, & 5) ++............ 5.24% 5.43% 5.53% 5.3%
Without reimbursement by
Chancellor LGT and expense
reductions ++................... 4.49% 3.87% 1.29% 3.4%
Without expenses assumed by
Chancellor LGT (e) ++.......... --% --% --% (6.9)%
Ratio of expenses to average net
assets:
With reimbursement by Chancellor
LGT and expense reductions
(Notes 1, 2, & 5) ++............ 1.00% 1.00% 0.38% 0.0%
Without reimbursement by
Chancellor LGT and expense
reductions ++................... 1.75% 2.56% 4.63% 1.9%
Without expenses assumed by
Chancellor LGT (e) ++.......... --% --% --% 12.3%
Portfolio turnover ++.............. 49% 186% 34% 81%
Average commission rate per share
paid on portfolio transactions.... N/A N/A N/A N/A
</TABLE>

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GT GLOBAL
-----------------------------------------------------------------------------
VARIABLE GROWTH & INCOME FUND
-----------------------------------------------------------------------------
FEBRUARY 10, 1993
YEAR ENDED DECEMBER 31, (COMMENCEMENT OF
--------------------------------------------------------- OPERATIONS) TO
1996 1995 1994 DECEMBER 31, 1993
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of
period............................ $ 14.57 $ 12.99 $ 13.77 $ 12.00
----------------- ----------------- ----------------- -----------------
Net investment income (loss)..... 0.53(a) 0.52(b) 0.46(c) 0.31(d)
Net realized and unrealized gain
(loss) on investments........... 1.81 1.46 (0.85) 1.79
----------------- ----------------- ----------------- -----------------
Net increase (decrease)
resulting from operations..... 2.34 1.98 (0.39) 2.10
----------------- ----------------- ----------------- -----------------
Distributions to shareholders:
From net investment income....... (0.35) (0.40) (0.39) (0.28)
From net realized gain on
investments..................... (0.05) -- -- (0.05)
In excess of net investment
income.......................... -- -- -- --
Return of capital................ -- -- -- --
----------------- ----------------- ----------------- -----------------
Total distributions............ (0.40) (0.40) (0.39) (0.33)
----------------- ----------------- ----------------- -----------------
Net asset value, end of period..... $ 16.51 $ 14.57 $ 12.99 $ 13.77
----------------- ----------------- ----------------- -----------------
----------------- ----------------- ----------------- -----------------
Total investment return (f) +..... 16.33% 15.49% (2.85)% 17.8%
----------------- ----------------- ----------------- -----------------
----------------- ----------------- ----------------- -----------------
Ratios and supplemental data:
Net assets, end of period (in
000's)............................ $ 36,433 $ 30,565 $ 25,580 $ 11,677
Ratio of net investment income
(loss) to average net assets:
With reimbursement by Chancellor
LGT and expense reductions
(Notes 1, 2, & 5) ++............ 3.58% 3.87% 3.69% 3.2%
Without reimbursement by
Chancellor LGT and expense
reductions ++................... 3.48% 3.66% 3.45% 2.7%
Without expenses assumed by
Chancellor LGT (e) ++.......... --% --% --% 1.1%
Ratio of expenses to average net
assets:
With reimbursement by Chancellor
LGT and expense reductions
(Notes 1, 2, & 5) ++............ 1.20% 1.23% 1.25% 0.6%
Without reimbursement by
Chancellor LGT and expense
reductions ++................... 1.30% 1.44% 1.49% 1.2%
Without expenses assumed by
Chancellor LGT (e) ++.......... --% --% --% 2.8%
Portfolio turnover ++.............. 57% 73% 53% 17%
Average commission rate per share
paid on portfolio transactions.... $ 0.0147 N/A N/A N/A

<CAPTION>
GT GLOBAL
-----------------------------------------------------------------------------

VARIABLE TELECOMMUNICATIONS FUND
-----------------------------------------------------------------------------

YEAR ENDED OCTOBER 18, 1993
DECEMBER 31, (COMMENCEMENT OF
--------------------------------------------------------- OPERATIONS) TO
1996 1995 1994 DECEMBER 31, 1993
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of
period............................ $ 16.87 $ 13.98 $ 13.07 $ 12.00
----------------- ----------------- ----------------- --------
Net investment income (loss)..... (0.05) 0.02(b) 0.01(c) 0.04(d)
Net realized and unrealized gain
(loss) on investments........... 3.31 3.26 0.92 1.03
----------------- ----------------- ----------------- --------
Net increase (decrease)
resulting from operations..... 3.26 3.28 0.93 1.07
----------------- ----------------- ----------------- --------
Distributions to shareholders:
From net investment income....... (0.02) (0.03) (0.02) --
From net realized gain on
investments..................... (1.97) (0.36) -- --
In excess of net investment
income.......................... -- -- -- --
Return of capital................ -- -- -- --
----------------- ----------------- ----------------- --------
Total distributions............ (1.99) (0.39) (0.02) --
----------------- ----------------- ----------------- --------
Net asset value, end of period..... $ 18.14 $ 16.87 $ 13.98 $ 13.07
----------------- ----------------- ----------------- --------
----------------- ----------------- ----------------- --------
Total investment return (f) +..... 19.34% 23.66% 7.15% 8.9%
----------------- ----------------- ----------------- --------
----------------- ----------------- ----------------- --------
Ratios and supplemental data:
Net assets, end of period (in
000's)............................ $ 63,258 $ 50,778 $ 36,029 $ 7,903
Ratio of net investment income
(loss) to average net assets:
With reimbursement by Chancellor
LGT and expense reductions
(Notes 1, 2, & 5) ++............ (0.26)% 0.16% 0.31% 2.5%
Without reimbursement by
Chancellor LGT and expense
reductions ++................... (0.31)% 0.10% 0.07% 2.3%
Without expenses assumed by
Chancellor LGT (e) ++.......... --% --% --% 1.6%
Ratio of expenses to average net
assets:
With reimbursement by Chancellor
LGT and expense reductions
(Notes 1, 2, & 5) ++............ 1.12% 1.20% 1.25% 0.9%
Without reimbursement by
Chancellor LGT and expense
reductions ++................... 1.17% 1.26% 1.49% 1.1%
Without expenses assumed by
Chancellor LGT (e) ++.......... --% --% --% 1.8%
Portfolio turnover ++.............. 77% 70% 81% 20%
Average commission rate per share
paid on portfolio transactions.... $ 0.0068 N/A N/A N/A
</TABLE>

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

(d) Includes reimbursement by Chancellor 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).
(e) During the period ended December 31, 1993, Chancellor LGT Asset
Management, Inc. voluntarily assumed certain expenses for the Funds
(Note 2).
(f) 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.
N/A Not applicable.

The accompanying notes are an integral part of the financial statements.
F65
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

FINANCIAL HIGHLIGHTS (cont'd)

- --------------------------------------------------------------------------------
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 EMERGING MARKETS FUND
---------------------------------------------------------
YEAR ENDED JULY 5, 1994
DECEMBER 31, (COMMENCEMENT OF
------------------------------------- OPERATIONS) TO
1996 1995 DECEMBER 31, 1994
----------------- ----------------- -----------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of
period............................ $ 10.88 $ 11.89 $ 12.00
----------------- -------- --------
Net investment income (loss)..... 0.11(a) 0.14(b) 0.07(c)
Net realized and unrealized gain
(loss) on investments........... 3.27 (1.04) (0.05)
----------------- -------- --------
Net increase (decrease)
resulting from operations..... 3.38 (0.90) 0.02
----------------- -------- --------
Distributions to shareholders:
From net investment income....... -- (0.09) (0.07)
From net realized gain on
investments..................... -- -- --
In excess of net realized gain on
investments..................... -- -- (0.06)
Return of capital................ -- (0.02) --
----------------- -------- --------
Total distributions............ -- (0.11) (0.13)
----------------- -------- --------
Net asset value, end of period..... $ 14.26 $ 10.88 $ 11.89
----------------- -------- --------
----------------- -------- --------
Total investment return (f) +..... 31.07% (7.54)% 0.12%
----------------- -------- --------
----------------- -------- --------
Ratios and supplemental data:
Net assets, end of period (in
000's)............................ $ 17,604 $ 8,983 $ 7,267
Ratio of net investment income
(loss) to average net assets:
With reimbursement by Chancellor
LGT and expense reductions
(Notes 1, 2, & 5) ++............ 0.89% 1.55% 4.10%
Without reimbursement by
Chancellor LGT and expense
reductions ++................... 0.39% 0.51% (0.20)%
Without expenses assumed by
Chancellor LGT (e) ++.......... --% --% --%
Ratio of expenses to average net
assets:
With reimbursement by Chancellor
LGT and expense reductions
(Notes 1, 2, & 5) ++............ 1.18% 1.18% 0.00%
Without reimbursement by
Chancellor LGT and expense
reductions ++................... 1.68% 2.22% 4.30%
Without expenses assumed by
Chancellor LGT (e) ++.......... --% --% --%
Portfolio turnover ++.............. 216% 210% 117%
Average commission rate per share
paid on portfolio transactions.... $ 0.0021 N/A N/A

<CAPTION>
GT GLOBAL
-------------------------------------

VARIABLE INFRASTRUCTURE FUND
-------------------------------------
JANUARY 31, 1995
(COMMENCEMENT OF
YEAR ENDED OPERATIONS) TO
DECEMBER 31, 1996 DECEMBER 31, 1995
----------------- -----------------
<S> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of
period............................ $ 13.27 $ 12.00
----------------- -----------------
Net investment income (loss)..... 0.11(a) 0.07(b)
Net realized and unrealized gain
(loss) on investments........... 3.19 1.20
----------------- -----------------
Net increase (decrease)
resulting from operations..... 3.30 1.27
----------------- -----------------
Distributions to shareholders:
From net investment income....... (0.03) --
From net realized gain on
investments..................... (0.07) --
In excess of net realized gain on
investments..................... -- --
Return of capital................ -- --
----------------- -----------------
Total distributions............ (0.10) --
----------------- -----------------
Net asset value, end of period..... $ 16.47 $ 13.27
----------------- -----------------
----------------- -----------------
Total investment return (f) +..... 24.88% 10.58%
----------------- -----------------
----------------- -----------------
Ratios and supplemental data:
Net assets, end of period (in
000's)............................ $ 6,054 $ 1,594
Ratio of net investment income
(loss) to average net assets:
With reimbursement by Chancellor
LGT and expense reductions
(Notes 1, 2, & 5) ++............ 1.35% 1.24%
Without reimbursement by
Chancellor LGT and expense
reductions ++................... 0.03% (6.11)%
Without expenses assumed by
Chancellor LGT (e) ++.......... --% --%
Ratio of expenses to average net
assets:
With reimbursement by Chancellor
LGT and expense reductions
(Notes 1, 2, & 5) ++............ 1.21% 1.22%
Without reimbursement by
Chancellor LGT and expense
reductions ++................... 2.53% 8.57%
Without expenses assumed by
Chancellor LGT (e) ++.......... --% --%
Portfolio turnover ++.............. 76% 38%
Average commission rate per share
paid on portfolio transactions.... $ 0.0101 N/A
</TABLE>

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

<TABLE>
<CAPTION>
GT GLOBAL
-----------------------------------------------------------------------------
VARIABLE EUROPE FUND
-----------------------------------------------------------------------------
FEBRUARY 10, 1993
YEAR ENDED DECEMBER 31, (COMMENCEMENT OF
--------------------------------------------------------- OPERATIONS) TO
1996 1995 1994 DECEMBER 31, 1993
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of
period............................ $ 16.52 $ 15.22 $ 15.33 $ 12.00
----------------- ----------------- ----------------- --------
Net investment income (loss)..... 0.05(a) 0.18(b) 0.16(c) 0.05(d)
Net realized and unrealized gain
(loss) on investments........... 4.93 1.28 (0.25) 3.28
----------------- ----------------- ----------------- --------
Net increase (decrease)
resulting from operations..... 4.98 1.46 (0.09) 3.33
----------------- ----------------- ----------------- --------
Distributions to shareholders:
From net investment income....... (0.16) (0.16) -- --
From net realized gain on
investments..................... -- -- (0.02) --
In excess of net realized gain on
investments..................... -- -- -- --
Return of capital................ -- -- -- --
----------------- ----------------- ----------------- --------
Total distributions............ (0.16) (0.16) (0.02) --
----------------- ----------------- ----------------- --------
Net asset value, end of period..... $ 21.34 $ 16.52 $ 15.22 $ 15.33
----------------- ----------------- ----------------- --------
----------------- ----------------- ----------------- --------
Total investment return (f) +..... 30.25% 9.66% (0.59)% 27.8%
----------------- ----------------- ----------------- --------
----------------- ----------------- ----------------- --------
Ratios and supplemental data:
Net assets, end of period (in
000's)............................ $ 24,537 $ 15,641 $ 15,020 $ 5,410
Ratio of net investment income
(loss) to average net assets:
With reimbursement by Chancellor
LGT and expense reductions
(Notes 1, 2, & 5) ++............ 0.36% 1.12% 1.48% 1.1%
Without reimbursement by
Chancellor LGT and expense
reductions ++................... 0.09% 0.60% 1.07% 0.4%
Without expenses assumed by
Chancellor LGT (e) ++.......... --% --% --% (2.8)%
Ratio of expenses to average net
assets:
With reimbursement by Chancellor
LGT and expense reductions
(Notes 1, 2, & 5) ++............ 1.20% 1.20% 1.25% 0.7%
Without reimbursement by
Chancellor LGT and expense
reductions ++................... 1.47% 1.72% 1.66% 1.4%
Without expenses assumed by
Chancellor LGT (e) ++.......... --% --% --% 4.6%
Portfolio turnover ++.............. 56% 123% 61% 27%
Average commission rate per share
paid on portfolio transactions.... $ 0.0313 N/A N/A N/A
</TABLE>

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

(a) Includes reimbursement by Chancellor LGT Asset Management, Inc. of
Fund operating expenses of $0.05 for the Variable Emerging Markets
Fund, $0.19 for the Variable Infrastructure Fund, $0.11 for the
Variable Natural Resources Fund, $0.04 for the Variable New Pacific
Fund, $0.04 for the Variable Europe Fund, $0.00 for the Money Market
Fund, and $0.14 for the Variable International Fund.
(b) Includes reimbursement by Chancellor LGT Asset Management, Inc. of
Fund operating expenses of $0.09 for the Variable Emerging Markets
Fund, $0.42 for the Variable Infrastructure Fund, $0.47 for the
Variable Natural Resources Fund, $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).
(c) Includes reimbursement by Chancellor LGT Asset Management, Inc. of
Fund operating expenses of $0.07 for the Variable Emerging Markets
Fund, $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).
(d) Includes reimbursement by Chancellor 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).
(e) During the period ended December 31, 1993, Chancellor LGT Asset
Management, Inc. voluntarily assumed certain expenses for the Funds
(Note 2).
(f) 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.

The accompanying notes are an integral part of the financial statements.
F66
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

FINANCIAL HIGHLIGHTS (cont'd)

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GT GLOBAL
-------------------------------------
VARIABLE NATURAL RESOURCES FUND
-------------------------------------
JANUARY 31, 1995
YEAR ENDED (COMMENCEMENT OF
DECEMBER 31, OPERATIONS) TO
1996 DECEMBER 31, 1995
----------------- -----------------
<S> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of
period............................ $ 13.88 $ 12.00
----------------- --------
Net investment income (loss)..... (0.06) (a) 0.73(b)
Net realized and unrealized gain
(loss) on investments........... 7.16 1.91
----------------- --------
Net increase (decrease)
resulting from operations..... 7.10 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..... $ 20.98 $ 13.88
----------------- --------
----------------- --------
Total investment return (f) +..... 51.15% 22.20%
----------------- --------
----------------- --------
Ratios and supplemental data:
Net assets, end of period (in
000's)............................ $ 16,308 $ 1,365
Ratio of net investment income
(loss) to average net assets:
With reimbursement by Chancellor
LGT and expense reductions
(Notes 1, 2, & 5) ++............ (0.60)% 10.87%
Without reimbursement by
Chancellor LGT and expense
reductions ++................... (1.30)% 2.94%
Without expenses assumed by
Chancellor LGT (e) ++.......... --% --%
Ratio of expenses to average net
assets:
With reimbursement by Chancellor
LGT and expense reductions
(Notes 1, 2, & 5) ++............ 1.19% 1.14%
Without reimbursement by
Chancellor LGT and expense
reductions ++................... 1.89% 9.07%
Without expenses assumed by
Chancellor LGT (e) ++.......... --% --%
Portfolio turnover ++.............. 199% 875%
Average commission rate per share
paid on portfolio transactions.... $ 0.0164 N/A

<CAPTION>
GT GLOBAL
-----------------------------------------------------------------------------

VARIABLE AMERICA FUND
-----------------------------------------------------------------------------
FEBRUARY 10, 1993
YEAR ENDED DECEMBER 31, (COMMENCEMENT OF
--------------------------------------------------------- OPERATIONS) TO
1996 1995 1994 DECEMBER 31, 1993
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of
period............................ $ 19.46 $ 15.81 $ 13.75 $ 12.00
----------------- ----------------- ----------------- --------
Net investment income (loss)..... 0.12(a) 0.21(b) 0.48(c) 1.11(d)
Net realized and unrealized gain
(loss) on investments........... 3.18 3.80 2.08 0.64
----------------- ----------------- ----------------- --------
Net increase (decrease)
resulting from operations..... 3.30 4.01 2.56 1.75
----------------- ----------------- ----------------- --------
Distributions to shareholders:
From net investment income....... (0.30) (0.07) (0.50) --
From net realized gain on
investments..................... (2.75) (0.29) -- --
In excess of net realized gain on
investments..................... -- -- -- --
Return of capital................ -- -- -- --
----------------- ----------------- ----------------- --------
Total distributions............ (3.05) (0.36) (0.50) --
----------------- ----------------- ----------------- --------
Net asset value, end of period..... $ 19.71 $ 19.46 $ 15.81 $ 13.75
----------------- ----------------- ----------------- --------
----------------- ----------------- ----------------- --------
Total investment return (f) +..... 18.55% 25.37% 18.88% 14.7%
----------------- ----------------- ----------------- --------
----------------- ----------------- ----------------- --------
Ratios and supplemental data:
Net assets, end of period (in
000's)............................ $ 41,647 $ 37,643 $ 15,257 $ 1,700
Ratio of net investment income
(loss) to average net assets:
With reimbursement by Chancellor
LGT and expense reductions
(Notes 1, 2, & 5) ++............ 0.52% 1.66% 1.83% 14.1%
Without reimbursement by
Chancellor LGT and expense
reductions ++................... 0.46% 1.60% 0.76% 12.8%
Without expenses assumed by
Chancellor LGT (e) ++.......... --% --% --% 7.6%
Ratio of expenses to average net
assets:
With reimbursement by Chancellor
LGT and expense reductions
(Notes 1, 2, & 5) ++............ 0.95% 1.00% 0.98% 0.0%
Without reimbursement by
Chancellor LGT and expense
reductions ++................... 1.01% 1.06% 2.05% 1.3%
Without expenses assumed by
Chancellor LGT (e) ++.......... --% --% --% 6.5%
Portfolio turnover ++.............. 248% 79% 139% 831%
Average commission rate per share
paid on portfolio transactions.... $ 0.0531 N/A N/A N/A

<CAPTION>
GT GLOBAL
-----------------------------------------------------------------------------

VARIABLE NEW PACIFIC FUND
-----------------------------------------------------------------------------
FEBRUARY 10, 1993
YEAR ENDED DECEMBER 31, (COMMENCEMENT OF
--------------------------------------------------------- OPERATIONS) TO
1996 1995 1994 DECEMBER 31, 1993
----------------- ----------------- ----------------- -----------------
Per Share Operating Performance:
Net asset value, beginning of
period............................ $ 13.92 $ 14.01 $ 16.07 $ 12.00
----------------- ----------------- ----------------- --------
Net investment income (loss)..... 0.13(a) 0.20(b) 0.08(c) 0.04(d)
Net realized and unrealized gain
(loss) on investments........... 4.16 (0.23) (2.08) 4.03
----------------- ----------------- ----------------- --------
Net increase (decrease)
resulting from operations..... 4.29 (0.03) (2.00) 4.07
----------------- ----------------- ----------------- --------
Distributions to shareholders:
From net investment income....... (0.19) (0.06) (0.06) --
From net realized gain on
investments..................... -- -- -- --
In excess of net realized gain on
investments..................... -- -- -- --
Return of capital................ -- -- -- --
----------------- ----------------- ----------------- --------
Total distributions............ (0.19) (0.06) (0.06) --
----------------- ----------------- ----------------- --------
Net asset value, end of period..... $ 18.02 $ 13.92 $ 14.01 $ 16.07
----------------- ----------------- ----------------- --------
----------------- ----------------- ----------------- --------
Total investment return (f) +..... 30.97% (0.21)% (12.47)% 33.9%
----------------- ----------------- ----------------- --------
----------------- ----------------- ----------------- --------
Ratios and supplemental data:
Net assets, end of period (in
000's)............................ $ 32,670 $ 23,025 $ 19,391 $ 7,945
Ratio of net investment income
(loss) to average net assets:
With reimbursement by Chancellor
LGT and expense reductions
(Notes 1, 2, & 5) ++............ 0.88% 1.27% 0.83% 0.9%
Without reimbursement by
Chancellor LGT and expense
reductions ++................... 0.60% 1.74% 0.48% 0.3%
Without expenses assumed by
Chancellor LGT (e) ++.......... --% --% --% (2.0)%
Ratio of expenses to average net
assets:
With reimbursement by Chancellor
LGT and expense reductions
(Notes 1, 2, & 5) ++............ 1.12% 1.14% 1.25% 0.6%
Without reimbursement by
Chancellor LGT and expense
reductions ++................... 1.40% 1.61% 1.60% 1.3%
Without expenses assumed by
Chancellor LGT (e) ++.......... --% --% --% 3.6%
Portfolio turnover ++.............. 70% 67% 30% 15%
Average commission rate per share
paid on portfolio transactions.... $ 0.0071 N/A N/A N/A
</TABLE>

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GT GLOBAL
-----------------------------------------------------------------------------
MONEY MARKET FUND
-----------------------------------------------------------------------------
FEBRUARY 10, 1993
YEAR ENDED DECEMBER 31, (COMMENCEMENT OF
--------------------------------------------------------- OPERATIONS) TO
1996 1995 1994 DECEMBER 31, 1993
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of
period............................ $ 1.00 $ 1.00 $ 1.00 $ 1.00
----------------- ----------------- ----------------- --------
Net investment income (loss)..... 0.05(a) 0.05(b) 0.03(c) 0.03(d)
Net realized and unrealized gain
(loss) on investments........... -- -- -- --
----------------- ----------------- ----------------- --------
Net increase (decrease)
resulting from operations..... 0.05 0.05 0.03 0.03
----------------- ----------------- ----------------- --------
Distributions to shareholders:
From net investment income....... (0.05) (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) (0.05) (0.03) (0.03)
----------------- ----------------- ----------------- --------
Net asset value, end of period..... $ 1.00 $ 1.00 $ 1.00 $ 1.00
----------------- ----------------- ----------------- --------
----------------- ----------------- ----------------- --------
Total investment return (f) +..... 4.75% 5.26% 3.48% 2.6%
----------------- ----------------- ----------------- --------
----------------- ----------------- ----------------- --------
Ratios and supplemental data:
Net assets, end of period (in
000's)............................ $ 19,794 $ 14,891 $ 19,474 $ 3,775
Ratio of net investment income
(loss) to average net assets:
With reimbursement by Chancellor
LGT and expense reductions
(Notes 1, 2, & 5) ++............ 4.67% 5.15% 3.70% 2.9%
Without reimbursement by
Chancellor LGT and expense
reductions ++................... 4.57% 4.85% 3.64% 2.1%
Without expenses assumed by
Chancellor LGT (e) ++.......... --% --% --% (2.6)%
Ratio of expenses to average net
assets:
With reimbursement by Chancellor
LGT and expense reductions
(Notes 1, 2, & 5) ++............ 0.75% 0.75% 0.75% 0.2%
Without reimbursement by
Chancellor LGT and expense
reductions ++................... 0.85% 1.05% 0.81% 1.0%
Without expenses assumed by
Chancellor LGT (e) ++.......... --% --% --% 5.7%
Portfolio turnover ++.............. N/A N/A N/A N/A
Average commission rate per share
paid on portfolio transactions.... N/A N/A N/A N/A

<CAPTION>
GT GLOBAL
---------------------------------------------------------

VARIABLE INTERNATIONAL FUND
---------------------------------------------------------

YEAR ENDED JULY 5, 1994
DECEMBER 31, (COMMENCEMENT OF
------------------------------------- OPERATIONS) TO
1996 1995 DECEMBER 31, 1994
----------------- ----------------- -----------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of
period............................ $ 11.01 $ 11.25 $ 12.00
----------------- -------- --------
Net investment income (loss)..... 0.05(a) 0.09(b) 0.06(c)
Net realized and unrealized gain
(loss) on investments........... 0.89 (0.22) (0.76)
----------------- -------- --------
Net increase (decrease)
resulting from operations..... 0.94 (0.13) (0.70)
----------------- -------- --------
Distributions to shareholders:
From net investment income....... -- (0.09) (0.05)
From net realized gain on
investments..................... (0.04) (0.02) --
In excess of net realized gain on
investments..................... -- -- --
Return of capital................ -- -- --
----------------- -------- --------
Total distributions............ (0.04) (0.11) (0.05)
----------------- -------- --------
Net asset value, end of period..... $ 11.91 $ 11.01 $ 11.25
----------------- -------- --------
----------------- -------- --------
Total investment return (f) +..... 8.52% (1.14)% (5.81)%
----------------- -------- --------
----------------- -------- --------
Ratios and supplemental data:
Net assets, end of period (in
000's)............................ $ 4,782 $ 3,663 $ 2,229
Ratio of net investment income
(loss) to average net assets:
With reimbursement by Chancellor
LGT and expense reductions
(Notes 1, 2, & 5) ++............ 0.48% 0.93% 3.33%
Without reimbursement by
Chancellor LGT and expense
reductions ++................... (0.86)% (1.35)% (2.56)%
Without expenses assumed by
Chancellor LGT (e) ++.......... --% --% --%
Ratio of expenses to average net
assets:
With reimbursement by Chancellor
LGT and expense reductions
(Notes 1, 2, & 5) ++............ 1.15% 1.25% 0.69%
Without reimbursement by
Chancellor LGT and expense
reductions ++................... 2.49% 3.53% 6.58%
Without expenses assumed by
Chancellor LGT (e) ++.......... --% --% --%
Portfolio turnover ++.............. 92% 107% 17%
Average commission rate per share
paid on portfolio transactions.... $ 0.0156 N/A N/A
</TABLE>

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

+ Not annualized for periods of less than one year.
++ Annualized for periods of less than one year.
N/A Not applicable.

The accompanying notes are an integral part of the financial statements.
F67
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

NOTES TO FINANCIAL STATEMENTS

December 31, 1996

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

1. SIGNIFICANT ACCOUNTING POLICIES
GT Global Variable Investment Series and GT 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 GT 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. GT 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 Chancellor LGT Asset
Management, Inc. (the "Manager") to be the primary market.

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

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

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

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

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.

F68
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

(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 "Statements 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 received. A Fund can write options only on a covered
bases, 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 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 the Fund exercises a call
option, the cost of the securities acquired by exercising the call is increased
by the premium paid to buy the call. If the Fund exercises a put option, it
realizes a gain or loss from the sale of the underlying security, and the
proceeds from such sale are decreased by the premium originally paid.

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

(F) FUTURES CONTRACTS
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract 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 each 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

F69
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

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, or 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................................... $1,392,386 2002
.......................................... 820,482 2003
Variable Global Government Income........................... 1,139,600 2002
Variable Latin America...................................... 3,544,129 2003
Variable Growth and Income.................................. 924,355 2003
Variable New Pacific........................................ 562,115 2003
Variable International...................................... 77,169 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 the
Manager has advanced certain of the Companies' organizational costs incurred to
date, the Companies may reimburse the Manager for the amount of these advances.
In the event that the Manager redeems any of the initial 2,083.333 shares of
each of the Variable New Pacific Fund, Variable Europe Fund and Variable America
Fund; or the initial 25,000 shares of Money Market Fund; or the initial
1,666.667 shares of each of the Variable Strategic Income Fund, Variable Global
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 the Manager'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 year, restricted securities (excluding 144A issues) are shown at the end of
the Portfolio of Investments for each Fund, if any.

(N) SECURITIES PURCHASED ON A WHEN-ISSUED OR FORWARD COMMITMENT BASIS
A Fund may trade securities on a when-issued or forward commitment basis, with
payment and delivery scheduled for a future date. These transactions are subject
to market fluctuations and are subject to the risk that the value at delivery
may be less than the trade date purchase price. Although the Fund will generally
purchase these securities with the intention of acquiring such securities, they
may sell such securities before the settlement date. These securities, if any,
are identified on the accompanying Portfolio of Investments. The Variable
Strategic Income Fund has purchased and sold when-issue securities during the
year ended December 31, 1996, and has set aside sufficient cash and liquid
securities as collateral for these commitments.

F70
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

(O) PORTFOLIO SECURITIES LOANED
At December 31, 1996, 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>
YEAR ENDED
DECEMBER 31,
DECEMBER 31, 1996 1996
---------------------------- ------------
AGGREGATE VALUE CASH FEES
GT GLOBAL ON LOAN COLLATERAL RECEIVED
- ------------------------------------------------------------ --------------- ---------- ------------
<S> <C> <C> <C>
Variable Strategic Income Fund.............................. $1,940,190 $2,082,839 $ 3,554
Variable Global Government Income Fund...................... 2,463,399 2,625,278 5,008
Variable U.S. Government Income Fund........................ -- -- --
Variable Latin America Fund................................. 454,063 512,900 6,978
Variable Growth & Income Fund............................... 2,881,784 3,009,362 13,948
Variable Telecommunications Fund............................ 3,122,488 3,293,000 21,082
Variable Emerging Markets Fund.............................. 13,200 14,400 259
Variable Infrastructure Fund................................ 144,800 151,200 611
Variable Natural Resources Fund............................. 322,625 330,600 1,541
Variable America Fund....................................... 1,633,776 1,695,100 5,336
Variable New Pacific Fund................................... 3,361,947 3,588,044 15,419
Variable Europe Fund........................................ 1,780,815 1,859,691 4,867
Money Market Fund........................................... -- -- --
Variable International Fund................................. 34,100 37,400 598
</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.

(P) BORROWINGS
On December 31, 1996, the GT Global Variable Europe Fund borrowed $239,000 at a
money market rate from the Bank of Boston. For the year ended December 31, 1996,
the weighted average outstanding daily balance of bank loans (based on the
number of days the loans were outstanding) for the GT Global Variable Europe
Fund was $239,000 with a weighted average interest rate of 8.00%. Interest
incurred on this loan for the year ended December 31, 1996, was $53, included in
"Other Expenses" on the Statement of Operations.

2. RELATED PARTIES
Chancellor LGT Asset Management, Inc. is the Fund's investment manager and
administrator. On October 31, 1996, Chancellor Capital Management, Inc. merged
with LGT Asset Management, Inc., and the surviving entity was renamed Chancellor
LGT Asset Management, Inc. The 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 Variable Strategic Income Fund, Variable Global
Government Income Fund, Variable U.S. Government Income Fund and Variable
America 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. 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 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.

The Manager 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, Variable Europe Fund, Variable Latin America Fund,
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, the Manager 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, 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 average daily 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 the Companies and joint expenses of the Funds are
allocated among the Funds on a basis deemed fair and equitable.

F71
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

GT Global, Inc. ("GT Global"), an affiliate of the Manager, is the Funds'
distributor. GT Global Investor Services, Inc. ("GT Services"), an affiliate of
the Manager 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 ENDED
GT GLOBAL DECEMBER 31, 1996
- ------------------------------------------------------------ -----------------
<S> <C>
Variable Strategic Income Fund.............................. $21,150
Variable Global Government Income Fund...................... 5,111
Variable U.S. Government Income Fund........................ 5,338
Variable Latin America Fund................................. 13,187
Variable Growth & Income Fund............................... 15,592
Variable Telecommunications Fund............................ 44,208
Variable Emerging Markets Fund.............................. 19,804
Variable Infrastructure Fund................................ 11,132
Variable Natural Resources Fund............................. 79,433
Variable America Fund....................................... 24,619
Variable New Pacific Fund................................... 22,983
Variable Europe Fund........................................ 11,429
Money Market Fund........................................... 36,723
Variable International Fund................................. 2,917
</TABLE>

The Manager is the pricing and accounting agent for the Funds. The monthly fee
for these services to the Manager 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 the Manager and 0.02% to the assets in excess of $5 billion and
allocating the result according to each Fund's average daily net assets.

The Companies pay each of their Trustees who is not an employee, officer or
director of the Manager, GT Global or GT Services $5,000 per year.

3. PURCHASES AND SALES OF SECURITIES
The following summarizes purchases and sales of investment securities, other
than short-term investments, by Fund, for the year ended December 31, 1996:

PURCHASES AND SALES OF SECURITIES

<TABLE>
<CAPTION>
PURCHASES
------------------------------
GT GLOBAL U.S. GOVERNMENT OTHER ISSUES
- ------------------------------------------------------------ --------------- ------------
<S> <C> <C>
Variable Strategic Income Fund.............................. $7,294,996 $ 45,486,859
Variable Global Government Income Fund...................... 5,027,119 17,688,277
Variable U.S. Government Income Fund........................ 2,885,648 1,044,686
Variable Latin America Fund................................. -- 21,190,544
Variable Growth & Income Fund............................... 1,566,614 17,308,032
Variable Telecommunications Fund............................ -- 49,088,166
Variable Emerging Markets Fund.............................. -- 32,878,236
Variable Infrastructure Fund................................ -- 5,673,858
Variable Natural Resources Fund............................. -- 24,630,748
Variable America Fund....................................... -- 84,120,105
Variable New Pacific Fund................................... -- 19,734,764
Variable Europe Fund........................................ -- 12,759,407
Money Market Fund........................................... -- --
Variable International Fund................................. -- 4,892,948
</TABLE>

F72
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

<TABLE>
<CAPTION>
SALES
------------------------------
GT GLOBAL U.S. GOVERNMENT OTHER ISSUES
- ------------------------------------------------------------ --------------- ------------
Variable Strategic Income Fund.............................. $8,177,845 $ 43,849,660
<S> <C> <C>
Variable Global Government Income Fund...................... 5,545,981 19,533,176
Variable U.S. Government Income Fund........................ 2,165,773 --
Variable Latin America Fund................................. -- 20,191,543
Variable Growth & Income Fund............................... 1,632,971 16,050,929
Variable Telecommunications Fund............................ -- 42,645,663
Variable Emerging Markets Fund.............................. -- 29,017,419
Variable Infrastructure Fund................................ -- 2,252,320
Variable Natural Resources Fund............................. -- 14,279,346
Variable America Fund....................................... -- 80,600,556
Variable New Pacific Fund................................... -- 18,366,106
Variable Europe Fund........................................ -- 10,595,663
Money Market Fund........................................... -- --
Variable International Fund................................. -- 4,018,774
</TABLE>

The Funds' written options activity for the year ended December 31, 1996, 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, 1995.................... $ -- $ --
Options written during the year ended December 31, 1996..... $ 708,000 $16,100
Options cancelled in closing purchase transactions.......... (508,000) (11,900 )
Options expired prior to exercise........................... (200,000) (4,200 )
Options exercised........................................... -- --
---------------- --------
Options outstanding at December 31, 1996.................... $ -- $ --
---------------- --------
---------------- --------
</TABLE>

4. CAPITAL SHARES
At December 31, 1996, 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 YEAR ENDED
DECEMBER 31, 1996 DECEMBER 31, 1995
--------------------------- ---------------------------
GT GLOBAL VARIABLE STRATEGIC INCOME FUND SHARES AMOUNT SHARES AMOUNT
- -------------------------------------------------- ------------ ------------- ------------ -------------
<S> <C> <C> <C> <C>
Shares sold....................................... 3,455,994 $ 43,161,383 1,985,281 $ 22,200,799
Shares issued in connection with reinvestment of
distributions.................................... 161,635 2,004,763 179,542 1,991,044
------------ ------------- ------------ -------------
3,617,629 45,166,146 2,164,823 24,191,843
Shares repurchased................................ (3,384,466) (42,069,061) (2,185,897) (24,283,139)
------------ ------------- ------------ -------------
Net increase (decrease)........................... 233,163 $ 3,097,085 (21,074) $ (91,296)
------------ ------------- ------------ -------------
------------ ------------- ------------ -------------

GT GLOBAL VARIABLE GLOBAL GOVERNMENT INCOME FUND
- --------------------------------------------------
Shares sold....................................... 595,260 $ 6,669,492 1,119,737 $ 11,927,543
Shares issued in connection with reinvestment of
distributions.................................... 63,372 706,122 64,913 722,395
------------ ------------- ------------ -------------
658,632 7,375,614 1,184,650 12,649,938
Shares repurchased................................ (787,028) (8,839,632) (1,054,689) (11,200,397)
------------ ------------- ------------ -------------
Net increase (decrease)........................... (128,396) $ (1,464,018) 129,961 $ 1,449,541
------------ ------------- ------------ -------------
------------ ------------- ------------ -------------

GT GLOBAL VARIABLE US GOVERNMENT INCOME FUND
- --------------------------------------------------
Shares sold....................................... 333,844 $ 3,803,016 1,824,240 $ 20,431,040
Shares issued in connection with reinvestment of
distributions.................................... 23,060 262,014 18,588 234,899
------------ ------------- ------------ -------------
356,904 4,065,030 1,842,828 20,665,939
Shares repurchased................................ (386,658) (4,430,300) (1,556,416) (17,459,191)
------------ ------------- ------------ -------------
Net increase (decrease)........................... (29,754) $ (365,270) 286,412 $ 3,206,748
------------ ------------- ------------ -------------
------------ ------------- ------------ -------------
</TABLE>

F73
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1996 DECEMBER 31, 1995
--------------------------- ---------------------------
GT GLOBAL VARIABLE LATIN AMERICA FUND SHARES AMOUNT SHARES AMOUNT
- -------------------------------------------------- ------------ ------------- ------------ -------------
<S> <C> <C> <C> <C>
Shares sold....................................... 2,062,574 $ 28,548,855 2,569,344 $ 35,542,045
Shares issued in connection with reinvestment of
distributions.................................... 45,515 624,926 236,651 2,991,268
------------ ------------- ------------ -------------
2,108,089 29,173,781 2,805,995 38,533,313
Shares repurchased................................ (2,151,334) (29,883,182) (2,602,904) (36,198,875)
------------ ------------- ------------ -------------
Net increase (decrease)........................... (43,245) $ (709,401) 203,091 $ 2,334,438
------------ ------------- ------------ -------------
------------ ------------- ------------ -------------

GT GLOBAL VARIABLE GROWTH & INCOME FUND
- --------------------------------------------------
Shares sold....................................... 1,910,536 $ 29,111,115 776,808 $ 10,555,910
Shares issued in connection with reinvestment of
distributions.................................... 55,274 839,489 59,956 818,466
------------ ------------- ------------ -------------
1,965,810 29,950,604 836,764 11,374,376
Shares repurchased................................ (1,857,484) (28,213,931) (708,880) (9,669,648)
------------ ------------- ------------ -------------
Net increase...................................... 108,326 $ 1,736,673 127,884 $ 1,704,728
------------ ------------- ------------ -------------
------------ ------------- ------------ -------------

GT GLOBAL VARIABLE TELECOMMUNICATIONS FUND
- --------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold....................................... 2,031,581 $ 37,384,916 1,453,558 $ 23,188,408
Shares issued in connection with reinvestment of
distributions.................................... 354,065 6,443,990 68,050 1,045,935
------------ ------------- ------------ -------------
2,385,646 43,828,906 1,521,608 24,234,343
Shares repurchased................................ (1,908,080) (34,595,566) (1,087,480) (17,197,275)
------------ ------------- ------------ -------------
Net increase...................................... 477,566 $ 9,233,340 434,128 $ 7,037,068
------------ ------------- ------------ -------------
------------ ------------- ------------ -------------

GT GLOBAL VARIABLE EMERGING MARKETS FUND
- --------------------------------------------------
Shares sold....................................... 2,518,560 $ 32,771,217 1,173,549 $ 12,723,265
Shares issued in connection with reinvestment of
distributions.................................... -- -- 8,331 90,089
------------ ------------- ------------ -------------
2,518,560 32,771,217 1,181,880 12,813,354
Shares repurchased................................ (2,109,935) (27,696,344) (967,577) (10,519,830)
------------ ------------- ------------ -------------
Net increase...................................... 408,625 $ 5,074,873 214,303 $ 2,293,524
------------ ------------- ------------ -------------
------------ ------------- ------------ -------------
<CAPTION>

JANUARY 31, 1995
(COMMENCEMENT OF
OPERATIONS) TO DECEMBER 31,
1995
---------------------------
GT GLOBAL VARIABLE INFRASTRUCTURE FUND SHARES AMOUNT
- -------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Shares sold....................................... 469,810 $ 7,225,756 174,610 $ 2,285,935
Shares issued in connection with reinvestment of
distributions.................................... 1,715 26,769 -- --
------------ ------------- ------------ -------------
471,525 7,252,525 174,610 2,285,935
Shares repurchased................................ (224,095) (3,457,346) (62,813) (826,452)
------------ ------------- ------------ -------------
Net increase...................................... 247,430 $ 3,795,179 111,797 $ 1,459,483
------------ ------------- ------------ -------------
------------ ------------- ------------ -------------
<CAPTION>

GT GLOBAL VARIABLE NATURAL RESOURCES FUND
- --------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold....................................... 1,819,670 $ 33,416,057 228,814 $ 3,086,623
Shares issued in connection with reinvestment of
distributions.................................... -- -- 4,976 67,477
------------ ------------- ------------ -------------
1,819,670 33,416,057 233,790 3,154,100
Shares repurchased................................ (1,140,721) (20,919,006) (143,765) (1,940,086)
------------ ------------- ------------ -------------
Net increase...................................... 678,949 $ 12,497,051 90,025 $ 1,214,014
------------ ------------- ------------ -------------
------------ ------------- ------------ -------------
<CAPTION>

YEAR ENDED
DECEMBER 31, 1995
---------------------------
GT GLOBAL VARIABLE AMERICA FUND SHARES AMOUNT
- -------------------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
Shares sold....................................... 2,859,324 $ 55,470,879 3,800,437 $ 72,967,274
Shares issued in connection with reinvestment of
distributions.................................... 303,755 5,480,666 31,220 606,288
------------ ------------- ------------ -------------
3,163,079 60,951,545 3,831,657 73,573,562
Shares repurchased................................ (2,984,751) (57,915,239) (2,862,326) (55,970,932)
------------ ------------- ------------ -------------
Net increase...................................... 178,328 $ 3,036,306 969,331 $ 17,602,630
------------ ------------- ------------ -------------
------------ ------------- ------------ -------------
</TABLE>

F74
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1996 DECEMBER 31, 1995
--------------------------- ---------------------------
GT GLOBAL VARIABLE NEW PACIFIC FUND SHARES AMOUNT SHARES AMOUNT
- -------------------------------------------------- ------------ ------------- ------------ -------------
<S> <C> <C> <C> <C>
Shares sold....................................... 10,835,385 $ 176,690,218 7,058,585 $ 95,900,026
Shares issued in connection with reinvestment of
distributions.................................... 20,259 329,817 6,484 90,012
------------ ------------- ------------ -------------
10,855,644 177,020,035 7,065,069 95,990,038
Shares repurchased................................ (10,696,698) (175,737,852) (6,795,204) (92,832,446)
------------ ------------- ------------ -------------
Net increase...................................... 158,946 $ 1,282,183 269,865 $ 3,157,592
------------ ------------- ------------ -------------
------------ ------------- ------------ -------------

GT GLOBAL VARIABLE EUROPE FUND
- --------------------------------------------------
Shares sold....................................... 4,041,258 $ 77,833,163 2,497,482 $ 39,741,019
Shares issued in connection with reinvestment of
distributions.................................... 7,876 155,793 9,965 154,451
------------ ------------- ------------ -------------
4,049,134 77,988,956 2,507,447 39,895,470
Shares repurchased................................ (3,846,425) (74,160,899) (2,547,574) (40,557,920)
------------ ------------- ------------ -------------
Net increase (decrease)........................... 202,709 $ 3,828,057 (40,127) $ (662,450)
------------ ------------- ------------ -------------
------------ ------------- ------------ -------------

GT GLOBAL MONEY MARKET FUND
- --------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold....................................... 316,100,021 $ 316,100,051 178,846,705 $ 178,851,599
Shares issued in connection with reinvestment of
distributions.................................... 708,413 708,413 823,767 818,843
------------ ------------- ------------ -------------
316,808,434 316,808,464 179,670,472 179,670,442
Shares repurchased................................ (311,904,996) (311,904,996) (184,253,572) (184,253,572)
------------ ------------- ------------ -------------
Net increase (decrease)........................... 4,903,438 $ 4,903,468 (4,583,100) $ (4,583,130)
------------ ------------- ------------ -------------
------------ ------------- ------------ -------------

GT GLOBAL VARIABLE INTERNATIONAL FUND
- --------------------------------------------------
Shares sold....................................... 804,796 $ 9,121,897 1,403,934 $ 14,984,693
Shares issued in connection with reinvestment of
distributions.................................... 1,276 14,683 3,283 35,810
------------ ------------- ------------ -------------
806,072 9,136,580 1,407,217 15,020,503
Shares repurchased................................ (737,004) (8,376,359) (1,272,826) (13,587,017)
------------ ------------- ------------ -------------
Net increase...................................... 69,068 $ 760,221 134,391 $ 1,433,486
------------ ------------- ------------ -------------
------------ ------------- ------------ -------------
</TABLE>

5. EXPENSE REDUCTIONS
The Manager has directed certain portfolio trades to brokers who paid a portion
of the Funds' expenses. The Funds' expenses were reduced as follows under these
arrangements:

<TABLE>
<CAPTION>
YEAR ENDED
GT GLOBAL DECEMBER 31, 1996
- ------------------------------------------------------------ -----------------
<S> <C>
Variable Strategic Income Fund.............................. $ --
Variable Global Government Income Fund...................... --
Variable U.S. Government Income Fund........................ --
Variable Latin America Fund................................. 10,929
Variable Growth & Income Fund............................... 3,243
Variable Telecommunications Fund............................ 8,003
Variable Emerging Markets Fund.............................. 11,363
Variable Infrastructure Fund................................ 652
Variable Natural Resources Fund............................. 2,864
Variable America Fund....................................... 13,978
Variable New Pacific Fund................................... 23,220
Variable Europe Fund........................................ 5,079
Money Market Fund........................................... --
Variable International Fund................................. 3,533
</TABLE>

FEDERAL TAX INFORMATION (UNAUDITED):
Pursuant to Section 852 of the Internal Revenue Code, the Funds designate the
following amounts as capital gain dividends for the fiscal year ended December
31, 1996:

<TABLE>
<CAPTION>
CAPITAL GAIN
GT GLOBAL DIVIDEND
- ------------------------------------------------------------ ------------
<S> <C>
Variable Telecommunications................................. $1,782,794
Variable America............................................ 551,518
</TABLE>

F75