GT GLOBAL VARIABLE INVESTMENT SERIES, 497, 1998-04-02

GT GLOBAL VARIABLE INVESTMENT SERIES
497, 1998-04-02

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<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

SUPPLEMENT TO PROSPECTUS DATED APRIL 1, 1998

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

THE FOLLOWING SUPPLEMENTS, AS APPLICABLE, THE DISCUSSION UNDER "INVESTMENT
OBJECTIVES AND POLICIES," "MANAGEMENT" AND "OTHER INFORMATION" WITH RESPECT TO
G.T. VARIABLE INVESTMENT SERIES AND G.T. VARIABLE INVESTMENT TRUST (THE
"COMPANIES") AND THE FUNDS:

On January 30, 1998, Liechtenstein Global Trust, AG ("LGT"), the indirect parent
organization of GT Global Inc. and Chancellor LGT, entered into an agreement
with AMVESCAP PLC ("AMVESCAP") pursuant to which AMVESCAP will acquire LGT's
Asset Management Division, which includes Chancellor LGT (the "Purchase").
AMVESCAP is a holding company formed in 1997 by the merger of INVESCO PLC and
A I M Management Group Inc. Consummation of the purchase is subject to a number
of contingencies, including regulatory approvals. The transaction would
constitute an assignment of, and thereby result in the termination of, the
Companies' investment management agreements with Chancellor LGT. Accordingly,
the Companies' Boards of Trustees have approved, subject to shareholder
approval, new investment management and administration agreements between A I M
Advisors, Inc. ("A I M"), a wholly-owned subsidiary of AMVESCAP, and the
Companies, and sub-advisory and sub-administration agreements between A I M and
Chancellor LGT, which will become a separate, indirect wholly-owned subsidiary
of AMVESCAP. Under the new agreements, A I M would serve as investment manager
and administrator and Chancellor LGT would serve as investment sub-adviser and
sub-administrator of the Companies. In addition to shareholder approval,
implementation of the new investment advisory arrangements is contingent upon
the consummation of the Purchase.

The Boards of Trustees of the Companies have also approved the following
matters, subject to shareholder approval:

1. Amendments to the fundamental investment restrictions of each Fund.

2. The reorganization of the Companies from Massachusetts business trusts
into Delaware business trusts.

A special meeting of shareholders of the Companies will be held on May 20, 1998
to consider and vote on, among other proposals, the matters noted above that
require shareholder approvals. If the matters are approved by shareholders and
the Purchase consummated, it is anticipated that the changes described above
will become effective on or about June 1, 1998.

[LOGO]
VARST803M April 1, 1998
<PAGE>
GT GLOBAL
VARIABLE
INVESTMENT
FUNDS

PROSPECTUSES
<PAGE>
[LOGO]GT GLOBAL VARIABLE INVESTMENT FUNDS
PROSPECTUS -- APRIL 1, 1998

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

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 a series of 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 a series of 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.
See "Investment Objectives and Policies" and "Risk Factors."

This Prospectus concisely sets forth information about the Funds that an
investor should know before investing through the VA Contracts. This Prospectus,
in addition to the VA Contracts prospectus, should be read carefully and
retained for future reference. A Statement of Additional Information, dated
April 1, 1998, 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, CA 94111, or by calling (800) 824-1580. It is also available, along
with other related materials, on the SEC's Internet web site
(http://www.sec.gov).

[LOGO]

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

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE 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........................................................ 15
Risk Factors.............................................................................. 31
Currency, Options and Futures Strategies.................................................. 38
How to Invest............................................................................. 39
Calculation of Net Asset Value............................................................ 40
Dividends, Other Distributions and Federal Income Taxation................................ 40
Management................................................................................ 42
Other Information......................................................................... 48
</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>
YEAR ENDED DEC. 31,
------------------------------------------
1997 1996 1995
------------ ------------ ------------
JULY 5, 1994
(COMMENCEMENT
OF
OPERATIONS)
TO
DEC. 31, 1994
-------------
GT GLOBAL GT GLOBAL
------------------------------------------ -------------
VARIABLE VARIABLE VARIABLE VARIABLE
INTERNATIONAL INTERNATIONAL INTERNATIONAL INTERNATIONAL
FUND FUND FUND FUND
------------ ------------ ------------ -------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period.............. $ 11.91 $ 11.01 $ 11.25 $ 12.00
------------ ------------ ------------ -------------
Income from investment operations
Net investment income........................... 0.15* 0.05* 0.09* 0.06**
Net gains or losses on securities (both realized
and unrealized)................................ 0.68 0.89 (0.22) (0.76)
------------ ------------ ------------ -------------
Total from investment operations.................. 0.83 0.94 (0.13) (0.70)
------------ ------------ ------------ -------------
Less distributions
From net investment income...................... (0.02) -- (0.09) (0.05)
From net realized gain on investments........... -- (0.04) (0.02) --
In excess of net investment income.............. -- -- -- --
Return of capital............................... -- -- -- --
------------ ------------ ------------ -------------
Total distributions........................... (0.02) (0.04) (0.11) (0.05)
------------ ------------ ------------ -------------
Net asset value, end of period.................... $ 12.72 $ 11.91 $ 11.01 $ 11.25
------------ ------------ ------------ -------------
------------ ------------ ------------ -------------
Total returns +(b)................................ 6.93% 8.52% (1.14)% (5.81)%
Ratios/supplemental data
Net assets, end of period (in 000's)............ $ 5,929 $ 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)............................... 1.22% 0.48% 0.93% 3.33%
Without reimbursement by the Manager and
expense reductions (a)....................... 0.05% (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)............................... 1.14% 1.15% 1.25% 0.69%
Without reimbursement by the Manager and
expense reductions (a)....................... 2.31% 2.49% 3.53% 6.58%
Without expenses assumed by the Manager (a)... --% --% --% --%
Portfolio turnover (a).......................... 112% 92% 107% 17%
Average commission rate per share paid on
portfolio transactions......................... $0.0225 $0.0156 N/A N/A
</TABLE>

- ------------------
+ 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.

* Includes reimbursement by the Manager of International Fund operating
expenses for the fiscal years ended 1997, 1996 and 1995, of $0.06, $0.14 and
$0.22, respectively.

** Includes reimbursement by the Manager of International Fund operating
expenses of $0.11.

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

(b) Not annualized for periods of less than one year.
------------------------------

Prospectus Page 4
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

G.T. GLOBAL VARIABLE INVESTMENT SERIES (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED DEC. 31, 1997
----------------------------------------------
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.............. $ 18.02 $ 21.34 $19.71 $ 1.00
-------- -------- ------- -------
Income from investment operations
Net investment income........................... 0.26*** 0.05*** (0.07 ) 0.05***
Net gains or losses on securities (both realized
and unrealized)................................ (7.61) 3.10 2.88 --
-------- -------- ------- -------
Total from investment operations.................. (7.35) 3.15 2.81 0.05
-------- -------- ------- -------
Less distributions
From net investment income...................... (0.10) (0.06) (0.09 ) (0.05)
From net realized gain on investments........... (0.07) (1.91) (0.75 ) --
In excess of net investment income.............. -- -- -- --
Return of capital............................... -- -- -- --
-------- -------- ------- -------
Total distributions........................... (0.17) (1.97) (0.84 ) (0.05)
-------- -------- ------- -------
Net asset value, end of period.................... $ 10.50 $ 22.52 $21.68 $ 1.00
-------- -------- ------- -------
-------- -------- ------- -------
Total returns +(b)................................ (41.11)% 15.15% 14.88% 4.96%
Ratios/supplemental data
Net assets, end of period (in 000's)............ $ 16,490 $27,410 $43,977 $26,964
Ratio of net investment income (loss) to average
net assets:
With reimbursement by the Manager and expense
reductions (a)............................... 1.50% 0.22% (0.35)% 4.77%
Without reimbursement by the Manager and
expense reductions (a)....................... 1.16% 0.01% (0.42)% 4.73%
Without expenses assumed by the Manager (a)... --% --% --% --%
Ratio of expenses to average net assets:
With reimbursement by the Manager and expense
reductions (a)............................... 1.09% 1.20% 0.91% 0.75%
Without reimbursement by the Manager and
expense reductions (a)....................... 1.43% 1.41% 0.98% 0.79%
Without expenses assumed by the Manager (a)... --% --% --% --%
Portfolio turnover (a).......................... 93% 117% 210% N/A
Average commission rate per share paid on
portfolio transactions......................... $ 0.0064 $0.0626 $0.0552 N/A

<CAPTION>
YEAR ENDED DEC. 31, 1996
-----------------------------------------------
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.............. $ 13.92 $ 16.52 $19.46 $ 1.00
-------- -------- ------- -------
Income from investment operations
Net investment income........................... 0.13** 0.05** 0.12 ** 0.05**
Net gains or losses on securities (both realized
and unrealized)................................ 4.16 4.93 3.18 0.00
-------- -------- ------- -------
Total from investment operations.................. 4.29 4.98 3.30 0.05
-------- -------- ------- -------
Less distributions
From net investment income...................... (0.19) (0.16) (0.30 ) (0.05)
From net realized gain on investments........... -- -- (2.75 ) --
In excess of net investment income.............. -- -- -- --
Return of capital............................... -- -- -- --
-------- -------- ------- -------
Total distributions........................... (0.19) (0.16) (3.05 ) (0.05)
-------- -------- ------- -------
Net asset value, end of period.................... $ 18.02 $ 21.34 $19.71 $ 1.00
-------- -------- ------- -------
-------- -------- ------- -------
Total returns +(b)................................ 30.97% 30.25% 18.55% 4.75%
Ratios/supplemental data
Net assets, end of period (in 000's)............ $32,670 $24,537 $41,647 $19,794
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%
Without reimbursement by the Manager and
expense reductions (a)....................... 0.60% 0.09% 0.46% 4.57%
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%
Without reimbursement by the Manager and
expense reductions (a)....................... 1.40% 1.47% 1.01% 0.85%
Without expenses assumed by the Manager (a)... --% --% --% --%
Portfolio turnover (a).......................... 70% 56% 248% N/A
Average commission rate per share paid on
portfolio transactions......................... $0.0071 $0.0313 $0.0531 N/A
</TABLE>

* 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.

*** Includes reimbursements by the Manager of New Pacific Fund, Europe Fund and
Money Market Fund operating expenses for the fiscal year ended December 31,
1997 of $0.02, $0.02 and $0.00, respectively.

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

(b) Not annualized for periods of less than one year.

Prospectus Page 5
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

G.T. GLOBAL VARIABLE INVESTMENT SERIES (CONTINUED)

<TABLE>
<CAPTION>
YEAR ENDED DEC. 31, 1995
------------------------------------------
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....................... $ 14.01 $ 15.22 $ 15.81 $ 1.00
----------- -------- -------- --------
Income from investment
operations
Net investment income....... 0.20* 0.18 * 0.21 * 0.05*
Net gains or losses on
securities (both realized
and unrealized)............ (0.23) 1.28 3.80 --
----------- -------- -------- --------
Total from investment
operations................... (0.03) 1.46 4.01 0.05
----------- -------- -------- --------
Less distributions
From net investment
income..................... (0.06) (0.16 ) (0.07 ) (0.05)
From net realized gain on
investments................ -- -- (0.29 ) --
In excess of net investment
income..................... -- -- -- --
Return of capital........... -- -- -- --
----------- -------- -------- --------
Total distributions....... (0.06) (0.16 ) (0.36 ) (0.05)
----------- -------- -------- --------
Net asset value, end of
period....................... $ 13.92 $ 16.52 $ 19.46 $ 1.00
----------- -------- -------- --------
----------- -------- -------- --------
Total returns +(b)............ (0.21)% 9.66% 25.37% 5.26%
Ratios/supplemental data
Net assets, end of period
(in 000's)................. $ 23,025 $15,641 $37,643 $ 14,891
Ratio of net investment
income (loss) to average
net assets:
With reimbursement by the
Manager and expense
reductions (a)........... 1.27% 1.12% 1.66% 5.15%
Without reimbursement by
the Manager and expense
reductions (a)........... 1.74% 0.60% 1.60% 4.85%
Without expenses assumed
by the Manager (a)....... --% --% --% --%
Ratio of expenses to average
net assets:
With reimbursement by the
Manager and expense
reductions (a)........... 1.14% 1.20% 1.00% 0.75%
Without reimbursement by
the Manager and expense
reductions (a)........... 1.61% 1.72% 1.06% 1.05%
Without expenses assumed
by the Manager (a)....... --% --% --% --%
Portfolio turnover (a)...... 67% 123% 79% 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 for periods of less than one year.

Prospectus Page 6
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

G.T. GLOBAL VARIABLE INVESTMENT SERIES (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED DEC. 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 --
----------- -------- ------- -------
Total from investment operations........ (2.00) (0.09) 2.56 0.03
----------- -------- ------- -------
Less distributions
From net investment income............ (0.06) -- (0.50 ) (0.03)
From net realized gain on
investments.......................... -- (0.02) -- --
In excess of net investment income.... -- -- -- --
Return of capital..................... -- -- -- --
----------- -------- ------- -------
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>
FEB. 10, 1993
(COMMENCEMENT OF OPERATIONS)
TO DEC. 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 --
----------- -------- ------- ------
Total from investment operations........ 4.07 3.33 1.75 0.03
----------- -------- ------- ------
Less distributions
From net investment income............ -- -- -- (0.03 )
From net realized gain on
investments.......................... -- -- -- --
In excess of net investment income.... -- -- -- --
Return of capital..................... -- -- -- --
----------- -------- ------- ------
Total distributions..................... -- -- -- (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>

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

+ 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.

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

(b) Not annualized.
------------------------------

<TABLE>
<CAPTION>
AVERAGE MONTHLY
NUMBER OF
AVERAGE REGISTRANT'S AVERAGE
AMOUNT OF DEBT AMOUNT OF DEBT SHARES AMOUNT OF
YEAR OUTSTANDING OUTSTANDING OUTSTANDING DEBT PER SHARE
ENDED AT END OF PERIOD DURING THE PERIOD DURING THE PERIOD DURING THE PERIOD
----------- ---------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C>
New Pacific Fund.................. 1997 $ 0 $ 157,386 1,731,796 $ 0.0909
Europe Fund....................... 1997 0 253,348 1,255,414 0.2018
America Fund...................... 1997 0 91,718 2,058,932 0.0445
Money Market Fund................. 1997 0 0 22,500,758 0.0000
Europe Fund....................... 1996 239,000 655 1,035,444 0.0006
</TABLE>

Prospectus Page 7
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

G.T. GLOBAL VARIABLE INVESTMENT TRUST

<TABLE>
<CAPTION>
YEAR ENDED DEC. 31, 1997 YEAR ENDED DEC. 31, 1996
----------------------------------------- -----------------------------------------
GT GLOBAL VARIABLE GT GLOBAL VARIABLE
----------------------------------------- -----------------------------------------
NATURAL NATURAL
INFRASTRUCTURE RESOURCES EMERGING INFRASTRUCTURE RESOURCES EMERGING
FUND FUND MARKETS FUND FUND FUND MARKETS FUND
-------------- --------- ------------ -------------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.... $ 16.47 $ 20.98 $ 14.26 $ 13.27 $ 13.88 $ 10.88
-------------- --------- ------------ -------------- --------- ------------
Income from investment operations
Net investment income................. 0.12** (0.03)** 0.15** 0.11* (0.06)* 0.11*
Net gains or losses on securities
(both realized and unrealized)....... 0.74 0.18 (1.89) 3.19 7.16 3.27
-------------- --------- ------------ -------------- --------- ------------
Total from investment operations........ 0.86 0.15 (1.74) 3.30 7.10 3.38
-------------- --------- ------------ -------------- --------- ------------
Less distributions
From net investment income............ (0.10) -- (0.06) (0.03) -- --
From net realized gain on
investments.......................... (0.88) (0.93) (0.89) (0.07) -- --
In excess of net realized gain on
investments.......................... -- -- -- -- -- --
Return of capital..................... -- -- -- -- -- --
-------------- --------- ------------ -------------- --------- ------------
Total distributions..................... (0.98) (0.93) (0.95) (0.10) -- --
-------------- --------- ------------ -------------- --------- ------------
Net asset value, end of period.......... $ 16.35 $ 20.20 $ 11.57 $ 16.47 $ 20.98 $ 14.26
-------------- --------- ------------ -------------- --------- ------------
-------------- --------- ------------ -------------- --------- ------------
Total returns +(b)...................... 5.00% 1.29% (13.76)% 24.88% 51.15% 31.07%
Ratios/supplemental data
Net assets, end of period (in
000's)............................... $ 8,745 $16,709 $16,509 $ 6,054 $16,308 $17,604
Ratio of net investment income to
average net assets:
With reimbursement by the Manager
and expense reductions (a)......... 0.99% (0.16)% 1.05% 1.35% (0.60)% 0.89%
Without reimbursement by the Manager
and expense reductions (a)......... 0.68% (0.38)% 0.78% 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)......... 1.18% 1.20% 1.22% 1.21% 1.19% 1.18%
Without reimbursement by the Manager
and expense reductions (a)......... 1.49% 1.42% 1.49% 2.53% 1.89% 1.68%
Without expenses assumed by the
Manager (a)........................ --% --% --% --% --% --%
Portfolio turnover (a)................ 46% 315% 212% 76% 199% 216%
Average commission rate per share paid
on portfolio transactions............ $0.0077 $0.0123 $0.0013 $0.0101 $0.0164 $0.0021
</TABLE>

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

** Includes reimbursement by the Manager of Infrastructure Fund, Natural
Resources Fund and Emerging Markets Fund operating expenses for the fiscal
year ended December 31, 1997 of $0.04, $0.03 and $0.03, respectively.

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

(b) Not annualized.

Prospectus Page 8
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

G.T. GLOBAL VARIABLE INVESTMENT TRUST (CONTINUED)
<TABLE>
<CAPTION>
NATURAL EMERGING
INFRASTRUCTURE RESOURCES EMERGING MARKETS
FUND FUND MARKETS FUND FUND
-------------- --------- ------------ ---------------
GT GLOBAL
VARIABLE
------------
<S> <C> <C> <C> <C>

<CAPTION>
JULY 5, 1994
JAN. 31, 1995 (COMMENCEMENT
(COMMENCEMENT YEAR ENDED OF OPERATIONS)
OF OPERATIONS) TO DEC. 31, TO
DEC. 31, 1995 1995 DEC. 31, 1994
-------------------------- ------------ ---------------
<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 net realized gain on
investments.......................... -- -- -- --
In excess of net realized gain on
investments.......................... -- (0.05) -- (0.06)
Return of capital..................... -- -- (0.02) --
------- --------- ------------ -------
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>

* 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.

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

(b) Not annualized.
------------------------------

<TABLE>
<CAPTION>
AVERAGE MONTHLY
NUMBER OF
AVERAGE REGISTRANT'S AVERAGE
AMOUNT OF DEBT AMOUNT OF DEBT SHARES AMOUNT OF
YEAR OUTSTANDING OUTSTANDING OUTSTANDING DEBT PER SHARE
ENDED AT END OF PERIOD DURING THE PERIOD DURING THE PERIOD DURING THE PERIOD
----------- --------------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C>
Infrastructure Fund............... 1997 $ 0 $ 0 490,778 $ 0.0000
Natural Resources Fund............ 1997 0 71,425 879,531 0.0812
Emerging Markets Fund............. 1997 0 151,740 1,452,279 0.1045
</TABLE>

Prospectus Page 9
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

G.T. GLOBAL VARIABLE INVESTMENT TRUST (CONTINUED)

<TABLE>
<CAPTION>
YEAR ENDED DEC. 31, 1997
----------------------------------------------------------------------------------
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............ $ 14.80 $ 16.51 $ 13.38 $ 11.43 $ 11.41 $ 18.14
----------- ----------- ----------- ------------- ------------- -------------
Income from investment operations
Net investment income......................... 0.24** 0.41** 1.00** 0.82** 0.63** (0.02)
Net gains or losses on securities (both
realized and unrealized)..................... 1.91 2.23 (0.07) (0.34) 0.29 2.59
----------- ----------- ----------- ------------- ------------- -------------
Total from investment operations................ 2.15 2.64 0.93 0.48 0.92 2.57
----------- ----------- ----------- ------------- ------------- -------------
Less distributions
From net investment income.................... -- (0.51) (0.92) (0.74) (0.54) --
From net realized gain on investments......... -- (0.04) -- -- (0.09) (2.31)
In excess of net investment income............ -- -- -- -- -- --
Return of capital............................. -- -- -- -- -- --
----------- ----------- ----------- ------------- ------------- -------------
Total distributions............................. -- (0.55) (0.92) (0.74) (0.63) (2.31)
----------- ----------- ----------- ------------- ------------- -------------
Net asset value, end of period.................. $ 16.95 $ 18.60 $ 13.39 $ 11.17 $ 11.70 $ 18.40
----------- ----------- ----------- ------------- ------------- -------------
----------- ----------- ----------- ------------- ------------- -------------
Total returns +(b).............................. 14.53% 16.22% 7.14% 4.37% 8.30% 14.56%
Ratios/supplemental data
Net assets, end of period (in 000's).......... $ 28,786 $ 50,356 $ 28,497 $ 8,251 $ 7,373 $ 68,186
Ratio of net investment income to average net
assets:
With reimbursement by the Manager and
expense reductions (a)..................... 1.36% 2.86% 7.20% 6.33% 5.54% (0.10)%
Without reimbursement by the Manager and
expense reductions (a)..................... 1.21% 2.72% 7.03% 5.74% 4.92% (0.15)%
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% 1.13% 0.90% 0.95% 1.00% 1.11%
Without reimbursement by the Manager and
expense reductions (a)..................... 1.40% 1.27% 1.07% 1.54% 1.62% 1.16%
Without expenses assumed by the Manager
(a)........................................ --% --% --% --% --% --%
Portfolio turnover (a)........................ 141% 60% 185% 235% 143% 91%
Average commission rate per share paid on
portfolio transactions....................... $ 0.0004 $ 0.0141 N/A N/A N/A $ 0.0092
</TABLE>

* 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.

** Includes reimbursement by the Manager of operating expenses for the fiscal
year ended December 31, 1997 for the Latin America Fund, the Growth & Income
Fund, the Strategic Income Fund, the Global Government Income Fund and the
U.S. Government Income Fund of $0.02, $0.00, $0.01, $0.06 and $0.06,
respectively.

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

(b) Not annualized.

Prospectus Page 10
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

G.T. GLOBAL VARIABLE INVESTMENT TRUST (CONTINUED)

<TABLE>
<CAPTION>
YEAR ENDED DEC. 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 on investments......... -- (0.05) (0.08) -- -- (1.97)
In excess of net investment income............ (0.01) -- -- -- -- --
Return of capital............................. -- -- -- -- -- --
----------- ----------- ----------- ------------- ------------- -------------
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 $ 63,258
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.

Prospectus Page 11
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

G.T. GLOBAL VARIABLE INVESTMENT TRUST (CONTINUED)

<TABLE>
<CAPTION>
YEAR ENDED DEC. 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 net realized gain on investments......... (2.00) -- -- -- -- (0.36)
In excess of net investment income............ -- -- -- -- -- --
Return of capital............................. -- -- -- -- -- --
--------- ----------- ----------- ------------- ------------ -------------
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>

* 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.

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

(b) Not annualized.

Prospectus Page 12
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

G.T. GLOBAL VARIABLE INVESTMENT TRUST (CONTINUED)

<TABLE>
<CAPTION>
YEAR ENDED DEC. 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............... 1.60 (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 net realized gain on investments........ (0.07) -- (0.45) -- (0.06) --
In excess of net investment income........... -- -- -- -- -- --
Return of capital............................ -- -- (0.05) (0.09) -- --
----------- ----------- ----------- ------------- ------------- -------------
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>

* 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.

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

(b) Not annualized.

Prospectus Page 13
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

G.T. GLOBAL VARIABLE INVESTMENT TRUST (CONTINUED)

<TABLE>
<CAPTION>
OCT. 18, 1993
FEB. 10, 1993 (COMMENCEMENT
(COMMENCEMENT OF OPERATIONS) TO OF OPERATIONS) TO
DEC. 31, 1993 DEC. 31, 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................ -- (0.28) (0.61) (0.56) (0.53) --
From net realized gain on investments..... -- (0.05) -- -- -- --
In excess of net investment income........ -- -- -- -- -- --
----------- ----------- ----------- ------------- ------------- -------
Total distributions......................... -- (0.33) (0.61) (0.56) (0.53) --
----------- ----------- ----------- ------------- ------------- -------
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>

* 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.

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

(b) Not annualized.
------------------------------

<TABLE>
<CAPTION>
AVERAGE MONTHLY
NUMBER OF
AVERAGE REGISTRANT'S AVERAGE
AMOUNT OF DEBT AMOUNT OF DEBT SHARES AMOUNT OF
YEAR OUTSTANDING OUTSTANDING OUTSTANDING DEBT PER SHARE
ENDED AT END OF PERIOD DURING THE PERIOD DURING THE PERIOD DURING THE PERIOD
----------- --------------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C>
Latin America Fund................ 1997 $ 0 $ 158,488 1,733,114 $ 0.0914
Growth & Income Fund.............. 1997 0 26,175 2,409,575 0.0109
Strategic Income Fund............. 1997 0 69,819 2,214,986 0.0315
Global Government Income Fund..... 1997 0 83,438 839,189 0.0994
U.S Government Income Fund........ 1997 0 537 504,546 0.0011
Telecommunications Fund........... 1997 0 0 3,647,990 0.0000
</TABLE>

Prospectus Page 14
<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

Prospectus Page 15
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GT GLOBAL VARIABLE INVESTMENT FUNDS
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
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. It
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

Prospectus Page 16
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GT GLOBAL VARIABLE INVESTMENT FUNDS
services significant to the development of a country's infrastructure.

The Manager believes that a country's infrastructure is one key to the long-term
success of that country's economy. The Manager believes that adequate energy,
transportation, water and communications systems are essential elements for
long-term economic growth. The Manager believes that many developing nations,
especially in Asia and Latin America, plan to make significant expenditures to
the development of their infrastructure in the coming years, which is expected
to facilitate increased levels of services and manufactured goods.

In the developed countries of North America, Europe, Japan and the 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.
It 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

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GT GLOBAL VARIABLE INVESTMENT FUNDS
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 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. It 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

Prospectus Page 18
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GT GLOBAL VARIABLE INVESTMENT FUNDS
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 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

Prospectus Page 19
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GT GLOBAL VARIABLE INVESTMENT FUNDS
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 depository 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 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

Prospectus Page 20
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
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 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 Investors Service,
Inc. ("Moody's") or Standard & Poor's, a division of The McGraw-Hill Companies,
Inc. ("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

Prospectus Page 21
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GT GLOBAL VARIABLE INVESTMENT FUNDS
national governments, such as the World Bank and the Asian Development Bank. The
debt obligations held by the Growth & Income Fund may include debt obligations
convertible into equity securities or having attached warrants or rights to
purchase equity securities.

The Growth & Income Fund currently contemplates that it will invest principally
in securities of issuers in the United States, Canada, Japan, the Western
European nations, New Zealand and Australia. The Growth & Income Fund may invest
substantially in securities denominated in more than one currency. Under normal
market conditions, the Growth & Income Fund invests in the securities of issuers
located in at least three different countries. Investments in securities of
issuers in any one country, other than the United States, will represent no more
than 40% of the Fund's total assets. The Growth & Income Fund may purchase
securities of an issuer located in one country but denominated in the currency
of another country (or a multinational currency unit).

The Manager allocates the Growth & Income Fund's assets among securities of
issuers located in countries where opportunities for meeting the Fund's
investment objectives are expected to be the most attractive. The relative
proportions of equity and debt securities held by the Growth & Income Fund at
any one time will vary, and will depend upon the Manager's assessment of global
political and economic conditions and the relative strengths and weaknesses of
the world equity and debt markets. To enable the Growth & Income Fund to respond
to general economic changes and market conditions around the world, the Fund is
authorized to invest up to 100% of its assets in either equity securities or
debt securities.

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

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GT GLOBAL VARIABLE INVESTMENT FUNDS
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. Its secondary
objectives are capital appreciation and protection of principal through active
management of its 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 or by foreign governments. 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 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 of U.S. or foreign issuers rated at least investment
grade 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

Prospectus Page 23
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GT GLOBAL VARIABLE INVESTMENT FUNDS
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 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; (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) commercial paper and other short-term debt obligations of U.S.
and foreign corporations, rated at least A-1 by S&P or Prime-1 by Moody's, 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.

Prospectus Page 24
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GT GLOBAL VARIABLE INVESTMENT FUNDS

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 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,

Prospectus Page 25
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GT GLOBAL VARIABLE INVESTMENT FUNDS
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 Albania, Argentina, Brazil, Bulgaria, Costa Rica, Dominican
Republic, Ecuador, Ivory Coast, Jordan, Mexico, Nigeria, Panama, Peru,
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 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
the time of issuance and is adjusted at regular intervals thereafter.

PRIVATIZATIONS. The governments of some foreign countries have been engaged in
programs of selling part or all of their stakes in government owned or
controlled enterprises ("privatizations"). The Manager believes that
privatizations may offer opportunities for significant capital appreciation and
intends to invest assets of the Infrastructure Fund, the Natural Resources Fund,
the Telecommunications Fund, the Emerging Markets Fund, and the Latin America
Fund, respectively, in privatizations in appropriate circumstances. In certain
foreign countries, the ability of foreign entities such as the Funds to
participate in privatizations may be limited by local law, or the terms on which
the Funds may be permitted to participate may be less advantageous than those
for local investors. There can be no assurance that foreign governments will
continue to sell companies currently owned or controlled by them or that
privatization programs will be successful.

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.

Prospectus Page 26
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GT GLOBAL VARIABLE INVESTMENT FUNDS
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 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.

Prospectus Page 27
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GT GLOBAL VARIABLE INVESTMENT FUNDS
Securities lending allows the Fund to retain ownership of the securities loaned
and, at the same time, enhances the Fund's total return. While 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 or such other collateral as permitted by a Fund's investment program
and regulatory agencies, and as approved by the Board. 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. Some of the investment companies in which the Funds invest may be
investment vehicles or companies that are advised by the Manager.

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 except with respect
to investments in other investment companies that are advised by the Manager.
The Manager has agreed to waive its fees charged to the Funds to the extent that
such fees are based on the Funds' investments in such other investment
companies.

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 that 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 and market rate of interest unrelated to the coupon rate
or maturity of the purchased security. Although repurchase agreements carry
certain

Prospectus Page 28
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GT GLOBAL VARIABLE INVESTMENT FUNDS
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.

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INDEXED SECURITIES. The Strategic Income Fund may invest without limitation in
commercial paper which is indexed to certain specific foreign currency exchange
rates. The terms of such commercial paper provide that its principal amount is
adjusted upwards or downwards (but not below zero) at maturity to reflect
changes in the exchange rate between two currencies while the obligation is
outstanding. The Fund will purchase such commercial paper with the currency in
which it is denominated and, at maturity, will receive interest and principal
payments thereon in that currency, but the amount of principal payable by the
issuer at maturity will change in proportion to the change (if any) in the
exchange rate between the two specified currencies between the date the
instrument is issued and the date the instrument matures. While such commercial
paper entails the risk of loss of principal, the potential for realizing gains
as a result of changes in foreign currency exchange rates enables the Strategic
Income Fund to hedge (or cross-hedge) against a decline in the U.S. dollar value
of investments denominated in foreign currencies while 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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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. The value of equity securities held by a Fund will
fluctuate in response to general market and economic developments, as well as
developments affecting the particular issuers of such securities. 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

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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 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. Such companies may also be subject to
irregular fluctuations in earnings due to changes in the availability of money,
the level of interest rates, and other factors.

The value of securities of natural resource companies will fluctuate in response
to market conditions for the particular natural resources with which the issuers
are involved. The price of natural resources will fluctuate due to changes in
worldwide levels of inventory, and changes, perceived or actual, in production
and consumption. With respect to precious metals, such price fluctuations may be
substantial over short periods of time. In addition, the value 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.

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

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GT GLOBAL VARIABLE INVESTMENT FUNDS
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.

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 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. Moreover, recent currency devaluations in some Pacific region
countries have resulted in high interest rate levels and sharp reductions in
economic activity and have diminished prospects for short-term growth in
corporate earnings. Certain countries, such as

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India, face serious exchange constraints. Jurisdictional disputes also exist
between South Korea and North Korea.

In addition, Hong Kong reverted to Chinese Administration on July 1, 1997. The
long-term effects of this reversion are not known at this time. However, a
Fund's investments in Hong Kong may now be subject to the same or similar risks
as any investment in China. 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 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

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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 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, 1997, the Strategic Income Fund had 89.11% of its total net
assets invested in debt securities that received a rating from Moody's and 2.98%
of its total net assets invested in debt securities that were not so rated. In
addition, the Strategic Income Fund had 7.91% 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--42.44%, Aa--9.62%,
A--1.04%, Baa--3.37%, Ba--18.37%, B--12.27%, Caa--0.00%, Ca--0.00%, C--0.00%.
Included under the unrated category are securities composing 2.98% 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: Ba--0.96%, B--2.02%. 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

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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 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.

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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.

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.

Foreign mortgage-backed securities markets are substantially smaller than U.S.
markets, but have been established in several countries, including Germany,
Denmark, Sweden, Canada, and Australia, and may be developed elsewhere. Foreign
mortgage-backed securities generally are structured similar to domestic
mortgage-backed securities, and they normally present substantially similar
investment risks as well as the other risks normally associated with foreign
securities.

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.

Prospectus Page 37
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GT GLOBAL VARIABLE INVESTMENT FUNDS

CURRENCY, OPTIONS AND
FUTURES STRATEGIES

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

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.

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

Prospectus Page 38
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
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; and (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.

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.

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

HOW TO INVEST

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

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."

Prospectus Page 39
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

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 cannot purchase
or redeem shares of 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.

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

DIVIDENDS, OTHER DISTRIBUTIONS
AND FEDERAL INCOME TAXATION

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

DIVIDENDS AND OTHER DISTRIBUTIONS. The Money Market Fund declares dividends from
net investment income on each day it determines its net asset value, which are
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 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

Prospectus Page 40
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
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 (i.e., the excess of
net long-term capital gain over short-term capital loss) 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
it distributes 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 calendar quarter or within
30 days thereafter, no more than 55% of the total assets of a Fund may be
invested in the securities of any one issuer. For this purpose, all securities
of the same issuer are consolidated, and while each U.S. government agency and
instrumentality is considered a separate issuer, a particular foreign government
and its agencies, instrumentalities and political subdivisions are all
considered to be the same issuer. Section 817(h) provides, as a safe harbor,
that adequate diversification will exist for a separate account if the
diversification requirements under Subchapter M are satisfied and no more than
55% of the value of the separate account's total assets are cash and cash items,
government securities and securities of other RICs. Failure of a Fund to satisfy
the section 817(h) requirements would result in treatment of the VA Contract
holders other than as described in the applicable VA 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.

Prospectus Page 41
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

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 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 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,
compose Liechtenstein Global Trust ("LGT"). LGT is a provider of global asset
management and private banking products and services to individual and
institutional investors. LGT 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.

On January 30, 1998, LGT, the indirect parent organization of Chancellor LGT
Asset Management, Inc. (the "Manager"), entered into an agreement with AMVESCAP
PLC ("AMVESCAP") pursuant to which AMVESCAP will acquire LGT's Asset Management
Division, which includes the Manager. AMVESCAP is a holding company formed in
1997 by the merger of INVESCO PLC and A I M Management Group Inc. Consummation
of the transaction is subject to a number of contingencies, including regulatory
approvals. Because the transaction would constitute an assignment of the
Company's investment management agreement under the Investment Company Act of
1940 (and, therefore, a termination of such agreement), it is anticipated that
the approval of each Company's Board of Trustees and each Company's shareholders
of new investment management arrangements will be sought. The Manager
anticipates that the investment management arrangements will be presented for
shareholder approval, and anticipates that the transaction will close, on or
about May 31, 1998.

As of December 31, 1997, the Manager and its worldwide affiliates managed
approximately $54 billion in assets. In the United States, as of December 31,
1997, the Manager managed or administered approximately $8 billion of assets of
the GT Global Mutual Funds. As of December 31, 1997, assets entrusted to
Liechtenstein Global Trust totaled approximately $79 billion.

Prospectus Page 42
<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 each Fund's
investment objective.

The investment professionals primarily responsible for the portfolio management
of each Fund are as follows:

NEW PACIFIC FUND

EUROPE FUND

LATIN AMERICA FUND

Prospectus Page 43
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

EMERGING MARKETS FUND

<TABLE>
<CAPTION>
RESPONSIBILITIES FOR BUSINESS EXPERIENCE
NAME/OFFICE THE FUND PAST 5 YEARS
- ----------------------- ------------------------ --------------------------------------------------------------------
<S> <C> <C>
Allan Conway Portfolio Manager since See description above.
London 1997
Hugh Hunter Portfolio Manager since Mr. Hunter has been a Portfolio Manager for the Manager and LGT
London 1997 Asset Management since June 1997. From 1987 to 1997, he was Head of
Quantitative Emerging Strategy at ING-Barings (Hong Hong)
("Barings").
Aziz Minhas Portfolio Manager since Mr. Minhas has been a Portfolio Manager for the Manager and LGT
London 1998 Asset Management since December 1997. Prior thereto, he was an
Investment Analyst and then a Senior Investment Analyst with Abu
Dhabi Investment Authority (London) from 1990 to 1997.
Darren Read Portfolio Manager since Mr. Read has been a Portfolio Manager for the Manager and LGT Asset
London 1997 Management since May 1997. From 1995 to 1997, Mr. Read was a Senior
Investment Analyst at Hermes responsible for stock selection and
strategic asset allocation input in a number of emerging markets.
Prior thereto, Mr. Read was a Chartered Accountant in the Financial
Markets Division of Arthur Andersen from 1991 to 1995.
Christine Rowley Portfolio Manager since Ms. Rowley has been a Portfolio Manager for the Manager, LGT Asset
London 1997 Management and LGT Asset Management Ltd. (Hong Kong) since 1992. In
this position, Ms. Rowley managed Asian emerging market portfolios
and, commencing in 1997, global emerging market portfolios. Prior
thereto, Ms. Rowley was an Analyst with the Bank of England from
1989 to 1990.
Mark Thorogood Portfolio Manager since Mr. Thorogood joined the Manager and LGT Asset Management in May
London 1997 1997 as a Portfolio Manager. Prior thereto, he worked for Barings
from 1994 to 1997 as a proprietary Trader. From 1987 to 1994, Mr.
Thorogood was at Provident Mutual, first as an Analyst, and then as
a Portfolio Manager covering the Japanese and Asian Equity Markets.
</TABLE>

Prospectus Page 44
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

AMERICA FUND

INFRASTRUCTURE FUND

NATURAL RESOURCES FUND

TELECOMMUNICATIONS FUND

GROWTH & INCOME FUND

- --------------
* On October 31, 1996, Chancellor Capital Management, Inc. ("Chancellor
Capital") merged with LGT Asset Management, Inc. (San Francisco), and the
resulting entity was renamed Chancellor LGT Asset Management, Inc. Prior to
October 31, 1996, Mr. Clum and Mr. Nelson were employees only of Chancellor
Capital.

Prospectus Page 45
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

STRATEGIC INCOME FUND

INTERNATIONAL FUND

U.S. GOVERNMENT INCOME FUND

- --------------
* On October 31, 1996, Chancellor Capital merged with LGT Asset Management, Inc.
(San Francisco), and the resulting entity was renamed Chancellor LGT Asset
Management, Inc. Prior to October 31, 1996, Mr. Lau was an employee only of
Chancellor Capital.

Prospectus Page 46
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
<TABLE>
<S> <C> <C>
Edward J. O'Hara* Portfolio Manager since Mr. O'Hara joined the Manager in August 1995 as a Senior Portfolio
New York 1998 Manager in the high grade fixed income group. Prior thereto, Mr.
O'Hara was a Manager for Ark Asset Management, Inc., formerly
Lehman Management Company, Inc., from 1983 to 1989, and a Senior
Manager from 1989 to August 1995.
</TABLE>

GLOBAL GOVERNMENT INCOME FUND

MONEY MARKET FUND

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

* On October 31, 1996, Chancellor Capital merged with LGT Asset Management, Inc.
(San Francisco), and the resulting entity was renamed Chancellor LGT Asset
Management, Inc. Prior to October 31, 1996, Mr. O'Hara, Mr. Lau, Mr. Hughes
and Ms. Koch were employees only of Chancellor Capital.

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

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 47
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

OTHER INFORMATION

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

DIVERSIFICATION STANDARDS. Each of the following Funds is a series of 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 a series of 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, (a) the aggregate amount
of such holdings does not exceed 50% of the value of its total assets and (b) 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 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 a 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 each Fund and of the Company's other Funds 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.

Normally there will be no 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 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

Prospectus Page 48
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
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, the Funds may quote their 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 a Fund. Standardized Return assumes the
reinvestment of all dividends and other distributions.

In addition, in order to more completely represent the Funds' performance or
more accurately compare such performance to other measures of investment return,
the Funds 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-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.

Prospectus Page 49
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

The Funds' performance data reflects past performance and is not necessarily
indicative of future results. The Funds' investment results will vary from time
to time depending upon market conditions, the composition of their portfolio and
their 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.

YEAR 2000 COMPLIANCE PROJECT. In providing services to the GT Global Funds, GT
Global, the Transfer Agent and the Manager rely on internal computer systems as
well as external computer systems provided by third parties. Some of these
systems were not originally designed to distinguish between the year 1900 and
the year 2000. This inability, if not corrected, could adversely affect the
services GT Global, the Transfer Agent and the Manager and others provide the GT
Global Funds and their shareholders.

To address this important issue, GT Global, the Transfer Agent and the Manager
have undertaken a comprehensive Year 2000 Compliance Project (the "Project").
The Project consists of four phases: (i) inventorying every software and
hardware system in use at GT Global, the Transfer Agent and the Manager, as well
as remote, third-party systems on which GT Global, the Transfer Agent and the
Manager rely; (ii) identifying those systems that may not function properly
after December 31, 1999; (iii) correcting or replacing those systems that have
been so identified; and (iv) testing the processing of GT Global Fund data in
all systems. Phase (i) has been completed; phase (ii) is substantially
completed; phase (iii) has commenced; and phase (iv) is expected to commence
during the third quarter of 1998. The Project is scheduled to be completed by
December 31, 1998. Following completion of the Project, the Manager will ensure
that any systems subsequently acquired are year 2000 compliant.

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, CA
94596.

CUSTODIAN. State Street Bank and Trust Company, 225 Franklin Street, Boston, MA
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, MA 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 50
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

NOTES

- --------------------------------------------------------------------------------
<PAGE>
GENERAL AMERICAN

GA0598/VARPR8050M

SELIC

SELPR805M
<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
April 1, 1998

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

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, a "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 April 1, 1998, 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...................................................................................... 36
Trustees and Executive Officers.......................................................................................... 40
Management............................................................................................................... 42
Valuation of Fund Shares................................................................................................. 46
Information Relating to Sales and Redemptions............................................................................ 47
Taxes.................................................................................................................... 48
Additional Information................................................................................................... 50
Investment Results....................................................................................................... 51
Description of Debt Ratings.............................................................................................. 59
Appendix................................................................................................................. 62
Financial Statements..................................................................................................... 63
</TABLE>

[LOGO]

Statement of Additional Information Page 1
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

INVESTMENT OBJECTIVES
AND POLICIES

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

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 political 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

Statement of Additional Information Page 2
<PAGE>
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

Statement of Additional Information Page 3
<PAGE>
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.

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

Statement of Additional Information Page 4
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
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 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

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GT GLOBAL VARIABLE INVESTMENT FUNDS
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 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,

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GT GLOBAL VARIABLE INVESTMENT FUNDS
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 SECURITIES
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"), Global Depository Receipts ("GDRs") 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 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, GDRs and EDRs will be
deemed to be investments in the equity securities representing securities of
foreign issuers into which they may be converted.

ADR facilities may be established as either "unsponsored" or "sponsored." While
ADRs issued under these two types of facilities are in some respects similar,
there are distinctions between them relating to the rights and obligations of
ADR holders and the practices of market participants. A depository may establish
an unsponsored facility without participation by (or even necessarily the
acquiescence of) the issuer of the deposited securities, although typically the
depository requests a letter of non-objection from such issuer prior to the
establishment of the facility. Holders of unsponsored ADRs generally bear all
the costs of such facilities. The depository usually charges fees upon the
deposit and withdrawal of the deposited securities, the conversion of dividends
into U.S. dollars, the disposition of non-cash distributions, and the
performance of other services. The depository of an unsponsored facility
frequently is under no obligation to distribute shareholder communications
received from the issuer of the deposited securities or to pass through voting
rights to ADR holders with respect to the deposited securities. Sponsored ADR
facilities are created in generally the same manner as unsponsored facilities,
except that the issuer of the deposited securities enters into a deposit
agreement with the depository. The deposit agreement sets out the rights and
responsibilities of the issuer, the depository and the ADR holders. With
sponsored facilities, the issuer of the deposited securities generally will bear
some of the costs relating to the facility (such as dividend payment fees of the
depository), although ADR holders continue to bear certain other costs (such

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GT GLOBAL VARIABLE INVESTMENT FUNDS
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.

COMMERCIAL PAPER
U.S. Government Income Fund may invest in commercial paper, which consists of
short-term promissory notes issued by large corporations with a high quality
rating to finance short-term credit needs.

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.

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BORROWING, REVERSE REPURCHASE AGREEMENTS AND "ROLL" TRANSACTIONS

Each Fund's borrowings will not exceed 33 1/3% (30% in the case of Global
Government Income Fund) of the Fund's total assets, i.e., the Fund's total
assets at all times will equal at least 300% of the amount of outstanding
borrowing. If market fluctuations in the value of a Fund's securities holdings
or other factors cause the ratio of the Fund's total assets to outstanding
borrowings to fall below 300%, within three days (excluding Sundays and
holidays) of such event the Fund may be required to sell securities to restore
the 300% asset coverage, even though from an investment standpoint such sales
might be disadvantageous. Each Fund also may borrow up to 5% of its total assets
for temporary or emergency purposes other than to provide cash to meet
redemptions of Fund shares. Any borrowing by a Fund may cause greater
fluctuation in its net asset value than would be the case if the Fund did not
borrow.

Each Fund (except the Strategic Income Fund) currently is prohibited from
borrowing money in order to purchase securities. If 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 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) may 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.

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GT GLOBAL VARIABLE INVESTMENT FUNDS

If the price of the security sold short increases between the time of the short
sale and the time the Fund replaces the borrowed security, the Fund will incur a
loss; conversely, if the price declines, the Fund will realize a gain. Any gain
will be decreased, and any loss increased, by the transaction costs associated
with the transaction. Although the Fund's gain is limited by the price at which
it sold the security short, its potential loss theoretically is unlimited.

The Infrastructure Fund, the Natural Resources Fund, the Telecommunications
Fund, the Emerging Markets Fund, and the Latin America Fund will not make a
short sale if, after giving effect to such sale, the market value of the
securities sold short exceeds 25% of the value of their respective total assets,
or their respective aggregate short sales of the securities of any one issuer
exceed the lesser of 2% of net assets or 2% of the securities of any class of
the issuer. Moreover, the Infrastructure Fund, the Natural Resources Fund, the
Telecommunications Fund and the Latin America Fund may engage in short sales
only with respect to securities listed on a national securities exchange.

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.

TEMPORARY DEFENSIVE STRATEGIES
The Emerging Markets Fund and Latin America Growth Fund may invest in the
following types of money market instruments (I.E., debt instruments with less
than 12 months remaining until maturity) denominated in U.S. dollars or other
currencies (in the case of Latin America Growth Fund, a Latin American
currency): (a) obligations issued or guaranteed by the U.S. or foreign
governments (in the case of Latin America Growth Fund, the government of a Latin
American country), their agencies, instrumentalities or municipalities; (b)
obligations of international organizations designed or supported by multiple
foreign governmental entities to promote economic reconstruction or development;
(c) finance company obligations, corporate commercial paper and other short-term
commercial obligations; (d) bank obligations (including certificates of deposit,
time deposits, demand deposits and bankers' acceptances); (e) repurchase
agreements with respect to the foregoing; and (f) other substantially similar
short-term debt securities with comparable characteristics.

The Emerging Markets Fund and Latin America Growth Fund may invest in commercial
paper rated as low as A-3 by S&P or P-3 by Moody's or, if not rated, determined
by the Manager to be of comparable quality. Obligations rated A-3 and P-3 are
considered by S&P and Moody's, respectively, to have an acceptable capacity for
timely repayment. However, these securities may be more vulnerable to adverse
effects of changes in circumstances than obligations carrying higher
designations.

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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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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. The premium
paid for the put option and any transaction costs would reduce any profit
otherwise available for distribution 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 it purchased the
security or currency, an increase in the market price could result in the
exercise of the call option written by the Fund and the realization of a loss on
the underlying security or currency. Accordingly, the Fund could purchase a call
option on the same underlying security or currency, which could be exercised to
fulfill the Fund's delivery obligations under its written call (if it is
exercised). This strategy could allow the Fund to avoid selling the portfolio
security or currency at a time when it has an unrealized loss; however, the Fund
would have to pay a premium to purchase the call option plus transaction costs.

Aggregate premiums paid for put and call options will not exceed 5% of the
Fund's total assets at the time of purchase.

Each Fund may attempt to accomplish objectives similar to those involved in
using Forward Contracts by purchasing put or call options on currencies. A put
option gives a Fund as purchaser the right (but not the obligation) to sell a
specified amount of currency at the exercise price at any time until (American
style) or on (European style) the expiration date of the

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GT GLOBAL VARIABLE INVESTMENT FUNDS
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 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.

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

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GT GLOBAL VARIABLE INVESTMENT FUNDS
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 purchases 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 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

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GT GLOBAL VARIABLE INVESTMENT FUNDS
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 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.

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GT GLOBAL VARIABLE INVESTMENT FUNDS

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 CONTRACTS
A Forward Contract is an obligation, usually arranged with a commercial bank or
other currency dealer, to purchase or sell a currency against another currency
at a future date and price as agreed upon by the parties. A Fund may either
accept or make delivery of the currency at the maturity of the Forward Contract.
A Fund may also, if its contra party agrees, prior to maturity, enter into a
closing transaction involving the purchase or sale of an offsetting contract.

A Fund engages in forward currency transactions in anticipation of, or to
protect itself against, fluctuations in exchange rates. A Fund might sell a
particular foreign currency forward, for example, when it holds bonds
denominated in a foreign currency but anticipates, and seeks to be protected
against, a decline in the currency against the U.S. dollar. Similarly, a Fund
might sell the U.S. dollar forward when it holds bonds denominated in U.S.
dollars but anticipates, and seeks to be

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GT GLOBAL VARIABLE INVESTMENT FUNDS
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 entering into
a second contract, if its contra party agrees, entitling it to sell the same
amount of the same currency on the maturity date of the first 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 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

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GT GLOBAL VARIABLE INVESTMENT FUNDS
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 purchased by a Fund) 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.

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

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GT GLOBAL VARIABLE INVESTMENT FUNDS
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, a division of The McGraw-Hill Companies,
("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.

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

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.

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

Statement of Additional Information Page 20
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GT GLOBAL VARIABLE INVESTMENT FUNDS
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. If the liquidity
percentage restriction of a Fund is satisfied at the time of investment, a later
increase in the percentage of illiquid securities held by the Fund resulting
from a change in market value or assets will not constitute a violation of that
restriction. If as a result of a change in market value or assets, the
percentage of illiquid securities held by the Fund increases above the
applicable limit, the Manager will take appropriate steps to bring the aggregate
amount of illiquid assets back within the prescribed limitations as soon as
reasonably practicable, taking into account the effect of any disposition on the
Fund.

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 foreign 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

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GT GLOBAL VARIABLE INVESTMENT FUNDS
proposed investment, which may include on-site inspection of the issuer,
interviews with its management and consultations with accountants, bankers and
other specialists. There is substantially less publicly available information
about foreign companies than there are reports and ratings published about U.S.
companies and the U.S. government. In addition, where public information is
available, it may be less reliable than such information regarding U.S. issuers.
Issuers of securities 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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GT GLOBAL VARIABLE INVESTMENT FUNDS
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. Certain of the
risks associated with international investments are heightened for investments
in Pacific region countries. For example, some of the currencies at Pacific
region 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.
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

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GT GLOBAL VARIABLE INVESTMENT FUNDS
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.

In China, India, Indonesia, Malaysia, the Philippines, Singapore, South Korea
and Thailand, government regulation or a company's charter may limit the maximum
foreign aggregate ownership of equity in any one company. South Korea generally
prohibits foreign investment in Won-denominated debt securities and Sri Lanka
prohibits foreign investment in government debt securities. South Korea
prohibits foreign investment in specified telecommunications companies and the
Philippines prohibits foreign investment in mass media companies and companies
providing certain professional services. In the Philippines, a Fund may
generally invest in "B" shares of Philippine issuers engaged in partly
nationalized business activities, the market prices, liquidity and rights of
which may vary from shares owned by nationals. Similarly, in China, a Fund may
only invest in "B" shares of securities traded on The Shanghai Securities
Exchange and The Shenzhen Stock Exchange, currently the two officially
recognized securities exchanges in China. "B" shares traded on The Shanghai
Securities Exchange are settled in U.S. dollars, and those traded on The
Shenzhen Stock Exchange are generally settled in Hong Kong dollars.

If, because of restrictions on repatriation or conversion, a Fund were unable to
distribute substantially all of its net investment income and net capital gains
within applicable time periods, the Fund could be subject to federal income and
excise taxes that would not otherwise be incurred and could cease to qualify for
the favorable tax treatment afforded to regulated investment companies ("RICs")
under the Internal Revenue Code of 1986, as amended ("Code"). In such case, it
would become subject to federal income tax on all of its income and net capital
gains.

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.

Few of the Asia Pacific region countries have Western-style or fully democratic
governments. Some governments in the region are authoritarian in nature and
influenced by security forces. For example, during the course of the last 25
years, governments in the region have been installed or removed as a result of
military coups, while others have periodically demonstrated repressive police
state characteristics. In several Asia Pacific Region countries, the leadership
ability of the government has suffered as a result of recent corruption
scandals. Disparities of wealth, among other factors, have also led to social
unrest in some of the Asia Pacific region countries, accompanied, in certain
cases, by violence and labor unrest. Ethnic, religious and racial disaffection,
as evidenced in India, Pakistan, and Sri Lanka, for example, have created
social, economic and political problems. Such problems also have occurred in
other regions.

Starting in mid-1997, some Pacific region countries began to experience currency
devaluations that resulted in high interest rate levels and sharp reductions in
economic activity. While the currency crisis diminished prospects for short-term
corporate earnings growth, the Manager believes that high interest rate levels
may force governments and corporations to restructure the financial sector in a
manner that may facilitate a return to high levels of long-term economic
activity.

China recently assumed sovereignty over Hong Kong in 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 Chinese sovereignty over 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

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GT GLOBAL VARIABLE INVESTMENT FUNDS
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.

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 that 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 that 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
<PAGE>
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
<PAGE>
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
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

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

(6) Sell securities short, except to the extent that the Fund
contemporaneously owns or has the right to acquire at no additional cost
securities identical to those sold short;

(7) Purchase securities on margin provided that the Fund may obtain such
short-term credits as may be necessary for the clearance of purchases and
sales of securities, except that the Fund may make margin deposits in
connection with futures contracts subject to (13) below;

(8) Borrow money in excess of 33 1/3% of the Fund's total assets
(including the amount borrowed), less all liabilities and indebtedness
(other than borrowing). The restriction shall not prevent the Fund from
entering into reverse repurchase agreements and engaging in "roll"
transactions, provided that reverse repurchase agreements, "roll"
transactions and any other transactions constituting borrowing by the Fund
may not exceed one-third of the

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 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.

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

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 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 investment management and administration contracts. 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

Statement of Additional Information Page 36
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
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,
GDRs, CDRs or securities convertible into foreign equity securities. ADRs, ADSs,
EDRs, GDRs and CDRs may be listed on stock exchanges, or traded in the OTC
markets in the United States or Europe, as the case may be. ADRs, like other
securities traded in the United States, will be subject to negotiated commission
rates. The foreign and domestic debt securities and money market instruments in
which the Funds may invest are generally traded in the OTC markets.

The Funds contemplate that, consistent with the policy of obtaining the best net
results, brokerage transactions may be conducted through 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, 1997, the Variable Telecommunications
Fund paid LGT Bank in Liechtenstein (Deutschland) GmbH, an "affiliated" broker
as defined in the 1940 Act, aggregate brokerage commissions of $1,565 for
transmissions involving purchases and sales of portfolio securities, which
represented 1% of the total brokerage commissions paid by the Variable
Telecommunications Fund and 0% of the aggregate dollar amount of transactions
involving payment of commissions by the Variable Telecommunications Fund.

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, 1995, 1996 and 1997, are as follows:

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 37
<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>

YEAR ENDED DECEMBER 31, 1997

<TABLE>
<CAPTION>
GT GLOBAL

<S> <C>
Variable America Fund.................................................................................................. $ 154,355
Variable Europe Fund................................................................................................... 110,624
Variable New Pacific Fund.............................................................................................. 198,849
Variable International Fund............................................................................................ 23,556
Money Market Fund...................................................................................................... 0
Variable Growth & Income Fund.......................................................................................... 42,783
Variable Strategic Income Fund......................................................................................... 423
Variable Global Government Income Fund................................................................................. 155
Variable U.S. Government Income Fund................................................................................... 80
Variable Latin America Fund............................................................................................ 223,878
Variable Telecommunications Fund....................................................................................... 123,863
Variable Emerging Markets Fund......................................................................................... 220,448
Variable Infrastructure Fund........................................................................................... 14,298
Variable Natural Resources Fund........................................................................................ 156,581
</TABLE>

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

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, 1997 and 1996, were as follows:

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
---------------------------
GT GLOBAL VARIABLE 1997 1996
- -------------------------------------------------- ------------ ------------
<S> <C> <C>
America Fund...................................... 210% 248%
Europe Fund....................................... 117% 56%
New Pacific Fund.................................. 93% 70%
International Fund................................ 112% 92%
Money Market Fund................................. N/A N/A
Growth & Income Fund.............................. 60% 57%
Strategic Income Fund............................. 185% 210%
Global Government Income Fund..................... 235% 235%
U.S. Government Income Fund....................... 143% 49%
Latin America Fund................................ 141% 102%
Telecommunications Fund........................... 91% 77%
Emerging Markets Fund............................. 212% 216%
Infrastructure Fund............................... 46% 76%
Natural Resources Fund............................ 315% 199%
</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*, 39 Mr. Guilfoyle is President, GT Global, Inc. since 1995; Director, GT Global since 1991;
Trustee, Chairman of the Board and Senior Vice President and Director of Sales and Marketing, GT Global from May 1992 to
President April 1995; Vice President and Director of Marketing, GT Global from 1987 to 1992;
50 California Street Director, Liechtenstein Global Trust AG (holding company of the various international LGT
San Francisco, CA 94111 companies) Advisory Board since January 1996; Director, G.T. Global Insurance Agency
("G.T. Insurance") since 1996; President and Chief Executive Officer, G.T. Insurance since
1995; Senior Vice President and Director, Sales and Marketing, G.T. Insurance from April
1995 to November 1995; Senior Vice President, Retail Marketing, G.T. Insurance from 1992
to 1993. Mr. Guilfoyle is also a director or trustee of each of the other investment
companies registered under the Investment Company Act of 1940, as amended (the "1940
Act"), that is managed or administered by the Manager.
C. Derek Anderson, 56 Mr. Anderson is President, Plantagenet Capital Management, LLC (an investment
Trustee partnership); Chief Executive Officer, Plantagenet Holdings, Ltd. (an investment banking
220 Sansome Street firm); Director, Anderson Capital Management, Inc. since 1988; Director, PremiumWear, Inc.
Suite 400 (formerly Munsingwear, Inc.) (a casual apparel company) and Director, "R" Homes, Inc. and
San Francisco, CA 94104 various other companies, Mr. Anderson is also a director or trustee of each of the other
investment companies registered under the 1940 Act that is managed or administered by the
Manager.
Frank S. Bayley, 58 Mr. Bayley is a partner of the law firm of Baker & McKenzie, and serves as a Director and
Trustee Chairman of C.D. Stimson Company (a private investment company). Mr. Bayley is also a
Two Embarcadero Center director or trustee of each of the other investment companies registered under the 1940
Suite 2400 Act that is managed or administered by the Manager.
San Francisco, CA 94111
Arthur C. Patterson, 54 Mr. Patterson is Managing Partner of Accel Partners (a venture capital firm). He also
Trustee serves as a director of Viasoft and PageMart, Inc. (both public software companies), as
428 University Avenue well as several other privately held software and communications companies. Mr. Patterson
Palo Alto, CA 94301 is also a director or trustee of each of the other investment companies registered under
the 1940 Act that is managed or administered by the Manager.
Ruth H. Quigley, 62 Miss Quigley is a private investor. From 1984 to 1986, she was President of Quigley
Trustee Friedlander & Co., Inc. (a financial advisory services firm). Miss Quigley is also a
1055 California Street director or trustee of each of the other investment companies registered under the 1940
San Francisco, CA 94108 Act that is managed or administered by the Manager.
Robert G. Wade, Jr.*, 70 Mr. Wade is Consultant to the Manager; Chairman of the Board of Chancellor Capital
Trustee Management, Inc. from January 1995 to October 1996; President, Chief Executive Officer and
1166 Avenue of the Americas Chairman of the Board of Chancellor Capital Management, Inc. from 1988 to January 1995.
New York, NY 10036 Mr. Wade is also a director or trustee of each of the other investment companies
registered under the 1940 Act that is managed or administered by the Manager.
</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

Helge K. Lee, 51 Chief Legal and Compliance Officer -- North America, the Manager since
Vice President and Secretary October 1997; Executive Vice President of the Asset Management Division
50 California Street of Liechtenstein Global Trust since October 1996; Senior Vice President,
San Francisco, CA 94111 General Counsel and Secretary of the Manager, GT Global, GT Services and
G.T. Insurance from February 1996 to October 1996; Vice President,
General Counsel and Secretary of LGT Asset Management, Inc., the
Manager, GT Global, GT Services and G.T. Insurance from May 1994 to
February 1996; Senior Vice President, General Counsel and Secretary of
Strong/Corneliuson Management, Inc. and Secretary of 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., 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 47 series managed or administered by the Manager. Each Trustee who
is not a director, officer or employee of the Manager or any affiliated company
is paid aggregate fees of $2,000 and $3,000 per annum by Investment Series and
Investment Trust, respectively, and reimbursed 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, 1997, Mr. Anderson, Mr. Bayley, Mr. Patterson
and Miss Quigley, who are not directors, officers or employees of the Manager or
any affiliated company, received from Investment Series and Investment Trust
aggregate Trustees' fees and expenses of $2,000 and $2,000; $2,000 and $2,000;
$3,000 and $3,000; and $3,000 and $3,000, respectively. For the fiscal year
ended December 31, 1997, Mr. Anderson, Mr. Bayley, Mr. Patterson and Miss
Quigley received total compensation of $103,654, $106,556, $89,700 and $98,038,
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).

The amounts of investment management and administration fees paid by each Fund
for the fiscal periods ended December 31, 1995, 1996 and 1997 were as follows:

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1995
-------------------------------
INVESTMENT
MANAGEMENT AND
ADMINISTRATION REIMBURSEMENT
GT GLOBAL FEES AMOUNT
- -------------------------------------------------------------------------------------------------- -------------- ---------------
<S> <C> <C>
Variable America Fund............................................................................. $ 236,272 $ 18,927
Variable Europe Fund.............................................................................. 152,847 71,515
Variable New Pacific Fund......................................................................... 204,362 73,848
Variable International Fund....................................................................... 32,608 32,608
Money Market Fund................................................................................. 79,561 48,354
Variable Strategic Income Fund.................................................................... 173,720 56,631
Variable Global Government Income Fund............................................................ 81,039 71,061
Variable U.S. Government Income Fund.............................................................. 33,749 33,749
Variable Latin America Fund....................................................................... 205,457 89,040
Variable Emerging Markets Fund.................................................................... 76,146 73,847
Variable Telecommunications Fund.................................................................. 434,684 6,725
Variable Growth & Income Fund..................................................................... 277,913 53,927
Variable Infrastructure Fund
(from January 31, 1995, commencement of operations).............................................. 6,836 6,836
Variable Natural Resources Fund
(from January 31, 1995, commencement of operations).............................................. 5,918 5,918
</TABLE>

Statement of Additional Information Page 42
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1996
-------------------------------
INVESTMENT
MANAGEMENT AND
ADMINISTRATION 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
<CAPTION>

YEAR ENDED
DECEMBER 31, 1997
-------------------------------
INVESTMENT
MANAGEMENT AND
ADMINISTRATION REIMBURSEMENT
GT GLOBAL FEES AMOUNT
- -------------------------------------------------------------------------------------------------- -------------- ---------------
<S> <C> <C>
Variable America Fund............................................................................. $ 305,132 $ --
Variable Europe Fund.............................................................................. 279,058 27,622
Variable New Pacific Fund......................................................................... 276,947 39,729
Variable International Fund....................................................................... 56,606 60,092
Money Market Fund................................................................................. 108,454 8,673
Variable Strategic Income Fund.................................................................... 224,634 16,129
Variable Global Government Income Fund............................................................ 70,010 43,130
Variable U.S. Government Income Fund.............................................................. 42,280 34,816
Variable Latin America Fund....................................................................... 298,692 33,765
Variable Emerging Markets Fund.................................................................... 207,464 38,322
Variable Growth & Income Fund..................................................................... 421,575 5,189
Variable Telecommunications Fund.................................................................. 691,109 --
Variable Infrastructure Fund...................................................................... 84,074 19,594
Variable Natural Resources Fund................................................................... 182,720 26,931
</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, 1997, 1996 and 1995 were as
follows:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1997
----------------------------
OTHER
EXPENSES REIMBURSEMENT
GT GLOBAL PAID AMOUNT
- ------------------------------------------------------------------------------------------------------ ----------- ---------------
<S> <C> <C>
Variable America Fund................................................................................. $ 91,538 $ 0
Variable Europe Fund.................................................................................. 114,912 0
Variable New Pacific Fund............................................................................. 119,626 0
Variable International Fund........................................................................... 74,346 3,486
Money Market Fund..................................................................................... 62,885 0
Variable Strategic Income Fund........................................................................ 96,221 0
Variable Global Government Income Fund................................................................ 73,484 0
Variable U.S. Government Income Fund.................................................................. 48,943 0
Variable Latin America Fund........................................................................... 118,583 0
Variable Emerging Markets Fund........................................................................ 106,583 0
Variable Growth & Income Fund......................................................................... 112,816 0
Variable Telecommunications Fund...................................................................... 113,907 0
Variable Infrastructure Fund.......................................................................... 40,755 0
Variable Natural Resources Fund....................................................................... 77,556 0

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
</TABLE>

Statement of Additional Information Page 44
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1995
----------------------------
OTHER
EXPENSES REIMBURSEMENT
GT GLOBAL PAID AMOUNT
- ------------------------------------------------------------------------------------------------------ ----------- ---------------
<S> <C> <C>
Variable America Fund................................................................................. $ 97,684 $ 0
Variable Europe Fund.................................................................................. 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 AGENCY 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.

The Manager also serves as each Fund's pricing and accounting agent. For the
fiscal years ended December 31, 1997, 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 1997 1996 1995
- -------------------------------------------------- ------ ------ ------
<S> <C> <C> <C>
Variable Strategic Income Fund.................... $7,516 $6,725 $2,523
Variable Global Government Income Fund............ 2,342 2,707 1,197
Variable U.S. Government Income Fund.............. 1,448 1,305 567
Variable Latin America Fund....................... 7,491 5,629 2,080
Variable Growth & Income Fund..................... 10,587 7,952 3,066
Variable Telecommunications Fund.................. 17,340 14,996 5,248
Variable Emerging Markets Fund.................... 5,281 3,728 884
Variable Infrastructure Fund...................... 2,161 877 124
Variable Natural Resources Fund................... 4,696 1,878 109
Variable America Fund............................. 10,211 9,687 4,066
Variable New Pacific Fund......................... 6,939 7,289 2,215
Variable Europe Fund.............................. 7,002 4,997 1,673
Money Market Fund................................. 5,575 3,883 1,633
Variable International Fund....................... 1,421 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 FUND 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 ("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,
Martin Luther King Day, President's 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, GDRs 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.
To continue to qualify for treatment as a 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)("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) 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, in
respect of 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 (3) 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, and gains realized thereby, may be
subject to income, withholding, or other taxes imposed by foreign countries that
would reduce the yield and/or total return 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 -- other than a
"controlled foreign corporation" (I.E., a foreign corporation in which, on any
day during its taxable year, more than 50% of the total voting power of all
voting stock therein or the total value of all stock therein is owned, directly,
indirectly or constructively, by "U.S. shareholders," defined as U.S. persons
that individually own, directly, indirectly or constructively, at least 10% of
that voting power) as to which a Fund is a U.S. shareholder -- 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 it
distributes that income to its shareholders.

If a Fund invests in a PFIC and elects to treat the PFIC as a "qualified
electing fund" ("QEF"), then in lieu of the foregoing tax and interest
obligation, the Fund would be required to include in income each year its pro
rata share of the QEF's

Statement of Additional Information Page 48
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
ordinary earnings and net capital gain (I.E., 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.

Each Fund may elect to "mark to market" its stock in any PFIC.
"Marking-to-market," in this context, means including in ordinary income each
taxable year the excess, if any, of the fair market value of the stock over a
Fund's adjusted basis therein as of the end of that year. Pursuant to the
election, a Fund also will be allowed to deduct (as ordinary, not capital, loss)
the excess, if any, of its adjusted basis in PFIC stock over the fair market
value thereof as of the taxable year-end, but only to the extent of any net
mark-to-market gains with respect to that stock included in income by the Fund
for prior taxable years. A Fund's adjusted basis in each PFIC's stock subject to
the election will be adjusted to reflect the amounts of income included and
deductions taken thereunder. Regulations proposed in 1992 would provide a
similar election with respect to the stock of certain PFICs.

OPTIONS, FUTURES, AND FOREIGN CURRENCY TRANSACTIONS
A Fund's 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 amount, 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.

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. As of the date of
preparation of this Statement of Additional Information, it is not entirely
clear whether that 60% portion will qualify for the reduced maximum tax rates on
non-corporate taxpayers' net capital gain enacted by the Taxpayer Relief Act of
1997 -- 20% (10% for taxpayers in the 15% marginal tax bracket) for gain
recognized on capital assets held for more than 18 months -- instead of the 28%
rate in effect before that legislation, which now applies to gain on capital
assets held for more than one year but not more than 18 months, although
technical corrections legislation passed by the House of Representatives late in
1997 would treat it as qualifying therefor.

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.

If a Fund has an "appreciated financial position" -- generally, an interest
(including an interest through an option, Futures or Forward Contract, or short
sale) with respect to any stock, debt instrument (other than "straight debt"),
or partnership interest the fair market value of which exceeds its adjusted
basis -- and enters into a "constructive sale" of the same or substantially
similar property, that Fund will be treated as having made an actual sale
thereof, with the result that gain will be recognized at that time. A
constructive sale generally consists of a short sale, an offsetting notional
principal contract, or Futures or Forward Contract entered into by a Fund or a
related person with respect to the same or substantially similar property. In
addition, if the appreciated financial position is itself a short sale or such a
contract, acquisition of the underlying property or substantially similar
property will be deemed a constructive sale.

The foregoing is a general and abbreviated summary of certain federal income tax
considerations affecting each Fund. 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 is composed of the Manager and its worldwide
affiliates. Other worldwide affiliates of Liechtenstein Global Trust include LGT
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 and LGT Asset Management AG, in Zurich, Switzerland.

Worldwide asset management affiliates also currently include LGT Asset
Management Inc. in Toronto, Canada; LGT Asset Management PLC in London, England;
LGT Asset Management Ltd. in Hong Kong; LGT Asset Management Ltd. in Tokyo; LGT
Asset Management Pte. Ltd. in Singapore; LGT Asset Management Ltd. in Sydney;
and LGT Asset Management GmbH in Frankfurt.

CUSTODIAN
State Street Bank and Trust Company ("State Street"), 225 Franklin Street,
Boston, MA 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, MA 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
ANNUALIZED
STANDARDIZED
GT GLOBAL RETURN
- -------------------------------------------------------------------------------- ----------
<S> <C>
Variable America Fund
- -- Year ended December 31, 1997................................................. 14.88%
- -- From inception on February 10, 1993 to December 31, 1997..................... 18.87%
Variable Europe Fund
- -- Year ended December 31, 1997................................................. 15.15%
- -- From inception on February 10, 1993 to December 31, 1997..................... 16.26%
Variable New Pacific Fund
- -- Year ended December 31, 1997................................................. (41.11)%
- -- From inception on February 10, 1993 to December 31, 1997..................... (2.08)%
Variable Growth & Income Fund
- -- Year ended December 31, 1997................................................. 16.22%
- -- From inception on February 10, 1993 to December 31, 1997..................... 12.60%
Variable Strategic Income Fund
- -- Year ended December 31, 1997................................................. 7.14%
- -- From inception on February 10, 1993 to December 31, 1997..................... 10.74%
Variable Global Government Income Fund
- -- Year ended December 31, 1997................................................. 4.37%
- -- From inception on February 10, 1993 to December 31, 1997..................... 5.19%
Variable U.S. Government Income Fund
- -- Year ended December 31, 1997................................................. 8.30%
- -- From inception on February 10, 1993 to December 31, 1997..................... 4.95%
Variable Latin America Fund
- -- Year ended December 31, 1997................................................. 14.53%
- -- From inception on February 10, 1993 to December 31, 1997..................... 11.62%
Money Market Fund
- -- Year ended December 31, 1997................................................. 4.96%
- -- From inception on February 10, 1993 to December 31, 1997..................... 4.29%
Variable Telecommunications Fund
- -- Year ended December 31, 1997................................................. 14.56%
- -- From inception on October 18, 1993 to December 31, 1997...................... 17.55%
</TABLE>

Statement of Additional Information Page 51
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
<TABLE>
<S> <C>
Variable Emerging Markets Fund
- -- Year ended December 31, 1997................................................. (13.76)%
- -- From inception on July 5, 1994 to December 31, 1997.......................... 1.31%
Variable International Fund
- -- Year ended December 31, 1997................................................. 6.93%
- -- From inception on July 5, 1994 to December 31, 1997.......................... 2.25%
Variable Infrastructure Fund
- -- Year ended December 31, 1997................................................. 5.00%
- -- From inception on January 31, 1995 to December 31, 1997...................... 13.59%
Variable Natural Resources Fund
- -- Year ended December 31, 1997................................................. 1.29%
- -- From inception on January 31, 1995 to December 31, 1997...................... 23.97%
</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, 1997..................... 132.76%
Variable Europe Fund
- -- From inception on February 10, 1993 to December 31, 1997..................... 108.86%
Variable New Pacific Fund
- -- From inception on February 10, 1993 to December 31, 1997..................... (9.78)%
Variable Growth & Income Fund
- -- From inception on February 10, 1993 to December 31, 1997..................... 78.60%
Variable Strategic Income Fund
- -- From inception on February 10, 1993 to December 31, 1997..................... 64.62%
Variable Global Government Income Fund
- -- From inception on February 10, 1993 to December 31, 1997..................... 28.05%
Variable U.S. Government Income Fund
- -- From inception on February 10, 1993 to December 31, 1997..................... 26.66%
Variable Latin America Fund
- -- From inception on February 10, 1993 to December 31, 1997..................... 71.10%
Money Market Fund
- -- From inception on February 10, 1993 to December 31, 1997..................... 22.82%
Variable Telecommunications Fund
- -- From inception on October 18, 1993 to December 31, 1997...................... 97.31%
</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, 1997.......................... 4.64%
Variable International Fund
- -- From inception on July 5, 1994 to December 31, 1997.......................... 8.06%
Variable Infrastructure Fund
- -- From inception on January 31, 1995 to December 31, 1997...................... 45.00%
Variable Natural Resources Fund
- -- From inception on January 31, 1995 to December 31, 1997...................... 87.10%
</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, 1997, the Fund's yield was 4.91% and
effective yield was 5.03%. 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, 1997:.................................................. $ 1.000941213
</TABLE>

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

<TABLE>
<S> <C>
Calculation:
Ending account value:.............................................................. $ 1.000941213
Less beginning account value:...................................................... $ 1.000000000
Net change in account value:....................................................... $ .000941213
Seven-day yield = $.000941213 X 365/7 = 4.91%
Effective yield** = [1 + .000941213] 365/7 - 1 = 5.03%
</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.

Each Fund and GT Global may from time to time, in advertisements, sales
literature and reports furnished to present or prospective shareholders, compare
the Funds with the following, among others, to the extent they apply to
investment companies whose shares are offered to insurance company separate
accounts:

(1) The Consumer Price Index ("CPI"), 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, I.E., the
risk of changing price levels in the economy that affects security prices or
the price of goods and services.

(2) Data, mutual fund rankings and comparisons and variable account
rankings and comparisons published or prepared by Lipper Analytical Data
Services, Inc. ("Lipper"), CDA/Wiesenberger Investment Company Services
("CDA/Wiesenberger"), Morningstar, Inc. ("Morningstar"), Micropal, Inc.,
Financial Planning Resources Inc., publisher of a compilation of data
regarding variable accounts ("VARDS") and/or other companies that rank
and/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
its "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 outside of 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 funds in an investment category receive five
stars and 22.5% receive four stars. The ratings are subject to change each
month.

(3) 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.

(4) Ibbotson Associates International Bond Index, which provides a
detailed breakdown of local market and currency returns since 1960.

(5) 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 U.S.

(6) Dow Jones Industrial Average.

(7) CNBC/Financial News Composite Index.

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

(8) 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.

(9) Morgan Stanley Capital International All Country (AC) World Index
("MSCI"). The MSCI is a broad, unmanaged index of global stock prices,
currently comprising 2,500 different issuers, located in 47 countries, and
grouped in 38 separate industries.

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

(11) The World Bank Publication of Trends in Developing Countries
("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.

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

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

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

(15) Various publications and reports produced by the World Bank and its
affiliates.

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

(17) Various publications produced by ratings agencies such as Moody's,
S&P and Fitch.

(18) Wilshire Associates, which is an on-line database for international
financial and economic data including performance measures for a wide range
of securities.

(19) Bank Rate National Monitor Index, which is an average of the quoted
rates for 100 leading banks and thrifts in ten U.S. cities.

(20) International Finance Corporation ("IFC") Emerging Markets Data
Base, which provides detailed statistics on bond and stock markets in
developing countries.

(21) Various publications from the Organization for Economic Cooperation
and Development ("OECD").

(22) Average of savings accounts, which is a measure of all kinds of
savings deposits, including longer-term certificates. Savings accounts offer
a guaranteed rate of return on principal, but no opportunity for capital
growth. The maximum rates paid on some savings deposits are currently fixed
by law.

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., Financial Research Corporation, J.P. Morgan, Morgan Stanley, Smith Barney
Shearson, S.G. Warburg, Jardine Flemming, The Bank for International
Settlements, Asian Development Bank, Bloomberg, L.P., and Ibbotson 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 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 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 that may be developed and made available in
the future.

Information relating to foreign market performance, capitalization and
diversification is based on sources believed to be reliable but may be subject
to revision and has not been independently verified by the Funds or GT Global.
The authors and publishers of such material are not to be considered as
"experts" under the 1933 Act, on account of the inclusion of such information
herein.

A portion of the performance figures for each market includes the positive or
negative effects of the currency exchange rates effective at December 31 of each
year between the U.S. dollar and currency of the foreign market (E.G., Japanese
Yen,

Statement of Additional Information Page 55
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
German Deutschemark and Hong Kong Dollar). A foreign currency that has
strengthened or weakened against the U.S. dollar will positively or negatively
affect the reported returns, as the case may be.

From time to time, each Fund and GT Global may refer to the number of
shareholders in the Fund or the aggregate number shareholders in all GT Global
Mutual Funds or the dollar amount Fund assets under management in advertising
materials.

GT Global believes the GT Global Variable Investment Funds can be an appropriate
investment for long-term investment goals, including 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. The GT
Global Variable Investment Funds do not represent a complete investment program
and the investors should consider the Funds 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 U.S. and
non-U.S. companies and 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 is 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.

Each Fund may quote various measures of volatility and benchmark correlation,
such as beta, standard deviation and R(2), in advertising. In addition, each
Fund may compare these measures to those of other funds. Measures of volatility
seek to compare the Funds' historical share price fluctuations or total return
compared to those of a benchmark. All measures of volatility and correlation are
calculated using averages of historical data.

Each Fund may advertise examples of the effect of periodic investment plans,
including the principle of dollar cost averaging programs. In such a program, an
investor invests a fixed dollar amount in a Fund at periodic intervals, thereby

Statement of Additional Information Page 56
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
purchasing fewer shares when prices are high and more shares when prices are
low. While such a strategy does not assure a profit or guard against loss in a
declining market, the investor's average cost per share can be lower than if
fixed numbers of shares are purchased at the same intervals. In evaluating such
a plan, investors should consider their ability to continue purchasing shares
through periods of low price levels.

Each Fund may describe in its sales material and advertisements how an investor
may invest in GT Global Mutual Funds through various retirement plans or other
programs that offer deferral of income taxes on investment earnings and pursuant
to which an investor may make deductible contributions. Because of their
advantages, these retirement plans and programs may produce returns superior to
comparable non-retirement investments. For example, a $10,000 investment earning
a taxable return of 10% annually would have an after-tax value of $17,976 after
ten years, assuming tax was deducted from the return each year at a 39.6% rate.
An equivalent tax-deferred investment would have an after-tax value of $19,626
after ten years, assuming tax was deducted at a 39.6% rate from the deferred
earnings at the end of the ten-year period. In sales material and
advertisements, the Fund may also discuss these plans and programs.

GT Global may from time to time in its sales methods and advertising discuss the
risks inherent in investing. The major types of investment risk are market risk,
industry risk, credit risk, interest rate 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 information regarding industries, individual countries, regions, world
stock exchanges, and economic and demographic statistics from sources GT Global
deems reliable, including the economic and financial data of 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 and IFC.

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

4) Wage rates: U.S. Department 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
IFC.

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: OECD and United Nations.

13) Total exports and imports by year: IFC, The World Bank and Datastream.

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

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

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, 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 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.

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. Many of the GT Global Variable Investment 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 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. With respect to stocks, a global stock
research (GSR) database developed by GT Global is utilized in the selection
process. All stocks within the GSR database are systematically ranked by our
analysts on a 1-5 basis with 1 representing the most favored. The rankings,
along with our quantitative, fundamental research, determine which stocks are
bought and sold.

GT Global describes the major stages of economic development as revolving in a
"virtuous cycle." From time to time, each Fund and GT Global may discuss the
virtuous cycle in its sales literature and advertising. This cycle operates
worldwide, forcing companies to become increasingly competitive in an
ever-expanding global marketplace. GT Global has identified the following stages
within the virtuous cycle:

FALLING BORDERS AND TRADE BARRIERS: Barriers between countries diminish,
increasing the potential for world trade and promoting global competition.

CAPITAL FLOWS FROM DEVELOPED MARKETS TO EMERGING MARKETS: As barriers fall,
restrictions on the free movement of capital in and out of a country are often
reduced or removed. The flow of money from developed to developing markets gains
momentum.

INDUSTRIALIZATION OF EMERGING MARKETS: With capital flowing across borders, many
developing nations are able to quickly begin their process of industrialization.

INCREASED DEMAND FOR GLOBAL CONSUMER PRODUCTS: As people in emerging markets
experience rising standards of living due to increased industrialization, they
demand more consumer products which can help spur global trade flows.

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

GT Global believes that we increasingly live in a world without boundaries in
terms of trade, competition and investment opportunities. Therefore, GT Global
believes it's becoming more relevant to look at investing in terms of industrial
groupings, or themes, as an alternative to the traditional, primary focus on
regions. GT Global believes such themes make movement possible between stages in
the virtuous cycle of economic progress.

ECONOMIC DEVELOPMENT IN EMERGING MARKETS
The Manager has identified six phases to track the progress of developing
economies.

In addition, the Manager focuses on the transitions between each phase:

BETWEEN PHASES 1 & 2, STABILIZATION: Developing nations recognize the need
for economic reform and launch initiatives to stabilize their economies. Typical
measures might include initiating monetary reforms to contain inflation,
controlling government spending, and addressing external trade imbalances.

BETWEEN PHASES 2 & 3, RENOVATION: Economic development gathers momentum as
the governments of developing nations take further steps to increase
productivity and external competitiveness. Typical reforms include easing market
regulations, privatizing state-owned industries, lowering trade barriers and
reforming the national tax structure.

BETWEEN PHASES 3 & 4, NEW CONSTRUCTION: As economic reforms take hold,
infrastructure improvements are needed to facilitate and support long-term
growth. The construction and upgrading of highways and airports, communications
and utility systems generally require financing in the form of public debt.
Similarly, as the private sector develops, bolstered by new privatizations,
corporate debt securities typically are issued to finance business expansion.

EMERGING MARKET TRADING VOLUME
The annual trading volume of debt securities from developing economies according
to Salomon Brothers, Inc. has grown from $90 billion in 1990 to $150 billion in
1991 to $400 billion in 1992 and was estimated to be $1,200 billion at the end
of 1993 and $1.5 trillion at the end of 1994, respectively.

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

DESCRIPTION OF DEBT RATINGS

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

DESCRIPTION OF BOND RATINGS
MOODY'S INVESTORS SERVICE, INC. ("Moody's") rates the debt securities issued
by various entities from "Aaa" to "C." Investment grade ratings are the first
four categories:

Aaa -- Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally referred
to as "gilt edged." Interest payments are protected by a large or by an
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 -- Bonds which are rated Aa are judged to be of 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 -- Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper-medium-grade obligations.
Factors giving security to principal and interest are considered adequate,
but elements may be present which suggest a susceptibility to impairment
some time in the future.

Baa -- Bonds which are rated Baa are considered as 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.

Statement of Additional Information Page 59
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

Ba -- Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as 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 -- Bonds which are rated 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 -- Bonds which are rated Caa are of poor standing. Such issues may
be in default or there may be present elements of danger with respect to
principal or interest.

Ca -- Bonds which are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or have other
marked shortcomings.

C -- Bonds which are rated C are the lowest rated class of bonds, and
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 Caa. The modifier 1 indicates that the Company 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 Company ranks in the
lower end of its generic rating category.

STANDARD & POOR'S, a division of The McGraw-Hill Companies, Inc. ("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 -- An obligation rated "AAA" has the highest rating assigned by S&P.
The obligor's capacity to meet its financial commitment on the obligation is
extremely strong.

AA -- An obligation rated "AA" differs from the highest rated
obligations only in a small degree. The obligor's capacity to meet its
financial commitment on the obligation is very strong.

A -- An obligation rated "A" is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than obligations
in higher rated categories.

BBB -- An obligation rated "BBB" exhibits adequate protection
parameters. However, adverse economic conditions or changing circumstances
are more likely to lead to a weakened capacity of the obligor to meet its
financial commitment on the obligation.

BB, B, CCC, CC, C -- Obligations rated "BB," "B," "CCC," "CC," and "C"
are regarded as having significant speculative characteristics. "BB"
indicates the least degree of speculation and "C" the highest. While such
obligations will likely have some quality and protective characteristics,
these may be outweighed by large uncertainties or major exposures to adverse
conditions.

BB -- An obligation rated "BB" is less vulnerable to nonpayment than
other speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could
lead to the obligor's inadequate capacity to meet its financial commitment
on the obligation.

B -- An obligation rated "B" is more vulnerable to nonpayment than
obligations rated "BB," but the obligor currently has the capacity to meet
its financial commitment on the obligation. Adverse business, financial, or
economic conditions will likely impair the obligor's capacity or willingness
to meet its financial commitment on the obligation.

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

CCC -- An obligation rated "CCC" is currently vulnerable to nonpayment,
and is dependent upon favorable business, financial, and economic conditions
for the obligor to meet its financial commitment on the obligation. In the
event of adverse business, financial, or economic conditions, the obligor is
not likely to have the capacity to meet its financial commitment on the
obligation.

CC -- An obligation rated "CC" is currently highly vulnerable to
nonpayment.

C -- The "C" rating may be used to cover a situation where a bankruptcy
petition has been filed or similar action has been taken, but payments on
this obligation are being continued.

D -- An obligation rated "D" is in payment default. The "D" rating
category is used when payments on an obligation 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 or the taking of
a similar action if payments on an obligation are jeopardized.

PLUS (+) OR MINUS (-): The ratings from "AA" to "CCC" may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.

NR: Indicates that no rating has been requested, that there is insufficient
information on which to base a rating, or that S&P does not rate a particular
type of obligation as a matter of policy.

DESCRIPTION OF COMMERCIAL PAPER RATINGS
MOODY'S employs the designation "Prime-1" to indicate commercial paper
having a superior ability for repayment of senior short-term debt obligations.
Prime-1 repayment ability will often be evidenced by many of the following
characteristics: leading market positions in well-established industries; high
rates of return on funds employed; conservative capitalization structure with
moderate reliance on debt and ample asset protection; 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. Issues rated Prime-2 have a strong ability for repayment of
senior 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.

S&P ratings of commercial paper are graded into several categories ranging
from "A1" for the highest quality obligations to "D" for the lowest. Issues in
the "A" category are delineated with numbers 1, 2, and 3 to indicate the
relative degree of safety. 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."

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, 1997 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, 1997, the
related statements of operations for the year then ended, the related statements
of changes in net assets for each of the two years in the period then ended and
financial highlights for each of the periods indicated therein. 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, 1997 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, 1997, the results of their operations for the year
then ended, the related changes in their net assets for each of the two years in
the period then ended and financial highlights for each of periods indicated
therein, in conformity with generally accepted accounting principles.

COOPERS & LYBRAND L.L.P.

BOSTON, MASSACHUSETTS
FEBRUARY 17, 1998

F1
<PAGE>
GT GLOBAL VARIABLE STRATEGIC INCOME FUND

PORTFOLIO OF INVESTMENTS

December 31, 1997

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

<TABLE>
<CAPTION>
PRINCIPAL VALUE % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- ------------------------------------------------------------ -------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Government & Government Agency Obligations (67.0%)
Argentina (2.7%)
Republic of Argentina:
Government Bond, 9.75% due 9/19/27 ................... USD 301,000 $ 289,261 1.0
Global Bond, 11% due 10/9/06 ......................... USD 228,000 244,245 0.9
Global Bond, 11.375% due 1/30/17 ..................... USD 200,000 219,250 0.8
Australia (2.2%)
Commonwealth of Australia, 7.5% due 9/15/09 ............ AUD 850,000 616,866 2.2
Brazil (2.9%)
Republic of Brazil:
C Bond, 4.5% (5% at 4/98) due 4/15/14 (Combined rate
at year end is 8%, including "payment-in-kind"
bonds)[.] ++ ........................................ USD 696,699 547,779 1.9
Par Z-L Bond, 5.25% (5.50% at 4/98) due 4/15/24++ .... USD 376,000 272,600 1.0
Bulgaria (2.0%)
Republic of Bulgaria:
Interest Arrears Bond, 6.5625% due 7/28/11 - Euro+ ... USD 442,000 324,318 1.1
Front Loaded Interest Reduction Bond Series A, 2.25%
(2.5% at 7/98) due 7/28/12++ ........................ USD 428,000 260,813 0.9
Canada (1.7%)
Canadian Government, 8.75% due 12/1/05 ................. CAD 586,000 492,325 1.7
Colombia (0.5%)
Republic of Colombia, 8.7% due 2/15/16 ................. USD 154,000 150,150 0.5
Costa Rica (0.3%)
Banco Central de Costa Rica, Principal Bond Series A,
6.25% due 5/21/10 ..................................... USD 100,000 86,000 0.3
Ecuador (1.0%)
Ecuador, Past Due Interest Bond, 6.6875% due 2/27/15 -
144A[.] + {.} ......................................... USD 426,488 279,350 1.0
France (1.5%)
French O.A.T., 7.25% due 4/25/06 ....................... FRF 2,200,000 415,436 1.5
Germany (7.9%)
Deutschland Republic:
6% due 1/5/06 ........................................ DEM 2,380,000 1,388,830 4.9
6.25% due 1/4/24 ..................................... DEM 500,000 292,105 1.0
Treuhandanstalt, 7.125% due 1/29/03 .................... DEM 946,000 578,488 2.0
Italy (4.3%)
Italian Buoni Poliennali del Tesoro (BTPS), 9.5% due
2/1/99 ................................................ ITL 1,260,000,000 744,740 2.6
Italian Government, 7.25% due 11/1/26 .................. ITL 750,000,000 493,778 1.7
Mexico (3.6%)
United Mexican States:
Global Bond, 11.375% due 9/15/16+/+ .................. USD 363,000 417,904 1.5
Global Bond, 11.5% due 5/15/26+/+ .................... USD 335,000 397,813 1.4
Global Bond, 9.875% due 1/15/07+/+ ................... USD 200,000 209,250 0.7
Netherlands (1.4%)
Netherlands Government Bond, 5.75% due 2/15/07 ......... NLG 800,000 407,656 1.4
</TABLE>

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

F2
<PAGE>
GT GLOBAL VARIABLE STRATEGIC INCOME FUND

PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1997

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- ------------------------------------------------------------ -------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Government & Government Agency Obligations (Continued)
New Zealand (1.6%)
New Zealand Government, 8% due 4/15/04 ................. NZD 750,000 $ 452,733 1.6
Nigeria (1.2%)
Central Bank of Nigeria, Par Bond, 6.25% due
11/15/20+/+ ........................................... USD 500,000 350,000 1.2
Panama (3.3%)
Republic of Panama:
Interest Reduction Bond, 3.75% (4% at 7/98) due
7/17/14++ {.} ....................................... USD 959,000 737,231 2.6
7.875% due 2/13/02 - 144A{.} ......................... USD 200,000 194,000 0.7
Peru (0.7%)
Republic of Peru, Past Due Interest Bond, 4% (4.5% at
3/99)
due 3/7/17 - Euro++ ................................... USD 312,000 205,335 0.7
Russia (4.3%)
Russia Principal Loans Floating Rate Note, 6.72% due
12/15/20 .............................................. USD 1,007,208 623,839 2.2
Russia Interest Notes Floating Rate Note, 6.72% due
12/15/15 .............................................. USD 448,392 317,237 1.1
Russian Ministry of Finance:
3% due 5/14/11 - GDR - 144A{.} ....................... USD 390,000 176,475 0.6
3% due 5/14/06 - GDR - 144A{.} ....................... USD 229,000 128,956 0.4
South Africa (3.3%)
Republic of South Africa, 13% due 8/31/10 .............. ZAR 4,800,000 940,016 3.3
Spain (1.9%)
Government of Spain, 10.5% due 10/30/03 ................ ESP 65,000,000 536,944 1.9
Sweden (0.7%)
Swedish Government, 8% due 8/15/07 ..................... SEK 1,300,000 187,248 0.7
United Kingdom (5.4%)
United Kingdom Conversion, 9.5% due 4/18/05 ............ GBP 430,000 829,639 2.9
United Kingdom Treasury, 7.5% due 12/7/06 .............. GBP 400,000 706,076 2.5
United States (10.9%)
United States Treasury:
6.875% due 8/15/25{j} ................................ USD 1,025,000 1,142,855 4.0
5.875% due 9/30/02{j} ................................ USD 896,000 901,320 3.2
6.50% due 10/15/06 ................................... USD 700,000 732,990 2.6
Federal National Mortgage Association, 7.25% due
6/20/02 ............................................... NZD 550,000 312,591 1.1
Uruguay (0.7%)
Banco Central del Uruguay, Par Bond Series B, 6.75% due
2/19/21+/ + ........................................... USD 250,000 212,500 0.7
Venezuela (1.0%)
Republic of Venezuela, 9.25% due 9/15/27+/+ ............ USD 315,000 282,555 1.0
-----------
Total Government & Government Agency Obligations (cost
$18,862,843) .............................................. 19,099,497
-----------
Corporate Bonds (12.3%)
Argentina (0.5%)
Industrias Metallurgicas Pescarmona S.A. (IMPSA), 9.5%
due 5/31/02 - 144A{.} ................................. USD 100,000 96,875 0.3
Acindar Industrial Argentina, 11.25% due 2/15/04 ....... USD 49,000 48,265 0.2
</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, 1997

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- ------------------------------------------------------------ -------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Corporate Bonds (Continued)
Brazil (1.4%)
Banco Do Brasil (Cayman), 9.375% due 6/15/07 ........... USD 354,000 $ 306,210 1.1
Comtel Brasileira Ltd. "A", 10.75% due 9/26/04 -
144A{.} ............................................... USD 100,000 97,120 0.3
Canada (0.2%)
Trench Electric & Trench, Inc., 10.25% due 12/15/07 -
144A{.} ............................................... USD 55,000 55,963 0.2
China (0.9%)
Panda Global Energy Co., 12.5% due 4/15/04{.} .......... USD 198,000 180,180 0.6
Greater Beijing First, 9.5% due 6/15/07 - 144A{.} ...... USD 100,000 80,000 0.3
Dominican Republic (0.3%)
Tricom S.A., 11.375% due 9/1/04 - 144A{.} .............. USD 89,000 87,199 0.3
Ecuador (0.4%)
Pacalta Resources Ltd., 10.75% due 6/15/04 - 144A{.} ... USD 106,000 102,820 0.4
Hong Kong (0.6%)
GS Superhighway Holdings, 9.875% due 8/15/04 -
144A{.} ............................................... USD 100,000 89,000 0.3
Road King Infrastructure, 9.5% due 7/15/07 - 144A{.} ... USD 100,000 83,000 0.3
India (0.4%)
Tata Electric Co., 8.5% due 8/19/17 - 144A{.} .......... USD 149,000 122,627 0.4
Indonesia (0.7%)
DGS International Finance Co., 10% due 6/1/07 -
144A{.} ............................................... USD 177,000 142,485 0.5
Pratama Datakom Asia BV, 12.75% due 7/15/05 -
144A{.} ............................................... USD 76,000 45,600 0.2
Jamaica (0.4%)
Mechala Group Jamaica:
12.75% due 12/30/99 - Series B ....................... USD 95,000 90,250 0.3
12.75% due 12/30/99 - Reg S{c} ....................... USD 44,000 41,800 0.1
Mexico (2.2%)
Petroleos Mexicanos:
9.5% due 9/15/27 - 144A{.} ........................... USD 286,000 285,285 1.0
8.85% due 9/15/07 - 144A{.} .......................... USD 143,000 141,391 0.5
Fideicomiso Petacalco Trust:
10.16% due 12/23/09 - Reg S{c} ....................... USD 100,000 102,500 0.4
10.16% due 12/23/09 - 144A{.} ........................ USD 78,000 79,950 0.3
Russia (0.7%)
Lukinter Finance BV Convertible, 3.5% due 5/6/02 -
144A{.} ............................................... USD 94,000 135,595 0.5
Mosenergo Finance BV, 8.375% due 10/9/02 - 144A{.} ..... USD 67,000 57,620 0.2
South Africa (0.1%)
Eskom, 11% due 6/1/08 .................................. ZAR 188,000 32,594 0.1
United States (3.5%)
Globalstar LP Capital, 11.375% due 2/15/04 ............. USD 150,000 150,750 0.5
Chase Manhattan Corp., 6.25% due 1/15/06 ............... USD 152,000 149,912 0.5
General Motors Acceptance Corp., 6.625% due 10/15/05 ... USD 143,000 145,004 0.5
Riddell Sports, Inc., 10.5% due 7/15/07 ................ USD 135,000 140,063 0.5
Trump Atlantic Association Funding, Inc., 11.25% due
5/1/06 ................................................ USD 135,000 131,288 0.5
ACME Metal, Inc., 10.875% due 12/15/07 - 144A{.} ....... USD 100,000 98,750 0.3
</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, 1997

TOTAL FIXED INCOME INVESTMENTS (cost $24,824,374) .......... 24,944,216 87.5
----------- -----
<CAPTION>

UNDERLYING VALUE % OF NET
OPTIONS CURRENCY AMOUNT (NOTE 1) ASSETS
- ------------------------------------------------------------ -------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Federal Republic of Brazil Debt Conversion Bond, Call
Option, strike 82.25, expires 1/12/98 (cost $36,864) .... USD 2,048,000 -- --
----------- -----
GOVERNMENT & GOVERNMENT AGENCY OBLIGATIONS
<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, 1997

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

<TABLE>
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- ------------------------------------------------------------ ----------- -------------
<S> <C> <C> <C> <C>
Dated December 31, 1997, with State Street Bank & Trust
Co., due January 2, 1998, for an effective yield of
5.80%, collateralized by $2,530,000 U.S. Treasury Notes,
7.875% due 11/15/07 (market value of collateral is
$2,776,675, including accrued interest).
(cost $2,721,000) ...................................... $ 2,721,000 9.5
----------- -----

TOTAL INVESTMENTS (cost $28,828,023) * .................... 28,911,001 101.4
Other Assets and Liabilities ............................... (414,309) (1.4)
----------- -----

NET ASSETS ................................................. $28,496,692 100.0
----------- -----
----------- -----
</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.
{c} Security issued under Regulation S. Rule 144A and additional
restrictions may apply in the resale of such securities.
++ The coupon rate shown on step-up or pay-up coupon bond represents
the rate at period end.
[.] Each unit represents 3 "B" shares and 1 "C" share.
+ The coupon rate shown on floating rate note represents the rate at
period end.
+/+ Issued with detachable warrants or value recovery rights. The
current market value of each warrant or right is zero.
{j} All or part of the Fund's holdings in this security is segregated
as collateral for when-issued securities. See Note 1 to the
Financial Statements.
[::] Purchased on a forward commitment basis.
* For Federal income tax purposes, cost is $28,874,506 and
appreciation (depreciation) is as follows:

<TABLE>
<S> <C>
Unrealized appreciation: $ 921,540
Unrealized depreciation: (885,045)
-------------
Net unrealized appreciation: $ 36,495
-------------
-------------
</TABLE>

Abbreviation:
GDR--Global Depositary 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, 1997

- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
DECEMBER 31, 1997

CONTRACTS TO SELL:
- ----------------------------------------
Australian Dollars...................... 567,324 1.41533 2/5/98 47,375
Canadian Dollars........................ 17,520 1.39800 2/5/98 362
British Pounds.......................... 1,331,887 0.59613 2/5/98 35,276
British Pounds.......................... 915,161 0.62274 2/5/98 (15,913)
Deutsche Marks.......................... 2,612,370 1.71600 2/5/98 119,638
Deutsche Marks.......................... 1,326,553 1.72000 2/5/98 57,525
Deutsche Marks.......................... 947,313 1.71800 2/5/98 42,230
Deutsche Marks.......................... 443,891 1.77023 2/5/98 6,109
Deutsche Marks.......................... 51,305 1.71600 2/5/98 2,350
Italian Liras........................... 531,807 1696.15001 2/5/98 22,684
Netherland Guilders..................... 405,446 1.93000 2/5/98 19,425
New Zealand Dollars..................... 768,156 1.60256 2/5/98 58,644
South African Rand...................... 687,183 5.04500 1/30/98 (19,274)
Spanish Pesetas......................... 538,929 145.00000 2/5/98 26,588
------------ ------------
Total Contracts to Sell (Receivable
amount $11,547,864)................ 11,144,845 403,019
------------ ------------
THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF NET ASSETS IS 39.11%.
Total Open Forward Foreign Currency
Contracts, Net..................... $ 324,236
------------
------------
</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, 1997

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

<TABLE>
<CAPTION>
PRINCIPAL VALUE % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- --------------------------------------------------------------- -------- ----------- ---------- -------------
<S> <C> <C> <C> <C>
Government & Government Agency Obligations (56.5%)
Australia (4.8%)
Commonwealth of Australia, 7.5% due 9/15/09 ............... AUD 540,000 $ 391,891 4.8
Canada (1.9%)
Canadian Government, 7.25% due 6/1/07 ..................... CAD 205,000 160,508 1.9
Germany (4.9%)
Deutschland Republic:
7.5% due 11/11/04 ....................................... DEM 350,000 220,995 2.7
6% due 1/5/06 ........................................... DEM 305,000 177,980 2.2
Italy (12.3%)
Italian Buoni Poliennali del Tesoro (BTPS):
7.75% due 9/15/01 ....................................... ITL 730,000,000 450,676 5.5
9% due 11/1/23 .......................................... ITL 370,000,000 289,219 3.5
7.25% due 11/1/26 ....................................... ITL 410,000,000 269,932 3.3
New Zealand (1.9%)
New Zealand Government, 8% due 4/15/04 .................... NZD 260,000 156,948 1.9
Spain (2.5%)
Spain Government, 10.5% due 10/30/03 ...................... ESP 25,000,000 206,517 2.5
Sweden (2.8%)
Swedish Government, 8% due 8/15/07 ........................ SEK 1,600,000 230,459 2.8
United Kingdom (7.0%)
United Kingdom Treasury Conversion, 9.5% due 4/18/05 ...... GBP 260,000 501,642 6.1
United Kingdom Treasury, 7.25% due 12/7/07 ................ GBP 40,000 70,341 0.9
United States (17.2%)
United States Treasury:
8% due 11/15/21 ......................................... USD 550,000 685,824 8.3
6.375% due 8/15/27 ...................................... USD 230,000 242,735 2.9
6.625% due 5/15/07 ...................................... USD 50,000 52,953 0.6
Federal National Mortgage Association:
7.25% due 6/20/02 ....................................... NZD 550,000 312,591 3.8
6.375% due 8/15/07 ...................................... AUD 200,000 132,013 1.6
Uruguay (1.2%)
Republic of Uruguay, 7.875% due 7/15/27 - 144A{.} ......... USD 100,000 98,500 1.2
----------
Total Government & Government Agency Obligations (cost
$4,661,639) .................................................. 4,651,724
----------
Corporate Bonds (17.4%)
Germany (1.9%)
Commerzbank O/S Financial, 8.5% due 5/13/02 ............... NZD 160,000 94,359 1.1
Kredit Fuer Wiederaufbau International Finance, 7.25% due
7/16/07 .................................................. AUD 100,000 68,897 0.8
New Zealand (3.5%)
Transpower Finance Ltd., 8% due 3/15/02 ................... NZD 500,000 290,052 3.5
South Africa (4.7%)
Eskom, 11% due 6/1/08 ..................................... ZAR 1,500,000 260,059 3.2
Transnet Ltd., 7.5% due 4/1/08 ............................ ZAR 860,000 116,071 1.4
Development Bank of South Africa, due 12/31/27 ............ ZAR 2,000,000 11,565 0.1
</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, 1997

TOTAL FIXED INCOME INVESTMENTS (cost $7,297,293) .............. 7,209,750 87.4
---------- -----
<CAPTION>

VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- --------------------------------------------------------------- ---------- -------------
<S> <C> <C> <C> <C>
Dated December 31, 1997, with State Street Bank & Trust Co.,
due January 2, 1998 for an effective yield of 5.80%
collateralized by $55,000 U.S. Treasury Notes, 7.875% due
11/15/07 (market value of collateral is $60,363, including
accrued interest). (cost $55,000) ......................... 55,000 0.6
---------- -----

TOTAL INVESTMENTS (cost $7,352,293) * ........................ 7,264,750 88.0
Other Assets and Liabilities .................................. 986,277 12.0
---------- -----

NET ASSETS .................................................... $8,251,027 100.0
---------- -----
---------- -----
</TABLE>

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

<TABLE>
<S> <C>
Unrealized appreciation: $ 166,538
Unrealized depreciation: (259,791)
-------------
Net unrealized depreciation: $ (93,253)
-------------
-------------
</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, 1997

- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
DECEMBER 31, 1997

<TABLE>
<CAPTION>
MARKET VALUE UNREALIZED
(U.S. CONTRACT DELIVERY APPRECIATION
CONTRACTS TO BUY: DOLLARS) PRICE DATE (DEPRECIATION)
- ---------------------------------------- ------------ ----------- -------- ------------
<S> <C> <C> <C> <C>
Australian Dollars...................... 144,127 1.47347 2/5/98 $ (5,873)
British Pounds.......................... 2,614,746 0.63411 2/5/98 91,531
British Pounds.......................... 571,976 0.62087 2/5/98 8,248
British Pounds.......................... 170,286 0.59265 2/5/98 (5,537)
British Pounds.......................... 85,352 0.60391 2/5/98 (1,131)
Danish Kroner........................... 83,513 6.68900 2/5/98 (1,854)
Deutsche Marks.......................... 2,976,582 1.86050 2/5/98 105,453
Deutsche Marks.......................... 2,771,562 1.84900 2/5/98 81,562
Deutsche Marks.......................... 443,759 1.76970 2/5/98 (6,241)
Deutsche Marks.......................... 424,071 1.74950 2/5/98 (10,929)
Deutsche Marks.......................... 278,616 1.82590 2/5/98 4,778
Deutsche Marks.......................... 267,738 1.85468 2/5/98 8,674
Deutsche Marks.......................... 195,009 1.74980 2/5/98 (4,991)
Deutsche Marks.......................... 194,173 1.74230 2/5/98 (5,827)
Deutsche Marks.......................... 74,874 1.77285 2/5/98 (918)
Italian Liras........................... 691,697 1,747.52000 2/5/98 (8,303)
Italian Liras........................... 441,505 1,732.32000 2/5/98 (9,220)
Italian Liras........................... 244,196 1,699.54001 2/5/98 (9,908)
Italian Liras........................... 98,473 1,741.50000 2/5/98 (1,527)
New Zealand Dollars..................... 115,948 1.61031 2/5/98 (8,252)
Swedish Kronor.......................... 82,314 7.49385 2/5/98 (4,777)
Swedish Kronor.......................... 35,618 7.42040 2/5/98 (2,440)
------------ ------------
Total Contracts to Buy (Payable
amount $12,793,617)................ 13,006,135 212,518
------------ ------------
THE VALUE OF CONTRACTS TO BUY AS PERCENTAGE OF NET ASSETS IS 157.63%.

CONTRACTS TO SELL:
- ----------------------------------------
Australian Dollars...................... 499,578 1.41533 2/5/98 41,718
Australian Dollars...................... 95,492 1.46439 2/5/98 4,508
British Pounds.......................... 3,186,722 0.59613 2/5/98 84,403
British Pounds.......................... 255,638 0.60165 2/5/98 4,362
Canadian Dollars........................ 156,013 1.39136 2/5/98 3,987
Danish Kroner........................... 186,301 6.52300 2/5/98 8,981
Deutsche Marks.......................... 5,081,816 1.71600 2/5/98 232,730
Deutsche Marks.......................... 1,593,962 1.71600 2/5/98 72,998
Deutsche Marks.......................... 569,978 1.71800 2/5/98 25,409
Deutsche Marks.......................... 412,351 1.79459 2/5/98 18,266
Deutsche Marks.......................... 145,096 1.73592 2/5/98 4,904
Italian Liras........................... 1,102,631 1,696.15000 2/5/98 47,032
Italian Liras........................... 295,581 1,696.90000 2/5/98 12,472
Italian Liras........................... 213,888 1,697.70003 2/5/98 8,919
New Zealand Dollars..................... 1,001,792 1.60256 2/5/98 76,481
South African Rand...................... 262,054 4.97100 1/16/98 (5,567)
Swedish Kronor.......................... 117,932 7.47700 2/5/98 7,126
------------ ------------
Total Contracts to Sell (Receivable
amount $15,825,554)................ 15,176,825 648,729
------------ ------------
THE VALUE OF CONTRACTS TO SELL AS A PERCENTAGE OF NET ASSETS IS 183.94%.
Total Open Forward Foreign Currency
Contracts, Net..................... $ 861,247
------------
------------
</TABLE>

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

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

F10
<PAGE>
GT GLOBAL VARIABLE U.S. GOVERNMENT INCOME FUND

PORTFOLIO OF INVESTMENTS

December 31, 1997

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- --------------------------------------------------------------- -------- ----------- ---------- -------------
<S> <C> <C> <C> <C>
Government & Government Agency Obligations (52.5%)
United States Treasury:
5.625% due 2/15/06{z} ..................................... USD 1,000,000 $ 988,945 13.4
7.625% due 2/15/25 ........................................ USD 600,000 728,039 9.9
5.75% due 8/15/03 ......................................... USD 650,000 650,660 8.8
5.25% due 1/31/01 ......................................... USD 350,000 345,748 4.7
5.875% due 2/15/04 ........................................ USD 100,000 100,871 1.4
Tennessee Valley Authority Series A, 6.375% due 6/15/05 ..... USD 400,000 407,000 5.5
Student Loan Marketing Assoc., 7.5% due 3/8/00 .............. USD 350,000 361,430 4.9
Federal Home Loan Bank, 6.79% due 2/5/02 .................... USD 100,000 100,229 1.4
Federal National Mortgage Association, 6.8% due 1/10/03 ..... USD 90,000 93,318 1.3
Financial Assistance Corp., 9.375% due 7/21/03 .............. USD 75,000 86,993 1.2
----------
Total Government & Government Agency Obligations (cost
$3,752,658) .................................................. 3,863,233
----------
Mortgage Backed (24.7%)
Federal National Mortgage Association:
TBA Pass Thru, 7% due 1/25/28[::] ....................... USD 500,000 503,750 6.8
Pool #398668, 6.5% due 9/1/27 ........................... USD 348,825 344,518 4.7
Pool #363939, 7% due 3/1/04 ............................. USD 188,994 191,711 2.6
Pool #356801, 6% due 12/1/08 ............................ USD 130,034 128,210 1.7
Government National Mortgage Association:
Pool # 780523, 7.5% due 3/15/08 ......................... USD 282,707 290,923 3.9
TBA Pass Thru Pool, 7% due 1/15/28[::] .................. USD 150,000 151,266 2.1
Federal Home Loan Mortgage Corp. Series 1462 PL due
7/15/21 .................................................. USD 155,000 157,664 2.1
Salomon Brothers Mortgage Securities VII Series 1997 -
HUD1 Class AWAC, 6.0867% due 12/25/30 .................... USD 57,378 58,308 0.8
----------
Total Mortgage Backed (cost $1,814,243) ....................... 1,826,350
----------
Supranational Bonds (7.5%)
International Bank of Reconstruction & Development, 5.25%
due 9/16/03 .............................................. USD 350,000 341,469 4.6
Asian Development Bank, 8% due 4/30/01 .................... USD 200,000 212,074 2.9
----------
Total Supranational Bonds (cost $524,815) ..................... 553,543
---------- -----

TOTAL FIXED INCOME INVESTMENTS (cost $6,091,716) .............. 6,243,126 84.7
---------- -----

PRINCIPAL VALUE % OF NET
SHORT-TERM INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- --------------------------------------------------------------- -------- ----------- ---------- -------------
<S> <C> <C> <C> <C>
Commercial Paper - Discounted (8.8%)
United States (8.8%)
Ford Motor Credit Corp., effective yield 5.77%, due
1/14/98 .................................................. USD 250,000 249,480 3.4
General Electric Co., effective yield 5.82%, due
1/14/98 .................................................. USD 250,000 249,476 3.4
Associates Corp., effective yield 5.77%, due 1/22/98 ...... USD 150,000 149,497 2.0
----------
Total Commercial Paper - Discounted (cost $648,453) ........... 648,453
---------- -----

TOTAL SHORT-TERM INVESTMENTS (cost $648,453) .................. 648,453 8.8
---------- -----
</TABLE>

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

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

PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1997

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- --------------------------------------------------------------- ---------- -------------
<S> <C> <C> <C> <C>
Dated December 31, 1997, with State Street Bank & Trust Co.,
due January 2, 1998, for an effective yield of 5.80%,
collateralized by $960,000 U.S. Treasury Notes, 7.875% due
11/15/07 (market value of collateral is $1,053,600,
including accrued interest). (cost $1,031,000) ............ $1,031,000 14.0
---------- -----

TOTAL INVESTMENTS (cost $7,771,169) * ........................ 7,922,579 107.5
Other Assets and Liabilities .................................. (549,943) (7.5)
---------- -----

NET ASSETS .................................................... $7,372,636 100.0
---------- -----
---------- -----
</TABLE>

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

{z} All or part of the Fund's holdings in this security is segregated
as collateral for when issued securities. See Note 1 to the
Financial Statements.
[::] Purchased on a forward commitment basis.
* For Federal income tax purposes, cost is $7,779,279 and
appreciation (depreciation) is as follows:

<TABLE>
<S> <C>
Unrealized appreciation: $ 151,843
Unrealized depreciation: (8,543)
-------------
Net unrealized appreciation: $ 143,300
-------------
-------------
</TABLE>

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

F12
<PAGE>
GT GLOBAL VARIABLE LATIN AMERICA FUND

PORTFOLIO OF INVESTMENTS

December 31, 1997

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

<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Services (29.1%)
Telecomunicacoes Brasileiras S.A. (Telebras): .............. BRZL -- -- 10.6
TELEPHONE NETWORKS
ADR{\/} .................................................. -- 18,270 $ 2,127,315 --
Common ................................................... -- 9,005,510 915,883 --
Telefonos de Mexico, S.A. de C.V. "L" - ADR{\/} ............ MEX 14,500 812,906 2.8
TELEPHONE NETWORKS
Companhia de Saneamento Basico do Estado de Sao Paulo -
SABESP .................................................... BRZL 2,780,000 660,125 2.3
BUSINESS & PUBLIC SERVICES
Nortel Inversora S.A. - ADR{\/} ............................ ARG 19,700 502,350 1.7
TELEPHONE - REGIONAL/LOCAL
Telefonica del Peru S.A. - ADR{\/} ......................... PERU 21,600 502,200 1.7
TELEPHONE NETWORKS
Cia de Telecomunicaciones de Chile S.A. - ADR{\/} .......... CHLE 15,000 448,125 1.6
TELEPHONE NETWORKS
Telecomunicacoes de Sao Paulo S.A. (TELESP): ............... BRZL -- -- 1.4
TELEPHONE NETWORKS
Preferred ................................................ -- 1,009,176 268,563 --
Common-/- ................................................ -- 693,000 157,720 --
Telecomunicacoes do Rio de Janeiro S.A. (TELERJ)
Preferred ................................................. BRZL 3,705,228 385,131 1.3
TELEPHONE NETWORKS
Controladora Comercial Mexicana, S.A. de C.V.: ............. MEX -- -- 1.2
RETAILERS-FOOD
UBC[.] ................................................... -- 240,000 312,940 --
GDR{\/} .................................................. -- 1,100 28,531 --
Compania Anonima Nacional Telefonos de Venezuela (CANTV) -
ADR{\/} ................................................... VENZ 7,900 328,838 1.1
TELEPHONE NETWORKS
Grupo Televisa, S.A. de C.V. - GDR-/- {\/} ................. MEX 7,400 286,288 1.0
BROADCASTING & PUBLISHING
Santa Isabel S.A. - ADR{\/} ................................ CHLE 16,000 280,000 1.0
RETAILERS-FOOD
Telefonica de Argentina S.A. - ADR{\/} ..................... ARG 7,100 264,475 0.9
TELEPHONE NETWORKS
Cifra, S.A. de C.V. "V" .................................... MEX 46,825 115,495 0.4
RETAILERS-OTHER
Supermercados Unimarc S.A. - ADR (Chile)-/- {\/} ........... CHLE 2,700 33,244 0.1
RETAILERS-FOOD
-----------
8,430,129
-----------
Energy (24.4%)
Centrais Eletricas Brasileiras S.A. (Eletrobras): .......... BRZL -- -- 4.6
ELECTRICAL & GAS UTILITIES
Common-/- ................................................ -- 13,980,830 695,283 --
Preferred "B" ............................................ -- 12,480,000 637,419 --
Petroleo Brasileiro S.A. (Petrobras) Preferred ............. BRZL 4,287,000 1,002,605 3.5
OIL
Light - Servicos de Electricidade S.A. ..................... BRZL 1,555,800 648,222 2.3
ELECTRICAL & GAS UTILITIES
C.A. La Electricidad de Caracas ............................ VENZ 539,185 647,493 2.3
ELECTRICAL & GAS UTILITIES
Companhia Energetica de Minas Gerais (CEMIG) - ADR{\/} ..... BRZL 13,100 563,300 2.0
ELECTRICAL & GAS UTILITIES
</TABLE>

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

F13
<PAGE>
GT GLOBAL VARIABLE LATIN AMERICA FUND

PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1997

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Energy (Continued)
YPF S.A. - ADR{\/} ......................................... ARG 13,000 $ 444,438 1.5
OIL
Enersis S.A. - ADR{\/} ..................................... CHLE 14,800 429,200 1.5
ELECTRICAL & GAS UTILITIES
Harken Energy Corp.-/- ..................................... US 55,900 391,300 1.4
OIL
Empresa Nacional de Electricidad S.A. - ADR{\/} ............ CHLE 21,700 383,819 1.3
ELECTRICAL & GAS UTILITIES
Chilgener S.A. - ADR{\/} ................................... CHLE 13,564 332,318 1.2
ELECTRICAL & GAS UTILITIES
Light - Participacoes S.A. ................................. BRZL 935,500 280,818 1.0
ELECTRICAL & GAS UTILITIES
Perez Companc S.A. "B" ..................................... ARG 32,249 230,304 0.8
OIL
Companhia Brasileira de Petroleo Ipiranga S.A. Preferred ... BRZL 14,594,000 222,310 0.8
OIL
Compania Paulista de Forca e Luz ........................... BRZL 430,000 56,640 0.2
ELECTRICAL & GAS UTILITIES
-----------
6,965,469
-----------
Finance (12.7%)
Unibanco Units-/- .......................................... BRZL 10,522,500 716,586 2.5
BANKS-MONEY CENTER
Administradora de Fondos de Pensiones Provida S.A. -
ADR{\/} ................................................... CHLE 33,100 564,768 2.0
INVESTMENT MANAGEMENT
Banco Rio de La Plata S.A. - ADR-/- {\/} ................... ARG 28,800 403,200 1.4
BANKS-MONEY CENTER
Grupo Financiero Banorte "B"-/- ............................ MEX 201,000 350,280 1.2
BANKS-MONEY CENTER
Banco LatinoAmericano de Exportaciones S.A. (Bladex)
"E"{\/} ................................................... PAN 7,713 319,125 1.1
OTHER FINANCIAL
Banco de A. Edwards - ADR{\/} .............................. CHLE 17,300 294,100 1.0
BANKS-MONEY CENTER
Banco Frances del Rio de la Plata S.A. - ADR{\/} ........... ARG 10,400 284,700 1.0
BANKS-MONEY CENTER
Banco BHIF - ADR{\/} ....................................... CHLE 13,400 214,400 0.7
BANKS-MONEY CENTER
Credicorp Ltd. - ADR{\/} ................................... PERU 11,900 214,200 0.7
BANKS-MONEY CENTER
Banco Provincial S.A. ...................................... VENZ 68,160 125,551 0.4
BANKS-MONEY CENTER
Inversiones y Representaciones S.A. (IRSA) - GDR{\/} ....... ARG 3,217 121,040 0.4
REAL ESTATE
Banco Wiese - ADR{\/} ...................................... PERU 11,900 59,500 0.2
BANKS-MONEY CENTER
ARA, S.A. de C.V.-/- ....................................... MEX 4,600 22,350 0.1
REAL ESTATE
-----------
3,689,800
-----------
</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, 1997

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Materials/Basic Industry (12.6%)
Kimberly-Clark de Mexico, S.A. de C.V. "A" ................. MEX 225,500 $ 1,104,022 3.8
PAPER/PACKAGING
Apasco, S.A. de C.V. ....................................... MEX 101,900 707,288 2.5
CEMENT
Companhia Vale do Rio Doce Preferred ....................... BRZL 22,300 448,598 1.6
METALS - STEEL
Grupo Mexico S.A. "L" ...................................... MEX 121,800 384,965 1.3
METALS - NON-FERROUS
Sociedad Quimica y Minera de Chile S.A. - ADR{\/} .......... CHLE 8,400 369,600 1.3
CHEMICALS
Industrias Penoles S.A. (CP) ............................... MEX 68,200 308,540 1.1
METALS - NON-FERROUS
Siderca S.A. ............................................... ARG 54,500 151,540 0.5
METALS - STEEL
Venezolana de Cementos, S.A.C.A.: .......................... VENZ -- -- 0.3
CEMENT
"A" ...................................................... -- 30,344 49,088 --
"B" ...................................................... -- 14,129 22,660 --
Corcemar S.A. .............................................. ARG 11,570 56,010 0.2
CEMENT
Angel Estrada S.A.-/- ...................................... ARG 4,029 11,485 --
PAPER/PACKAGING
Siderar S.A.I.C. "A" ....................................... ARG 1,900 8,077 --
METALS - STEEL
-----------
3,621,873
-----------
Multi-Industry/Miscellaneous (9.4%)
Grupo Carso, S.A. de C.V. "A1" ............................. MEX 118,000 789,787 2.7
MULTI-INDUSTRY
Alfa, S.A. de C.V. "A" ..................................... MEX 99,600 675,275 2.3
CONGLOMERATE
Sanluis Corporacion, S.A. de C.V. .......................... MEX 52,700 433,070 1.5
CONGLOMERATE
Desc, S.A. de C.V. - ADR{\/} ............................... MEX 8,100 303,750 1.1
CONGLOMERATE
Itausa Investimentos Itau S.A. Preferred ................... BRZL 316,075 246,403 0.9
MULTI-INDUSTRY
Empresas La Moderna, S.A. de C.V. "A"-/- ................... MEX 30,300 164,870 0.6
MULTI-INDUSTRY
Commercial Del Plata-/- .................................... ARG 62,000 97,980 0.3
CONGLOMERATE
-----------
2,711,135
-----------
Consumer Non-Durables (7.8%)
Fomento Economico Mexicano, S.A. de C.V. "B" ............... MEX 106,300 849,820 3.0
BEVERAGES - ALCOHOLIC
Grupo Industrial Maseca, S.A. de C.V. "B" .................. MEX 349,000 360,766 1.3
FOOD
Compania Cervecerias Unidas S.A. - ADR{\/} ................. CHLE 11,500 337,813 1.2
BEVERAGES - ALCOHOLIC
</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, 1997

TOTAL EQUITY INVESTMENTS (cost $27,501,963) .................. 27,768,692 96.5
----------- -----
<CAPTION>

PRINCIPAL VALUE % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Corporate Bonds (0.0%)
Brazil (0.0%)
Companhia Vale do Rio Doce - Non Convertible (cost $0) ... BRL 20,000 -- --
----------- -----
<CAPTION>

VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- -------------------------------------------------------------- ----------- -------------
<S> <C> <C> <C> <C>
Dated December 31, 1997, with State Street Bank & Trust Co.,
due January 2, 1998, for an effective yield of 5.80%,
collateralized by $900,000 U.S. Treasury Notes, 5.75% due
12/31/98 (market value of collateral is $900,844, including
accrued interest). (cost $881,000) ....................... 881,000 3.0
----------- -----

TOTAL INVESTMENTS (cost $28,382,963) * ...................... 28,649,692 99.5
Other Assets and Liabilities ................................. 136,525 0.5
----------- -----

NET ASSETS ................................................... $28,786,217 100.0
----------- -----
----------- -----
</TABLE>

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

{\/} U.S. currency denominated.
-/- Non-income producing security.
[.] Each unit represents 3 "B" shares and 1 "C" share.
* For Federal income tax purposes, cost is $28,399,188 and
appreciation (depreciation) is as follows:

<TABLE>
<S> <C>
Unrealized appreciation: $ 2,687,612
Unrealized depreciation: (2,437,108)
-------------
Net unrealized appreciation: $ 250,504
-------------
-------------
</TABLE>

Abbreviations:
ADR--American Depositary Receipt
GDR--Global Depositary 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, 1997

- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at December 31, 1997, was concentrated in
the following countries:

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

{d} Percentages indicated are based on net assets of $28,786,217.

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

F17
<PAGE>
GT GLOBAL VARIABLE GROWTH & INCOME FUND

PORTFOLIO OF INVESTMENTS

December 31, 1997

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

<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------ -------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Finance (28.1%)
Schweizerischer Bankverein (Swiss Bank Corp.) ............ SWTZ 4,355 $ 1,353,670 2.7
BANKS-MONEY CENTER
First Tennessee National Corp. ........................... US 16,700 1,114,723 2.2
BANKS-REGIONAL
Royal & Sun Alliance Insurance Group PLC ................. UK 108,531 1,092,438 2.2
INSURANCE - MULTI-LINE
Union Bank of Switzerland - Bearer ....................... SWTZ 744 1,075,810 2.1
BANKS-MONEY CENTER
CS Holding AG - Registered ............................... SWTZ 6,520 1,008,846 2.0
BANKS-MONEY CENTER
AEGON N.V. ............................................... NETH 8,742 778,380 1.5
INSURANCE-LIFE
ABN AMRO Holdings N.V. ................................... NETH 38,342 747,094 1.5
BANKS-MONEY CENTER
Fortis Amev N.V. ......................................... NETH 16,990 740,882 1.5
OTHER FINANCIAL
American General Corp. ................................... US 11,950 646,047 1.3
INSURANCE-LIFE
ING Groep N.V. ........................................... NETH 14,000 589,779 1.2
OTHER FINANCIAL
Commonwealth Bank of Australia ........................... AUSL 41,710 478,270 0.9
BANKS-SUPER REGIONAL
Deutsche Bank AG ......................................... GER 6,750 476,647 0.9
BANKS-MONEY CENTER
National Westminster Bank PLC ............................ UK 27,000 448,670 0.9
BANKS-MONEY CENTER
General Accident PLC ..................................... UK 23,766 411,710 0.8
INSURANCE - PROPERTY-CASUALTY
IKB Deutsche Industriebank AG ............................ GER 19,890 387,073 0.8
BANKS-REGIONAL
Generale de Banque S.A.: ................................. BEL -- -- 0.7
BANKS-MONEY CENTER
Common ................................................. -- 829 361,033 --
Strip VVPR-/- .......................................... -- 75 20 --
Lloyds TSB Group PLC ..................................... UK 26,571 343,372 0.7
BANKS-REGIONAL
Kredietbank N.V. ......................................... BEL 680 285,583 0.6
BANKS-REGIONAL
Mercury Asset Management Group PLC ....................... UK 10,211 285,036 0.6
INVESTMENT MANAGEMENT
Commercial Union PLC ..................................... UK 17,682 246,503 0.5
INSURANCE - MULTI-LINE
Reinsurance Australia Corporation Ltd. ................... AUSL 94,250 245,619 0.5
INSURANCE - MULTI-LINE
National Australia Bank Ltd. ............................. AUSL 17,375 242,587 0.5
BANKS-REGIONAL
General Property Trust ................................... AUSL 127,000 225,057 0.4
REAL ESTATE
Commerzbank AG ........................................... GER 5,400 212,577 0.4
BANKS-MONEY CENTER
</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, 1997

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------ -------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Finance (Continued)
Infrastructure Trust of Australia Group .................. AUSL 240,625 $ 188,123 0.4
OTHER FINANCIAL
M & G Group PLC .......................................... UK 5,000 115,558 0.2
INVESTMENT MANAGEMENT
Gerrard Group PLC ........................................ UK 7,080 38,946 0.1
SECURITIES BROKER
-----------
14,140,053
-----------
Consumer Non-Durables (10.5%)
Diageo PLC ............................................... UK 113,500 1,042,746 2.1
BEVERAGES - ALCOHOLIC
Pernod Ricard ............................................ FR 12,570 739,350 1.5
BEVERAGES - ALCOHOLIC
Brown-Forman Corp. "B" ................................... US 12,855 710,239 1.4
BEVERAGES - ALCOHOLIC
Cadbury Schweppes PLC .................................... UK 64,208 646,824 1.3
BEVERAGES - NON-ALCOHOLIC
Philip Morris Cos., Inc. ................................. US 13,450 609,453 1.2
TOBACCO
Avon Products, Inc. ...................................... US 9,600 589,200 1.2
PERSONAL CARE/COSMETICS
Universal Corp. .......................................... US 12,200 501,725 1.0
TOBACCO
Reckitt & Colman PLC ..................................... UK 26,140 409,913 0.8
HOUSEHOLD PRODUCTS
-----------
5,249,450
-----------
Energy (9.5%)
Royal Dutch Petroleum Co. ................................ NETH 14,200 779,627 1.5
OIL
Exxon Corp. .............................................. US 11,940 730,579 1.4
OIL
VEBA AG .................................................. GER 9,980 679,761 1.3
ELECTRICAL & GAS UTILITIES
Mobil Corp. .............................................. US 7,300 526,969 1.0
OIL
RWE AG ................................................... GER 8,170 438,368 0.9
ELECTRICAL & GAS UTILITIES
Electrabel S.A. .......................................... BEL 1,880 435,143 0.9
ELECTRICAL & GAS UTILITIES
Elf Aquitaine ............................................ FR 2,980 346,598 0.7
OIL
Reunies Electrobel & Tractebel S.A. ...................... BEL 3,815 332,805 0.7
ELECTRICAL & GAS UTILITIES
Shell Transport & Trading Co., PLC ....................... UK 41,390 299,041 0.6
OIL
Groupe Bruxelles Lambert S.A. ............................ BEL 1,680 243,202 0.5
OIL
-----------
4,812,093
-----------
</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, 1997

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------ -------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Services (8.4%)
EMI Group PLC ............................................ UK 87,790 $ 732,304 1.5
LEISURE & TOURISM
McGraw-Hill, Inc. ........................................ US 8,880 657,120 1.3
BROADCASTING & PUBLISHING
Telecom Corporation of New Zealand Ltd. .................. NZ 133,160 645,245 1.3
TELEPHONE NETWORKS
Woolworths Ltd. .......................................... AUSL 178,125 595,336 1.2
RETAILERS-OTHER
PMP Communications Ltd. .................................. AUSL 228,950 507,154 1.0
BROADCASTING & PUBLISHING
Qantas Airways Ltd. ...................................... AUSL 244,500 432,642 0.9
TRANSPORTATION - AIRLINES
Royal PTT Nederland N.V. ................................. NETH 5,915 246,847 0.5
TELEPHONE NETWORKS
Telstra Corp. Ltd. ....................................... AUSL 89,800 189,558 0.4
TELECOM - OTHER
Dun & Bradstreet Corp. ................................... US 4,800 148,500 0.3
BROADCASTING & PUBLISHING
-----------
4,154,706
-----------
Capital Goods (4.3%)
Lockheed Martin Corp. .................................... US 16,566 1,631,751 3.2
AEROSPACE/DEFENSE
General Electric Co. PLC ................................. UK 75,600 489,724 1.0
AEROSPACE/DEFENSE
BICC PLC ................................................. UK 20,327 57,410 0.1
INDUSTRIAL COMPONENTS
-----------
2,178,885
-----------
Materials/Basic Industry (3.8%)
BASF AG .................................................. GER 15,500 549,416 1.1
CHEMICALS
Akzo Nobel N.V. .......................................... NETH 3,069 529,263 1.0
CHEMICALS
Solvay S.A. "A" .......................................... BEL 7,510 472,595 0.9
CHEMICALS
Monsanto Co. ............................................. US 7,500 315,000 0.6
CHEMICALS
Aberfoyle Ltd. ........................................... AUSL 53,130 86,537 0.2
METALS - NON-FERROUS
-----------
1,952,811
-----------
Health Care (3.4%)
Bristol Myers Squibb Co. ................................. US 13,450 1,272,706 2.5
PHARMACEUTICALS
Bayer AG ................................................. GER 12,500 467,056 0.9
PHARMACEUTICALS
-----------
1,739,762
-----------
</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, 1997

TOTAL EQUITY INVESTMENTS (cost $24,935,945) ................ 35,322,965 70.2
----------- -----
<CAPTION>

PRINCIPAL VALUE % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- ------------------------------------------------------------ -------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Government & Government Agency Obligations (24.6%)
Australia (0.9%)
Australian Government, 8.75% due 8/15/08 ............... AUD 552,000 433,248 0.9
Canada (1.1%)
Canadian Government, 8.75% due 12/1/05 ................. CAD 657,000 551,976 1.1
Denmark (0.6%)
Kingdom of Denmark, 7% due 11/15/07 .................... DKK 1,921,000 308,413 0.6
Germany (3.4%)
Deutschland Republic:
6.75% due 4/22/03 .................................... DEM 1,500,000 904,671 1.8
6.25 due 1/4/24 ...................................... DEM 400,000 233,684 0.5
Treuhandanstalt:
6.375% due 7/1/99 .................................... DEM 500,000 287,128 0.6
6.625% due 7/9/03 .................................... DEM 395,000 236,978 0.5
Italy (1.6%)
Italian Buoni Poliennali del Tesoro (BTPS):
6% due 2/15/00 ....................................... ITL 1,125,000,000 651,902 1.3
10.5% due 9/1/05 ..................................... ITL 215,000,000 158,526 0.3
New Zealand (0.3%)
New Zealand Government, 8% due 4/15/04 ................. NZD 253,000 152,722 0.3
Sweden (0.6%)
Swedish Government, 8% due 8/15/07 ..................... SEK 2,000,000 288,074 0.6
United Kingdom (3.1%)
United Kingdom Treasury, 7.25% due 12/7/07 ............. GBP 902,000 1,586,184 3.1
United States (13.0%)
United States Treasury:
6.5% due 8/15/05 ..................................... USD 3,840,000 4,007,700 7.9
6% due 2/15/26 ....................................... USD 2,379,000 2,376,677 4.7
</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, 1997

TOTAL FIXED INCOME INVESTMENTS (cost $13,209,161) .......... 13,562,337 26.9
----------- -----

NO. OF VALUE % OF NET
WARRANTS COUNTRY WARRANTS (NOTE 1) ASSETS
- ------------------------------------------------------------ -------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Societe Generale Banque put warrants due 11/15/99
Tractebel (cost $0) ..................................... BEL 763 1,958 --
----------- -----
BANKS-MONEY CENTER
<CAPTION>

VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- ------------------------------------------------------------ ----------- -------------
<S> <C> <C> <C> <C>
Dated December 31, 1997, with State Street Bank & Trust
Co., due January 2, 1998, for an effective yield of
5.80%, collateralized by $1,735,000 U.S. Treasury Notes,
7.875% due 11/15/07 (market value of collateral is
$1,904,163, including accrued interest). (cost
$1,864,000) ............................................. 1,864,000 3.7
----------- -----

TOTAL INVESTMENTS (cost $40,009,106) * .................... 50,751,260 100.8
Other Assets and Liabilities ............................... (394,996) (0.8)
----------- -----

NET ASSETS ................................................. $50,356,264 100.0
----------- -----
----------- -----
</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 $40,012,281 and
appreciation (depreciation) is as follows:

<TABLE>
<S> <C>
Unrealized appreciation: $ 11,390,821
Unrealized depreciation: (651,842)
-------------
Net unrealized appreciation: $ 10,738,979
-------------
-------------
</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, 1997

- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at December 31, 1997, was concentrated in
the following countries:

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

{d} Percentages indicated are based on net assets of $50,356,264.

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

FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
DECEMBER 31, 1997
<TABLE>
<CAPTION>
UNREALIZED
MARKET VALUE CONTRACT DELIVERY APPRECIATION
CONTRACTS TO BUY: (U.S. DOLLARS) PRICE DATE (DEPRECIATION)
- ---------------------------------------- -------------- ----------- -------- --------------
<S> <C> <C> <C> <C>
French Francs........................... 33,305 5.70223 2/6/98 $ (1,769)
-------------- --------------
Total Contracts to Buy (Payable amount
$35,074)............................. 33,305 (1,769)
-------------- --------------
THE VALUE OF CONTRACTS TO BUY AS
PERCENTAGE OF NET ASSETS IS 0.07%.

CONTRACTS TO SELL:
- ----------------------------------------
<S> <C> <C> <C> <C>
French Francs........................... 33,305 5.72800 2/6/98 1,611
-------------- --------------
Total Contracts to Sell (Receivable
amount $34,916)...................... 33,305 1,611
-------------- --------------
THE VALUE OF CONTRACTS TO SELL AS
PERCENTAGE OF NET ASSETS IS 0.07%.
Total Open Forward Foreign Currency
Contracts, Net....................... $ (158)
--------------
--------------
</TABLE>

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

F23
<PAGE>
GT GLOBAL VARIABLE TELECOMMUNICATIONS FUND

PORTFOLIO OF INVESTMENTS

December 31, 1997

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

<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Telephone Networks (26.6%)
Telecomunicacoes Brasileiras S.A. (Telebras) - ADR{\/} ..... BRZL 27,176 $ 3,164,306 4.6
Telecom Italia SpA - Di Risp-/- ............................ ITLY 717,093 3,152,695 4.6
WorldCom, Inc.-/- .......................................... US 62,000 1,875,500 2.8
SPT Telecom-/- ............................................. CZCH 16,570 1,773,679 2.6
Cable & Wireless PLC - ADR-/- {\/} ......................... UK 60,000 1,631,250 2.4
NTL, Inc.-/- {\/} .......................................... UK 40,000 1,115,000 1.6
Magyar Tavkozlesi Rt.: ..................................... HGRY -- -- 1.6
ADR-/- {\/} .............................................. -- 22,400 582,400 --
Common-/- ................................................ -- 100,000 531,529 --
Portugal Telecom S.A. - ADR{\/} ............................ PORT 22,000 1,034,000 1.5
Carso Global Telecom "A1" .................................. MEX 185,900 755,766 1.1
France Telecom S.A.: ....................................... FR -- -- 0.8
ADR-/- {\/} .............................................. -- 12,000 432,000 --
Common-/- ................................................ -- 3,300 119,696 --
Telstra Corp. Ltd. ......................................... AUSL 260,000 548,831 0.8
Bell Canada International, Inc.: ........................... CAN -- -- 0.8
Common-/- ................................................ -- 27,800 425,133 --
Common-/- {\/} ........................................... -- 5,400 82,350 --
Telefonica del Peru S.A. - ADR{\/} ......................... PERU 12,200 283,650 0.4
TeleBermuda International Ltd.(.) -/- {\/} ................. BDA 33,200 273,900 0.4
Compania Anonima Nacional Telefonos de Venezuela (CANTV) -
ADR{\/} ................................................... VENZ 6,400 266,400 0.4
Ionica Group PLC-/- ........................................ UK 56,400 126,877 0.2
-----------
18,174,962
-----------
Telecom Equipment (23.7%)
Nokia Oyj "A" - ADR{\/} .................................... FIN 46,000 3,220,000 4.7
ECI Telecommunications Ltd.{\/} ............................ ISRL 100,000 2,550,000 3.7
Newbridge Networks Corp.-/- ................................ CAN 56,000 1,961,646 2.9
L.M. Ericsson Telephone Co. - ADR{\/} ...................... SWDN 40,000 1,492,500 2.2
DSC Communications Corp.-/- ................................ US 47,000 1,128,000 1.7
Corning, Inc. .............................................. US 30,000 1,113,750 1.6
P-COM, Inc.-/- ............................................. US 57,000 983,250 1.4
ANTEC Corp.-/- ............................................. US 50,000 781,250 1.1
Tellabs, Inc.-/- ........................................... US 9,000 475,875 0.7
Alcatel Alsthom Compagnie Generale d'Electricite ........... FR 3,700 470,300 0.7
Tekelec-/- ................................................. US 14,300 436,150 0.6
Champion Technology Holding Ltd. ........................... HK 3,586,928 384,223 0.6
Pairgain Technologies, Inc.-/- ............................. US 14,900 288,688 0.4
Mitec Telecom, Inc.-/- ..................................... CAN 43,900 245,801 0.4
Performance Technologies, Inc.-/- .......................... US 15,000 217,500 0.3
Allen Telecom, Inc.-/- ..................................... US 11,000 202,813 0.3
Geotek Communications, Inc.-/- ............................. US 100,000 153,125 0.2
Teledata Communications Ltd.-/- {\/} ....................... ISRL 8,000 146,000 0.2
-----------
16,250,871
-----------
</TABLE>

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

F24
<PAGE>
GT GLOBAL VARIABLE TELECOMMUNICATIONS FUND

PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1997

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Wireless Communications (17.0%)
Nextel Communications, Inc. "A"-/- ......................... US 106,000 $ 2,756,000 4.0
Millicom International Cellular S.A.-/- {\/} ............... LUX 46,000 1,730,750 2.5
Vimpel-Communications - ADR-/- {\/} ........................ RUS 40,000 1,425,000 2.1
Grupo Iusacell S.A. "L" - ADR-/- {\/} ...................... MEX 65,000 1,409,688 2.1
Paging Network, Inc.-/- .................................... US 85,000 913,750 1.3
DDI Corp. .................................................. JPN 327 864,483 1.3
WinStar Communications, Inc.-/- ............................ US 25,000 623,438 0.9
Western Wireless Corp. "A"-/- .............................. US 29,600 514,300 0.8
Clearnet Communications, Inc. "A"-/- ....................... CAN 40,700 448,646 0.7
Vodafone Group PLC ......................................... UK 46,617 336,040 0.5
Powertel, Inc.-/- .......................................... US 15,000 251,250 0.4
Microcell Telecommunications, Inc. "B"-/- {\/} ............. CAN 24,000 162,000 0.2
China Telecom (Hong Kong) Ltd.-/- .......................... HK 60,000 102,988 0.2
-----------
11,538,333
-----------
Telephone - Regional/Local (8.7%)
ICG Communications, Inc.-/- ................................ US 60,500 1,648,625 2.4
GTE Corp. .................................................. US 30,000 1,567,500 2.3
Intermedia Communications of Florida, Inc.-/- .............. US 23,000 1,397,250 2.0
Teleport Communications Group, Inc. "A"-/- ................. US 15,000 823,125 1.2
ING Barings Russian Regional Telecommunications Basket
Bridge Certificates-/ - {=} {\/} .......................... RUS 66 444,453 0.7
NEXTLINK Communications, Inc. "A"-/- ....................... US 2,900 61,806 0.1
-----------
5,942,759
-----------
Multi-Industry (6.4%)
Mannesmann AG .............................................. GER 5,900 2,981,985 4.4
Grupo Carso, S.A. de C.V. "A1" ............................. MEX 150,000 1,003,966 1.5
Hutchison Whampoa .......................................... HK 49,000 307,337 0.5
-----------
4,293,288
-----------
Aerospace/Defense (2.9%)
Orbital Sciences Corp.-/- .................................. US 66,000 1,963,500 2.9
-----------
Cable Television (2.4%)
Comcast UK Cable Partners Ltd. "A"{\/} ..................... UK 85,000 802,188 1.2
Comcast Corp. "A" .......................................... US 22,000 694,375 1.0
United International Holdings, Inc. "A"-/- ................. US 12,000 138,000 0.2
-----------
1,634,563
-----------
Telephone - Long Distance (1.6%)
Call-Net Enterprises, Inc. "B"-/- .......................... CAN 61,300 963,175 1.4
RSL Communications Ltd. "A"-/- ............................. US 5,100 112,200 0.2
-----------
1,075,375
-----------
</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, 1997

TOTAL EQUITY INVESTMENTS (cost $53,078,512) .................. 62,023,322 91.0
----------- -----
<CAPTION>

VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- -------------------------------------------------------------- ----------- -------------
<S> <C> <C> <C> <C>
Dated December 31, 1997, with State Street Bank & Trust Co.,
due January 2, 1998, for an effective yield of 5.80%,
collateralized by $5,715,000 of U.S. Treasury Notes, 7.875%
due 11/15/07 (market value of collateral is $6,272,213,
including accrued interest). (cost $6,148,000) ........... 6,148,000 9.0
----------- -----

TOTAL INVESTMENTS (cost $59,226,512) * ...................... 68,171,322 100.0
Other Assets and Liabilities ................................. 14,821 --
----------- -----

NET ASSETS ................................................... $68,186,143 100.0
----------- -----
----------- -----
</TABLE>

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

-/- Non-income producing security.
{\/} U.S. currency denominated.
(.) Restricted securities: At December 31, 1997 the Fund owned the
following restricted security constituting less than 0.5% of net
assets which may not be publicly sold without registration under
the Securities Act of 1933 (Note 1).

<TABLE>
<CAPTION>
VALUE
PER
SHARE
ACQUISITION (NOTE
DESCRIPTION ACQUISITION DATE SHARES COST 1)
----------------------------------------------- ----------------- ------ ----------- ------
<S> <C> <C> <C> <C>
TeleBermuda International Ltd.................. 10/4/96 33,200 $ 282,200 8.25
</TABLE>

{=} Issued by ING Barings, the value of which is linked to the
underlying value of a basket of shares issued by Russian regional
telephone companies.
* For Federal income tax purposes, cost is $59,226,512 and
appreciation (depreciation) is as follows:

<TABLE>
<S> <C>
Unrealized appreciation: $ 13,320,057
Unrealized depreciation: (4,375,247)
-------------
Net unrealized appreciation: $ 8,944,810
-------------
-------------
</TABLE>

Abbreviation:
ADR--American Depositary Receipt

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, 1997

- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at December 31, 1997, 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>
Australia (AUSL/AUD) ................. 0.8 0.8
Bermuda (BDA/BMD) .................... 0.4 0.4
Brazil (BRZL/BRL) .................... 4.6 4.6
Canada (CAN/CAD) ..................... 6.4 6.4
Czech Republic (CZCH/CSK) ............ 2.6 2.6
Finland (FIN/FIM) .................... 4.7 4.7
France (FR/FRF) ...................... 1.5 1.5
Germany (GER/DEM) .................... 4.4 4.4
Hong Kong (HK/HKD) ................... 1.3 1.3
Hungary (HGRY/HUF) ................... 1.6 1.6
Israel (ISRL/ILS) .................... 3.9 3.9
Italy (ITLY/ITL) ..................... 4.6 4.6
Japan (JPN/JPY) ...................... 1.3 1.3
Luxembourg (LUX/LUF) ................. 2.5 2.5
Mexico (MEX/MXN) ..................... 4.7 4.7
Peru (PERU/PES) ...................... 0.4 0.4
Portgual (PORT/PTE) .................. 1.5 1.5
Russia (RUS/SUR) ..................... 2.8 2.8
Sweden (SWDN/SEK) .................... 2.2 2.2
United Kingdom (UK/GBP) .............. 5.9 5.9
United States (US/USD) ............... 32.5 9.0 41.5
Venezuela (VENZ/VEB) ................. 0.4 0.4
------ ----- -----
Total ............................... 91.0 9.0 100.0
------ ----- -----
------ ----- -----
</TABLE>

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

{d} Percentages indicated are based on net assets of $68,186,143.

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

FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
DECEMBER 31, 1997
<TABLE>
<CAPTION>
UNREALIZED
MARKET VALUE DELIVERY APPRECIATION
CONTRACTS TO BUY: (U.S. DOLLARS) CONTRACT PRICE DATE (DEPRECIATION)
- ---------------------------------------- ---------------- -------------- -------- ---------------
<S> <C> <C> <C> <C>
Japanese Yen............................ 115,680 127.15000 02/12/98 $ (2,292)
Japanese Yen............................ 115,680 129.29000 02/12/98 (338)
Japanese Yen............................ 115,680 126.69000 02/12/98 (2,719)
Swedish Kroner.......................... 592,285 7.74600 01/21/98 (14,479)
---------------- ---------------
Total Contracts to Buy (Payable amount
$959,153)............................ 939,325 (19,828)
---------------- ---------------
THE VALUE OF CONTRACTS TO BUY AS
PERCENTAGE OF NET ASSETS IS 1.38%.

CONTRACTS TO SELL:
- ----------------------------------------
<S> <C> <C> <C> <C>
British Pounds.......................... 1,312,454 0.61936 01/20/98 (20,798)
Deutsche Marks.......................... 334,664 1.72492 02/23/98 13,178
Deutsche Marks.......................... 446,311 1.73540 02/27/98 14,678
Finnish Markka.......................... 1,561,461 5.28300 01/21/98 47,474
Italian Liras........................... 1,696,712 1730.40000 01/21/98 36,992
Japanese Yen............................ 771,198 122.50500 02/12/98 45,094
Swedish Kroner.......................... 1,764,257 7.61030 01/21/98 75,355
---------------- ---------------
Total Contracts to Sell (Receivable
amount $8,099,030)................... 7,887,057 211,973
---------------- ---------------
THE VALUE OF CONTRACTS TO SELL AS
PERCENTAGE OF NET ASSETS IS 11.57%.

Total Open Forward Foreign Currency
Contracts, Net....................... $ 192,145
---------------
---------------
</TABLE>

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

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

F27
<PAGE>
GT GLOBAL VARIABLE EMERGING MARKETS FUND

PORTFOLIO OF INVESTMENTS

December 31, 1997

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

<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Services (19.5%)
Telecomunicacoes Brasileiras S.A. (Telebras): .............. BRZL -- -- 4.5
TELEPHONE NETWORKS
ADR{\/} .................................................. -- 4,048 $ 471,339 --
Common ................................................... -- 2,534,538 257,769 --
Telefonos de Mexico, S.A. de C.V. "L" - ADR{\/} ............ MEX 5,118 286,928 1.7
TELEPHONE NETWORKS
Pick'n Pay Stores Ltd.: .................................... SAFR -- -- 1.4
RETAILERS-OTHER
Common ................................................... -- 130,231 189,831 --
"N" ...................................................... -- 21,100 28,631 --
Magyar Tavkozlesi Rt. - ADR-/- {\/} ........................ HGRY 6,900 179,400 1.1
TELEPHONE NETWORKS
Cia de Telecomunicaciones de Chile S.A. - ADR{\/} .......... CHLE 5,134 153,378 0.9
TELEPHONE NETWORKS
Cifra, S.A. de C.V.: ....................................... MEX -- -- 0.9
RETAILERS-OTHER
"V" ...................................................... -- 32,502 80,167 --
"C" ...................................................... -- 32,000 71,790 --
Telefonica del Peru S.A. - ADR{\/} ......................... PERU 6,320 146,940 0.9
TELEPHONE NETWORKS
Mahanagar Telephone Nigam Ltd.: ............................ IND -- -- 0.9
TELECOM - OTHER
Common ................................................... -- 14,800 97,657 --
GDR-/- {\/} .............................................. -- 3,100 48,081 --
Telefonica de Argentina S.A. - ADR{\/} ..................... ARG 2,763 102,922 0.6
TELEPHONE NETWORKS
Companhia de Saneamento Basico do Estado de Sao Paulo -
SABESP .................................................... BRZL 416,633 98,932 0.6
BUSINESS & PUBLIC SERVICES
Telecomunicacoes de Sao Paulo S.A. (TELESP): ............... BRZL -- -- 0.6
TELEPHONE NETWORKS
Preferred ................................................ -- 243,769 64,872 --
Common-/- ................................................ -- 143,100 32,568 --
Vimpel-Communications - ADR-/- {\/} ........................ RUS 2,500 89,063 0.5
WIRELESS COMMUNICATIONS
Compania Anonima Nacional Telefonos de Venezuela (CANTV) -
ADR{\/} ................................................... VENZ 1,895 78,879 0.5
TELEPHONE NETWORKS
Carso Global Telecom "A1" .................................. MEX 16,500 67,080 0.4
TELEPHONE NETWORKS
Nortel Inversora S.A. - ADR{\/} ............................ ARG 2,300 58,650 0.4
TELEPHONE - REGIONAL/LOCAL
Guangshen Railway Co., Ltd. ................................ HK 211,000 55,824 0.3
TRANSPORTATION - ROAD & RAIL
Guangnan Holdings .......................................... HK 61,000 49,990 0.3
WHOLESALE & INTERNATIONAL TRADE
Indian Hotels Co., Ltd. - GDR{\/} .......................... IND 2,600 48,913 0.3
LEISURE & TOURISM
Grupo Televisa, S.A. de C.V. - GDR-/- {\/} ................. MEX 1,100 42,556 0.3
BROADCASTING & PUBLISHING
Danubius Hotel and Spa Rt.-/- .............................. HGRY 1,367 41,558 0.3
LEISURE & TOURISM
</TABLE>

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

F28
<PAGE>
GT GLOBAL VARIABLE EMERGING MARKETS FUND

PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1997

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Services (Continued)
Telecom Argentina S.A. - ADR{\/} ........................... ARG 1,100 $ 39,325 0.2
TELEPHONE - LONG DISTANCE
Santa Isabel S.A. - ADR{\/} ................................ CHLE 2,052 35,910 0.2
RETAILERS-FOOD
PT Indosat ................................................. INDO 17,000 32,717 0.2
TELECOM - OTHER
Migros Turk T.A.S. ......................................... TRKY 30,500 27,627 0.2
RETAILERS-FOOD
Pakistan Telecommunications Co., Ltd. - GDR-/- {\/} ........ PAK 400 27,000 0.2
TELEPHONE NETWORKS
PT Matahari Putra Prima .................................... INDO 258,000 21,906 0.1
RETAILERS-APPAREL
Super Sol Ltd. ............................................. ISRL 7,688 21,814 0.1
RETAILERS-FOOD
Shanghai Hai Xing Shipping Co., Ltd. "H"-/- {*} ............ CHNA 78,000 19,932 0.1
TRANSPORTATION - SHIPPING
Telekom Malaysia Bhd. ...................................... MAL 6,000 17,761 0.1
TELEPHONE NETWORKS
Advanced Info. Service - Foreign ........................... THAI 3,500 17,462 0.1
WIRELESS COMMUNICATIONS
Sonae Investimentos-Sociedade Gestora de Participacoes
Sociais S.A. .............................................. PORT 423 17,113 0.1
RETAILERS-OTHER
Genting Bhd. ............................................... MAL 6,000 15,058 0.1
LEISURE & TOURISM
Tanjong PLC ................................................ MAL 9,000 14,942 0.1
LEISURE & TOURISM
PT Citra Marga Nusaphala Persada ........................... INDO 130,000 14,717 0.1
BUSINESS & PUBLIC SERVICES
BEC World Public Co., Ltd. - Foreign ....................... THAI 2,200 9,131 0.1
BROADCASTING & PUBLISHING
TelecomAsia Corp. - Foreign-/- ............................. THAI 42,700 8,448 0.1
TELEPHONE NETWORKS
Jeronimo Martins, Sociedade Gestora de Participacoes Sociais
S.A. ...................................................... PORT 221 6,998 --
RETAILERS-OTHER
Siam Makro Public Co., Ltd. - Foreign ...................... THAI 6,000 6,903 --
RETAILERS-OTHER
Investec-Consultoria Internacional S.A.-/- ................. PORT 204 6,042 --
BROADCASTING & PUBLISHING
Konsortium Perkapalan Bhd. ................................. MAL 12,000 5,560 --
TRANSPORTATION - SHIPPING
-----------
3,210,084
-----------
Energy (15.8%)
LUKoil Holding - ADR{\/} ................................... RUS 3,550 324,825 2.0
OIL
Sasol Ltd. ................................................. SAFR 24,546 257,370 1.6
ENERGY SOURCES
Centrais Eletricas Brasileiras S.A.-Eletrobras "B" -
ADR{\/} ................................................... BRZL 8,816 228,112 1.4
ELECTRICAL & GAS UTILITIES
</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, 1997

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Energy (Continued)
Companhia Energetica de Minas Gerais (CEMIG) - ADR{\/} ..... BRZL 4,720 $ 202,960 1.2
ELECTRICAL & GAS UTILITIES
Petroleo Brasileiro S.A. (Petrobras) Preferred ............. BRZL 801,780 187,513 1.1
OIL
Unified Energy Systems - Reg S GDR-/- {c} {\/} ............. RUS 6,100 183,000 1.1
ELECTRICAL & GAS UTILITIES
Light - Servicos de Electricidade S.A. ..................... BRZL 333,328 138,881 0.8
ELECTRICAL & GAS UTILITIES
Light - Participacoes S.A. ................................. BRZL 461,507 138,535 0.8
ELECTRICAL & GAS UTILITIES
Enersis S.A. - ADR{\/} ..................................... CHLE 4,583 132,907 0.8
ELECTRICAL & GAS UTILITIES
YPF S.A. - ADR{\/} ......................................... ARG 2,978 101,810 0.6
OIL
C.A. La Electricidad de Caracas ............................ VENZ 83,854 100,698 0.6
ELECTRICAL & GAS UTILITIES
Chilgener S.A. - ADR{\/} ................................... CHLE 3,996 97,902 0.6
ELECTRICAL & GAS UTILITIES
Surgutneftegaz - ADR{\/} ................................... RUS 7,960 80,635 0.5
OIL
Empresa Nacional de Electricidad S.A. - ADR{\/} ............ CHLE 4,377 77,418 0.5
ELECTRICAL & GAS UTILITIES
The Hub Power Co., Ltd. - GDR-/- {\/} ...................... PAK 2,000 61,500 0.4
ENERGY SOURCES
MOL Magyar Olaj-es Gazipari RT - Reg S GDR{c} {\/} ......... HGRY 2,200 53,460 0.3
ENERGY SOURCES
Pakistan State Oil Co., Ltd. ............................... PAK 5,280 44,934 0.3
OIL
Bombay Suburban Electric Supply (BSES) Ltd. ................ IND 8,850 38,705 0.2
ELECTRICAL & GAS UTILITIES
Tenaga Nasional Bhd. ....................................... MAL 18,000 38,456 0.2
ELECTRICAL & GAS UTILITIES
Mosenergo - ADR-/- {\/} .................................... RUS 942 34,760 0.2
ELECTRICAL & GAS UTILITIES
Perez Companc S.A. "B" ..................................... ARG 4,526 32,322 0.2
OIL
Petronas Gas Bhd. .......................................... MAL 11,000 25,058 0.2
OIL
Electricity Generating Public Co., Ltd. - Foreign .......... THAI 8,200 15,871 0.1
ELECTRICAL & GAS UTILITIES
PTT Exploration and Production Public Co., Ltd. -
Foreign ................................................... THAI 1,100 13,105 0.1
OIL
Companhia Paranaense de Energia - Copel .................... BRZL 504,000 5,645 --
ELECTRICAL & GAS UTILITIES
Banpu Public Co., Ltd. - Foreign ........................... THAI 500 2,075 --
ELECTRICAL & GAS UTILITIES
-----------
2,618,457
-----------
</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, 1997

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Multi-Industry/Miscellaneous (14.8%)
GT Taiwan Fund-/- +X+ {\/} ................................. TWN 49,751 $ 627,861 3.8
COUNTRY FUNDS
Barlow Ltd. ................................................ SAFR 22,457 190,681 1.2
CONGLOMERATE
Grupo Carso, S.A. de C.V. "A1" ............................. MEX 25,500 170,674 1.0
MULTI-INDUSTRY
ITC Ltd.: .................................................. IND -- -- 0.9
MULTI-INDUSTRY
Common ................................................... -- 6,500 102,820 --
GDR-/- {\/} .............................................. -- 2,100 42,210 --
Anglo American Corporation of South Africa Ltd. ............ SAFR 3,403 137,547 0.8
CONGLOMERATE
Rembrandt Group Ltd. ....................................... SAFR 18,217 132,957 0.8
CONGLOMERATE
Shanghai Industrial Holdings Ltd. .......................... HK 35,000 130,090 0.8
MULTI-INDUSTRY
China Resources Enterprise Ltd. ............................ HK 56,000 125,031 0.8
CONGLOMERATE
The Saudi Arabian Investment Fund Ltd.-/- {\/} ............. UK 12,000 100,500 0.6
COUNTRY FUNDS
Sanluis Corporacion, S.A. de C.V. .......................... MEX 10,637 87,411 0.5
CONGLOMERATE
Delta Corporation Ltd. (subdivision) ....................... ZBBW 122,800 84,110 0.5
MULTI-INDUSTRY
NASR (El) City Company For Housing & Construction .......... EGPT 1,250 81,001 0.5
MISCELLANEOUS
PT Gudang Garam ............................................ INDO 50,500 79,800 0.5
MULTI-INDUSTRY
John Keells Holdings Ltd.-/- ............................... SLNKA 11,000 59,903 0.4
MULTI-INDUSTRY
PT Telekomunikasi Indonesia ................................ INDO 93,000 51,325 0.3
MULTI-INDUSTRY
Koc Holding AS ............................................. TRKY 174,600 40,909 0.2
CONGLOMERATE
Empresas La Moderna, S.A. de C.V. "A"-/- ................... MEX 7,500 40,809 0.2
MULTI-INDUSTRY
Koor Industries Ltd. - ADR{\/} ............................. ISRL 1,345 29,506 0.2
CONGLOMERATE
Alfa, S.A. de C.V. "A" ..................................... MEX 4,000 27,119 0.2
CONGLOMERATE
PT Hanjaya Mandala Sampoerna ............................... INDO 34,000 26,623 0.2
MULTI-INDUSTRY
YTL Corporation Bhd. ....................................... MAL 16,000 21,622 0.1
MULTI-INDUSTRY
Discount Investment Corp. .................................. ISRL 732 20,480 0.1
MULTI-INDUSTRY
Quinenco S.A. - ADR-/- {\/} ................................ CHLE 1,700 19,550 0.1
CONGLOMERATE
PT Bimantara Citra ......................................... INDO 61,000 12,085 0.1
MULTI-INDUSTRY
</TABLE>

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, 1997

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Multi-Industry/Miscellaneous (Continued)
Sime Darby Bhd. ............................................ MAL 7,000 $ 6,739 --
MISCELLANEOUS
-----------
2,449,363
-----------
Finance (12.7%)
ABSA Group Ltd. ............................................ SAFR 38,125 219,470 1.3
BANKS-REGIONAL
State Bank of India Ltd. - GDR{\/} ......................... IND 7,380 131,918 0.8
BANKS-REGIONAL
Unibanco Units-/- .......................................... BRZL 1,845,564 125,684 0.8
BANKS-MONEY CENTER
Administradora de Fondos de Pensiones Provida S.A. -
ADR{\/} ................................................... CHLE 7,022 119,813 0.7
INVESTMENT MANAGEMENT
Akbank T.A.S. .............................................. TRKY 1,280,000 112,850 0.7
BANKS-REGIONAL
Commercial International Bank: ............................. EGPT -- -- 0.6
BANKS-MONEY CENTER
Common ................................................... -- 5,000 101,119 --
144A GDR{.} {\/} ......................................... -- 200 4,200 --
Turkiye Is Bankasi (Isbank) "C" ............................ TRKY 542,800 98,333 0.6
BANKS-MONEY CENTER
Liberty Life Association of Africa Ltd. .................... SAFR 3,400 87,377 0.5
INSURANCE-LIFE
Credicorp Ltd. - ADR{\/} ................................... PERU 4,300 77,400 0.5
BANKS-MONEY CENTER
Global Menkul Degerler AS-/- ............................... TRKY 3,540,026 75,247 0.5
SECURITIES BROKER
Banco Rio de La Plata S.A. - ADR-/- {\/} ................... ARG 5,100 71,400 0.4
BANKS-MONEY CENTER
C.G. Smith Ltd. ............................................ SAFR 16,800 69,079 0.4
INVESTMENT MANAGEMENT
Egyptian American Bank SAE ................................. EGPT 2,100 65,567 0.4
BANKS-MONEY CENTER
Banco Frances del Rio de la Plata S.A. - ADR{\/} ........... ARG 2,374 64,988 0.4
BANKS-MONEY CENTER
Haci Omer Sabanci Holding AS: .............................. TRKY -- -- 0.4
INVESTMENT MANAGEMENT
Common-/- ................................................ -- 829,000 51,062 --
ADR Reg S-/- {c} {\/} .................................... -- 700 10,675 --
Banco de A. Edwards - ADR{\/} .............................. CHLE 3,463 58,871 0.4
BANKS-MONEY CENTER
Aksigorta AS ............................................... TRKY 862,500 55,208 0.3
INSURANCE - MULTI-LINE
Nedcor Ltd. ................................................ SAFR 2,400 53,289 0.3
BANKS-REGIONAL
Golden Hope Plantations Bhd. ............................... MAL 40,000 46,332 0.3
INVESTMENT MANAGEMENT
Banco de Galicia y Buenos Aires, S.A. de C.V. - ADR{\/} .... ARG 1,400 36,050 0.2
BANKS-MONEY CENTER
Berjaya Sports Toto Bhd. ................................... MAL 14,000 35,856 0.2
REAL ESTATE
</TABLE>

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

F32
<PAGE>
GT GLOBAL VARIABLE EMERGING MARKETS FUND

PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1997

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Finance (Continued)
National Development Bank-/- ............................... SLNKA 7,800 $ 29,045 0.2
BANKS-REGIONAL
Muslim Commercial Bank Ltd.-/- ............................. PAK 32,100 28,813 0.2
BANKS-MONEY CENTER
Banco Santander Chile - ADR{\/} ............................ CHLE 2,000 28,250 0.2
BANKS-REGIONAL
Bank Hapoalim Ltd. ......................................... ISRL 11,434 27,462 0.2
BANKS-REGIONAL
Bank Leumi Le - Israel ..................................... ISRL 14,626 24,577 0.2
BANKS-REGIONAL
Inversiones y Representaciones S.A. (IRSA) - GDR{\/} ....... ARG 650 24,456 0.1
REAL ESTATE
Malayan Banking Bhd. ....................................... MAL 8,000 23,269 0.1
BANKS-MONEY CENTER
Kazkommertsbank Co. - GDR-/- {\/} .......................... KAZ 1,070 21,400 0.1
BANKS-REGIONAL
Turkiye Garanti Bankasi AS ................................. TRKY 416,000 20,599 0.1
BANKS-REGIONAL
Bank Slaski S.A. ........................................... POL 363 20,109 0.1
BANKS-MONEY CENTER
MISR International Bank SAE - GDR-/- {\/} .................. EGPT 1,000 14,675 0.1
BANKS-MONEY CENTER
Yapi ve Kredi Bankasi AS ................................... TRKY 299,645 11,436 0.1
BANKS-REGIONAL
Bangkok Bank Public Co., Ltd. - Foreign .................... THAI 4,100 10,581 0.1
BANKS-MONEY CENTER
Thai Farmers Bank Public Co., Ltd. - Foreign ............... THAI 5,600 10,538 0.1
BANKS-REGIONAL
F.I.B.I. Holdings Ltd. ..................................... ISRL 48 8,623 0.1
BANKS-SUPER REGIONAL
Malaysian Assurance Alliance Bhd. .......................... MAL 5,900 6,773 --
INSURANCE - MULTI-LINE
-----------
2,082,394
-----------
Materials/Basic Industry (11.2%)
Kimberly-Clark de Mexico, S.A. de C.V. "A" ................. MEX 58,809 287,922 1.7
PAPER/PACKAGING
Suez Cement Co. - Reg S GDR{c} {\/} ........................ EGPT 9,963 203,494 1.2
CEMENT
Helwan Portland Cement Co.-/- .............................. EGPT 6,500 131,149 0.8
CEMENT
SA Iron & Steel Industrial Corporation Ltd. (ISCOR) ........ SAFR 373,247 110,501 0.7
METALS - STEEL
Sappi Ltd. ................................................. SAFR 21,652 109,061 0.7
FOREST PRODUCTS
Industrias Penoles S.A. (CP) ............................... MEX 23,240 105,139 0.6
METALS - NON-FERROUS
De Beers Centenary AG - Linked Unit{.:} .................... SAFR 4,400 89,556 0.5
MISC. MATERIALS & COMMODITIES
</TABLE>

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

F33
<PAGE>
GT GLOBAL VARIABLE EMERGING MARKETS FUND

PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1997

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Materials/Basic Industry (Continued)
Apasco, S.A. de C.V. ....................................... MEX 11,931 $ 82,813 0.5
CEMENT
Torah Portland Cement Co. .................................. EGPT 3,600 82,699 0.5
CEMENT
Pannonplast Rt. ............................................ HGRY 1,301 68,584 0.4
MISC. MATERIALS & COMMODITIES
Helioplis Housing .......................................... EGPT 500 66,642 0.4
BUILDING MATERIALS & COMPONENTS
Turk Sise ve Cam Fabrikalari AS-/- ......................... TRKY 740,000 54,517 0.3
GLASS
Ameriyah Cement Co. ........................................ EGPT 2,000 46,834 0.3
CEMENT
Grupo Mexico S.A. "L" ...................................... MEX 14,200 44,881 0.3
METALS - NON-FERROUS
Siderca S.A. ............................................... ARG 14,900 41,430 0.3
METALS - STEEL
Israel Chemicals Ltd. ...................................... ISRL 23,326 31,608 0.2
CHEMICALS
North Cairo Flour Mills .................................... EGPT 1,000 28,571 0.2
MISC. MATERIALS & COMMODITIES
Sociedad Quimica y Minera de Chile S.A. - ADR{\/} .......... CHLE 600 26,400 0.2
CHEMICALS
Hindalco Industries Ltd.: .................................. IND -- -- 0.1
METALS - NON-FERROUS
GDR{\/} .................................................. -- 800 15,750 --
Common ................................................... -- 400 7,601 --
HI Cement Corp. ............................................ PHIL 305,000 23,256 0.1
CEMENT
Maanshan Iron and Steel Co. "H"{*} ......................... CHNA 174,000 19,312 0.1
METALS - STEEL
Agros Holding S.A. "C"-/- .................................. POL 766 15,886 0.1
MISC. MATERIALS & COMMODITIES
PT Indah Kiat Pulp & Paper Corp.Tbk ........................ INDO 85,000 15,637 0.1
PAPER/PACKAGING
PT Aneka Tambang-/- ........................................ INDO 60,500 15,125 0.1
METALS - NON-FERROUS
Engro Chemicals Pakistan Ltd. .............................. PAK 5,800 15,045 0.1
CHEMICALS
Nampak Ltd. ................................................ SAFR 4,400 13,207 0.1
PAPER/PACKAGING
Cosco Pacific Ltd. ......................................... HK 16,000 13,009 0.1
PAPER/PACKAGING
Compania de Minas Buenaventura S.A. - ADR{\/} .............. PERU 800 12,800 0.1
METALS - NON-FERROUS
IOI Corporation Bhd. ....................................... MAL 36,000 11,676 0.1
MISC. MATERIALS & COMMODITIES
Cahya Mata Sarawak Bhd. .................................... MAL 16,000 9,843 0.1
BUILDING MATERIALS & COMPONENTS
Fauji Fertilizer Co., Ltd. ................................. PAK 5,100 9,764 0.1
MISC. MATERIALS & COMMODITIES
</TABLE>

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

F34
<PAGE>
GT GLOBAL VARIABLE EMERGING MARKETS FUND

PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1997

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Materials/Basic Industry (Continued)
Makhteshim Chemical Works Ltd.-/- .......................... ISRL 1,200 $ 8,690 0.1
CHEMICALS
Shanghai Petrochemical Co., Ltd. "H" ....................... HK 39,000 6,090 --
CHEMICALS
The Siam Cement Public Co., Ltd. - Foreign ................. THAI 700 5,720 --
CEMENT
Yizheng Chemical Fibre Co., Ltd.{*} ........................ CHNA 20,000 3,614 --
CHEMICALS
-----------
1,833,826
-----------
Consumer Non-Durables (7.2%)
Fomento Economico Mexicano, S.A. de C.V. "B" ............... MEX 26,334 210,528 1.3
BEVERAGES - ALCOHOLIC
South African Breweries Ltd. ............................... SAFR 8,523 210,271 1.3
BEVERAGES - ALCOHOLIC
Gruma S.A. "B"-/- .......................................... MEX 42,097 166,969 1.0
FOOD
Hindustan Lever Ltd. ....................................... IND 2,800 99,074 0.6
PERSONAL CARE/COSMETICS
Companhia Cervejaria Brahma Preferred ...................... BRZL 142,241 95,592 0.6
BEVERAGES - ALCOHOLIC
A-Ahram Beverages Co. S.A.E. - 144A GDR{.} {\/} ............ EGPT 3,000 84,750 0.5
BEVERAGES - ALCOHOLIC
Eastern Tobacco Co. ........................................ EGPT 2,700 62,836 0.4
TOBACCO
Embotelladora Andina S.A. "B" - ADR{\/} .................... CHLE 3,207 62,336 0.4
BEVERAGES - NON-ALCOHOLIC
Reliance Industries Ltd. - GDR{\/} ......................... IND 6,200 52,313 0.3
TEXTILES & APPAREL
Compania Cervecerias Unidas S.A. - ADR{\/} ................. CHLE 1,400 41,125 0.3
BEVERAGES - ALCOHOLIC
C.G. Smith Foods Ltd. ...................................... SAFR 2,000 28,783 0.2
FOOD
Ng Fung Hong Ltd. .......................................... HK 22,000 23,140 0.1
FOOD
Kuala Lumpur Kepong Bhd. ................................... MAL 10,000 21,493 0.1
OTHER CONSUMER GOODS
Zaklady Piwowarskie w Zywcu S.A. (Zywiec) .................. POL 215 18,080 0.1
BEVERAGES - ALCOHOLIC
Rothmans of Pall Mall Bhd. ................................. MAL 800 6,229 --
TOBACCO
Oriental Weavers "C"-/- .................................... EGPT 350 6,082 --
TEXTILES & APPAREL
-----------
1,189,601
-----------
Health Care (1.7%)
Richter Gedeon Rt. - Reg S GDR{c} {\/} ..................... HGRY 805 92,474 0.6
PHARMACEUTICALS
Egypt International Pharmaceutical Industries Co.
(EIPICO) .................................................. EGPT 1,000 70,103 0.4
PHARMACEUTICALS
</TABLE>

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

F35
<PAGE>
GT GLOBAL VARIABLE EMERGING MARKETS FUND

PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1997

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Health Care (Continued)
Teva Pharmaceutical Industries Ltd. ........................ ISRL 1,238 $ 58,767 0.4
PHARMACEUTICALS
Ranbaxy Laboratories Ltd. .................................. IND 3,000 54,035 0.3
MEDICAL TECHNOLOGY & SUPPLIES
PT Kalbe Farma - Foreign ................................... INDO 31,000 5,703 --
PHARMACEUTICALS
-----------
281,082
-----------
Consumer Durables (1.4%)
Bajaj Auto Ltd. ............................................ IND 5,850 90,518 0.5
AUTOMOBILES
Arcelik AS ................................................. TRKY 566,466 53,363 0.3
APPLIANCES & HOUSEHOLD
Qingling Motors Co., Ltd.{*} ............................... CHNA 78,000 38,253 0.2
AUTOMOBILES
Tata Engineering and Locomotive Co., Ltd. - GDR{\/} ........ IND 4,200 35,007 0.2
AUTOMOBILES
Mahindra & Mahindra Ltd. ................................... IND 3,800 31,246 0.2
AUTOMOBILES
-----------
248,387
-----------
Capital Goods (1.0%)
Empresas ICA Sociedad Controladora, S.A. de C.V. -
ADR{\/} ................................................... MEX 2,300 37,806 0.2
CONSTRUCTION
Cheung Kong Infrastructure Holdings ........................ HK 12,000 33,916 0.2
CONSTRUCTION
New World Infrastructure Ltd.-/- ........................... HK 13,000 29,277 0.2
CONSTRUCTION
Elektrim Spolka Akcyjna S.A. ............................... POL 2,882 27,919 0.2
ELECTRICAL PLANT/EQUIPMENT
Irkutskenergo - ADR{\/} .................................... RUS 1,898 18,031 0.1
ELECTRICAL PLANT/EQUIPMENT
ECI Telecommunications Ltd.{\/} ............................ ISRL 650 16,575 0.1
TELECOM EQUIPMENT
Arabian International Construction-/- ...................... EGPT 275 7,776 --
CONSTRUCTION
Sungmi Telecom Electronics Co. ............................. KOR 1 28 --
TELECOM EQUIPMENT
-----------
171,328
-----------
Technology (0.3%)
Clal Electronics Industries Ltd. ........................... ISRL 173 25,155 0.2
SEMICONDUCTORS
Tadiran Ltd. ............................................... ISRL 500 17,851 0.1
TELECOM TECHNOLOGY
-----------
43,006
----------- -----

TOTAL EQUITY INVESTMENTS (cost $15,806,682) .................. 14,127,528 85.6
----------- -----
</TABLE>

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

F36
<PAGE>
GT GLOBAL VARIABLE EMERGING MARKETS FUND

PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1997

NO. OF
WARRANTS COUNTRY WARRANTS
- -------------------------------------------------------------- -------- -----------
<S> <C> <C> <C> <C>
Belle Corp. Warrants, expire 2002 (cost $0) ................ PHIL 41,720 65 --
----------- -----
OIL
<CAPTION>

REPURCHASE AGREEMENT
- --------------------------------------------------------------
<S> <C> <C> <C> <C>
Dated December 31, 1997, with State Street Bank & Trust Co.,
due January 2, 1998, for an effective yield of 5.80%,
collateralized by $2,475,000 U.S. Treasury Notes, 7.875%
due 11/15/07 (market value of collateral is $2,716,313,
including accrued interest). (cost $2,659,000) ........... 2,659,000 16.1
----------- -----

TOTAL INVESTMENTS (cost $18,479,446) * ...................... 16,800,243 101.8
Other Assets and Liabilities ................................. (291,486) (1.8)
----------- -----

NET ASSETS ................................................... $16,508,757 100.0
----------- -----
----------- -----
</TABLE>

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

-/- Non-income producing security.
{\/} U.S. currency denominated.
{*} Security denominated in Hong Kong Dollars.
{.} Security exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers.
{c} Security issued under Regulation S. Rule 144A and additional
restrictions may apply in the resale of such securities.
{.:} Each Centenary Linked Unit consists of 1 registered deferred share
of De Beers Consolidated Mine + 1 Centenary Depositary Receipt.
+X+ The GT Global Variable Emerging Markets Fund (the "Fund") has
invested in the GT Global Taiwan Fund, a fund managed by LGT Asset
Management Ltd. who is an affiliate of the Fund's manager,
Chancellor LGT Asset Management, Inc.
* For Federal income tax purposes, cost is $18,619,373 and
appreciation (depreciation) is as follows:

<TABLE>
<S> <C>
Unrealized appreciation: $ 745,251
Unrealized depreciation: (2,564,381)
-------------
Net unrealized depreciation: $ (1,819,130)
-------------
-------------
</TABLE>

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

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

F37
<PAGE>
GT GLOBAL VARIABLE EMERGING MARKETS FUND

PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1997

- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at December 31, 1997, was concentrated in
the following countries:

<TABLE>
<CAPTION>
PERCENTAGE OF NET ASSETS {D}
-------------------------------------------
FIXED INCOME,
RIGHTS & SHORT-TERM
COUNTRY (COUNTRY CODE/CURRENCY CODE) EQUITY WARRANTS & OTHER TOTAL
- -------------------------------------- ------ ------------- ---------- -----
<S> <C> <C> <C> <C>
Argentina (ARG/ARS) .................. 3.4 3.4
Brazil (BRZL/BRL) .................... 12.4 12.4
Chile (CHLE/CLP) ..................... 5.3 5.3
China (CHNA/RMB) ..................... 0.4 0.4
Egypt (EGPT/EGP) ..................... 6.3 6.3
Hong Kong (HK/HKD) ................... 2.8 2.8
Hungary (HGRY/HUF) ................... 2.7 2.7
India (IND/INR) ...................... 5.3 5.3
Indonesia (INDO/IDR) ................. 1.7 1.7
Israel (ISRL/ILS) .................... 2.0 2.0
Kazakhstan (KAZ/KTS) ................. 0.1 0.1
Malaysia (MAL/MYR) ................... 1.7 1.7
Mexico (MEX/MXN) ..................... 10.8 10.8
Pakistan (PAK/PKR) ................... 1.3 0.1 1.4
Peru (PERU/PES) ...................... 1.5 1.5
Philippines (PHIL/PHP) ............... 0.1 0.1
Poland (POL/PLZ) ..................... 0.5 0.5
Portugal (PORT/PTE) .................. 0.1 0.1
Russia (RUS/SUR) ..................... 4.4 4.4
South Africa (SAFR/ZAR) .............. 11.8 11.8
Sri Lanka (S LNKA/LKR) ............... 0.6 0.6
Taiwan (TWN/TWD) ..................... 3.8 3.8
Thailand (THAI/THB) .................. 0.7 0.7
Turkey (TRKY/TRL) .................... 3.7 3.7
United Kingdom (UK/GBP) .............. 0.6 0.6
United States (US/USD) ............... 14.3 14.3
Venezuela (VENZ/VEB) ................. 1.1 1.1
Zimbabwe (ZBBW/ZWD) .................. 0.5 0.5
------ ----- ----- -----
Total ............................... 85.6 0.1 14.3 100.0
------ ----- ----- -----
------ ----- ----- -----
</TABLE>

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

{d} Percentages indicated are based on net assets of $16,508,757.

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

F38
<PAGE>
GT GLOBAL VARIABLE INFRASTRUCTURE FUND

PORTFOLIO OF INVESTMENTS

December 31, 1997

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

<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- --------------------------------------------------------------- -------- ----------- ---------- -------------
<S> <C> <C> <C> <C>
Electrical & Gas Utilities (29.7%)
AES Corp.-/- ................................................ US 6,400 $ 298,400 3.4
Endesa S.A. - ADR{\/} ....................................... SPN 15,200 276,450 3.2
Hub Power Co.-/- ............................................ PAK 204,000 265,627 3.0
IES Industries, Inc. ........................................ US 6,900 254,006 2.9
Edison S.p.A. ............................................... ITLY 38,200 228,681 2.6
Light - Participacoes S.A. .................................. BRZL 650,000 195,116 2.2
EVN Energie-Versorgung Niederoesterreich AG ................. ASTRI 1,400 184,021 2.1
Light - Servicos de Electricidade S.A. ...................... BRZL 440,000 183,325 2.1
Companhia Energetica de Minas Gerais (CEMIG) - ADR{\/} ...... BRZL 3,600 154,800 1.8
VEBA AG ..................................................... GER 2,000 136,225 1.6
RWE AG ...................................................... GER 2,500 134,140 1.5
Viag AG ..................................................... GER 200 107,756 1.2
BSES Ltd. - 144A GDR{.} {\/} ................................ IND 6,000 99,000 1.1
MetroGas S.A. - ADR{\/} ..................................... ARG 7,662 59,381 0.7
Chilgener S.A. - ADR{\/} .................................... CHLE 930 22,785 0.3
----------
2,599,713
----------
Telephone Networks (10.8%)
Telecom Italia SpA - Di Risp-/- ............................. ITLY 50,900 223,782 2.6
Telefonica de Espana - ADR{\/} .............................. SPN 2,400 218,550 2.5
Portugal Telecom S.A. - ADR{\/} ............................. PORT 3,700 173,900 2.0
Magyar Tavkozlesi Rt. - ADR-/- {\/} ......................... HGRY 6,400 166,400 1.9
SPT Telecom-/- .............................................. CZCH 1,100 117,746 1.3
Compania Anonima Nacional Telefonos de Venezuela (CANTV) -
ADR{\/} .................................................... VENZ 1,100 45,788 0.5
----------
946,166
----------
Metals - Steel (10.3%)
Northwest Pipe Co.-/- ....................................... US 10,800 259,200 3.0
IPSCO, Inc. ................................................. CAN 5,800 225,294 2.6
Hylsamex, S.A. de C.V. - 144A ADR{.} {\/} ................... MEX 4,800 170,400 1.9
NS Group, Inc.-/- ........................................... US 9,800 167,825 1.9
EVI, Inc.-/- ................................................ US 1,500 77,625 0.9
----------
900,344
----------
Cement (5.6%)
Giant Cement Holding, Inc.-/- ............................... US 10,300 238,188 2.7
La Cementos Nacional, C.A. - 144A GDR{.} {\/} ............... ECDR 723 148,215 1.7
Suez Cement Co. - Reg S GDR{c} {\/} ......................... EGPT 5,100 104,168 1.2
----------
490,571
----------
Transportation - Road & Rail (5.5%)
Canadian National Railway Co. ............................... CAN 5,200 244,933 2.8
Tranz Rail Holdings Ltd. - ADR{\/} .......................... NZ 9,000 103,500 1.2
CNF Transportation, Inc. .................................... US 2,000 76,750 0.9
Brisa-Auto Estradas de Portugal S.A.-/- ..................... PORT 1,600 57,330 0.6
----------
482,513
----------
</TABLE>

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

F39
<PAGE>
GT GLOBAL VARIABLE INFRASTRUCTURE FUND

PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1997

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- --------------------------------------------------------------- -------- ----------- ---------- -------------
<S> <C> <C> <C> <C>
Transportation - Airlines (4.0%)
Aeroporti di Roma SpA-/- .................................... ITLY 24,400 $ 252,391 2.9
Airborne Freight Corp. ...................................... US 1,500 93,188 1.1
----------
345,579
----------
Multi-Industry (3.5%)
Mannesmann AG ............................................... GER 600 303,253 3.5
----------
Semiconductors (3.1%)
EMCORE Corp.-/- ............................................. US 8,000 156,000 1.8
DSP Communications, Inc.-/- ................................. US 9,600 115,200 1.3
----------
271,200
----------
Networking (2.9%)
Cisco Systems, Inc.-/- ...................................... US 4,500 250,875 2.9
----------
Telecom Equipment (2.8%)
Nokia Oyj "A" - ADR{\/} ..................................... FIN 2,000 140,000 1.6
Tadiran Ltd. - ADR{\/} ...................................... ISRL 3,100 109,663 1.2
----------
249,663
----------
Gas Production & Distribution (2.7%)
Enron Corporation ........................................... US 5,697 236,778 2.7
----------
Machinery & Engineering (2.0%)
Caterpillar, Inc. ........................................... US 3,100 150,544 1.7
United Engineers (Malaysia) Bhd.(::) ........................ MAL 23,000 19,181 0.2
KCI Konecranes International ................................ FIN 300 10,272 0.1
----------
179,997
----------
Aerospace/Defense (1.9%)
Doncasters PLC - ADR-/- {\/} ................................ UK 7,700 162,663 1.9
----------
Wireless Communications (1.8%)
Paging Network, Inc.-/- ..................................... US 9,000 96,750 1.1
DDI Corp. ................................................... JPN 18 47,586 0.5
China Telecom (Hong Kong) Ltd.-/- ........................... HK 8,000 13,732 0.2
----------
158,068
----------
Energy Equipment & Services (1.8%)
The Shaw Group, Inc.-/- ..................................... US 6,800 156,400 1.8
----------
Telecom Technology (1.4%)
Tadiran Telecommunications Ltd.{\/} ......................... ISRL 6,500 90,188 1.0
Asia Pacific Wire & Cable Corporation Ltd.-/- {\/} .......... SING 4,600 33,063 0.4
----------
123,251
----------
</TABLE>

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

F40
<PAGE>
GT GLOBAL VARIABLE INFRASTRUCTURE FUND

PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1997

TOTAL EQUITY INVESTMENTS (cost $7,192,094) .................... 7,857,880 89.8
---------- -----
<CAPTION>

VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- --------------------------------------------------------------- ---------- -------------
<S> <C> <C> <C> <C>
Dated December 31, 1997, with State Street Bank & Trust Co.,
due January 2, 1998, for an effective yield of 5.80%,
collateralized by $715,000 U.S. Treasury Notes, 7.875% due
11/15/07 (market value of collateral is $784,713 including
accrued interest). (cost $767,000) ........................ 767,000 8.8
---------- -----

TOTAL INVESTMENTS (cost $7,959,094) * ........................ 8,624,880 98.6
Other Assets and Liabilities .................................. 120,305 1.4
---------- -----

NET ASSETS .................................................... $8,745,185 100.0
---------- -----
---------- -----
</TABLE>

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

{\/} U.S. currency denominated.
-/- Non-income producing security.
(::) Valued in good faith at fair value using procedures approved by the
Board of Directors (See Note 1 of Notes to 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.
{c} Security issued under Regulation S. Rule 144A and additional
restrictions may apply in the resale of such securities.
* For Federal income tax purposes, cost is $7,959,094 and
appreciation (depreciation) is as follows:

<TABLE>
<S> <C>
Unrealized appreciation: $ 1,252,732
Unrealized depreciation: (586,946)
-------------
Net unrealized appreciation: $ 665,786
-------------
-------------
</TABLE>

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

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

F41
<PAGE>
GT GLOBAL VARIABLE INFRASTRUCTURE FUND

PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1997

- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at December 31, 1997, 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) .................. 0.7 0.7
Austria (ASTRI/ATS) .................. 2.1 2.1
Brazil (BRZL/BRL) .................... 6.1 6.1
Canada (CAN/CAD) ..................... 5.4 5.4
Chile (CHLE/CLP) ..................... 0.3 0.3
Czech Republic (CZCH/CSK) ............ 1.3 1.3
Ecuador (ECDR/ECS) ................... 1.7 1.7
Egypt (EGPT/EGP) ..................... 1.2 1.2
Finland (FIN/FIM) .................... 1.7 1.7
Germany (GER/DEM) .................... 7.8 7.8
Hong Kong (HK/HKD) ................... 0.2 0.2
Hungary (HGRY/HUF) ................... 1.9 1.9
India (IND/INR) ...................... 1.1 1.1
Israel (ISRL/ILS) .................... 2.2 2.2
Italy (ITLY/ITL) ..................... 8.1 8.1
Japan (JPN/JPY) ...................... 0.5 0.5
Malaysia (MAL/MYR) ................... 0.2 0.2
Mexico (MEX/MXN) ..................... 1.9 1.9
New Zealand (NZ/NZD) ................. 1.2 1.2
Pakistan (PAK/PKR) ................... 3.0 3.0
Portgual (PORT/PTE) .................. 2.6 2.6
Singapore (SING/SGD) ................. 0.4 0.4
Spain (SPN/ESP) ...................... 5.7 5.7
United Kingdom (UK/GBP) .............. 1.9 1.9
United States (US/USD) ............... 30.1 10.2 40.3
Venezuela (VENZ/VEB) ................. 0.5 0.5
------ ----- ----------
Total ............................... 89.8 10.2 100.0
------ ----- ----------
------ ----- ----------
</TABLE>

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

{d} Percentages indicated are based on net assets of $8,745,185.

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

F42
<PAGE>
GT GLOBAL VARIABLE NATURAL RESOURCES FUND

PORTFOLIO OF INVESTMENTS

December 31, 1997

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

<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Energy Equipment & Services (37.7%)
Schlumberger Ltd. .......................................... US 6,300 $ 507,150 3.0
Falcon Drilling Co., Inc.-/- ............................... US 14,400 504,900 3.0
Santa Fe International Corp. ............................... US 11,500 467,906 2.8
Helmerich & Payne, Inc. .................................... US 6,800 461,550 2.8
Diamond Offshore Drilling, Inc. ............................ US 8,700 418,688 2.5
Nabors Industries, Inc.-/- ................................. US 13,300 418,119 2.5
Patterson Energy, Inc.-/- .................................. US 10,000 386,875 2.3
Cliffs Drilling Co.-/- ..................................... US 7,400 369,075 2.2
Pool Energy Services Co.-/- ................................ US 16,400 364,900 2.2
Key Energy Group, Inc.-/- .................................. US 16,800 364,350 2.2
Veritas DGC, Inc.-/- ....................................... US 9,100 359,450 2.2
Noble Drilling Corp.-/- .................................... US 11,400 349,125 2.1
UTI Energy Corp.-/- ........................................ US 12,000 310,500 1.9
Smith International, Inc.-/- ............................... US 4,800 294,600 1.8
Fred Olsen Energy ASA-/- ................................... NOR 11,900 238,839 1.4
Computalog Ltd.-/- ......................................... CAN 10,400 174,692 1.0
Bonus Resource Services Corp.-/- ........................... CAN 41,674 172,086 1.0
Bayard Drilling Technologies, Inc.-/- ...................... US 4,600 74,750 0.4
IRI International Corp.-/- ................................. US 5,000 70,000 0.4
-----------
6,307,555
-----------
Construction (13.5%)
National-Oilwell, Inc.-/- .................................. US 14,600 499,138 3.0
Global Industries Ltd.-/- .................................. US 27,400 465,800 2.8
Coflexip - ADR{\/} ......................................... FR 5,400 299,700 1.8
Halter Marine Group, Inc.-/- ............................... US 9,450 272,869 1.6
Stolt Comex Seaway S.A.-/- ................................. US 5,300 265,000 1.6
Cal Dive International, Inc.-/- ............................ US 10,700 262,150 1.6
Bouygues Offshore S.A. - ADR{\/} ........................... FR 5,100 110,925 0.7
TransCoastal Marine Services, Inc.-/- ...................... US 5,100 72,675 0.4
-----------
2,248,257
-----------
Oil (12.1%)
Petroleo Brasileiro S.A. (Petrobras) Preferred ............. BRZL 2,000,000 467,742 2.8
Remington Energy Ltd.-/- ................................... CAN 27,000 453,527 2.7
Canadian Fracmaster Ltd.-/- ................................ CAN 41,800 351,064 2.1
Pinnacle Resources Ltd.-/- ................................. CAN 22,700 282,002 1.7
Orogen Minerals Ltd. - 144A ADR{.} {\/} .................... AUSL 13,500 263,860 1.6
Black Sea Energy Ltd.-/- ................................... CAN 157,800 208,736 1.2
-----------
2,026,931
-----------
Metals - Steel (10.1%)
Tubos de Acero de Mexico S.A. - ADR-/- {\/} ................ MEX 23,600 510,350 3.1
IPSCO, Inc. ................................................ CAN 12,500 485,547 2.9
EVI, Inc.-/- ............................................... US 8,700 450,225 2.7
NS Group, Inc.-/- .......................................... US 7,700 131,863 0.8
</TABLE>

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

F43
<PAGE>
GT GLOBAL VARIABLE NATURAL RESOURCES FUND

PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1997

TOTAL EQUITY INVESTMENTS (cost $16,229,109) .................. 16,115,801 96.4
----------- -----
</TABLE>

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

F44
<PAGE>
GT GLOBAL VARIABLE NATURAL RESOURCES FUND

PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1997

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- -------------------------------------------------------------- ----------- -------------
<S> <C> <C> <C> <C>
Dated December 31, 1997, with State Street Bank & Trust Co.,
due January 2, 1998, for an effective yield of 5.80%,
collateralized by $695,000 U.S. Treasury Notes, 5.75% due
12/31/98 (market value of collateral is $695,652, including
accrued interest). (cost $678,000) ....................... $ 678,000 4.1
----------- -----

TOTAL INVESTMENTS (cost $16,907,109) * ...................... 16,793,801 100.5
Other Assets and Liabilities ................................. (84,794) (0.5)
----------- -----

NET ASSETS ................................................... $16,709,007 100.0
----------- -----
----------- -----
</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 $16,986,496 and
appreciation (depreciation) is as follows:

<TABLE>
<S> <C>
Unrealized appreciation: $ 1,647,851
Unrealized depreciation: (1,840,546)
-------------
Net unrealized depreciation: $ (192,695)
-------------
-------------
</TABLE>

Abbreviation:
ADR--American Depositary Receipt

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

The Fund's Portfolio of Investments at December 31, 1997, was concentrated in
the following countries:

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

{d} Percentages indicated are based on net assets of $16,709,007.

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

F45
<PAGE>
GT GLOBAL VARIABLE AMERICA FUND

PORTFOLIO OF INVESTMENTS

December 31, 1997

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

<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Services (36.3%)
Cendant Corp.-/- ........................................... US 73,775 $ 2,536,017 5.8
RETAILERS-OTHER
Snyder Communications, Inc.-/- ............................. US 49,400 1,803,100 4.1
CONSUMER SERVICES
Outdoor Systems, Inc.-/- ................................... US 45,200 1,734,550 3.9
BUSINESS & PUBLIC SERVICES
U.S. Office Products Co.-/- ................................ US 71,350 1,400,240 3.2
CONSUMER SERVICES
Signature Resorts, Inc.-/- ................................. US 63,600 1,391,250 3.2
LEISURE & TOURISM
Universal Outdoor Holdings, Inc.-/- ........................ US 25,700 1,336,400 3.0
BUSINESS & PUBLIC SERVICES
Hilton Hotels Corp. ........................................ US 42,400 1,261,400 2.9
LEISURE & TOURISM
Caribiner International, Inc.-/- ........................... US 23,400 1,041,300 2.4
CONSUMER SERVICES
Mirage Resorts, Inc.-/- .................................... US 39,800 905,450 2.1
LEISURE & TOURISM
Valassis Communications, Inc.-/- ........................... US 20,800 769,600 1.7
BROADCASTING & PUBLISHING
Paychex, Inc. .............................................. US 11,500 582,188 1.3
CONSUMER SERVICES
Service Corporation International .......................... US 11,600 428,475 1.0
CONSUMER SERVICES
Nextel Communications, Inc. "A"-/- ......................... US 15,900 413,400 0.9
WIRELESS COMMUNICATIONS
Wolverine World Wide, Inc. ................................. US 16,500 373,313 0.8
RETAILERS-APPAREL
-----------
15,976,683
-----------
Finance (15.2%)
Conseco, Inc. .............................................. US 29,200 1,326,775 3.0
INSURANCE - MULTI-LINE
GreenPoint Financial Corp. ................................. US 14,900 1,081,181 2.5
BANKS-REGIONAL
CMAC Investment Corp. ...................................... US 14,300 863,363 2.0
INSURANCE - PROPERTY-CASUALTY
National Commerce Bancorp. ................................. US 24,400 860,100 2.0
OTHER FINANCIAL
Exel Ltd. .................................................. US 13,500 855,563 1.9
INSURANCE - PROPERTY-CASUALTY
The CIT Group, Inc. "A"-/- ................................. US 18,100 583,725 1.3
CONSUMER FINANCE
Consolidated Capital Corp.-/- .............................. US 25,000 507,813 1.2
INVESTMENT MANAGEMENT
Student Loan Marketing Association ......................... US 2,800 389,550 0.9
OTHER FINANCIAL
Ace Ltd. ................................................... US 1,600 154,400 0.4
INSURANCE - PROPERTY-CASUALTY
-----------
6,622,470
-----------
</TABLE>

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

F46
<PAGE>
GT GLOBAL VARIABLE AMERICA FUND

PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1997

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Health Care (11.5%)
McKesson Corp. ............................................. US 11,100 $ 1,200,881 2.7
HEALTH CARE SERVICES
AmeriSource Health Corp. "A"-/- ............................ US 17,700 1,039,875 2.4
HEALTH CARE SERVICES
Quintiles Transnational Corp.-/- ........................... US 23,800 910,350 2.1
HEALTH CARE SERVICES
HBO & Co. .................................................. US 16,000 768,000 1.7
HEALTH CARE SERVICES
Covance, Inc.-/- ........................................... US 36,800 731,400 1.7
HEALTH CARE SERVICES
Guidant Corp. .............................................. US 6,500 404,625 0.9
MEDICAL TECHNOLOGY & SUPPLIES
-----------
5,055,131
-----------
Materials/Basic Industry (10.4%)
Crompton & Knowles Corp. ................................... US 48,300 1,279,950 2.9
CHEMICALS
International Specialty Products, Inc.-/- .................. US 82,400 1,230,850 2.8
CHEMICALS
J. Ray McDermott S.A.-/- ................................... US 25,500 1,096,500 2.5
BUILDING MATERIALS & COMPONENTS
Sealed Air Corp.-/- ........................................ US 16,000 988,000 2.2
PLASTICS & RUBBER
-----------
4,595,300
-----------
Technology (10.0%)
Sterling Commerce, Inc.-/- ................................. US 34,700 1,333,781 3.0
SOFTWARE
Peoplesoft, Inc.-/- ........................................ US 31,400 1,224,600 2.8
SOFTWARE
Ciena Corp.-/- ............................................. US 13,200 806,850 1.8
TELECOM TECHNOLOGY
Pegasystems, Inc.-/- ....................................... US 29,600 597,550 1.4
SOFTWARE
CBT Group PLC - ADR-/- {\/} ................................ IRE 5,600 459,900 1.0
COMPUTERS & PERIPHERALS
-----------
4,422,681
-----------
Energy (8.2%)
Anadarko Petroleum Corp. ................................... US 15,500 940,656 2.1
OIL
Cooper Cameron Corp.-/- .................................... US 12,700 774,700 1.8
ENERGY EQUIPMENT & SERVICES
BJ Services Co.-/- ......................................... US 10,000 719,375 1.6
ENERGY EQUIPMENT & SERVICES
Santa Fe International Corp. ............................... US 14,900 606,244 1.4
ENERGY EQUIPMENT & SERVICES
</TABLE>

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

F47
<PAGE>
GT GLOBAL VARIABLE AMERICA FUND

PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1997

TOTAL EQUITY INVESTMENTS (cost $39,605,742) .................. 44,500,260 101.2
----------- -----
<CAPTION>

VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- -------------------------------------------------------------- ----------- -------------
<S> <C> <C> <C> <C>
Dated December 31, 1997, with State Street Bank & Co., due
January 2, 1998, for an effective yield of 5.80%,
collateralized by $3,775,000 U.S. Treasury Notes, 7.875%
due 11/15/07 (market value of collateral is $4,143,063,
including accrued interest). (cost $4,057,000) ........... 4,057,000 9.2
----------- -----

TOTAL INVESTMENTS (cost $43,662,742) * ...................... 48,557,260 110.4
Other Assets and Liabilities ................................. (4,580,436) (10.4)
----------- -----

NET ASSETS ................................................... $43,976,824 100.0
----------- -----
----------- -----
</TABLE>

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

-/- Non-income producing security.
{\/} U.S. currency denominated.
* For Federal income tax purposes, cost is $43,764,519 and
appreciation (depreciation) is as follows:

<TABLE>
<S> <C>
Unrealized appreciation: $ 5,422,864
Unrealized depreciation: (630,123)
-------------
Net unrealized appreciation: $ 4,792,741
-------------
-------------
</TABLE>

Abbreviation:
ADR--American Depositary Receipt

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

F48
<PAGE>
GT GLOBAL VARIABLE NEW PACIFIC FUND

PORTFOLIO OF INVESTMENTS

December 31, 1997

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

<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Services (27.8%)
Hong Kong Telecommunications Ltd. .......................... HK 409,729 $ 843,412 5.1
TELEPHONE NETWORKS
Woolworths Ltd. ............................................ AUSL 206,000 688,501 4.2
RETAILERS-OTHER
Brambles Industries Ltd. ................................... AUSL 28,600 567,379 3.5
BUSINESS & PUBLIC SERVICES
Telekom Malaysia Bhd. ...................................... MAL 146,000 432,175 2.6
TELEPHONE NETWORKS
Qantas Airways Ltd. ........................................ AUSL 186,000 329,126 2.0
TRANSPORTATION - AIRLINES
China Telecom (Hong Kong) Ltd.-/- .......................... HK 178,000 305,530 1.9
WIRELESS COMMUNICATIONS
Singapore Press Holdings Ltd. - Foreign .................... SING 24,000 300,891 1.8
BROADCASTING & PUBLISHING
Guangnan Holdings .......................................... HK 300,000 245,854 1.5
WHOLESALE & INTERNATIONAL TRADE
Philippine Long Distance Telephone Co. ..................... PHIL 10,590 232,980 1.4
TELEPHONE - LONG DISTANCE
Telstra Corp. Ltd. ......................................... AUSL 106,100 223,965 1.4
TELECOM - OTHER
Genting Bhd. ............................................... MAL 73,000 183,205 1.1
LEISURE & TOURISM
Resorts World Bhd. ......................................... MAL 70,000 118,018 0.7
LEISURE & TOURISM
Mahanagar Telephone Nigam Ltd. - GDR-/- {\/} ............... IND 6,300 97,713 0.6
TELECOM - OTHER
-----------
4,568,749
-----------
Finance (20.8%)
Australia & New Zealand Banking Group Ltd. ................. AUSL 158,000 1,043,794 6.3
BANKS-REGIONAL
Overseas-Chinese Banking Corp., Ltd. - Foreign ............. SING 83,000 483,304 2.9
BANKS-REGIONAL
Development Bank of Singapore - Foreign .................... SING 56,000 479,144 2.9
BANKS-MONEY CENTER
HSBC Holdings PLC .......................................... HK 16,000 394,399 2.4
BANKS-MONEY CENTER
Hysan Development Co., Ltd. ................................ HK 150,000 299,090 1.8
REAL ESTATE
United Overseas Bank Ltd. - Foreign ........................ SING 46,000 255,556 1.6
BANKS-MONEY CENTER
City Developments Ltd. ..................................... SING 42,000 194,652 1.2
REAL ESTATE
Hang Seng Bank ............................................. HK 16,030 154,642 0.9
BANKS-MONEY CENTER
Keppel Land Ltd. ........................................... SING 100,000 137,849 0.8
REAL ESTATE
-----------
3,442,430
-----------
</TABLE>

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

F49
<PAGE>
GT GLOBAL VARIABLE NEW PACIFIC FUND

PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1997

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Multi-Industry/Miscellaneous (14.7%)
Hutchison Whampoa .......................................... HK 175,000 $ 1,097,632 6.7
MULTI-INDUSTRY
Pacific Dunlop Ltd. ........................................ AUSL 270,000 571,698 3.5
MULTI-INDUSTRY
Citic Pacific Ltd. ......................................... HK 105,000 417,371 2.5
CONGLOMERATE
China Resources Enterprise Ltd. ............................ HK 148,000 330,438 2.0
CONGLOMERATE
-----------
2,417,139
-----------
Materials/Basic Industry (10.1%)
Leighton Holdings Ltd. ..................................... AUSL 150,000 523,813 3.2
BUILDING MATERIALS & COMPONENTS
Broken Hill Proprietary Co., Ltd. .......................... AUSL 43,000 399,212 2.4
MISC. MATERIALS & COMMODITIES
Pasminco Ltd. .............................................. AUSL 290,000 332,530 2.0
METALS - NON-FERROUS
QNI Ltd. ................................................... AUSL 315,000 209,330 1.3
METALS - NON-FERROUS
Cosco Pacific Ltd. ......................................... HK 250,000 203,265 1.2
PAPER/PACKAGING
-----------
1,668,150
-----------
Consumer Durables (7.8%)
Henderson Land Development Co., Ltd. ....................... HK 125,000 588,824 3.6
HOUSING
New World Development Co., Ltd. ............................ HK 125,000 432,342 2.6
HOUSING
Cheung Kong (Holdings) Ltd. ................................ HK 40,000 261,986 1.6
HOUSING
-----------
1,283,152
-----------
Energy (5.2%)
China Light & Power Co., Ltd. .............................. HK 98,000 543,847 3.3
ELECTRICAL & GAS UTILITIES
Manila Electric Co. "B" .................................... PHIL 78,670 263,545 1.6
ELECTRICAL & GAS UTILITIES
YTL Power International Bhd.-/- ............................ MAL 72,000 55,413 0.3
ENERGY SOURCES
-----------
862,805
-----------
Capital Goods (3.9%)
Cheung Kong Infrastructure Holdings ........................ HK 229,000 647,235 3.9
CONSTRUCTION
----------- -----

TOTAL EQUITY INVESTMENTS (cost $17,371,716) .................. 14,889,660 90.3
----------- -----
</TABLE>

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

F50
<PAGE>
GT GLOBAL VARIABLE NEW PACIFIC FUND

PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1997

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- -------------------------------------------------------------- ----------- -------------
<S> <C> <C> <C> <C>
Dated December 31, 1997, with State Street Bank & Trust Co.,
due January 2, 1998, for an effective yield of 5.80%
collateralized by $3,110,000 U.S. Treasury Notes, 7.875%
due 11/15/07 (market value of collateral is $3,413,225,
including accrued interest). (cost $3,341,000) ........... $ 3,341,000 20.3
----------- -----

TOTAL INVESTMENTS (cost $20,712,716) * ...................... 18,230,660 110.6
Other Assets and Liabilities ................................. (1,740,576) (10.6)
----------- -----

NET ASSETS ................................................... $16,490,084 100.0
----------- -----
----------- -----
</TABLE>

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

-/- Non-income producing security.
{\/} U.S. currency denominated.
* For Federal income tax purposes, cost is $20,800,974 and
appreciation (depreciation) is as follows:

<TABLE>
<S> <C>
Unrealized appreciation: $ 578,668
Unrealized depreciation: (3,148,982)
-------------
Net unrealized depreciation: $ (2,570,314)
-------------
-------------
</TABLE>

Abbreviation:
GDR--Global Depositary Receipt

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

The Fund's Portfolio of Investments at December 31, 1997, was concentrated in
the following countries:

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

{d} Percentages indicated are based on net assets of $16,490,084.

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

FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
DECEMBER 31, 1997

<TABLE>
<CAPTION>
UNREALIZED
MARKET VALUE CONTRACT DELIVERY APPRECIATION
CONTRACTS TO SELL: (U.S. DOLLARS) PRICE DATE (DEPRECIATION)
- ---------------------------------------- -------------- ----------- -------- --------------
<S> <C> <C> <C> <C>
Australian Dollars...................... 1,702,630 1.44937 2/24/98 $ 98,158
Singapore Dollars....................... 855,479 1.67140 3/17/98 12,057
-------------- --------------
Total Contracts to Sell (Receivable
amount $2,668,324)..................... 2,558,109 110,215
-------------- --------------
THE VALUE OF CONTRACTS TO SELL AS
PERCENTAGE OF NET ASSETS IS 15.51%.
Total Open Forward Foreign Currency
Contracts............................ $ 110,215
--------------
--------------
</TABLE>

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

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

F51
<PAGE>
GT GLOBAL VARIABLE EUROPE FUND

PORTFOLIO OF INVESTMENTS

December 31, 1997

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

<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Finance (32.8%)
Schweizerischer Bankverein (Swiss Bank Corp.) .............. SWTZ 3,670 $ 1,140,751 4.2
BANKS-MONEY CENTER
ING Groep N.V. ............................................. NETH 23,850 1,004,731 3.7
OTHER FINANCIAL
Axa - UAP .................................................. FR 11,400 882,110 3.2
INSURANCE - MULTI-LINE
Safra Republic Holdings S.A.{\/} ........................... LUX 6,800 724,200 2.6
OTHER FINANCIAL
General Accident PLC ....................................... UK 40,700 705,066 2.6
INSURANCE - PROPERTY-CASUALTY
ForeningsSparbanken AB ..................................... SWDN 29,711 675,641 2.5
BANKS-REGIONAL
Banque Nationale de Paris .................................. FR 12,000 637,833 2.3
BANKS-MONEY CENTER
National Westminster Bank PLC .............................. UK 37,000 614,844 2.2
BANKS-MONEY CENTER
Unidanmark AS "A" .......................................... DEN 7,900 580,026 2.1
BANKS-REGIONAL
Nordbanken Holding AB ...................................... SWDN 94,665 535,498 2.0
OTHER FINANCIAL
Lloyds TSB Group PLC ....................................... UK 40,560 524,150 1.9
BANKS-REGIONAL
Svenska Handelsbanken, Inc. "A" Free ....................... SWDN 14,900 515,288 1.9
BANKS-MONEY CENTER
Abbey National PLC ......................................... UK 23,999 429,933 1.6
BANKS-SUPER REGIONAL
-----------
8,970,071
-----------
Energy (15.8%)
Total S.A. "B" ............................................. FR 10,000 1,088,311 4.0
OIL
Petroleum Geo-Services ASA-/- .............................. NOR 13,830 871,174 3.2
ENERGY EQUIPMENT & SERVICES
Shell Transport & Trading Co., PLC ......................... UK 86,000 621,346 2.3
OIL
Viag AG .................................................... GER 1,110 598,048 2.2
ELECTRICAL & GAS UTILITIES
Ente Nazionale Idrocarburi (ENI) S.p.A. .................... ITLY 99,530 568,695 2.1
OIL
Coflexip - ADR{\/} ......................................... FR 10,000 555,000 2.0
ENERGY EQUIPMENT & SERVICES
-----------
4,302,574
-----------
Services (13.5%)
VNU (Verenigde Nederlandse Uitgeversbedrijven Verenigd
Bezit) .................................................... NETH 32,500 917,028 3.3
BROADCASTING & PUBLISHING
Telecel - Comunicacaoes Pessoais S.A.-/- ................... PORT 8,107 864,012 3.1
WIRELESS COMMUNICATIONS
Telecom Italia SpA ......................................... ITLY 123,900 793,016 2.9
TELEPHONE NETWORKS
</TABLE>

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

F52
<PAGE>
GT GLOBAL VARIABLE EUROPE FUND

PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1997

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Services (Continued)
Vodafone Group PLC ......................................... UK 90,000 $ 648,768 2.4
WIRELESS COMMUNICATIONS
Koninklijke Ahold N.V. ..................................... NETH 19,367 505,384 1.8
RETAILERS-FOOD
-----------
3,728,208
-----------
Health Care (12.4%)
Roche Holding AG ........................................... SWTZ 90 893,777 3.3
PHARMACEUTICALS
Nycomed Amersham PLC ....................................... UK 18,800 698,286 2.5
PHARMACEUTICALS
Genset: .................................................... FR -- -- 2.2
BIOTECHNOLOGY
ADR-/- {\/} .............................................. -- 27,204 537,279 --
Common-/- ................................................ -- 900 53,834 --
Glaxo Wellcome PLC ......................................... UK 20,397 482,294 1.8
PHARMACEUTICALS
Schering AG ................................................ GER 4,160 401,312 1.5
PHARMACEUTICALS
Incentive AB "A" ........................................... SWDN 1,950 175,656 0.6
MEDICAL TECHNOLOGY & SUPPLIES
Nearmedic Ltd.-/- .......................................... ASTRI 71,100 146,377 0.5
PHARMACEUTICALS
-----------
3,388,815
-----------
Consumer Non-Durables (8.8%)
Nestle S.A. - Registered ................................... SWTZ 600 899,219 3.3
FOOD
Cadbury Schweppes PLC ...................................... UK 63,500 639,692 2.3
BEVERAGES - NON-ALCOHOLIC
Gucci Group - NY Registered Shares{\/} ..................... NETH 10,800 452,250 1.6
TEXTILES & APPAREL
OY Hartwall AB "A" ......................................... FIN 5,300 437,880 1.6
BEVERAGES - ALCOHOLIC
-----------
2,429,041
-----------
Technology (7.6%)
Baan Company N.V.-/- {\/} .................................. NETH 26,000 858,000 3.1
SOFTWARE
Misys PLC .................................................. UK 25,714 772,687 2.8
SOFTWARE
TT Tieto Oy "B" ............................................ FIN 4,129 464,699 1.7
COMPUTERS & PERIPHERALS
-----------
2,095,386
-----------
</TABLE>

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

F53
<PAGE>
GT GLOBAL VARIABLE EUROPE FUND

PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1997

TOTAL EQUITY INVESTMENTS (cost $23,991,189) .................. 28,531,059 104.1
----------- -----
<CAPTION>

NO. OF VALUE % OF NET
WARRANTS COUNTRY WARRANTS (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Union Bank of Switzerland Roche Warrants "C", expire 7/98
(cost $185,238) ........................................... SWTZ 26,100 197,457 0.7
----------- -----
PHARMACEUTICALS
<CAPTION>

VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- -------------------------------------------------------------- ----------- -------------
<S> <C> <C> <C> <C>
Dated December 31, 1997, with State Street Bank & Trust Co.,
due January 2, 1998, for an effective yield of 5.80%,
collateralized by $2,505,000 U.S. Treasury Notes, 7.875%
due 11/15/07 (market value of collateral is $2,749,238,
including accrued interest). (cost $2,694,000) ............ 2,694,000 9.8
----------- -----

TOTAL INVESTMENTS (cost $26,870,427) * ...................... 31,422,516 114.6
Other Assets and Liabilities ................................. (4,012,766) (14.6)
----------- -----

NET ASSETS ................................................... $27,409,750 100.0
----------- -----
----------- -----
</TABLE>

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

{\/} U.S. currency denominated.
-/- Non-income producing security.
* For Federal income tax purposes, cost is $26,870,427 and
appreciation (depreciation) is as follows:

<TABLE>
<S> <C>
Unrealized appreciation: $ 4,646,796
Unrealized depreciation: (94,707)
-------------
Net unrealized appreciation: $ 4,552,089
-------------
-------------
</TABLE>

Abbreviation:
ADR--American Depositary Receipt

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

F54
<PAGE>
GT GLOBAL VARIABLE EUROPE FUND

PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1997

- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at December 31, 1997, 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>
Austria (ASTRI/ATS) .................. 0.5 0.5
Denmark (DEN/DKK) .................... 2.1 2.1
Finland (FIN/FIM) .................... 7.0 7.0
France (FR/FRF) ...................... 16.4 16.4
Germany (GER/DEM) .................... 3.7 3.7
Italy (ITLY/ITL) ..................... 5.0 5.0
Luxembourg (LUX/LUF) ................. 2.6 2.6
Netherlands (NETH/NLG) ............... 16.4 16.4
Norway (NOR/NOK) ..................... 3.2 3.2
Portugal (PORT/PTE) .................. 3.1 3.1
Sweden (SWDN/SEK) .................... 7.0 7.0
Switzerland (SWTZ/CHF) ............... 14.7 0.7 15.4
United Kingdom (UK/GBP) .............. 22.4 22.4
United States (US/USD) ............... (4.8) (4.8)
------ --- --- -----
Total ............................... 104.1 0.7 (4.8) 100.0
------ --- --- -----
------ --- --- -----
</TABLE>

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

{d} Percentages indicated are based on net assets of $27,409,750.

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

F55
<PAGE>
GT GLOBAL MONEY MARKET FUND

PORTFOLIO OF INVESTMENTS

December 31, 1997

- --------------------------------------------------------------------------------
<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 (48.6%)
Pitney Bowes Credit Corp. ..................................... 6.02% 14-Jan-98 1,000,000 $ 997,832 3.7
AIG Funding, Inc. ............................................. 5.73% 30-Jan-98 1,000,000 995,425 3.7
Motorola, Inc. ................................................ 5.59% 09-Feb-98 1,000,000 994,042 3.7
Bellsouth Telecommunications, Inc. ............................ 5.78% 25-Feb-98 1,000,000 991,261 3.7
General Electric Capital Corp. ................................ 5.71% 11-Mar-98 1,000,000 989,363 3.7
John Deere Capital Corp. ...................................... 5.73% 19-Mar-98 1,000,000 987,915 3.7
Walt Disney Co. ............................................... 5.59% 14-Apr-98 1,000,000 984,407 3.6
3M Corp. ...................................................... 5.68% 24-Apr-98 1,000,000 982,485 3.6
American Express Credit Corp. ................................. 5.71% 21-May-98 1,000,000 978,339 3.6
The Procter & Gamble Co. ...................................... 5.72% 11-Jun-98 1,000,000 975,090 3.6
Kingdom of Sweden ............................................. 5.62% 26-Jan-98 750,000 747,141 2.8
E.I. DuPont de Nemours & Co. .................................. 5.62% 09-Feb-98 750,000 745,556 2.8
Ford Motor Credit Corp. ....................................... 5.63% 13-Feb-98 750,000 745,091 2.8
Emerson Electric Co. .......................................... 5.66% 05-Jan-98 500,000 499,694 1.8
AT&T Corp. .................................................... 5.58% 15-Jan-98 500,000 498,942 1.8
----------- -----
Total Commercial Paper - Discounted (amortized cost
$13,112,583) ................................................... 13,112,583 48.6
----------- -----
Government & Government Agency Obligations (3.7%)
Federal Home Loan Bank (amortized cost $990,329) .............. 5.59% 06-Mar-98 1,000,000 990,329 3.7
----------- -----
TOTAL SHORT-TERM INVESTMENTS (amortized cost $14,102,912) * .... 14,102,912 52.3
----------- -----

REPURCHASE AGREEMENT
- -----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Dated December 31, 1997, with State Street Bank & Trust Co.,
due January 2, 1998, for an effective yield of 5.80%,
collateralized by $3,175,000 U.S. Treasury Notes, 7.875% due
11/15/07 (market value of collateral is $3,484,563, including
accrued interest). (cost $3,413,000) ......................... 3,413,000 12.7
----------- -----
TOTAL INVESTMENTS (cost $17,515,912) * ......................... 17,515,912 65.0
Other Assets and Liabilities .................................... 9,448,295 35.0
----------- -----
NET ASSETS ...................................................... $26,964,207 100.0
----------- -----
----------- -----
</TABLE>

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

* For Federal income tax purposes, cost is $17,515,912

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

F56
<PAGE>
GT GLOBAL VARIABLE INTERNATIONAL FUND

PORTFOLIO OF INVESTMENTS

December 31, 1997

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

<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- --------------------------------------------------------------- -------- ----------- ---------- -------------
<S> <C> <C> <C> <C>
Finance (26.4%)
Australia & New Zealand Banking Group Ltd. .................. AUSL 22,700 $ 149,963 2.5
BANKS-REGIONAL
HSBC Holdings PLC ........................................... HK 5,100 125,715 2.1
BANKS-MONEY CENTER
Nordbanken Holding AB-/- .................................... SWDN 21,330 120,659 2.0
OTHER FINANCIAL
M & G Group PLC ............................................. UK 5,100 117,869 2.0
INVESTMENT MANAGEMENT
Royal & Sun Alliance Insurance Group PLC .................... UK 11,000 110,722 1.9
INSURANCE - MULTI-LINE
ING Groep N.V. .............................................. NETH 2,243 94,491 1.6
OTHER FINANCIAL
Abbey National PLC .......................................... UK 4,800 85,990 1.5
BANKS-SUPER REGIONAL
ForeningsSparbanken AB ...................................... SWDN 3,710 84,367 1.4
BANKS-REGIONAL
National Westminster Bank PLC ............................... UK 4,900 81,425 1.4
BANKS-MONEY CENTER
Lloyds TSB Group PLC ........................................ UK 6,000 77,537 1.3
BANKS-REGIONAL
Axa Group ................................................... FR 860 66,545 1.1
INSURANCE - MULTI-LINE
Unidanmark AS "A" ........................................... DEN 900 66,079 1.1
BANKS-REGIONAL
Schroders PLC ............................................... UK 2,100 65,966 1.1
BANKS-MONEY CENTER
Nichiei Co., Ltd. ........................................... JPN 600 63,908 1.1
OTHER FINANCIAL
Banque Nationale de Paris ................................... FR 1,051 55,864 0.9
BANKS-MONEY CENTER
State Bank of India Ltd. - GDR{\/} .......................... IND 3,000 53,625 0.9
BANKS-REGIONAL
Schweizerischer Bankverein (Swiss Bank Corp.)-/- ............ SWTZ 170 52,841 0.9
BANKS-MONEY CENTER
United Overseas Bank Ltd. - Foreign ......................... SING 6,000 33,333 0.6
BANKS-MONEY CENTER
Cheung Kong (Holdings) Ltd. ................................. HK 5,000 32,748 0.6
REAL ESTATE
PSIL Bangkok Bank Co., Ltd. (Entitlement Certificates){\/}
{=} ........................................................ THAI 8,000 14,720 0.2
OTHER FINANCIAL
Union Bank of Switzerland - Bearer .......................... SWTZ 8 11,568 0.2
BANKS-MONEY CENTER
----------
1,565,935
----------
Services (20.9%)
EMI Group PLC ............................................... UK 17,400 145,143 2.4
LEISURE & TOURISM
Woolworths Ltd. ............................................. AUSL 38,500 128,676 2.2
RETAILERS-OTHER
</TABLE>

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

F57
<PAGE>
GT GLOBAL VARIABLE INTERNATIONAL FUND

PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1997

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- --------------------------------------------------------------- -------- ----------- ---------- -------------
<S> <C> <C> <C> <C>
Services (Continued)
Telecomunicacoes Brasileiras S.A. (Telebras) - ADR{\/} ...... BRZL 1,000 $ 116,438 2.0
TELEPHONE NETWORKS
Telecom Italia SpA .......................................... ITLY 16,340 104,583 1.8
TELEPHONE NETWORKS
Telecom Corporation of New Zealand Ltd. ..................... NZ 19,000 92,067 1.6
TELEPHONE NETWORKS
Reuters Holdings PLC ........................................ UK 8,400 91,724 1.5
BROADCASTING & PUBLISHING
Koninklijke Ahold N.V. ...................................... NETH 3,216 83,922 1.4
RETAILERS-FOOD
EMAP PLC .................................................... UK 5,000 74,507 1.3
BROADCASTING & PUBLISHING
Great Universal Stores PLC .................................. UK 5,700 71,788 1.2
RETAILERS-OTHER
Portugal Telecom S.A. - Registered .......................... PORT 1,270 58,945 1.0
TELEPHONE NETWORKS
Amway Japan Ltd. ............................................ JPN 2,900 55,556 0.9
RETAILERS-OTHER
Ezaki Glico Co., Ltd. ....................................... JPN 8,000 51,678 0.9
RETAILERS-FOOD
Telecel - Comunicacaoes Pessoais S.A.-/- .................... PORT 480 51,157 0.9
WIRELESS COMMUNICATIONS
Vendex International N.V. ................................... NETH 815 44,987 0.8
RETAILERS-OTHER
Vodafone Group PLC .......................................... UK 4,764 34,341 0.6
WIRELESS COMMUNICATIONS
Telstra Corp. Ltd.-/- ....................................... AUSL 12,300 25,964 0.4
TELECOM - OTHER
Fast Retailing Co., Ltd. .................................... JPN 44 705 --
RETAILERS-APPAREL
----------
1,232,181
----------
Health Care (8.4%)
Roche Holding AG ............................................ SWTZ 18 178,755 3.0
PHARMACEUTICALS
Novartis AG ................................................. SWTZ 46 74,641 1.3
PHARMACEUTICALS
Schering AG ................................................. GER 680 65,599 1.1
PHARMACEUTICALS
Astra AB "B" ................................................ SWDN 3,463 58,245 1.0
MEDICAL TECHNOLOGY & SUPPLIES
Richter Gedeon Rt. - Reg S GDR{c} {\/} ...................... HGRY 500 57,438 1.0
PHARMACEUTICALS
Takeda Chemical Industries .................................. JPN 2,000 57,011 1.0
PHARMACEUTICALS
M.L. Laboratories PLC-/- .................................... UK 630 853 --
PHARMACEUTICALS
----------
492,542
----------
</TABLE>

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

F58
<PAGE>
GT GLOBAL VARIABLE INTERNATIONAL FUND

PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1997

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- --------------------------------------------------------------- -------- ----------- ---------- -------------
<S> <C> <C> <C> <C>
Energy (8.2%)
Shell Transport & Trading Co., PLC .......................... UK 12,900 $ 93,202 1.6
OIL
Viag AG ..................................................... GER 168 90,515 1.5
ELECTRICAL & GAS UTILITIES
Petroleo Brasileiro S.A. (Petrobras) - ADR{\/} .............. BRZL 3,600 85,950 1.5
GAS PRODUCTION & DISTRIBUTION
Total S.A. "B" .............................................. FR 760 82,712 1.4
OIL
Petroleum Geo-Services ASA-/- ............................... NOR 1,250 78,739 1.3
ENERGY EQUIPMENT & SERVICES
Ente Nazionale Idrocarburi (ENI) S.p.A. ..................... ITLY 9,500 54,281 0.9
OIL
----------
485,399
----------
Materials/Basic Industry (6.6%)
Kimberly-Clark de Mexico, S.A. de C.V. "A" .................. MEX 23,300 114,074 1.9
PAPER/PACKAGING
Ciba Specialty Chemicals AG-/- .............................. SWTZ 860 102,451 1.7
CHEMICALS
Akzo Nobel N.V. ............................................. NETH 420 72,431 1.2
CHEMICALS
BOC Group PLC ............................................... UK 4,100 67,391 1.1
CHEMICALS
CRH PLC ..................................................... UK 3,600 41,675 0.7
BUILDING MATERIALS & COMPONENTS
----------
398,022
----------
Technology (4.7%)
Alcatel Alsthom Compagnie Generale d'Electricite ............ FR 840 106,771 1.8
TELECOM TECHNOLOGY
Cap Gemini N.V. ............................................. NETH 1,850 63,060 1.1
COMPUTERS & PERIPHERALS
Baan Company N.V.-/- {\/} ................................... NETH 1,840 60,720 1.0
SOFTWARE
Matsushita-Kotobuki Electronics Ltd. ........................ JPN 2,000 50,268 0.8
COMPUTERS & PERIPHERALS
----------
280,819
----------
Consumer Non-Durables (4.4%)
Nestle S.A. - Registered .................................... SWTZ 51 76,434 1.3
FOOD
Asahi Breweries Ltd. ........................................ JPN 5,000 72,797 1.2
BEVERAGES - ALCOHOLIC
Diageo PLC .................................................. UK 6,500 59,717 1.0
BEVERAGES - ALCOHOLIC
Benckiser N.V. "B"-/- ....................................... NETH 700 28,971 0.5
HOUSEHOLD PRODUCTS
</TABLE>

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

F59
<PAGE>
GT GLOBAL VARIABLE INTERNATIONAL FUND

PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1997

TOTAL EQUITY INVESTMENTS (cost $4,979,064) .................... 5,232,398 88.3
---------- -----
</TABLE>

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

F60
<PAGE>
GT GLOBAL VARIABLE INTERNATIONAL FUND

PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1997

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
REPURCHASE AGREEMENT (NOTE 1) ASSETS
- --------------------------------------------------------------- ---------- -------------
<S> <C> <C> <C> <C>
Dated December 31, 1997, with State Street Bank & Trust Co.,
due January 2, 1998, for an effective yield of 5.80%
collateralized by $755,000 U.S. Treasury Bills, 5.75% due
12/31/98 (market value of collateral is 755,708 including
accrued interest). (cost $737,000) ........................ $ 737,000 12.4
---------- -----

TOTAL INVESTMENTS (cost $5,716,064) * ........................ 5,969,398 100.7
Other Assets and Liabilities .................................. (40,219) (0.7)
---------- -----

NET ASSETS .................................................... $5,929,179 100.0
---------- -----
---------- -----
</TABLE>

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

{\/} U.S. currency denominated.
-/- Non-income producing security.
{c} Security issued under Regulation S. Rule 144A and additional
restrictions may apply in the resale of such securities.
{=} Each share of Entitlement Certificates represents one local share
of PSIL Bangkok Bank Co., Ltd.
* For Federal income tax purposes, cost is $5,742,779 and
appreciation (depreciation) is as follows:

<TABLE>
<S> <C>
Unrealized appreciation: $ 550,414
Unrealized depreciation: (323,795)
-------------
Net unrealized appreciation: $ 226,619
-------------
-------------
</TABLE>

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

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

F61
<PAGE>
GT GLOBAL VARIABLE INTERNATIONAL FUND

PORTFOLIO OF INVESTMENTS (cont'd)

December 31, 1997

- --------------------------------------------------------------------------------
The Fund's Portfolio of Investments at December 31, 1997, 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>
Australia (AUSL/AUD) ................. 6.3 6.3
Brazil (BRZL/BRL) .................... 3.5 3.5
Denmark (DEN/DKK) .................... 1.1 1.1
Finland (FIN/FIM) .................... 1.1 1.1
France (FR/FRF) ...................... 6.0 6.0
Germany (GER/DEM) .................... 2.6 2.6
Hong Kong (HK/HKD) ................... 4.6 4.6
Hungary (HGRY/HUF) ................... 1.0 1.0
India (IND/INR) ...................... 0.9 0.9
Italy (ITLY/ITL) ..................... 2.7 2.7
Japan (JPN/JPY) ...................... 8.4 8.4
Mexico (MEX/MXN) ..................... 1.9 1.9
Netherlands (NETH/NLG) ............... 7.6 7.6
New Zealand (NZ/NZD) ................. 1.6 1.6
Norway (NOR/NOK) ..................... 1.3 1.3
Portugal (PORT/PTE) .................. 1.9 1.9
Singapore (SING/SGD) ................. 0.6 0.6
South Africa (SAFR/ZAR) .............. 0.4 0.4
Sweden (SWDN/SEK) .................... 4.4 4.4
Switzerland (SWTZ/CHF) ............... 8.4 8.4
Thailand (THAI/THB) .................. 0.2 0.2
United Kingdom (UK/GBP) .............. 21.8 21.8
United States (US/USD) ............... 11.7 11.7
------ ----- -----
Total ............................... 88.3 11.7 100.0
------ ----- -----
------ ----- -----
</TABLE>

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

{d} Percentages indicated are based on net assets of $5,929,179.

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

FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING
DECEMBER 31, 1997

<TABLE>
<CAPTION>
MARKET VALUE CONTRACT DELIVERY UNREALIZED
CONTRACTS TO SELL: (U.S. DOLLARS) PRICE DATE APPRECIATION
- ---------------------------------------- -------------- ----------- -------- --------------
<S> <C> <C> <C> <C>
Deutsche Marks.......................... 103,209 1.73540 2/27/98 $ 3,394
French Francs........................... 109,074 5.72800 2/6/98 5,276
French Francs........................... 58,284 5.77490 2/6/98 2,323
Japanese Yen............................ 71,264 120.70000 1/7/98 5,786
Japanese Yen............................ 77,032 118.82300 2/4/98 7,127
Japanese Yen............................ 185,089 122.20000 2/12/98 11,312
Swiss Francs............................ 141,640 1.42180 3/19/98 2,544
-------------- --------------
Total Contracts to Sell (Receivable
amount $783,354)..................... 745,592 37,762
-------------- --------------
THE VALUE OF CONTRACTS TO SELL AS
PERCENTAGE OF NET ASSETS IS 12.57%.
Total Open Forward Foreign Currency
Contracts............................ $ 37,762
--------------
--------------
</TABLE>

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

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

F62
<PAGE>
(THIS PAGE INTENTIONALLY LEFT BLANK)

F63
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

STATEMENTS OF ASSETS
AND LIABILITIES
December 31, 1997

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

<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.................. $26,107,023 $7,297,293 $6,740,169 $27,501,963
---------- ----------- ----------- ----------
---------- ----------- ----------- ----------
At value............................ $26,190,001 $7,209,750 $6,891,579 $27,768,692
Repurchase Agreement, at value and
cost (Note 1)........................ 2,721,000 55,000 1,031,000 881,000
U.S. currency......................... 787 689 673 333
Foreign currencies (cost $11,696; $0;
$0; $366,104; $927,628; $5,078;
$144,519; $29,071; $386; $0;
$137,665; $442,937; $0; $129,665,
respectively)........................ 11,612 -- -- 366,083
Dividends and dividend withholding tax
reclaims receivable.................. -- -- -- 38,108
Interest and interest withholding tax
reclaims receivable.................. 641,631 129,185 96,042 142
Receivable for forward foreign
currency contracts -- closed (Note
1)................................... 22,808 -- -- --
Receivable for Fund shares sold....... 60,753 17,673 69,470 74,881
Receivable for open forward foreign
currency contracts, net (Note 1)..... 324,236 861,247 -- --
Receivable for securities sold........ 85,997 1,021 -- 104,354
Unamortized organizational costs (Note
1)................................... 720 720 720 720
Miscellaneous receivable.............. 7,942 -- -- --
---------- ----------- ----------- ----------
Total assets........................ 30,067,487 8,275,285 8,089,484 29,234,313
---------- ----------- ----------- ----------
Liabilities:
Distribution payable (Note 1)......... -- -- -- --
Payable for custodian fees............ 5,647 1,400 499 1,464
Payable for fund accounting fees (Note
2)................................... 382 109 141 364
Payable for Fund shares repurchased... 175 -- 39,093 417,685
Payable for investment management and
administration fees (Note 2)......... 8,042 104 1,833 2,743
Payable for open forward foreign
currency contracts, net (Note 1)..... -- -- -- --
Payable for printing and postage
expenses............................. 7,954 9,458 11,676 10,604
Payable for professional fees......... 5,391 8,142 7,947 11,409
Payable for registration and filing
fees................................. 791 986 973 974
Payable for securities purchased...... 1,538,668 -- 652,860 --
Payable for Trustees' fees and
expenses (Note 2).................... 2,193 2,896 1,806 1,005
Other accrued expenses................ 1,552 1,163 20 1,848
---------- ----------- ----------- ----------
Total liabilities................... 1,570,795 24,258 716,848 448,096
---------- ----------- ----------- ----------
Net assets.............................. $28,496,692 $8,251,027 $7,372,636 $28,786,217
---------- ----------- ----------- ----------
---------- ----------- ----------- ----------
Shares outstanding...................... 2,128,526 738,630 629,899 1,697,887
Net asset value per share............... $ 13.39 $ 11.17 $ 11.70 $ 16.95
---------- ----------- ----------- ----------
---------- ----------- ----------- ----------
Net assets consist of:
Paid in capital (Note 4).............. $28,211,677 $9,025,361 $7,168,948 $28,083,619
Undistributed/Accumulated net
investment income (loss)............. 397,677 98,996 70,621 304,812
Accumulated net realized gain (loss)
on investments and foreign currency
transactions......................... (511,122) (1,643,521) (18,343) 130,952
Net unrealized appreciation
(depreciation) on translation of
assets and liabilities in foreign
currencies........................... 315,482 857,734 -- 105
Net unrealized appreciation
(depreciation) of investments........ 82,978 (87,543) 151,410 266,729
---------- ----------- ----------- ----------
Total -- representing net assets
applicable to capital shares
outstanding............................ $28,496,692 $8,251,027 $7,372,636 $28,786,217
---------- ----------- ----------- ----------
---------- ----------- ----------- ----------
</TABLE>

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

F64
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

STATEMENTS OF ASSETS
AND LIABILITIES (cont'd)
December 31, 1997

- --------------------------------------------------------------------------------
<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.................. $38,145,106 $53,078,512 $15,820,446 $7,192,094 $16,229,109 $39,605,742 $17,371,716
---------- ---------- ---------- ----------- ---------- ---------- ----------
---------- ---------- ---------- ----------- ---------- ---------- ----------
At value............................ $48,887,260 $62,023,322 $14,141,243 $7,857,880 $16,115,801 $44,500,260 $14,889,660
Repurchase Agreement, at value and
cost (Note 1)........................ 1,864,000 6,148,000 2,659,000 767,000 678,000 4,057,000 3,341,000
U.S. currency......................... 419 27,840 622 237 653 745 894
Foreign currencies (cost $11,696; $0;
$0; $366,104; $927,628; $5,078;
$144,519; $29,071; $386; $0;
$137,665; $442,937; $0; $129,665,
respectively)........................ 918,800 4,993 144,328 28,443 583 -- 133,271
Dividends and dividend withholding tax
reclaims receivable.................. 69,481 22,431 29,371 6,871 57,073 11,542 49,059
Interest and interest withholding tax
reclaims receivable.................. 301,826 991 741 124 109 654 538
Receivable for forward foreign
currency contracts -- closed (Note
1)................................... -- -- -- -- -- -- --
Receivable for Fund shares sold....... 522 15,989 40,934 3,769 21,811 128,089 3,873
Receivable for open forward foreign
currency contracts, net (Note 1)..... -- 192,145 -- -- -- -- 110,215
Receivable for securities sold........ 24,586 -- 314,868 128,096 49,242 780,668 586,144
Unamortized organizational costs (Note
1)................................... 720 5,009 -- -- -- 720 720
Miscellaneous receivable.............. 2,771 -- 802 -- -- -- 1,279
---------- ---------- ---------- ----------- ---------- ---------- ----------
Total assets........................ 52,070,385 68,440,720 17,331,909 8,792,420 16,923,272 49,479,678 19,116,653
---------- ---------- ---------- ----------- ---------- ---------- ----------
Liabilities:
Distribution payable (Note 1)......... -- -- -- -- -- -- --
Payable for custodian fees............ 1,759 3,652 4,187 1,631 6,278 3,860 3,811
Payable for fund accounting fees (Note
2)................................... 779 2,005 165 182 356 629 160
Payable for Fund shares repurchased... 1,650,561 92,027 742,945 26,066 165,416 941,221 2,500,744
Payable for investment management and
administration fees (Note 2)......... 8,813 56,704 3,824 3,461 20,687 27,168 340
Payable for open forward foreign
currency contracts, net (Note 1)..... 158 -- -- -- -- -- --
Payable for printing and postage
expenses............................. 11,234 18,205 9,964 9,855 9,994 10,799 8,697
Payable for professional fees......... 9,207 11,747 16,597 2,479 9,089 13,746 12,378
Payable for registration and filing
fees................................. 849 647 868 718 718 971 786
Payable for securities purchased...... 26,672 51,615 39,171 -- -- 4,501,419 97,962
Payable for Trustees' fees and
expenses (Note 2).................... 2,229 1,529 2,175 1,541 1,626 2,101 789
Other accrued expenses................ 1,860 16,446 3,256 1,302 101 940 902
---------- ---------- ---------- ----------- ---------- ---------- ----------
Total liabilities................... 1,714,121 254,577 823,152 47,235 214,265 5,502,854 2,626,569
---------- ---------- ---------- ----------- ---------- ---------- ----------
Net assets.............................. $50,356,264 $68,186,143 $16,508,757 $8,745,185 $16,709,007 $43,976,824 $16,490,084
---------- ---------- ---------- ----------- ---------- ---------- ----------
---------- ---------- ---------- ----------- ---------- ---------- ----------
Shares outstanding...................... 2,706,781 3,705,691 1,426,915 534,970 827,133 2,028,716 1,569,858
Net asset value per share............... $ 18.60 $ 18.40 $ 11.57 $ 16.35 $ 20.20 $ 21.68 $ 10.50
---------- ---------- ---------- ----------- ---------- ---------- ----------
---------- ---------- ---------- ----------- ---------- ---------- ----------
Net assets consist of:
Paid in capital (Note 4).............. $38,305,805 $53,343,304 $17,488,167 $8,207,422 $14,901,974 $33,148,647 $19,282,058
Undistributed/Accumulated net
investment income (loss)............. 643,714 -- 168,757 77,503 -- -- 351,912
Accumulated net realized gain (loss)
on investments and foreign currency
transactions......................... 678,335 5,705,968 537,424 (203,730) 1,919,773 5,933,659 (767,156)
Net unrealized appreciation
(depreciation) on translation of
assets and liabilities in foreign
currencies........................... (13,744) 192,061 (6,388) (1,796) 568 -- 105,326
Net unrealized appreciation
(depreciation) of investments........ 10,742,154 8,944,810 (1,679,203) 665,786 (113,308) 4,894,518 (2,482,056)
---------- ---------- ---------- ----------- ---------- ---------- ----------
Total -- representing net assets
applicable to capital shares
outstanding............................ $50,356,264 $68,186,143 $16,508,757 $8,745,185 $16,709,007 $43,976,824 $16,490,084
---------- ---------- ---------- ----------- ---------- ---------- ----------
---------- ---------- ---------- ----------- ---------- ---------- ----------

VARIABLE MONEY VARIABLE
EUROPE MARKET INTERNATIONAL
FUND FUND FUND
---------- ---------- -----------
<S> <C> <C> <C>
Assets:
Investments in securities: (Note 1)
At identified cost.................. $24,176,427 $14,102,912 $4,979,064
---------- ---------- -----------
---------- ---------- -----------
At value............................ $28,728,516 $14,102,912 $5,232,398
Repurchase Agreement, at value and
cost (Note 1)........................ 2,694,000 3,413,000 737,000
U.S. currency......................... 829 846 266
Foreign currencies (cost $11,696; $0;
$0; $366,104; $927,628; $5,078;
$144,519; $29,071; $386; $0;
$137,665; $442,937; $0; $129,665,
respectively)........................ 431,337 -- 128,171
Dividends and dividend withholding tax
reclaims receivable.................. 18,956 -- 8,741
Interest and interest withholding tax
reclaims receivable.................. 434 550 119
Receivable for forward foreign
currency contracts -- closed (Note
1)................................... -- -- --
Receivable for Fund shares sold....... 6,680 9,660,958 --
Receivable for open forward foreign
currency contracts, net (Note 1)..... -- -- 37,762
Receivable for securities sold........ 17,598 -- 14,957
Unamortized organizational costs (Note
1)................................... 720 720 --
Miscellaneous receivable.............. -- -- --
---------- ---------- -----------
Total assets........................ 31,899,070 27,178,986 6,159,414
---------- ---------- -----------
Liabilities:
Distribution payable (Note 1)......... -- 122,689 --
Payable for custodian fees............ 4,021 3,495 4,421
Payable for fund accounting fees (Note
2)................................... 420 619 84
Payable for Fund shares repurchased... 3,513,563 74,045 170,125
Payable for investment management and
administration fees (Note 2)......... 2,409 847 71
Payable for open forward foreign
currency contracts, net (Note 1)..... -- -- --
Payable for printing and postage
expenses............................. 9,992 6,519 13,050
Payable for professional fees......... 11,840 5,049 17,293
Payable for registration and filing
fees................................. 1,670 603 793
Payable for securities purchased...... 943,185 -- 21,762
Payable for Trustees' fees and
expenses (Note 2).................... 636 479 1,434
Other accrued expenses................ 1,584 434 1,202
---------- ---------- -----------
Total liabilities................... 4,489,320 214,779 230,235
---------- ---------- -----------
Net assets.............................. $27,409,750 $26,964,207 $5,929,179
---------- ---------- -----------
---------- ---------- -----------
Shares outstanding...................... 1,216,931 26,964,207 466,276
Net asset value per share............... $ 22.52 $ 1.00 $ 12.72
---------- ---------- -----------
---------- ---------- -----------
Net assets consist of:
Paid in capital (Note 4).............. $18,882,870 $26,964,207 $5,176,835
Undistributed/Accumulated net
investment income (loss)............. 60,949 -- 56,757
Accumulated net realized gain (loss)
on investments and foreign currency
transactions......................... 3,916,409 -- 406,239
Net unrealized appreciation
(depreciation) on translation of
assets and liabilities in foreign
currencies........................... (2,567) -- 36,014
Net unrealized appreciation
(depreciation) of investments........ 4,552,089 -- 253,334
---------- ---------- -----------
Total -- representing net assets
applicable to capital shares
outstanding............................ $27,409,750 $26,964,207 $5,929,179
---------- ---------- -----------
---------- ---------- -----------
</TABLE>

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

F65
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

STATEMENTS OF OPERATIONS

Year ended December 31, 1997

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

<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....................... -- -- -- $ 648,017
Interest income....................... $2,424,904 $ 679,758 $ 368,795 131,839
--------- ----------- ----------- ---------
Total investment income............. 2,424,904 679,758 368,795 779,856
--------- ----------- ----------- ---------
Expenses:
Amortization of organization costs
(Note 1)............................. 6,264 6,264 6,264 6,264
Custodian fees........................ 28,036 16,723 1,595 45,522
Fund accounting fees (Note 2)......... 7,516 2,342 1,448 7,491
Investment management and
administration fees (Note 2)......... 224,634 70,010 42,280 298,692
Printing and postage expenses......... 12,717 9,887 9,600 15,520
Professional fees..................... 31,733 29,227 28,677 32,866
Registration and filing fees.......... 718 13 -- --
Trustees' fees and expenses (Note
2)................................... 1,825 1,825 1,325 625
Other expenses (Note 1)............... 7,412 7,203 34 10,295
--------- ----------- ----------- ---------
Total expenses before reimbursements
and reductions..................... 320,855 143,494 91,223 417,275
--------- ----------- ----------- ---------
Expenses reimbursed by Chancellor
LGT Asset Management, Inc. (Note
2)............................... (16,129) (43,130) (34,816) (33,765)
Expense reductions (Notes 1 &
5)............................... (36,222) (12,000) -- (8,037)
--------- ----------- ----------- ---------
Total net expenses.................. 268,504 88,364 56,407 375,473
--------- ----------- ----------- ---------
Net investment income (loss)............ 2,156,400 591,394 312,388 404,383
--------- ----------- ----------- ---------
Net realized and unrealized gain (loss)
on investments and foreign currencies:
(Note 1)
Net realized gain (loss) on
investments.......................... 1,498,322 (367,088) (2,569) 3,622,656
Net realized gain (loss) on foreign
currency transactions................ 119,922 (371,086) 1,093 (52,834)
--------- ----------- ----------- ---------
Net realized gain (loss) during the
year............................... 1,618,244 (738,174) (1,476) 3,569,822
--------- ----------- ----------- ---------
Net change in unrealized appreciation
(depreciation) on translation of
assets and liabilities
in foreign currencies................ 271,762 803,351 (2,603) 2,156
Net change in unrealized appreciation
(depreciation) of investments........ (1,968,623) (292,630) 153,207 (244,181)
--------- ----------- ----------- ---------
Net unrealized appreciation
(depreciation) during the year..... (1,696,861) 510,721 150,604 (242,025)
--------- ----------- ----------- ---------
Net realized and unrealized gain
(loss) on investments and foreign
currencies........................... (78,617) (227,453) 149,128 3,327,797
--------- ----------- ----------- ---------
Net increase (decrease) in net assets
resulting from operations.............. $2,077,783 $ 363,941 $ 461,516 $3,732,180
--------- ----------- ----------- ---------
--------- ----------- ----------- ---------
*Net of foreign withholding tax of:.... $ -- $ -- $ -- $ 14,936
--------- ----------- ----------- ---------
--------- ----------- ----------- ---------
</TABLE>

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

F66
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

STATEMENTS OF OPERATIONS (cont'd)

Year ended December 31, 1997

- --------------------------------------------------------------------------------
<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....................... $ 800,518 $ 330,336 $ 399,980 $ 105,232 $ 120,162 $ 148,233 $ 617,672
Interest income....................... 881,543 371,303 79,108 77,168 69,213 77,101 101,060
--------- ----------- --------- ----------- --------- --------- ----------
Total investment income............. 1,682,061 701,639 479,088 182,400 189,375 225,334 718,732
--------- ----------- --------- ----------- --------- --------- ----------
Expenses:
Amortization of organization costs
(Note 1)............................. 6,264 6,264 -- -- -- 6,264 6,264
Custodian fees........................ 35,997 27,145 36,387 8,467 28,249 17,611 42,871
Fund accounting fees (Note 2)......... 10,587 17,340 5,281 2,161 4,696 10,211 6,939
Investment management and
administration fees (Note 2)......... 421,575 691,109 207,464 84,074 182,720 305,132 276,947
Printing and postage expenses......... 17,157 24,875 12,871 8,831 9,893 17,011 16,811
Professional fees..................... 34,776 34,085 37,323 19,540 27,635 29,664 31,924
Registration and filing fees.......... 711 305 717 13 12 12 711
Trustees' fees and expenses (Note
2)................................... 1,996 1,325 417 417 365 2,190 873
Other expenses (Note 1)............... 5,028 2,568 13,587 1,326 6,706 8,575 13,233
--------- ----------- --------- ----------- --------- --------- ----------
Total expenses before reimbursements
and reductions..................... 534,091 805,016 314,047 124,829 260,276 396,670 396,573
--------- ----------- --------- ----------- --------- --------- ----------
Expenses reimbursed by Chancellor
LGT Asset Management, Inc. (Note
2)............................... (5,189) -- (38,322) (19,594) (26,931) -- (39,729)
Expense reductions (Notes 1 &
5)............................... (52,486) (35,043) (18,243) (6,093) (14,139) (28,418) (53,740)
--------- ----------- --------- ----------- --------- --------- ----------
Total net expenses.................. 476,416 769,973 257,482 99,142 219,206 368,252 303,104
--------- ----------- --------- ----------- --------- --------- ----------
Net investment income (loss)............ 1,205,645 (68,334) 221,606 83,258 (29,831) (142,918) 415,628
--------- ----------- --------- ----------- --------- --------- ----------
Net realized and unrealized gain (loss)
on investments and foreign currencies:
(Note 1)
Net realized gain (loss) on
investments.......................... 1,354,147 5,547,017 691,815 (203,137) 2,089,325 6,277,204 (51,464)
Net realized gain (loss) on foreign
currency transactions................ 276,305 259,544 (199,511) (3,279) (55,031) -- (49,256)
--------- ----------- --------- ----------- --------- --------- ----------
Net realized gain (loss) during the
year............................... 1,630,452 5,806,561 492,304 (206,416) 2,034,294 6,277,204 (100,720)
--------- ----------- --------- ----------- --------- --------- ----------
Net change in unrealized appreciation
(depreciation) on translation of
assets and liabilities
in foreign currencies................ (54,835) 167,417 (9,023) (1,800) 2,250 -- 105,422
Net change in unrealized appreciation
(depreciation) of investments........ 3,876,889 2,996,284 (2,699,474) 442,473 (1,935,169) (372,530) (10,613,599)
--------- ----------- --------- ----------- --------- --------- ----------
Net unrealized appreciation
(depreciation) during the year..... 3,822,054 3,163,701 (2,708,497) 440,673 (1,932,919) (372,530) (10,508,177)
--------- ----------- --------- ----------- --------- --------- ----------
Net realized and unrealized gain
(loss) on investments and foreign
currencies........................... 5,452,506 8,970,262 (2,216,193) 234,257 101,375 5,904,674 (10,608,897)
--------- ----------- --------- ----------- --------- --------- ----------
Net increase (decrease) in net assets
resulting from operations.............. $6,658,151 $8,901,928 $(1,994,587) $ 317,515 $ 71,544 $5,761,756 $(10,193,269)
--------- ----------- --------- ----------- --------- --------- ----------
--------- ----------- --------- ----------- --------- --------- ----------
*Net of foreign withholding tax of:.... $ 90,398 $ 26,632 $ 22,039 $ 7,094 $ 14,701 $ -- $ 27,707
--------- ----------- --------- ----------- --------- --------- ----------
--------- ----------- --------- ----------- --------- --------- ----------

VARIABLE MONEY VARIABLE
EUROPE MARKET INTERNATIONAL
FUND FUND FUND
--------- --------- -----------
<S> <C> <C> <C>
Investment income: * (Note 1)
Dividend income....................... $ 339,608 -- $ 93,804
Interest income....................... 57,835 $1,196,522 40,255
--------- --------- -----------
Total investment income............. 397,443 1,196,522 134,059
--------- --------- -----------
Expenses:
Amortization of organization costs
(Note 1)............................. 6,264 6,264 --
Custodian fees........................ 32,466 12,482 20,499
Fund accounting fees (Note 2)......... 7,002 5,575 1,421
Investment management and
administration fees (Note 2)......... 279,058 108,454 56,606
Printing and postage expenses......... 13,381 12,099 14,658
Professional fees..................... 33,807 22,907 34,523
Registration and filing fees.......... 711 12 718
Trustees' fees and expenses (Note
2)................................... 1,677 1,825 413
Other expenses (Note 1)............... 19,604 1,721 2,114
--------- --------- -----------
Total expenses before reimbursements
and reductions..................... 393,970 171,339 130,952
--------- --------- -----------
Expenses reimbursed by Chancellor
LGT Asset Management, Inc. (Note
2)............................... (27,622) (8,673) (60,092)
Expense reductions (Notes 1 &
5)............................... (31,687) -- (6,300)
--------- --------- -----------
Total net expenses.................. 334,661 162,666 64,560
--------- --------- -----------
Net investment income (loss)............ 62,782 1,033,856 69,499
--------- --------- -----------
Net realized and unrealized gain (loss)
on investments and foreign currencies:
(Note 1)
Net realized gain (loss) on
investments.......................... 4,020,416 -- 452,351
Net realized gain (loss) on foreign
currency transactions................ 64,152 -- 49,164
--------- --------- -----------
Net realized gain (loss) during the
year............................... 4,084,568 -- 501,515
--------- --------- -----------
Net change in unrealized appreciation
(depreciation) on translation of
assets and liabilities
in foreign currencies................ (4,948) -- 19,339
Net change in unrealized appreciation
(depreciation) of investments........ 417,896 -- (52,826)
--------- --------- -----------
Net unrealized appreciation
(depreciation) during the year..... 412,948 -- (33,487)
--------- --------- -----------
Net realized and unrealized gain
(loss) on investments and foreign
currencies........................... 4,497,516 -- 468,028
--------- --------- -----------
Net increase (decrease) in net assets
resulting from operations.............. $4,560,298 $1,033,856 $ 537,527
--------- --------- -----------
--------- --------- -----------
*Net of foreign withholding tax of:.... $ 48,612 $ -- $ 12,924
--------- --------- -----------
--------- --------- -----------
</TABLE>

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

F67
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

STATEMENTS OF CHANGES IN NET ASSETS

For the year ended December 31, 1997

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

<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>
Increase (decrease) in net assets
Operations:
Net investment income (loss).......... $ 2,156,400 $ 591,394 $ 312,388 $ 404,383
Net realized gain (loss) on
investments and foreign currency
transactions......................... 1,618,244 (738,174) (1,476) 3,569,822
Net change in unrealized appreciation
(depreciation) on translation of
assets and liabilities in foreign
currencies........................... 271,762 803,351 (2,603) 2,156
Net change in unrealized appreciation
(depreciation) of investments........ (1,968,623) (292,630) 153,207 (244,181)
------------- ------------ ------------ -------------
Net increase (decrease) in net
assets resulting from operations... 2,077,783 363,941 461,516 3,732,180
------------- ------------ ------------ -------------
Distributions to shareholders: (Note 1)
From net investment income............ (2,041,389) (616,309) (262,504) --
From net realized gain on
investments.......................... -- -- (42,460) --
In excess of net investment income.... -- -- -- --
------------- ------------ ------------ -------------
Total distributions................. (2,041,389) (616,309) (304,964) --
------------- ------------ ------------ -------------
Capital share transactions: (Note 4)
Increase from capital shares sold and
reinvested........................... 37,352,357 4,845,991 6,057,200 50,446,691
Decrease from capital shares
repurchased.......................... (40,609,980) (6,739,965) (4,324,042) (48,320,307)
------------- ------------ ------------ -------------
Net increase (decrease) from capital
share transactions................. (3,257,623) (1,893,974) 1,733,158 2,126,384
------------- ------------ ------------ -------------
Total increase (decrease) in net
assets................................. (3,221,229) (2,146,342) 1,889,710 5,858,564
Net assets:
Beginning of year..................... 31,717,921 10,397,369 5,482,926 22,927,653
------------- ------------ ------------ -------------
End of year *........................ $ 28,496,692 $ 8,251,027 $ 7,372,636 $ 28,786,217
------------- ------------ ------------ -------------
------------- ------------ ------------ -------------
*Includes undistributed/accumulated
net investment income (loss) of:..... $ 397,677 $ 98,996 $ 70,621 $ 304,812
------------- ------------ ------------ -------------
------------- ------------ ------------ -------------
</TABLE>

<TABLE>
<CAPTION>
For the year ended December 31, 1996
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).......... $ 2,081,768 $ 683,201 $ 272,902 $ 435,954
Net realized gain (loss) on
investments and foreign currency
transactions......................... 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 increase in net assets resulting
from operations.................... 5,280,715 623,782 117,765 4,491,134
------------- ------------ ------------ -------------
Distributions to shareholders: (Note 1)
From net investment income............ (1,851,306) (706,141) (262,014) (613,467)
From net realized gain on
investments.......................... (153,457) -- -- --
In excess of net investment income.... -- -- -- (11,459)
------------- ------------ ------------ -------------
Total distributions................. (2,004,763) (706,141) (262,014) (624,926)
------------- ------------ ------------ -------------
Capital share transactions: (Note 4)
Increase from capital shares sold and
reinvested........................... 45,166,146 7,375,614 4,065,030 29,173,781
Decrease from capital shares
repurchased.......................... (42,069,061) (8,839,632) (4,430,300) (29,883,182)
------------- ------------ ------------ -------------
Net increase (decrease) from capital
share transactions................. 3,097,085 (1,464,018) (365,270) (709,401)
------------- ------------ ------------ -------------
Total increase (decrease) in net
assets................................. 6,373,037 (1,546,377) (509,519) 3,156,807
Net assets:
Beginning of year..................... 25,344,884 11,943,746 5,992,445 19,770,846
------------- ------------ ------------ -------------
End of year * *...................... $ 31,717,921 $ 10,397,369 $ 5,482,926 $ 22,927,653
------------- ------------ ------------ -------------
------------- ------------ ------------ -------------
* *Includes undistributed/accumulated
net investment income (loss) of:..... $ 461,426 $ 427,910 $ 21,121 $ --
------------- ------------ ------------ -------------
------------- ------------ ------------ -------------
</TABLE>

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

F68
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

STATEMENTS OF CHANGES IN NET ASSETS (cont'd)
For the year ended December 31, 1997

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

GT GLOBAL
-----------------------------------------------------------------------------------------
VARIABLE VARIABLE VARIABLE VARIABLE
GROWTH & TELECOM- EMERGING VARIABLE NATURAL VARIABLE
INCOME MUNICATIONS MARKETS INFRASTRUCTURE RESOURCES AMERICA
FUND FUND FUND FUND FUND FUND
------------- ------------- ------------- -------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income (loss).......... $ 1,205,645 $ (68,334) $ 221,606 $ 83,258 $ (29,831) $ (142,918)
Net realized gain (loss) on
investments and foreign currency
transactions......................... 1,630,452 5,806,561 492,304 (206,416) 2,034,294 6,277,204
Net change in unrealized appreciation
(depreciation) on translation of
assets and liabilities in foreign
currencies........................... (54,835) 167,417 (9,023) (1,800) 2,250 --
Net change in unrealized appreciation
(depreciation) of investments........ 3,876,889 2,996,284 (2,699,474) 442,473 (1,935,169) (372,530)
------------- ------------- ------------- -------------- ------------- -------------
Net increase in net assets resulting
from operations.................... 6,658,151 8,901,928 (1,994,587) 317,515 71,544 5,761,756
------------- ------------- ------------- -------------- ------------- -------------
Distributions to shareholders: (Note 1)
From net investment income............ (1,300,804) -- (84,900) (47,833) -- (196,399)
From net realized gain on
investments.......................... (90,528) (7,777,355) (1,283,734) (431,226) (762,160) (1,554,377)
In excess of net investment income.... -- -- -- -- -- --
------------- ------------- ------------- -------------- ------------- -------------
Total distributions................. (1,391,332) (7,777,355) (1,368,634) (479,059) (762,160) (1,750,776)
------------- ------------- ------------- -------------- ------------- -------------
Capital share transactions: (Note 4)
Increase from capital shares sold and
reinvested........................... 80,082,075 53,743,901 65,386,565 6,628,609 42,957,139 51,554,136
Decrease from capital shares
repurchased.......................... (71,425,393) (49,940,160) (63,118,511) (3,775,850) (41,865,469) (53,234,901)
------------- ------------- ------------- -------------- ------------- -------------
Net increase (decrease) from capital
share transactions................. 8,656,682 3,803,741 2,268,054 2,852,759 1,091,670 (1,680,765)
------------- ------------- ------------- -------------- ------------- -------------
Total increase (decrease) in net
assets................................. 13,923,501 4,928,314 (1,095,167) 2,691,215 401,054 2,330,215
Net assets:
Beginning of year..................... 36,432,763 63,257,829 17,603,924 6,053,970 16,307,953 41,646,609
------------- ------------- ------------- -------------- ------------- -------------
End of year........................... $ 50,356,264 $ 68,186,143 $ 16,508,757 $ 8,745,185 $ 16,709,007 $ 43,976,824
------------- ------------- ------------- -------------- ------------- -------------
------------- ------------- ------------- -------------- ------------- -------------
*Includes undistributed/accumulated
net investment income (loss) of:..... $ 643,714 $ -- $ 168,757 $ 77,503 $ -- $ --
------------- ------------- ------------- -------------- ------------- -------------
------------- ------------- ------------- -------------- ------------- -------------

VARIABLE
NEW VARIABLE MONEY VARIABLE
PACIFIC EUROPE MARKET INTERNATIONAL
FUND FUND FUND FUND
-------------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income (loss).......... $ 415,628 $ 62,782 $ 1,033,856 $ 69,499
Net realized gain (loss) on
investments and foreign currency
transactions......................... (100,720) 4,084,568 -- 501,515
Net change in unrealized appreciation
(depreciation) on translation of
assets and liabilities in foreign
currencies........................... 105,422 (4,948) -- 19,339
Net change in unrealized appreciation
(depreciation) of investments........ (10,613,599) 417,896 -- (52,826)
-------------- ------------- -------------- -------------
Net increase in net assets resulting
from operations.................... (10,193,269) 4,560,298 1,033,856 537,527
-------------- ------------- -------------- -------------
Distributions to shareholders: (Note 1)
From net investment income............ (178,145) (69,048) (1,033,856) (7,912)
From net realized gain on
investments.......................... (128,263) (2,404,127) -- --
In excess of net investment income.... -- -- -- --
-------------- ------------- -------------- -------------
Total distributions................. (306,408) (2,473,175) (1,033,856) (7,912)
-------------- ------------- -------------- -------------
Capital share transactions: (Note 4)
Increase from capital shares sold and
reinvested........................... 181,437,283 147,172,457 524,518,140 35,266,039
Decrease from capital shares
repurchased.......................... (187,117,722) (146,386,879) (517,347,993) (34,648,323)
-------------- ------------- -------------- -------------
Net increase (decrease) from capital
share transactions................. (5,680,439) 785,578 7,170,147 617,716
-------------- ------------- -------------- -------------
Total increase (decrease) in net
assets................................. (16,180,116) 2,872,701 7,170,147 1,147,331
Net assets:
Beginning of year..................... 32,670,200 24,537,049 19,794,060 4,781,848
-------------- ------------- -------------- -------------
End of year........................... $ 16,490,084 $ 27,409,750 $ 26,964,207 $ 5,929,179
-------------- ------------- -------------- -------------
-------------- ------------- -------------- -------------
*Includes undistributed/accumulated
net investment income (loss) of:..... $ 351,912 $ 60,949 $ -- $ 56,757
-------------- ------------- -------------- -------------
-------------- ------------- -------------- -------------
</TABLE>
<TABLE>
<CAPTION>

For the year ended December 31, 1996
GT GLOBAL
----------------------------------------------------------------------------------------
VARIABLE VARIABLE VARIABLE VARIABLE
GROWTH & TELECOM- EMERGING VARIABLE NATURAL VARIABLE
INCOME MUNICATIONS MARKETS INFRASTRUCTURE RESOURCES AMERICA
FUND FUND FUND FUND FUND FUND
------------- ------------- ------------- ------------- ------------- -------------
<S> <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
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
Net change in unrealized appreciation
(depreciation) on translation of
assets and liabilities in foreign
currencies........................... 20,456 3,633 2,710 145 (2,282) --
Net change in unrealized appreciation
(depreciation) of investments........ 3,228,349 1,763,783 826,703 211,063 1,760,818 4,688,367
------------- ------------- ------------- ------------- ------------- -------------
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
------------- ------------- ------------- ------------- ------------- -------------
Distributions to shareholders: (Note 1)
From net investment income............ (736,222) (70,025) -- (9,314 ) -- (526,781)
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)
------------- ------------- ------------- ------------- ------------- -------------
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
Decrease from capital shares
repurchased.......................... (28,213,931) (34,595,566) (27,696,344) (3,457,346 ) (20,919,006) (57,915,239)
------------- ------------- ------------- ------------- ------------- -------------
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
------------- ------------- ------------- ------------- ------------- -------------
Total increase (decrease) in net
assets................................. 5,867,362 12,479,754 8,621,163 4,459,752 14,943,006 4,003,631
Net assets:
Beginning of year..................... 30,565,401 50,778,075 8,982,761 1,594,218 1,364,947 37,642,978
------------- ------------- ------------- ------------- ------------- -------------
End of year * *...................... $ 36,432,763 $ 63,257,829 $ 17,603,924 $ 6,053,970 $ 16,307,953 $ 41,646,609
------------- ------------- ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- ------------- -------------
* *Includes undistributed/accumulated
net investment income (loss) of:..... $ 745,652 $ -- $ 83,731 $ 45,357 $ -- $ 196,399
------------- ------------- ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- ------------- -------------

VARIABLE
NEW VARIABLE MONEY VARIABLE
PACIFIC EUROPE MARKET INTERNATIONAL
FUND FUND FUND FUND
-------------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets
Operations:
Net investment income (loss).......... $ 256,226 $ 71,331 $ 717,755 $ 21,621
Net realized gain (loss) on
investments and foreign currency
transactions......................... 1,248,081 3,075,019 -- 218,360
Net change in unrealized appreciation
(depreciation) on translation of
assets and liabilities in foreign
currencies........................... (2,246) (10,428) -- 3,152
Net change in unrealized appreciation
(depreciation) of investments........ 7,190,989 2,087,986 -- 130,577
-------------- ------------- -------------- -------------
Net increase in net assets resulting
from operations.................... 8,693,050 5,223,908 717,755 373,710
-------------- ------------- -------------- -------------
Distributions to shareholders: (Note 1)
From net investment income............ (329,817) (155,793) (717,755) (526)
From net realized gain on
investments.......................... -- -- -- (14,157)
In excess of net investment income.... -- -- -- --
-------------- ------------- -------------- -------------
Total distributions................. (329,817) (155,793) (717,755) (14,683)
-------------- ------------- -------------- -------------
Capital share transactions: (Note 4)
Increase from capital shares sold and
reinvested........................... 177,020,035 77,988,956 316,808,464 9,136,580
Decrease from capital shares
repurchased.......................... (175,737,852) (74,160,899) (311,904,996) (8,376,359)
-------------- ------------- -------------- -------------
Net increase (decrease) from capital
share transactions................. 1,282,183 3,828,057 4,903,468 760,221
-------------- ------------- -------------- -------------
Total increase (decrease) in net
assets................................. 9,645,416 8,896,172 4,903,468 1,119,248
Net assets:
Beginning of year..................... 23,024,784 15,640,877 14,890,592 3,662,600
-------------- ------------- -------------- -------------
End of year * *...................... $ 32,670,200 $ 24,537,049 $ 19,794,060 $ 4,781,848
-------------- ------------- -------------- -------------
-------------- ------------- -------------- -------------
* *Includes undistributed/accumulated
net investment income (loss) of:..... $ 163,089 $ 67,215 $ -- $ 6,759
-------------- ------------- -------------- -------------
-------------- ------------- -------------- -------------
</TABLE>

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

F69
<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
(COMMENCEMENT OF
YEAR ENDED DECEMBER 31, OPERATIONS) TO
----------------------------------------------------- DECEMBER 31,
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 13.38 $ 11.86 $ 10.82 $ 14.57 $ 12.00
----------- ----------- ----------- ----------- ----------------
Net investment income (loss).......... 1.00(a) 0.95(b) 1.07(c) 1.71(d) 0.61(e)
Net realized and unrealized gain
(loss) on investments................ (0.07) 1.50 0.93 (4.17) 2.57
----------- ----------- ----------- ----------- ----------------
Net increase (decrease) resulting
from operations.................... 0.93 2.45 2.00 (2.46) 3.18
----------- ----------- ----------- ----------- ----------------
Distributions to shareholders:
From net investment income............ (0.92) (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.......................... -- -- -- -- --
In excess of net investment income.... -- -- -- -- --
Return of capital..................... -- -- -- (0.05) --
----------- ----------- ----------- ----------- ----------------
Total distributions................. (0.92) (0.93) (0.96) (1.29) (0.61)
----------- ----------- ----------- ----------- ----------------
Net asset value, end of period.......... $ 13.39 $ 13.38 $ 11.86 $ 10.82 $ 14.57
----------- ----------- ----------- ----------- ----------------
----------- ----------- ----------- ----------- ----------------
Total investment return (g) +.......... 7.14% 21.58% 19.50% (17.09)% 27.5%
----------- ----------- ----------- ----------- ----------------
----------- ----------- ----------- ----------- ----------------
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 28,497 $ 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) ++................................ 7.20% 7.74% 9.59% 7.58% 6.6%
Without reimbursement by Chancellor
LGT and expense reductions ++........ 7.03% 7.59% 9.35% 7.43% 6.3%
Without expenses assumed by Chancellor
LGT (f) ++.......................... --% --% --% --% 5.2%
Ratio of expenses to average net assets:
With reimbursement by Chancellor LGT
and expense reductions (Notes 1, 2, &
5) ++................................ 0.90% 0.99% 1.00% 1.00% 0.5%
Without reimbursement by Chancellor
LGT and expense reductions ++........ 1.07% 1.14% 1.24% 1.15% 0.9%
Without expenses assumed by Chancellor
LGT (f) ++.......................... --% --% --% --% 1.9%
Portfolio turnover ++................... 185% 210% 193% 313% 245%
Average commission rate per share paid
on portfolio transactions.............. N/A N/A N/A N/A N/A
</TABLE>

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

<TABLE>
<CAPTION>
GT GLOBAL
-----------------------------------------------------------------
VARIABLE LATIN AMERICA FUND
-----------------------------------------------------------------
FEBRUARY 10,
1993
(COMMENCEMENT OF
YEAR ENDED DECEMBER 31, OPERATIONS) TO
---------------------------------------------- DECEMBER 31,
1997 1996 1995 1994 1993
---- ----------- ----------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $14.80 $ 12.42 $ 19.17 $ 17.68 $ 12.00
---- ----------- ----------- ----------- --------
Net investment income (loss).......... 0.24(a) 0.27(b) 0.51(c) 0.11(d) 0.04(e)
Net realized and unrealized gain
(loss) on investments................ 1.91 2.49 (5.10) 1.49 5.64
---- ----------- ----------- ----------- --------
Net increase (decrease) resulting
from operations.................... 2.15 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.......... $16.95 $ 14.80 $ 12.42 $ 19.17 $ 17.68
---- ----------- ----------- ----------- --------
---- ----------- ----------- ----------- --------
Total investment return (g) +.......... 14.53% 22.48% (24.14)% 9.14% 47.3%
---- ----------- ----------- ----------- --------
---- ----------- ----------- ----------- --------
Ratios and supplemental data:
Net assets, end of period (in 000's).... $28,786 $ 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) ++................................ 1.36% 1.94% 4.43% 0.82% 1.0%
Without reimbursement by Chancellor
LGT and expense reductions ++........ 1.21% 1.69% 3.92% 0.49% 0.4%
Without expenses assumed by Chancellor
LGT (f) ++.......................... --% --% --% --% (2.5)%
Ratio of expenses to average net assets:
With reimbursement by Chancellor LGT
and expense reductions (Notes 1, 2, &
5) ++................................ 1.25% 1.17% 1.18% 1.25% 0.7%
Without reimbursement by Chancellor
LGT and expense reductions ++........ 1.40% 1.42% 1.69% 1.58% 1.3%
Without expenses assumed by Chancellor
LGT (f) ++.......................... --% --% --% --% 4.2%
Portfolio turnover ++................... 141% 102% 140% 185% 78%
Average commission rate per share paid
on portfolio transactions.............. $0.0004 $ 0.0002 N/A N/A N/A
</TABLE>

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

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

F70
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

FINANCIAL HIGHLIGHTS (cont'd)

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GT GLOBAL
-----------------------------------------------------------------------
VARIABLE GLOBAL GOVERNMENT INCOME FUND
-----------------------------------------------------------------------
FEBRUARY 10,
1993
(COMMENCEMENT OF
YEAR ENDED DECEMBER 31, OPERATIONS) TO
---------------------------------------------------- DECEMBER 31,
1997 1996 1995 1994 1993
----------- ----------- ----------- ---------- ----------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 11.43 $ 11.51 $ 10.63 $ 12.53 $ 12.00
----------- ----------- ----------- ---------- --------
Net investment income (loss).......... 0.82(a) 0.72(b) 0.79(c) 0.77(d) 0.57(e)
Net realized and unrealized gain
(loss) on investments................ (0.34) (0.06) 0.84 (1.85) 0.52
----------- ----------- ----------- ---------- --------
Net increase (decrease) resulting
from operations.................... 0.48 0.66 1.63 (1.08) 1.09
----------- ----------- ----------- ---------- --------
Distributions to shareholders:
From net investment income............ (0.74) (0.74) (0.75) (0.73) (0.56)
From net realized gain on
investments.......................... -- -- -- -- --
In excess of net realized gain on
investments.......................... -- -- -- -- --
In excess of net investment income.... -- -- -- -- --
Return of capital..................... -- -- -- (0.09) --
----------- ----------- ----------- ---------- --------
Total distributions................. (0.74) (0.74) (0.75) (0.82) (0.56)
----------- ----------- ----------- ---------- --------
Net asset value, end of period.......... $ 11.17 $ 11.43 $ 11.51 $ 10.63 $ 12.53
----------- ----------- ----------- ---------- --------
----------- ----------- ----------- ---------- --------
Total investment return (g) +.......... 4.37% 6.17% 15.85% (8.70)% 9.5%
----------- ----------- ----------- ---------- --------
----------- ----------- ----------- ---------- --------
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 8,251 $ 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) ++................................ 6.33% 6.32% 7.03% 6.89% 6.1%
Without reimbursement by Chancellor
LGT and expense reductions ++........ 5.74% 5.80% 6.37% 6.21% 5.5%
Without expenses assumed by Chancellor
LGT (f) ++.......................... --% --% --% --% 2.4%
Ratio of expenses to average net assets:
With reimbursement by Chancellor LGT
and expense reductions (Notes 1, 2, &
5) ++................................ 0.95% 0.95% 1.00% 1.00% 0.5%
Without reimbursement by Chancellor
LGT and expense reductions ++........ 1.54% 1.47% 1.66% 1.68% 1.1%
Without expenses assumed by Chancellor
LGT (f) ++.......................... --% --% --% --% 4.2%
Portfolio turnover ++................... 235% 235% 394% 350% 298%
Average commission rate per share paid
on portfolio transactions.............. N/A N/A N/A N/A N/A

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

VARIABLE U.S. GOVERNMENT INCOME FUND
--------------------------------------------------------------------
FEBRUARY 10,
1993
(COMMENCEMENT
OF
YEAR ENDED DECEMBER 31, OPERATIONS) TO
-------------------------------------------------- DECEMBER 31,
1997 1996 1995 1994 1993
----------- ---------- ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 11.41 $ 11.74 $ 10.79 $ 12.23 $ 12.00
----------- ---------- ---------- ---------- ---------------
Net investment income (loss).......... 0.63(a) 0.60(b) 0.62(c) 0.63(d) 0.53(e)
Net realized and unrealized gain
(loss) on investments................ 0.29 (0.35) 0.93 (1.39) 0.23
----------- ---------- ---------- ---------- ---------------
Net increase (decrease) resulting
from operations.................... 0.92 0.25 1.55 (0.76) 0.76
----------- ---------- ---------- ---------- ---------------
Distributions to shareholders:
From net investment income............ (0.54) (0.58) (0.60) (0.62) (0.53)
From net realized gain on
investments.......................... (0.09) -- -- (0.06) --
In excess of net realized gain on
investments.......................... -- -- -- -- --
In excess of net investment income.... -- -- -- -- --
Return of capital..................... -- -- -- -- --
----------- ---------- ---------- ---------- ---------------
Total distributions................. (0.63) (0.58) (0.60) (0.68) (0.53)
----------- ---------- ---------- ---------- ---------------
Net asset value, end of period.......... $ 11.70 $ 11.41 $ 11.74 $ 10.79 $ 12.23
----------- ---------- ---------- ---------- ---------------
----------- ---------- ---------- ---------- ---------------
Total investment return (g) +.......... 8.30% 2.23% 14.73% (6.27)% 6.4%
----------- ---------- ---------- ---------- ---------------
----------- ---------- ---------- ---------- ---------------
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 7,373 $ 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) ++................................ 5.54% 5.24% 5.43% 5.53% 5.3%
Without reimbursement by Chancellor
LGT and expense reductions ++........ 4.92% 4.49% 3.87% 1.29% 3.4%
Without expenses assumed by Chancellor
LGT (f) ++.......................... --% --% --% --% (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% 1.00% 0.38% 0.0%
Without reimbursement by Chancellor
LGT and expense reductions ++........ 1.62% 1.75% 2.56% 4.63% 1.9%
Without expenses assumed by Chancellor
LGT (f) ++.......................... --% --% --% --% 12.3%
Portfolio turnover ++................... 143% 49% 186% 34% 81%
Average commission rate per share paid
on portfolio transactions.............. N/A N/A N/A N/A N/A
</TABLE>

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GT GLOBAL
------------------------------------------------------------------------
VARIABLE GROWTH & INCOME FUND
------------------------------------------------------------------------
FEBRUARY 10,
1993
(COMMENCEMENT OF
YEAR ENDED DECEMBER 31, OPERATIONS) TO
----------------------------------------------------- DECEMBER 31,
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 16.51 $ 14.57 $ 12.99 $ 13.77 $ 12.00
----------- ----------- ----------- ----------- ----------------
Net investment income (loss).......... 0.41(a) 0.53(b) 0.52(c) 0.46(d) 0.31(e)
Net realized and unrealized gain
(loss) on investments................ 2.23 1.81 1.46 (0.85) 1.79
----------- ----------- ----------- ----------- ----------------
Net increase (decrease) resulting
from operations.................... 2.64 2.34 1.98 (0.39) 2.10
----------- ----------- ----------- ----------- ----------------
Distributions to shareholders:
From net investment income............ (0.51) (0.35) (0.40) (0.39) (0.28)
From net realized gain on
investments.......................... (0.04) (0.05) -- -- (0.05)
In excess of net investment income.... -- -- -- -- --
Return of capital..................... -- -- -- -- --
----------- ----------- ----------- ----------- ----------------
Total distributions................. (0.55) (0.40) (0.40) (0.39) (0.33)
----------- ----------- ----------- ----------- ----------------
Net asset value, end of period.......... $ 18.60 $ 16.51 $ 14.57 $ 12.99 $ 13.77
----------- ----------- ----------- ----------- ----------------
----------- ----------- ----------- ----------- ----------------
Total investment return (g) +.......... 16.22% 16.33% 15.49% (2.85)% 17.8%
----------- ----------- ----------- ----------- ----------------
----------- ----------- ----------- ----------- ----------------
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 50,356 $ 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) ++................................ 2.86% 3.58% 3.87% 3.69% 3.2%
Without reimbursement by Chancellor
LGT and expense reductions ++........ 2.72% 3.48% 3.66% 3.45% 2.7%
Without expenses assumed by Chancellor
LGT (f) ++.......................... --% --% --% --% 1.1%
Ratio of expenses to average net assets:
With reimbursement by Chancellor LGT
and expense reductions (Notes 1, 2, &
5) ++................................ 1.13% 1.20% 1.23% 1.25% 0.6%
Without reimbursement by Chancellor
LGT and expense reductions ++........ 1.27% 1.30% 1.44% 1.49% 1.2%
Without expenses assumed by Chancellor
LGT (f) ++.......................... --% --% --% --% 2.8%
Portfolio turnover ++................... 60% 57% 73% 53% 17%
Average commission rate per share paid
on portfolio transactions.............. $ 0.0141 $ 0.0147 N/A N/A N/A

GT GLOBAL
------------------------------------------------------------------------

VARIABLE TELECOMMUNICATIONS FUND
------------------------------------------------------------------------
OCTOBER 18, 1993
(COMMENCEMENT OF
YEAR ENDED DECEMBER 31, OPERATIONS) TO
----------------------------------------------------- DECEMBER 31,
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 18.14 $ 16.87 $ 13.98 $ 13.07 $ 12.00
----------- ----------- ----------- ----------- --------
Net investment income (loss).......... (0.02) (0.05) 0.02(c) 0.01(d) 0.04(e)
Net realized and unrealized gain
(loss) on investments................ 2.59 3.31 3.26 0.92 1.03
----------- ----------- ----------- ----------- --------
Net increase (decrease) resulting
from operations.................... 2.57 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.......................... (2.31) (1.97) (0.36) -- --
In excess of net investment income.... -- -- -- -- --
Return of capital..................... -- -- -- -- --
----------- ----------- ----------- ----------- --------
Total distributions................. (2.31) (1.99) (0.39) (0.02) --
----------- ----------- ----------- ----------- --------
Net asset value, end of period.......... $ 18.40 $ 18.14 $ 16.87 $ 13.98 $ 13.07
----------- ----------- ----------- ----------- --------
----------- ----------- ----------- ----------- --------
Total investment return (g) +.......... 14.56% 19.34% 23.66% 7.15% 8.9%
----------- ----------- ----------- ----------- --------
----------- ----------- ----------- ----------- --------
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 68,186 $ 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) ++................................ (0.10)% (0.26)% 0.16% 0.31% 2.5%
Without reimbursement by Chancellor
LGT and expense reductions ++........ (0.15)% (0.31)% 0.10% 0.07% 2.3%
Without expenses assumed by Chancellor
LGT (f) ++.......................... --% --% --% --% 1.6%
Ratio of expenses to average net assets:
With reimbursement by Chancellor LGT
and expense reductions (Notes 1, 2, &
5) ++................................ 1.11% 1.12% 1.20% 1.25% 0.9%
Without reimbursement by Chancellor
LGT and expense reductions ++........ 1.16% 1.17% 1.26% 1.49% 1.1%
Without expenses assumed by Chancellor
LGT (f) ++.......................... --% --% --% --% 1.8%
Portfolio turnover ++................... 91% 77% 70% 81% 20%
Average commission rate per share paid
on portfolio transactions.............. $ 0.0092 $ 0.0068 N/A N/A N/A
</TABLE>

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

(e) 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).
(f) During the period ended December 31, 1993, Chancellor LGT Asset
Management, Inc. voluntarily assumed certain expenses for the Funds
(Note 2).
(g) 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.

F71
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

FINANCIAL HIGHLIGHTS (cont'd)

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

<TABLE>
<CAPTION>
GT GLOBAL
---------------------------------------------------------
VARIABLE EMERGING MARKETS FUND
---------------------------------------------------------
JULY 5, 1994
(COMMENCEMENT OF
YEAR ENDED DECEMBER 31, OPERATIONS) TO
-------------------------------------- DECEMBER 31,
1997 1996 1995 1994
----------- ----------- ---------- ----------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 14.26 $ 10.88 $ 11.89 $ 12.00
----------- ----------- ---------- --------
Net investment income (loss).......... 0.15(a) 0.11(b) 0.14(c) 0.07(d)
Net realized and unrealized gain
(loss) on investments................ (1.89) 3.27 (1.04) (0.05)
----------- ----------- ---------- --------
Net increase (decrease) resulting
from operations.................... (1.74) 3.38 (0.90) 0.02
----------- ----------- ---------- --------
Distributions to shareholders:
From net investment income............ (0.06) -- (0.09) (0.07)
From net realized gain on
investments.......................... (0.89) -- -- --
In excess of net realized gain on
investments.......................... -- -- -- (0.06)
Return of capital..................... -- -- (0.02) --
----------- ----------- ---------- --------
Total distributions................. (0.95) -- (0.11) (0.13)
----------- ----------- ---------- --------
Net asset value, end of period.......... $ 11.57 $ 14.26 $ 10.88 $ 11.89
----------- ----------- ---------- --------
----------- ----------- ---------- --------
Total investment return (g) +.......... (13.76)% 31.07% (7.54)% 0.12%
----------- ----------- ---------- --------
----------- ----------- ---------- --------
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 16,509 $ 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) ++................................ 1.05% 0.89% 1.55% 4.10%
Without reimbursement by Chancellor
LGT and expense reductions ++........ 0.78% 0.39% 0.51% (0.20)%
Without expenses assumed by Chancellor
LGT (f) ++.......................... --% --% --% --%
Ratio of expenses to average net assets:
With reimbursement by Chancellor LGT
and expense reductions (Notes 1, 2, &
5) ++................................ 1.22% 1.18% 1.18% 0.00%
Without reimbursement by Chancellor
LGT and expense reductions ++........ 1.49% 1.68% 2.22% 4.30%
Without expenses assumed by Chancellor
LGT (f) ++.......................... --% --% --% --%
Portfolio turnover ++................... 212% 216% 210% 117%
Average commission rate per share paid
on portfolio transactions.............. $ 0.0013 $ 0.0021 N/A N/A
</TABLE>

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

<TABLE>
<CAPTION>
GT GLOBAL
------------------------------------------------------------------------
VARIABLE AMERICA FUND
------------------------------------------------------------------------
FEBRUARY 10,
1993
(COMMENCEMENT OF
YEAR ENDED DECEMBER 31, OPERATIONS) TO
----------------------------------------------------- DECEMBER 31,
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 19.71 $ 19.46 $ 15.81 $ 13.75 $ 12.00
----------- ----------- ----------- ----------- ----------------
Net investment income (loss).......... (0.07) 0.12(b) 0.21(c) 0.48(d) 1.11(e)
Net realized and unrealized gain
(loss) on investments................ 2.88 3.18 3.80 2.08 0.64
----------- ----------- ----------- ----------- ----------------
Net increase (decrease) resulting
from operations.................... 2.81 3.30 4.01 2.56 1.75
----------- ----------- ----------- ----------- ----------------
Distributions to shareholders:
From net investment income............ (0.09) (0.30) (0.07) (0.50) --
From net realized gain on
investments.......................... (0.75) (2.75) (0.29) -- --
In excess of net realized gain on
investments.......................... -- -- -- -- --
Return of capital..................... -- -- -- -- --
----------- ----------- ----------- ----------- ----------------
Total distributions................. (0.84) (3.05) (0.36) (0.50) --
----------- ----------- ----------- ----------- ----------------
Net asset value, end of period.......... $ 21.68 $ 19.71 $ 19.46 $ 15.81 $ 13.75
----------- ----------- ----------- ----------- ----------------
----------- ----------- ----------- ----------- ----------------
Total investment return (g) +.......... 14.88% 18.55% 25.37% 18.88% 14.7%
----------- ----------- ----------- ----------- ----------------
----------- ----------- ----------- ----------- ----------------
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 43,977 $ 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) ++................................ (0.35)% 0.52% 1.66% 1.83% 14.1%
Without reimbursement by Chancellor
LGT and expense reductions ++........ (0.42)% 0.46% 1.60% 0.76% 12.8%
Without expenses assumed by Chancellor
LGT (f) ++.......................... --% --% --% --% 7.6%
Ratio of expenses to average net assets:
With reimbursement by Chancellor LGT
and expense reductions (Notes 1, 2, &
5) ++................................ 0.91% 0.95% 1.00% 0.98% 0.0%
Without reimbursement by Chancellor
LGT and expense reductions ++........ 0.98% 1.01% 1.06% 2.05% 1.3%
Without expenses assumed by Chancellor
LGT (f) ++.......................... --% --% --% --% 6.5%
Portfolio turnover ++................... 210% 248% 79% 139% 831%
Average commission rate per share paid
on portfolio transactions.............. $ 0.0552 $ 0.0531 N/A N/A N/A
</TABLE>

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

(a) Includes reimbursement by Chancellor LGT Asset Management, Inc. of
Fund operating expenses of $0.03 for the Variable Emerging Markets
Fund, $0.04 for the Variable Infrastructure Fund, $0.03 for the
Variable Natural Resources Fund, $0.02 for the Variable New Pacific
Fund, and $0.02 for the Variable Europe Fund (Note 2).
(b) 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, $0.00 for the Variable America Fund,
$0.04 for the Variable New Pacific Fund, and $0.04 for the Variable
Europe Fund (Note 2).
(c) 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, and $0.08 for the Variable
Europe Fund (Note 2).
(d) 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, and $0.04 for the Variable Europe Fund (Note 2).

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

F72
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

FINANCIAL HIGHLIGHTS (cont'd)

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GT GLOBAL
--------------------------------------------
VARIABLE INFRASTRUCTURE FUND
--------------------------------------------
JANUARY 31, 1995
YEAR ENDED (COMMENCEMENT OF
DECEMBER 31, OPERATIONS) TO
------------------------- DECEMBER 31,
1997 1996 1995
----------- ----------- ----------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 16.47 $ 13.27 $ 12.00
----------- ----------- ----------------
Net investment income (loss).......... 0.12(a) 0.11(b) 0.07(c)
Net realized and unrealized gain
(loss) on investments................ 0.74 3.19 1.20
----------- ----------- ----------------
Net increase (decrease) resulting
from operations.................... 0.86 3.30 1.27
----------- ----------- ----------------
Distributions to shareholders:
From net investment income............ (0.10) (0.03) --
From net realized gain on
investments.......................... (0.88) (0.07) --
In excess of net realized gain on
investments.......................... -- -- --
Return of capital..................... -- -- --
----------- ----------- ----------------
Total distributions................. (0.98) (0.10) --
----------- ----------- ----------------
Net asset value, end of period.......... $ 16.35 $ 16.47 $ 13.27
----------- ----------- ----------------
----------- ----------- ----------------
Total investment return (g) +.......... 5.00% 24.88% 10.58%
----------- ----------- ----------------
----------- ----------- ----------------
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 8,745 $ 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) ++................................ 0.99% 1.35% 1.24%
Without reimbursement by Chancellor
LGT and expense reductions ++........ 0.68% 0.03% (6.11)%
Without expenses assumed by Chancellor
LGT (f) ++.......................... --% --% --%
Ratio of expenses to average net assets:
With reimbursement by Chancellor LGT
and expense reductions (Notes 1, 2, &
5) ++................................ 1.18% 1.21% 1.22%
Without reimbursement by Chancellor
LGT and expense reductions ++........ 1.49% 2.53% 8.57%
Without expenses assumed by Chancellor
LGT (f) ++.......................... --% --% --%
Portfolio turnover ++................... 46% 76% 38%
Average commission rate per share paid
on portfolio transactions.............. $ 0.0077 $ 0.0101 N/A

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

VARIABLE NATURAL RESOURCES FUND
--------------------------------------------
JANUARY 31, 1995
YEAR ENDED (COMMENCEMENT OF
DECEMBER 31, OPERATIONS) TO
------------------------- DECEMBER 31,
1997 1996 1995
----------- ----------- ----------------
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 20.98 $ 13.88 $ 12.00
----------- ----------- ----------------
Net investment income (loss).......... (0.03) (a) (0.06) (b) 0.73(c)
Net realized and unrealized gain
(loss) on investments................ 0.18 7.16 1.91
----------- ----------- ----------------
Net increase (decrease) resulting
from operations.................... 0.15 7.10 2.64
----------- ----------- ----------------
Distributions to shareholders:
From net investment income............ -- -- (0.71)
From net realized gain on
investments.......................... (0.93) -- --
In excess of net realized gain on
investments.......................... -- -- (0.05)
Return of capital..................... -- -- --
----------- ----------- ----------------
Total distributions................. (0.93) -- (0.76)
----------- ----------- ----------------
Net asset value, end of period.......... $ 20.20 $ 20.98 $ 13.88
----------- ----------- ----------------
----------- ----------- ----------------
Total investment return (g) +.......... 1.29% 51.15% 22.20%
----------- ----------- ----------------
----------- ----------- ----------------
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 16,709 $ 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) ++................................ (0.16)% (0.60)% 10.87%
Without reimbursement by Chancellor
LGT and expense reductions ++........ (0.38)% (1.30)% 2.94%
Without expenses assumed by Chancellor
LGT (f) ++.......................... --% --% --%
Ratio of expenses to average net assets:
With reimbursement by Chancellor LGT
and expense reductions (Notes 1, 2, &
5) ++................................ 1.20% 1.19% 1.14%
Without reimbursement by Chancellor
LGT and expense reductions ++........ 1.42% 1.89% 9.07%
Without expenses assumed by Chancellor
LGT (f) ++.......................... --% --% --%
Portfolio turnover ++................... 315% 199% 875%
Average commission rate per share paid
on portfolio transactions.............. $ 0.0123 $ 0.0164 N/A
</TABLE>

- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GT GLOBAL
------------------------------------------------------------------------
VARIABLE NEW PACIFIC FUND
------------------------------------------------------------------------
FEBRUARY 10,
1993
(COMMENCEMENT OF
YEAR ENDED DECEMBER 31, OPERATIONS) TO
----------------------------------------------------- DECEMBER 31,
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 18.02 $ 13.92 $ 14.01 $ 16.07 $ 12.00
----------- ----------- ----------- ----------- ----------------
Net investment income (loss).......... 0.26(a) 0.13(b) 0.20(c) 0.08(d) 0.04(e)
Net realized and unrealized gain
(loss) on investments................ (7.61) 4.16 (0.23) (2.08) 4.03
----------- ----------- ----------- ----------- ----------------
Net increase (decrease) resulting
from operations.................... (7.35) 4.29 (0.03) (2.00) 4.07
----------- ----------- ----------- ----------- ----------------
Distributions to shareholders:
From net investment income............ (0.10) (0.19) (0.06) (0.06) --
From net realized gain on
investments.......................... (0.07) -- -- -- --
In excess of net realized gain on
investments.......................... -- -- -- -- --
Return of capital..................... -- -- -- -- --
----------- ----------- ----------- ----------- ----------------
Total distributions................. (0.17) (0.19) (0.06) (0.06) --
----------- ----------- ----------- ----------- ----------------
Net asset value, end of period.......... $ 10.50 $ 18.02 $ 13.92 $ 14.01 $ 16.07
----------- ----------- ----------- ----------- ----------------
----------- ----------- ----------- ----------- ----------------
Total investment return (g) +.......... (41.11)% 30.97% (0.21)% (12.47)% 33.9%
----------- ----------- ----------- ----------- ----------------
----------- ----------- ----------- ----------- ----------------
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 16,490 $ 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) ++................................ 1.50% 0.88% 1.27% 0.83% 0.9%
Without reimbursement by Chancellor
LGT and expense reductions ++........ 1.16% 0.60% 1.74% 0.48% 0.3%
Without expenses assumed by Chancellor
LGT (f) ++.......................... --% --% --% --% (2.0)%
Ratio of expenses to average net assets:
With reimbursement by Chancellor LGT
and expense reductions (Notes 1, 2, &
5) ++................................ 1.09% 1.12% 1.14% 1.25% 0.6%
Without reimbursement by Chancellor
LGT and expense reductions ++........ 1.43% 1.40% 1.61% 1.60% 1.3%
Without expenses assumed by Chancellor
LGT (f) ++.......................... --% --% --% --% 3.6%
Portfolio turnover ++................... 93% 70% 67% 30% 15%
Average commission rate per share paid
on portfolio transactions.............. $ 0.0064 $ 0.0071 N/A N/A N/A

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

VARIABLE EUROPE FUND
------------------------------------------------------------------------
FEBRUARY 10,
1993
(COMMENCEMENT OF
YEAR ENDED DECEMBER 31, OPERATIONS) TO
----------------------------------------------------- DECEMBER 31,
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 21.34 $ 16.52 $ 15.22 $ 15.33 $ 12.00
----------- ----------- ----------- ----------- ----------------
Net investment income (loss).......... 0.05(a) 0.05(b) 0.18(c) 0.16(d) 0.05(e)
Net realized and unrealized gain
(loss) on investments................ 3.10 4.93 1.28 (0.25) 3.28
----------- ----------- ----------- ----------- ----------------
Net increase (decrease) resulting
from operations.................... 3.15 4.98 1.46 (0.09) 3.33
----------- ----------- ----------- ----------- ----------------
Distributions to shareholders:
From net investment income............ (0.06) (0.16) (0.16) -- --
From net realized gain on
investments.......................... (1.91) -- -- (0.02) --
In excess of net realized gain on
investments.......................... -- -- -- -- --
Return of capital..................... -- -- -- -- --
----------- ----------- ----------- ----------- ----------------
Total distributions................. (1.97) (0.16) (0.16) (0.02) --
----------- ----------- ----------- ----------- ----------------
Net asset value, end of period.......... $ 22.52 $ 21.34 $ 16.52 $ 15.22 $ 15.33
----------- ----------- ----------- ----------- ----------------
----------- ----------- ----------- ----------- ----------------
Total investment return (g) +.......... 15.15% 30.25% 9.66% (0.59)% 27.8%
----------- ----------- ----------- ----------- ----------------
----------- ----------- ----------- ----------- ----------------
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 27,410 $ 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) ++................................ 0.22% 0.36% 1.12% 1.48% 1.1%
Without reimbursement by Chancellor
LGT and expense reductions ++........ 0.01% 0.09% 0.60% 1.07% 0.4%
Without expenses assumed by Chancellor
LGT (f) ++.......................... --% --% --% --% (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% 1.20% 1.25% 0.7%
Without reimbursement by Chancellor
LGT and expense reductions ++........ 1.41% 1.47% 1.72% 1.66% 1.4%
Without expenses assumed by Chancellor
LGT (f) ++.......................... --% --% --% --% 4.6%
Portfolio turnover ++................... 117% 56% 123% 61% 27%
Average commission rate per share paid
on portfolio transactions.............. $ 0.0626 $ 0.0313 N/A N/A N/A
</TABLE>

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

(e) 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, and $0.03 for the Variable Europe
Fund (Note 2).
(f) During the period ended December 31, 1993, Chancellor LGT Asset
Management, Inc. voluntarily assumed certain expenses for the Funds
(Note 2).
(g) 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.

F73
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

FINANCIAL HIGHLIGHTS (cont'd)

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

<TABLE>
<CAPTION>
GT GLOBAL
------------------------------------------------------------------------
MONEY MARKET FUND
------------------------------------------------------------------------
FEBRUARY 10,
1993
(COMMENCEMENT OF
YEAR ENDED DECEMBER 31, OPERATIONS) TO
----------------------------------------------------- DECEMBER 31,
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
----------- ----------- ----------- ----------- ----------------
Net investment income (loss).......... 0.05(a) 0.05(b) 0.05(c) 0.03(d) 0.03(e)
Net realized and unrealized gain
(loss) on investments................ -- -- -- -- --
----------- ----------- ----------- ----------- ----------------
Net increase (decrease) resulting
from operations.................... 0.05 0.05 0.05 0.03 0.03
----------- ----------- ----------- ----------- ----------------
Distributions to shareholders:
From net investment income............ (0.05) (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) (0.05) (0.03) (0.03)
----------- ----------- ----------- ----------- ----------------
Net asset value, end of period.......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
----------- ----------- ----------- ----------- ----------------
----------- ----------- ----------- ----------- ----------------
Total investment return (g) +.......... 4.96% 4.75% 5.26% 3.48% 2.6%
----------- ----------- ----------- ----------- ----------------
----------- ----------- ----------- ----------- ----------------
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 26,964 $ 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) ++................................ 4.77% 4.67% 5.15% 3.70% 2.9%
Without reimbursement by Chancellor
LGT and expense reductions ++........ 4.73% 4.57% 4.85% 3.64% 2.1%
Without expenses assumed by Chancellor
LGT (f) ++.......................... --% --% --% --% (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% 0.75% 0.2%
Without reimbursement by Chancellor
LGT and expense reductions ++........ 0.79% 0.85% 1.05% 0.81% 1.0%
Without expenses assumed by Chancellor
LGT (f) ++.......................... --% --% --% --% 5.7%
Portfolio turnover ++................... N/A 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 N/A
</TABLE>

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

<TABLE>
<CAPTION>
GT GLOBAL
---------------------------------------------------------
VARIABLE INTERNATIONAL FUND
---------------------------------------------------------
JULY 5, 1994
(COMMENCEMENT OF
YEAR ENDED DECEMBER 31, OPERATIONS) TO
-------------------------------------- DECEMBER 31,
1997 1996 1995 1994
----------- ----------- ---------- ----------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period.... $ 11.91 $ 11.01 $ 11.25 $ 12.00
----------- ----------- ---------- --------
Net investment income (loss).......... 0.15(a) 0.05(b) 0.09(c) 0.06(d)
Net realized and unrealized gain
(loss) on investments................ 0.68 0.89 (0.22) (0.76)
----------- ----------- ---------- --------
Net increase (decrease) resulting
from operations.................... 0.83 0.94 (0.13) (0.70)
----------- ----------- ---------- --------
Distributions to shareholders:
From net investment income............ (0.02) -- (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................. (0.02) (0.04) (0.11) (0.05)
----------- ----------- ---------- --------
Net asset value, end of period.......... $ 12.72 $ 11.91 $ 11.01 $ 11.25
----------- ----------- ---------- --------
----------- ----------- ---------- --------
Total investment return (g) +.......... 6.93% 8.52% (1.14)% (5.81)%
----------- ----------- ---------- --------
----------- ----------- ---------- --------
Ratios and supplemental data:
Net assets, end of period (in 000's).... $ 5,929 $ 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) ++................................ 1.22% 0.48% 0.93% 3.33%
Without reimbursement by Chancellor
LGT and expense reductions ++........ 0.05% (0.86)% (1.35)% (2.56)%
Without expenses assumed by Chancellor
LGT (f) ++.......................... --% --% --% --%
Ratio of expenses to average net assets:
With reimbursement by Chancellor LGT
and expense reductions (Notes 1, 2, &
5) ++................................ 1.14% 1.15% 1.25% 0.69%
Without reimbursement by Chancellor
LGT and expense reductions ++........ 2.31% 2.49% 3.53% 6.58%
Without expenses assumed by Chancellor
LGT (f) ++.......................... --% --% --% --%
Portfolio turnover ++................... 112% 92% 107% 17%
Average commission rate per share paid
on portfolio transactions.............. $ 0.0225 $ 0.0156 N/A N/A
</TABLE>

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

(a) Includes reimbursement by Chancellor LGT Asset Management, Inc. of
Fund operating expenses of $0.00 for the Money Market Fund and $0.06
for the Variable International Fund (Note 2).
(b) Includes reimbursement by Chancellor LGT Asset Management, Inc. of
Fund operating expenses of $0.00 for the Money Market Fund and $0.14
for the Variable International Fund (Note 2).
(c) Includes reimbursement by Chancellor LGT Asset Management, Inc. of
Fund operating expenses of $0.00 for the Money Market Fund and $0.22
for the Variable International Fund (Note 2).
(d) Includes reimbursement by Chancellor LGT Asset Management, Inc. of
Fund operating expenses of $0.00 for the Money Market Fund and $0.11
for the Variable International Fund (Note 2).
(e) Includes reimbursement by Chancellor LGT Asset Management, Inc. of
Fund operating expenses of $0.01 for the Money Market Fund (Note 2).
(f) During the period ended December 31, 1993, Chancellor LGT Asset
Management, Inc. voluntarily assumed certain expenses for the Funds
(Note 2).
(g) 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.

F74
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

NOTES TO FINANCIAL STATEMENTS

December 31, 1997

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

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 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 preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of
significant accounting policies in conformity with generally accepted accounting
principles consistently followed by the Funds in the preparation of the
financial statements.

(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.

F75
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

(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.

(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
basis, which, for a call, requires that the Fund hold the underlying securities
and, for a put, requires the Fund to set aside cash, U.S. government securities
or other liquid 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

F76
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

paid monthly from net investment income. The Variable Strategic Income Fund,
Variable Global Government Income Fund and Variable U.S. Government Income Fund
declare and pay dividends from net investment income, if any, monthly. The
Variable Growth & Income Fund declares and pays dividends from net investment
income, if any, quarterly. The Variable Latin America Fund, Variable
Telecommunications Fund, Variable New Pacific Fund, Variable Europe Fund,
Variable Emerging Markets Fund, Variable International Fund, Variable America
Fund, Variable Infrastructure Fund, and Variable Natural Resources Fund declare
and pay dividends from net investment income, if any, annually. With respect to
each Fund, dividends from net realized capital gains, if any, are normally
declared and paid annually.

Income and capital gain distributions are determined in accordance with Federal
income tax regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments of
income and gains on various investment securities held by the Fund and timing
differences.

(I) TAXES
It is the policy of the Funds to continue to meet the requirements for
qualification as a "regulated investment company" under the Internal Revenue
Code of 1986, as amended ("Code"). It is also the intention of the Funds to make
distributions sufficient to avoid imposition of any excise tax under Section
4982 of the Code. Therefore, no provision has been made for Federal taxes on
income, capital gains, 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................................... $ 190,054 2003
Variable Global Government Income........................... 823,063 2002
Variable U.S. Government Income............................. 10,233 2005
Variable Infrastructure..................................... 203,730 2005
Variable New Pacific........................................ 562,115 2003
18,626 2005
</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 and the Variable U.S. Government Income Fund have set
aside sufficient cash or liquid high grade debt securities as collateral for
these purchase commitments.

F77
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

(O) PORTFOLIO SECURITIES LOANED
At December 31, 1997, 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, 1997 1997
---------------------------- --------
AGGREGATE VALUE CASH FEES
GT GLOBAL ON LOAN COLLATERAL RECEIVED
- ------------------------------------------------------------ --------------- ---------- --------
<S> <C> <C> <C>
Variable Strategic Income Fund.............................. $3,371,001 $3,681,498 $36,222
Variable Global Government Income Fund...................... 576,311 641,875 12,000
Variable U.S. Government Income Fund........................ -- -- --
Variable Latin America Fund................................. 369,503 389,106 7,788
Variable Growth & Income Fund............................... 2,325,612 2,530,994 48,450
Variable Telecommunications Fund............................ 4,645,435 4,851,350 31,993
Variable Emerging Markets Fund.............................. 446,562 484,389 11,778
Variable Infrastructure Fund................................ 420,669 440,240 5,851
Variable Natural Resources Fund............................. 529,754 535,011 5,664
Variable America Fund....................................... 3,351,238 3,396,950 22,847
Variable New Pacific Fund................................... 448,248 502,500 28,835
Variable Europe Fund........................................ 514,800 546,000 24,456
Money Market Fund........................................... -- -- --
Variable International Fund................................. 223,510 238,538 5,349
</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 and administrative
expenses.

(P) LINE OF CREDIT
Certain Funds, along with other funds ("GT Funds") advised or administered by
the Manager, have a line of credit with BankBoston and State Street Bank & Trust
Company. The arrangements with the banks allow the Funds and the GT Funds to
borrow an aggregate maximum amount of $250,000,000. The Funds are limited to
borrowing up to 33 1/3% of the value of the Fund's total assets. There were no
outstanding loans at December 31, 1997.

For the year ended December 31, 1997, the weighted average outstanding daily
balance of bank loans (based on the number of days the loans were outstanding),
the weighted average interest rate, and interest expense which are included in
"Other expenses" on the Statement of Operations are as follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997
--------------------------------------------------------------------
WEIGHTED AVERAGE
GT GLOBAL OUTSTANDING DAILY BALANCE INTEREST RATE INTEREST EXPENSE
- ------------------------------------------------------------ ------------------------------ --------------- -------------------
<S> <C> <C> <C>
Variable Strategic Income Fund.............................. $ 1,499,059 6.39% $ 4,524
Variable Global Government Income Fund...................... 290,048 6.30% 5,332
Variable U.S. Government Income Fund........................ 19,600 6.26% 34
Variable Latin America Fund................................. 2,142,519 6.25% 10,037
Variable Growth & Income Fund............................... 329,448 6.36% 1,686
Variable Telecommunications Fund............................ -- -- --
Variable Emerging Markets Fund.............................. 453,975 6.31% 9,701
Variable Infrastructure Fund................................ -- -- --
Variable Natural Resources Fund............................. 931,071 6.36% 4,609
Variable America Fund....................................... 567,407 6.35% 5,904
Variable New Pacific Fund................................... 832,551 6.31% 10,075
Variable Europe Fund........................................ 934,061 6.32% 16,243
Money Market Fund........................................... -- -- --
Variable International Fund................................. -- -- --
</TABLE>

F78
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

2. RELATED PARTIES
Chancellor LGT Asset Management, Inc. is the Fund's investment manager and
administrator. 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.

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, 1997
- ------------------------------------------------------------ -----------------
<S> <C>
Variable Strategic Income Fund.............................. $13,549
Variable Global Government Income Fund...................... 3,882
Variable U.S. Government Income Fund........................ 4,354
Variable Latin America Fund................................. 11,573
Variable Growth & Income Fund............................... 21,810
Variable Telecommunications Fund............................ 28,956
Variable Emerging Markets Fund.............................. 14,926
Variable Infrastructure Fund................................ 12,446
Variable Natural Resources Fund............................. 21,834
Variable America Fund....................................... 13,032
Variable New Pacific Fund................................... 16,290
Variable Europe Fund........................................ 14,224
Money Market Fund........................................... 71,614
Variable International Fund................................. 4,428
</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.

F79
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

3. PURCHASES AND SALES OF SECURITIES
The following summarizes purchases and sales of investment securities, other
than short-term investments, by Fund, for the year ended December 31, 1997:

PURCHASES AND SALES OF SECURITIES

<TABLE>
<CAPTION>
PURCHASES
------------------------------
GT GLOBAL U.S. GOVERNMENT OTHER ISSUES
- ------------------------------------------------------------ --------------- ------------
<S> <C> <C>
Variable Strategic Income Fund.............................. $6,435,577 $ 41,738,763
Variable Global Government Income Fund...................... 3,328,157 15,724,583
Variable U.S. Government Income Fund........................ 8,249,846 64,860
Variable Latin America Fund................................. -- 42,098,900
Variable Growth & Income Fund............................... 8,233,743 24,158,405
Variable Telecommunications Fund............................ -- 56,320,805
Variable Emerging Markets Fund.............................. -- 41,171,271
Variable Infrastructure Fund................................ -- 5,463,341
Variable Natural Resources Fund............................. -- 54,632,416
Variable America Fund....................................... -- 83,753,841
Variable New Pacific Fund................................... -- 22,967,706
Variable Europe Fund........................................ -- 30,630,552
Money Market Fund........................................... -- --
Variable International Fund................................. -- 5,557,105
</TABLE>

<TABLE>
<CAPTION>
SALES
------------------------------
GT GLOBAL U.S. GOVERNMENT OTHER ISSUES
- ------------------------------------------------------------ --------------- ------------
<S> <C> <C>
Variable Strategic Income Fund.............................. $5,727,377 $ 45,079,434
Variable Global Government Income Fund...................... 3,367,455 16,416,966
Variable U.S. Government Income Fund........................ 6,671,306 851,841
Variable Latin America Fund................................. -- 39,537,437
Variable Growth & Income Fund............................... 4,472,480 19,070,750
Variable Telecommunications Fund............................ -- 65,725,114
Variable Emerging Markets Fund.............................. -- 40,343,287
Variable Infrastructure Fund................................ -- 3,170,949
Variable Natural Resources Fund............................. -- 52,541,044
Variable America Fund....................................... -- 83,403,217
Variable New Pacific Fund................................... -- 29,392,630
Variable Europe Fund........................................ -- 31,082,670
Money Market Fund........................................... -- --
Variable International Fund................................. -- 5,333,436
</TABLE>

The Funds' written options activity for the year ended December 31, 1997, was as
follows:

GT GLOBAL VARIABLE GLOBAL GOVERNMENT INCOME FUND
COVERED CALL OPTIONS WRITTEN

<TABLE>
<CAPTION>
UNDERLYING
PRINCIPAL AMOUNT PREMIUMS
----------------- --------
<S> <C> <C>
Options outstanding at December 31, 1996.................... $ -- $ --
Options written............................................. 5,070,000 29,339
Options cancelled in closing purchase transactions.......... (400,000) (2,587 )
Options expired prior to exercise........................... (4,670,000) (26,752 )
Options exercised........................................... -- --
----------------- --------
Options outstanding at December 31, 1997.................... $ -- $ --
----------------- --------
----------------- --------
</TABLE>

GT GLOBAL VARIABLE STRATEGIC INCOME FUND
COVERED CALL OPTIONS WRITTEN

<TABLE>
<CAPTION>
UNDERLYING
PRINCIPAL AMOUNT PREMIUMS
----------------- --------
<S> <C> <C>
Options outstanding at December 31, 1996.................... $ -- $ --
Options written............................................. 348,000 20,149
Options cancelled in closing purchase transactions.......... -- --
Options expired prior to exercise........................... -- --
Options exercised........................................... (348,000) (20,149 )
----------------- --------
Options outstanding at December 31, 1997.................... $ -- $ --
----------------- --------
----------------- --------
</TABLE>

F80
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

4. CAPITAL SHARES
At December 31, 1997, 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:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
------------------------------- --------------------------------
GT GLOBAL VARIABLE STRATEGIC INCOME FUND SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------ -------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Shares sold................................................. 2,611,339 $ 35,310,968 3,455,994 $ 43,161,383
Shares issued in connection with reinvestment of
distributions............................................. 151,821 2,041,389 161,635 2,004,763
-------------- --------------- --------------- ---------------
2,763,160 37,352,357 3,617,629 45,166,146
Shares repurchased.......................................... (3,005,617) (40,609,980) (3,384,466) (42,069,061)
-------------- --------------- --------------- ---------------
Net increase (decrease)..................................... (242,457) $ (3,257,623) 233,163 $ 3,097,085
-------------- --------------- --------------- ---------------
-------------- --------------- --------------- ---------------

GT GLOBAL VARIABLE GLOBAL GOVERNMENT INCOME FUND SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------ -------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Shares sold................................................. 380,383 $ 4,229,682 595,260 $ 6,669,492
Shares issued in connection with reinvestment of
distributions............................................. 55,693 616,309 63,372 706,122
-------------- --------------- --------------- ---------------
436,076 4,845,991 658,632 7,375,614
Shares repurchased.......................................... (606,738) (6,739,965) (787,028) (8,839,632)
-------------- --------------- --------------- ---------------
Net decrease................................................ (170,662) $ (1,893,974) (128,396) $ (1,464,018)
-------------- --------------- --------------- ---------------
-------------- --------------- --------------- ---------------
<CAPTION>

GT GLOBAL VARIABLE U.S. GOVERNMENT INCOME FUND SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------ -------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Shares sold................................................. 498,606 $ 5,752,236 333,844 $ 3,803,016
Shares issued in connection with reinvestment of
distributions............................................. 26,692 304,964 23,060 262,014
-------------- --------------- --------------- ---------------
525,298 6,057,200 356,904 4,065,030
Shares repurchased.......................................... (375,888) (4,324,042) (386,658) (4,430,300)
-------------- --------------- --------------- ---------------
Net increase (decrease)..................................... 149,410 $ 1,733,158 (29,754) $ (365,270)
-------------- --------------- --------------- ---------------
-------------- --------------- --------------- ---------------
<CAPTION>

GT GLOBAL VARIABLE LATIN AMERICA FUND SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------ -------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Shares sold................................................. 2,970,336 $ 50,446,691 2,062,574 $ 28,548,855
Shares issued in connection with reinvestment of
distributions............................................. -- -- 45,515 624,926
-------------- --------------- --------------- ---------------
2,970,336 50,446,691 2,108,089 29,173,781
Shares repurchased.......................................... (2,821,639) (48,320,307) (2,151,334) (29,883,182)
-------------- --------------- --------------- ---------------
Net increase (decrease)..................................... 148,697 $ 2,126,384 (43,245) $ (709,401)
-------------- --------------- --------------- ---------------
-------------- --------------- --------------- ---------------
<CAPTION>

GT GLOBAL VARIABLE GROWTH & INCOME FUND SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------ -------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Shares sold................................................. 4,454,366 $ 78,690,743 1,910,536 $ 29,111,115
Shares issued in connection with reinvestment of
distributions............................................. 78,960 1,391,332 55,274 839,489
-------------- --------------- --------------- ---------------
4,533,326 80,082,075 1,965,810 29,950,604
Shares repurchased.......................................... (4,032,695) (71,425,393) (1,857,484) (28,213,931)
-------------- --------------- --------------- ---------------
Net increase................................................ 500,631 $ 8,656,682 108,326 $ 1,736,673
-------------- --------------- --------------- ---------------
-------------- --------------- --------------- ---------------
<CAPTION>

GT GLOBAL VARIABLE TELECOMMUNICATIONS FUND SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------ -------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Shares sold................................................. 2,426,702 $ 45,966,546 2,031,581 $ 37,384,916
Shares issued in connection with reinvestment of
distributions............................................. 435,369 7,777,355 354,065 6,443,990
-------------- --------------- --------------- ---------------
2,862,071 53,743,901 2,385,646 43,828,906
Shares repurchased.......................................... (2,644,456) (49,940,160) (1,908,080) (34,595,566)
-------------- --------------- --------------- ---------------
Net increase................................................ 217,615 $ 3,803,741 477,566 $ 9,233,340
-------------- --------------- --------------- ---------------
-------------- --------------- --------------- ---------------
<CAPTION>

GT GLOBAL VARIABLE EMERGING MARKETS FUND SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------ -------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Shares sold................................................. 4,408,199 $ 64,017,931 2,518,560 $ 32,771,217
Shares issued in connection with reinvestment of
distributions............................................. 90,221 1,368,634 -- --
-------------- --------------- --------------- ---------------
4,498,420 65,386,565 2,518,560 32,771,217
Shares repurchased.......................................... (4,305,787) (63,118,511) (2,109,935) (27,696,344)
-------------- --------------- --------------- ---------------
Net increase................................................ 192,633 $ 2,268,054 408,625 $ 5,074,873
-------------- --------------- --------------- ---------------
-------------- --------------- --------------- ---------------
</TABLE>

F81
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
------------------------------- --------------------------------
GT GLOBAL VARIABLE INFRASTRUCTURE FUND SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------ -------------- --------------- --------------- ---------------
Shares sold................................................. 361,007 $ 6,149,550 469,810 $ 7,225,756
<S> <C> <C> <C> <C>
Shares issued in connection with reinvestment of
distributions............................................. 28,498 479,059 1,715 26,769
-------------- --------------- --------------- ---------------
389,505 6,628,609 471,525 7,252,525
Shares repurchased.......................................... (222,095) (3,775,850) (224,095) (3,457,346)
-------------- --------------- --------------- ---------------
Net increase................................................ 167,410 $ 2,852,759 247,430 $ 3,795,179
-------------- --------------- --------------- ---------------
-------------- --------------- --------------- ---------------

GT GLOBAL VARIABLE NATURAL RESOURCES FUND SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------ -------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Shares sold................................................. 2,023,682 $ 42,194,979 1,819,670 $ 33,416,057
Shares issued in connection with reinvestment of
distributions............................................. 42,776 762,160 -- --
-------------- --------------- --------------- ---------------
2,066,458 42,957,139 1,819,670 33,416,057
Shares repurchased.......................................... (2,016,632) (41,865,469) (1,140,721) (20,919,006)
-------------- --------------- --------------- ---------------
Net increase................................................ 49,826 $ 1,091,670 678,949 $ 12,497,051
-------------- --------------- --------------- ---------------
-------------- --------------- --------------- ---------------
<CAPTION>

GT GLOBAL VARIABLE AMERICA FUND SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------ -------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Shares sold................................................. 2,483,444 $ 49,803,360 2,859,324 $ 55,470,879
Shares issued in connection with reinvestment of
distributions............................................. 93,176 1,750,776 303,755 5,480,666
-------------- --------------- --------------- ---------------
2,576,620 51,554,136 3,163,079 60,951,545
Shares repurchased.......................................... (2,660,773) (53,234,901) (2,984,751) (57,915,239)
-------------- --------------- --------------- ---------------
Net increase (decrease)..................................... (84,153) $ (1,680,765) 178,328 $ 3,036,306
-------------- --------------- --------------- ---------------
-------------- --------------- --------------- ---------------
<CAPTION>

GT GLOBAL VARIABLE NEW PACIFIC FUND SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------ -------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Shares sold................................................. 11,514,400 $ 181,130,875 10,835,385 $ 176,690,218
Shares issued in connection with reinvestment of
distributions............................................. 17,420 306,408 20,259 329,817
-------------- --------------- --------------- ---------------
11,531,820 181,437,283 10,855,644 177,020,035
Shares repurchased.......................................... (11,774,960) (187,117,722) (10,696,698) (175,737,852)
-------------- --------------- --------------- ---------------
Net increase (decrease)..................................... (243,140) $ (5,680,439) 158,946 $ 1,282,183
-------------- --------------- --------------- ---------------
-------------- --------------- --------------- ---------------
<CAPTION>

GT GLOBAL VARIABLE EUROPE FUND SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------ -------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Shares sold................................................. 6,563,342 $ 144,699,282 4,041,258 $ 77,833,163
Shares issued in connection with reinvestment of
distributions............................................. 115,031 2,473,175 7,876 155,793
-------------- --------------- --------------- ---------------
6,678,373 147,172,457 4,049,134 77,988,956
Shares repurchased.......................................... (6,610,990) (146,386,879) (3,846,425) (74,160,899)
-------------- --------------- --------------- ---------------
Net increase................................................ 67,383 $ 785,578 202,709 $ 3,828,057
-------------- --------------- --------------- ---------------
-------------- --------------- --------------- ---------------
<CAPTION>

GT GLOBAL MONEY MARKET FUND SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------ -------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Shares sold................................................. 523,529,726 $ 523,529,726 316,100,021 $ 316,100,051
Shares issued in connection with reinvestment of
distributions............................................. 988,414 988,414 708,413 708,413
-------------- --------------- --------------- ---------------
524,518,140 524,518,140 316,808,434 316,808,464
Shares repurchased.......................................... (517,347,993) (517,347,993) (311,904,996) (311,904,996)
-------------- --------------- --------------- ---------------
Net increase................................................ 7,170,147 $ 7,170,147 4,903,438 $ 4,903,468
-------------- --------------- --------------- ---------------
-------------- --------------- --------------- ---------------
<CAPTION>

GT GLOBAL VARIABLE INTERNATIONAL FUND SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------ -------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Shares sold................................................. 2,840,820 $ 35,258,127 804,796 $ 9,121,897
Shares issued in connection with reinvestment of
distributions............................................. 621 7,912 1,276 14,683
-------------- --------------- --------------- ---------------
2,841,441 35,266,039 806,072 9,136,580
Shares repurchased.......................................... (2,776,796) (34,648,323) (737,004) (8,376,359)
-------------- --------------- --------------- ---------------
Net increase................................................ 64,645 $ 617,716 69,068 $ 760,221
-------------- --------------- --------------- ---------------
-------------- --------------- --------------- ---------------
</TABLE>

F82
<PAGE>
GT GLOBAL VARIABLE INVESTMENT FUNDS

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, 1997
- ---------------------------------------------------------------------------------------------------- -----------------
Variable Strategic Income Fund...................................................................... $ --
<S> <C>
Variable Global Government Income Fund.............................................................. --
Variable U.S. Government Income Fund................................................................ --
Variable Latin America Fund......................................................................... 249
Variable Growth & Income Fund....................................................................... 4,036
Variable Telecommunications Fund.................................................................... 3,050
Variable Emerging Markets Fund...................................................................... 6,465
Variable Infrastructure Fund........................................................................ 242
Variable Natural Resources Fund..................................................................... 8,475
Variable America Fund............................................................................... 5,571
Variable New Pacific Fund........................................................................... 24,905
Variable Europe Fund................................................................................ 7,231
Money Market Fund................................................................................... --
Variable International Fund......................................................................... 951
</TABLE>

6. HOLDINGS OF 5% VOTING SECURITIES OF PORTFOLIO COMPANIES
Investments of 5% or more of an issuer's outstanding voting securities by a Fund
or Portfolio are defined in the Investment Company Act of 1940 as an affiliated
company. There were no investments in affiliated companies at December 31, 1997.

Transactions during the year with companies that were affiliates for the GT
Global Variable Latin America Fund are as follows:

<TABLE>
<CAPTION>
NET REALIZED
PURCHASES COST SALES PROCEEDS GAIN (LOSS) DIVIDEND INCOME
-------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Industrias J B Duarte S.A. Preferred........................ $ -- $ 33,192 $ (735,270 ) $ --
</TABLE>

7. SUBSEQUENT EVENT
On January 30, 1998, Liechtenstein Global Trust ("LGT") and AMVESCAP PLC
("AMVESCAP") entered into an agreement by which AMVESCAP will acquire LGT's
Asset Management Division, including Chancellor LGT Asset Management, Inc.
AMVESCAP is the holding company of the A I M and INVESCO asset management
businesses.

- --------------
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, 1997:

<TABLE>
<CAPTION>
CAPITAL GAIN
FUND DIVIDEND
- ------------------------------------------------------------ ------------
<S> <C>
GT Global Variable U.S. Government Income Fund.............. $ 6,894
GT Global Variable Growth & Income Fund..................... 90,528
GT Global Variable Telecommunications Fund.................. 5,278,871
GT Global Variable Emerging Markets Fund.................... 158,163
GT Global Variable Infrastructure Fund...................... 130,229
GT Global Variable Natural Resources Fund................... 24,522
GT Global Variable America Fund............................. 1,541,102
GT Global Variable Europe Fund.............................. 1,883,128
</TABLE>

F83