<PAGE>
GT Global
Allocator
A VARIABLE ANNUITY ISSUED
BY SECURITY EQUITY LIFE
INSURANCE COMPANY
ANNUAL REPORT
DECEMBER 31, 1997
[logo]
<PAGE>
TABLE
OF CONTENTS
<TABLE>
<S> <C>
Reports on the
Funds................ 1
Funds'
Financial
Statements........... F1
The views of the Funds'
management as described in this
report are as of the date
written. Portfolio holdings and
allocations are as of December
31, 1997, unless otherwise
noted. Views, portfolio holdings
and allocations may have changed
subsequently.
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Understanding the
Performance Tables
The performance data shown in the upper left hand corner of each
report are for the
GT Global Variable Investment Divisions available in the GT Global
Allocator variable
annuity issued by Security Equity Life Insurance Company and for
their corresponding
GT Global Variable Investment Funds, which are the underlying
investment vehicles
for the Divisions. Division performance reflects Fund performance,
less the 1.4%
annuity charges (mortality and expense risk, and administrative
charges), but not
the $30 administration fee for contracts less than $20,000. Division
performance
which reflects the surrender charge (maximum 7% in the first year,
decreasing 1%
annually thereafter) assumes a complete withdrawal at the end of the
period noted.
Fund performance reflects all Fund expenses but not the charges and
expenses of the
separate account described above.
Past performance is no guarantee of future results. Investment
return and principal
value will fluctuate; therefore, an investor's units, when
surrendered, may be worth
more or less than their original cost. From time to time, the
investment advisor may
waive some fees and/or reimburse some expenses, without which
performance would
be lower. Waivers and/or reimbursements are subject to change.
Fund holdings and geographic allocations will change as market
conditions change.
GT Global, Inc., Distributor and Principal Underwriter.
Policy Form #6000531
</TABLE>
<PAGE>
GT GLOBAL
VARIABLE STRATEGIC INCOME FUND
TOTAL RETURNS THROUGH DECEMBER 31, 1997
Inception date: February 10, 1993
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
DIVISION PERFORMANCE
AVERAGE WITHOUT WITH APPLICABLE
ANNUALIZED SURRENDER CHARGE SURRENDER CHARGE
<S> <C> <C>
1 Year 5.67% -1.33%
Life of Fund 9.20% 8.76%
Fund Performance
Average Annualized
1 Year 7.14%
Life of Fund 10.74%
</TABLE>
PERFORMANCE
In a generally volatile environment, over the 12 months ended December 31, 1997,
the Fund returned a total of 7.14%. During the same time frame, total return for
the J.P. Morgan Global Government Bond Index(1) was 1.40%; 16.15% for the J.P.
Morgan Emerging Markets Bond Index (EMBI) (Brady).(2)
Relative to the emerging market bond indices, the Fund underperformed as a
result of holdings in core market debt. On the other hand, the Fund benefited
significantly from its holdings in Bulgaria and Russia. Outperformance relative
to the J.P. Morgan Global Government Bond Index was due to the Fund's
underweighting in the core European markets of France, Belgium and the
Netherlands -- several of the poorer performing European markets. The Fund held
virtually no investments in Japan, which also was of benefit.
MARKET REVIEW
Overall, the period was characterized by extreme sentiment swings between
bearish and bullish expectations of future inflation in G-3 economies (the U.S.,
Germany and Japan). In the first half of the year, above-trend economic activity
in the U.S. and economic recovery in Japan and Europe led investors to believe
future inflation would move higher. As capacity constraints tightened, a large
inflation risk premium was attached to long-term bond yields. Because of the
uncertainty, yields in the U.S., Germany and Japan were volatile for the first
half of the year. However, in the second half, declining inflation and Japanese
economic activity led to sharp falls in yields and rising prices for developed
market bonds.
Another major theme dominating global developed bond markets was Europe's
determined march towards monetary union and a single currency. It became
increasingly evident that all expedient efforts would be made by European
policymakers to meet the qualifying Maastricht benchmarks. This led to a sharp
decline in peripheral European bond yields, with yields converging toward German
bond lows.
The sharp appreciation of the U.S. dollar against our major trading partners'
currencies was also significant -- the dollar rose nearly 17% against the
deutschemark. Supporting this rally was the large economic growth differential
between the U.S. and other developed economies, and relatively higher U.S.
interest rates. ASEAN (Association of Southeast Asian Nations) currency
devaluations in the wake of collapsing, highly levered banking systems and
non-fundable rising current account deficits enhanced the dollar's allure.
In Latin America, Mexico has come a long way since devaluing its currency in
December 1994, and is now regarded as a relatively safe haven. It has achieved
this status in part by maintaining only a small current account deficit and a
free-floating exchange rate. These qualities enabled Mexico to enjoy by far the
tightest spreads in Latin American markets over the last several months,
although spreads widened in late October.
OUTLOOK
Our outlook over the next 12 months continues to be positive; we expect both
growth and inflation to be lower. The ASEAN economic crisis, and its impact on
both Japan and the U.S., is a significant contributor to our expectations of a
global economic slowdown.
In emerging debt markets, we believe fundamentals are still good, and would not
be surprised to see credit upgrades bestowed upon several of these debt markets.
Over the shorter term, given continuing market instabilities we plan to minimize
our investments in countries with large balance of payment imbalances or onerous
debt amortization schedules.
PERFORMANCE SUMMARY
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
GT GLOBAL VARIABLE STRATEGIC INCOME JPM GLOBAL GOVERNMENT BOND JP MORGAN EMBI (BRADY)
<S> <C> <C> <C>
2/10/93 $ 10,000.0 $ 10,000.0 $ 10,000.0
2/28/93 $ 10,008.0 $ 10,209.0 $ 10,118.0
3/31/93 $ 10,078.0 $ 10,366.0 $ 10,646.0
4/30/93 $ 10,082.0 $ 10,555.0 $ 10,860.0
5/31/93 $ 10,143.0 $ 10,622.0 $ 11,229.0
6/30/93 $ 10,521.0 $ 10,630.0 $ 11,622.0
7/31/93 $ 10,871.0 $ 10,635.0 $ 12,106.0
8/31/93 $ 11,459.0 $ 10,950.0 $ 12,349.0
9/30/93 $ 11,502.0 $ 11,065.0 $ 12,511.0
10/31/93 $ 12,168.0 $ 11,060.0 $ 13,565.0
11/30/93 $ 11,986.0 $ 10,979.0 $ 13,429.0
12/31/93 $ 12,755.0 $ 11,092.0 $ 14,249.0
1/31/94 $ 12,842.0 $ 11,196.0 $ 14,288.0
2/28/94 $ 11,553.0 $ 11,073.0 $ 13,099.0
3/31/94 $ 10,506.0 $ 11,022.0 $ 11,601.0
4/30/94 $ 10,396.0 $ 11,014.0 $ 11,606.0
5/31/94 $ 10,569.0 $ 10,923.0 $ 12,408.0
6/30/94 $ 10,447.0 $ 11,052.0 $ 11,409.0
7/31/94 $ 10,482.0 $ 11,156.0 $ 11,689.0
8/31/94 $ 10,856.0 $ 11,127.0 $ 12,524.0
9/30/94 $ 11,053.0 $ 11,183.0 $ 12,647.0
10/31/94 $ 10,975.0 $ 11,350.0 $ 12,289.0
11/30/94 $ 10,878.0 $ 11,207.0 $ 12,414.0
12/31/94 $ 10,575.0 $ 11,233.0 $ 11,588.0
1/31/95 $ 10,487.0 $ 11,461.0 $ 11,187.0
2/28/95 $ 10,438.0 $ 11,756.0 $ 10,604.0
3/31/95 $ 10,579.0 $ 12,354.0 $ 10,304.0
4/30/95 $ 11,130.0 $ 12,551.0 $ 11,411.0
5/31/95 $ 11,584.0 $ 12,901.0 $ 12,416.0
6/30/95 $ 11,615.0 $ 12,982.0 $ 12,657.0
7/31/95 $ 11,614.0 $ 13,043.0 $ 12,666.0
8/31/95 $ 11,614.0 $ 12,681.0 $ 12,965.0
9/30/95 $ 11,884.0 $ 12,966.0 $ 13,411.0
10/31/95 $ 11,946.0 $ 13,093.0 $ 13,274.0
11/30/95 $ 12,233.0 $ 13,239.0 $ 13,738.0
12/31/95 $ 12,637.0 $ 13,403.0 $ 14,779.0
1/31/96 $ 13,170.0 $ 13,265.0 $ 16,081.0
2/29/96 $ 12,686.0 $ 13,188.0 $ 14,951.0
3/31/96 $ 12,804.0 $ 13,168.0 $ 15,334.0
4/30/96 $ 13,109.0 $ 13,119.0 $ 16,106.0
5/31/96 $ 13,273.0 $ 13,132.0 $ 16,306.0
6/30/96 $ 13,472.0 $ 13,247.0 $ 16,758.0
7/31/96 $ 13,700.0 $ 13,491.0 $ 16,885.0
8/31/96 $ 13,995.0 $ 13,547.0 $ 17,433.0
9/30/96 $ 14,518.0 $ 13,622.0 $ 18,522.0
10/31/96 $ 14,760.0 $ 13,892.0 $ 18,570.0
11/30/96 $ 15,278.0 $ 14,090.0 $ 19,610.0
12/31/96 $ 15,364.0 $ 13,992.0 $ 19,828.0
1/31/97 $ 15,473.0 $ 13,642.0 $ 20,544.0
2/28/97 $ 15,570.0 $ 13,548.0 $ 20,913.0
3/31/97 $ 15,134.0 $ 13,445.0 $ 20,097.0
4/30/97 $ 15,316.0 $ 13,369.0 $ 20,779.0
5/31/97 $ 15,721.0 $ 13,685.0 $ 21,614.0
6/30/97 $ 16,046.0 $ 13,840.0 $ 22,117.0
7/31/97 $ 16,374.0 $ 13,790.0 $ 23,183.0
8/31/97 $ 16,320.0 $ 13,773.0 $ 22,955.0
9/30/97 $ 16,789.0 $ 14,078.0 $ 23,723.0
10/31/97 $ 16,169.0 $ 14,377.0 $ 21,170.0
11/30/97 $ 16,302.0 $ 14,204.0 $ 22,692.0
12/31/97 $ 16,462.0 $ 14,188.0 $ 23,031.0
</TABLE>
The chart above shows the performance of the Fund since inception compared to
the various indices for the same period. It assumes a hypothetical $10,000
initial investment in the Fund and reflects all Fund expenses but not charges
and expenses of the separate account. Past performance is no guarantee of future
results.
(1) The J.P. Morgan Global Government Bond Index is a market-value weighted
average of government bonds from 13 major bond markets. It includes the
effect of reinvested coupons and is measured in U.S. dollars.
(2) The J.P. Morgan EMBI (Brady) is a market-value weighted average of Brady
bonds from ten emerging bond markets. It includes the effect of reinvested
coupons and is measured in U.S. dollars.
Indices are unmanaged, not available for direct investment and do not incur
sales charges and professional management fees.
1
<PAGE>
GT GLOBAL
VARIABLE GLOBAL GOVERNMENT INCOME FUND
TOTAL RETURNS THROUGH DECEMBER 31, 1997
Inception date: February 10, 1993
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
DIVISION PERFORMANCE
AVERAGE WITHOUT WITH APPLICABLE
ANNUALIZED SURRENDER CHARGE SURRENDER CHARGE
<S> <C> <C>
1 Year 2.93% -4.07%
Life of Fund 3.75% 3.21%
Fund Performance
Average Annualized
1 Year 4.37%
Life of Fund 5.19%
</TABLE>
PERFORMANCE
Over the 12 months ended December 31, 1997, the Fund returned a total of 4.37%.
During the same time frame, total return for the J.P. Morgan Global Government
Bond Index(1) was 1.40%.
MARKET REVIEW
World economic growth, which again was predicted to substantially pick up in
1997, for the fourth time this decade, once again, never fully materialized.
Although stronger growth was evidenced in the U.S., UK, and Canada, growth
remained minimal in most continental European countries and non-existent in
Japan.
A continued decline in global inflation was one benefit of weaker growth. We
believe the fourth quarter Asian economic crises should extend the fixed income
market's gains, if increased competition and a decline in commodity prices
further aid declines in global inflation. Weaker growth and events in Asia
allowed global fixed income markets to extend their rallies for most of 1997.
Investors bought U.S. bonds in 1997 even in the face of steady economic growth
- -- nearly 4% for 1997 -- in anticipation of the spread of global deflation,
which could ultimately be a drag on growth. As the Federal Reserve did not
appear ready to lower interest rates in light of this economic momentum, the
spread between 2-year bills and 30-year bonds shrank from 0.60% at the start of
the fourth quarter to 0.20% by the end. The U.S. 10-year bond finished the
quarter at an historic low of 5.74%.
European bonds were influenced by the same factors that caused the rally in U.S.
markets. Additionally, the European bond market was underpinned by countries'
progress in fulfilling the strict criteria of the Masstricht Treaty for
participation in European Monetary Union.
The dollar finished the year strong due to safe-haven buying out of Asia and
Japan. The dollar also performed well relative to European currencies as the
threat of European interest rate increases were put on hold because of
deflationary effects from the Asian crises.
OUTLOOK
In yet another chapter of the "new economic environment," we believe economic
growth will once again be viewed as a positive for financial assets. Financial
assets have rallied in the face of strong growth in the past, particularly in
the U.S., as commodity prices and nascent labor pressures were never allowed to
materialize and threaten inflation. This time, we believe inflationary forces
should be kept at bay by deflationary winds from the East -- either from direct
competition or, indirectly, by pressure on profits.
We believe stronger growth could improve the fiscal situations in countries that
use the opportunity to restructure and pay down debt rather than spend the
surplus. A tighter fiscal position could also technically aid the market through
smaller product supplies. In this environment, we believe coupon accretions
should mitigate any capital losses throughout the first half of 1998.
We believe the dollar should continue to benefit from capital flows into the
U.S., a low inflationary environment, and relative higher interest rate
differentials that have the potential to even increase. An expanding trade
deficit may be a potential problem. However, we feel it is still well contained
and should be easily fundable.
We have positioned the portfolio to take advantage of the continuing decline in
global inflation. Most of the world's major fixed income markets are trading at
historic, nominal yield lows. However, on a valuation basis, bonds continue to
look attractive.
PERFORMANCE SUMMARY
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
GT GLOBAL VARIABLE GLOBAL GOVERNMENT INCOME JP M ORGAN GLOBAL GOVERNMENT BOND
<S> <C> <C>
2/10/93 $ 10,000 $ 10,000
2/28/93 $ 10,008 $ 10,209
3/31/93 $ 9,935 $ 10,366
4/30/93 $ 9,952 $ 10,555
5/31/93 $ 10,011 $ 10,622
6/30/93 $ 10,239 $ 10,630
7/31/93 $ 10,319 $ 10,635
8/31/93 $ 10,664 $ 10,950
9/30/93 $ 10,642 $ 11,065
10/31/93 $ 10,820 $ 11,060
11/30/93 $ 10,707 $ 10,979
12/31/93 $ 10,925 $ 11,092
1/31/94 $ 11,030 $ 11,196
2/28/94 $ 10,511 $ 11,073
3/31/94 $ 10,228 $ 11,022
4/30/94 $ 10,049 $ 11,014
5/31/94 $ 9,846 $ 10,923
6/30/94 $ 10,023 $ 11,052
7/31/94 $ 10,084 $ 11,156
8/31/94 $ 9,999 $ 11,127
9/30/94 $ 10,034 $ 11,183
10/31/94 $ 10,227 $ 11,350
11/30/94 $ 10,162 $ 11,207
12/31/94 $ 9,975 $ 11,233
1/31/95 $ 10,078 $ 11,461
2/28/95 $ 10,309 $ 11,756
3/31/95 $ 10,626 $ 12,354
4/30/95 $ 10,877 $ 12,551
5/31/95 $ 11,112 $ 12,901
6/30/95 $ 11,076 $ 12,982
7/31/95 $ 11,089 $ 13,043
8/31/95 $ 10,887 $ 12,681
9/30/95 $ 11,067 $ 12,966
10/31/95 $ 11,196 $ 13,093
11/30/95 $ 11,376 $ 13,239
12/31/95 $ 11,556 $ 13,403
1/31/96 $ 11,556 $ 13,265
2/29/96 $ 11,323 $ 13,188
3/31/96 $ 11,293 $ 13,168
4/30/96 $ 11,277 $ 13,119
5/31/96 $ 11,262 $ 13,132
6/30/96 $ 11,371 $ 13,247
7/31/96 $ 11,510 $ 13,491
8/31/96 $ 11,560 $ 13,547
9/30/96 $ 11,713 $ 13,622
10/31/96 $ 12,007 $ 13,892
11/30/96 $ 12,281 $ 14,090
12/31/96 $ 12,269 $ 13,992
1/31/97 $ 12,092 $ 13,642
2/28/97 $ 12,065 $ 13,548
3/31/97 $ 11,968 $ 13,445
4/30/97 $ 11,902 $ 13,369
5/31/97 $ 12,077 $ 13,685
6/30/97 $ 12,242 $ 13,840
7/31/97 $ 12,309 $ 13,790
8/31/97 $ 12,276 $ 13,773
9/30/97 $ 12,635 $ 14,078
10/31/97 $ 12,692 $ 14,377
11/30/97 $ 12,748 $ 14,204
12/31/97 $ 12,805 $ 14,188
</TABLE>
The chart above shows the performance of the Fund since inception compared to
the J.P. Morgan Global Government Bond Index for the same time period. It
assumes a hypothetical $10,000 initial investment in the Fund and reflects all
Fund expenses but not charges and expenses of the separate account. Past
performance is no guarantee of future results.
(1) The J.P. Morgan Global Government Bond Index is a market-value weighted
average of government bonds from 13 major bond markets. It includes the
effect of reinvested coupons and is measured in U.S. dollars.
2
<PAGE>
GT GLOBAL
VARIABLE U.S. GOVERNMENT INCOME FUND
TOTAL RETURNS THROUGH DECEMBER 31, 1997
Inception date: February 10, 1993
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
DIVISION PERFORMANCE
AVERAGE WITHOUT WITH APPLICABLE
ANNUALIZED SURRENDER CHARGE SURRENDER CHARGE
<S> <C> <C>
1 Year 6.80% -0.20%
Life of Fund 3.50% 2.95%
Fund Performance
Average Annualized
1 Year 8.30%
Life of Fund 4.95%
</TABLE>
PERFORMANCE
The Fund's total return for the 12 months ended December 31, 1997, was 8.30%;
total return for the J.P. Morgan U.S. Government Bond Index(1) over the same
period was 10.0%.
MARKET REVIEW
The bond market produced excellent returns in 1997. After a 25-basis point
increase in the Federal funds rate in March, the market began an upswing in the
second quarter that lasted throughout the last three quarters of the year. In
addition, interest rates fell after it became clear the benign economic
environment in the U.S. would forestall additional interest rate increases by
the Fed in 1997.
In total, 1997 produced the lowest rates of inflation in decades, while the
economy enjoyed continued steady growth. That combination, along with a stable
dollar, beckoned global investors in the fourth quarter. The yield on the long
bond closed the year at 5.92%, which was 70 basis points lower than December
1996.
OUTLOOK
We believe the overall environment for fixed income markets should continue to
be attractive in 1998. Short-term rates have remained in a narrow range for some
time, and the economic environment augurs well for continued stability. We
concur with Federal Reserve Chairman Greenspan's recent comments that the Asian
crisis has not yet fully impacted U.S. markets. We expect weakness in Asia to
moderate economic growth somewhat, but believe its potential negative effect on
U.S. profits and growth in 1998 could be counterbalanced by its positive effect
on inflation and interest rates.
Additionally, we see reasonable prospects for further declines in interest
rates. Inflation is at its lowest level in over 40 years, and productivity is
strong -- all positive cost factors we think will support U.S. profitability
even as product pricing remains under pressure. This environment (a new one for
investors) may necessitate a shift in policy stance by the Fed. As a result,
instead of constantly fighting inflation, the Fed must also be concerned with
deflation.
Our concerns about Fed tightening have been virtually erased, and potential
grows that the Fed may lower interest rates, perhaps by the middle of the year.
In keeping with this outlook, the duration of the portfolio has been increased
modestly and will be monitored closely while waiting for possible Fed action.
PERFORMANCE SUMMARY
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
GT GLOBAL VARIABLE US GOVERNMENT SECURITIES JP MORGAN US GOVERNMENT BOND
<S> <C> <C>
2/10/93 $ 10,000 $ 10,000
2/28/93 $ 10,008 $ 10,195
3/31/93 $ 9,932 $ 10,230
4/30/93 $ 9,973 $ 10,314
5/31/93 $ 9,977 $ 10,291
6/30/93 $ 10,188 $ 10,501
7/31/93 $ 10,286 $ 10,551
8/31/93 $ 10,933 $ 10,767
9/30/93 $ 10,916 $ 10,812
10/31/93 $ 10,992 $ 10,847
11/30/93 $ 10,656 $ 10,745
12/31/93 $ 10,638 $ 10,792
1/31/94 $ 10,891 $ 10,928
2/28/94 $ 10,444 $ 10,711
3/31/94 $ 10,110 $ 10,501
4/30/94 $ 9,994 $ 10,420
5/31/94 $ 9,963 $ 10,414
6/30/94 $ 9,963 $ 10,399
7/31/94 $ 10,107 $ 10,569
8/31/94 $ 10,125 $ 10,583
9/30/94 $ 9,980 $ 10,457
10/31/94 $ 9,953 $ 10,451
11/30/94 $ 9,925 $ 10,420
12/31/94 $ 9,971 $ 10,479
1/31/95 $ 10,129 $ 10,661
2/28/95 $ 10,296 $ 10,886
3/31/95 $ 10,343 $ 10,958
4/30/95 $ 10,446 $ 11,092
5/31/95 $ 10,805 $ 11,504
6/30/95 $ 10,880 $ 11,596
7/31/95 $ 10,832 $ 11,564
8/31/95 $ 10,947 $ 11,688
9/30/95 $ 11,034 $ 11,792
10/31/95 $ 11,168 $ 11,958
11/30/95 $ 11,304 $ 12,136
12/31/95 $ 11,440 $ 12,296
1/31/96 $ 11,519 $ 12,381
2/29/96 $ 11,313 $ 12,155
3/31/96 $ 11,204 $ 12,063
4/30/96 $ 11,113 $ 11,997
5/31/96 $ 11,090 $ 11,981
6/30/96 $ 11,215 $ 12,119
7/31/96 $ 11,233 $ 12,149
8/31/96 $ 11,240 $ 12,137
9/30/96 $ 11,399 $ 12,319
10/31/96 $ 11,660 $ 12,568
11/30/96 $ 11,851 $ 12,773
12/31/96 $ 11,695 $ 12,658
1/31/97 $ 11,716 $ 12,681
2/28/97 $ 11,715 $ 12,696
3/31/97 $ 11,583 $ 12,570
4/30/97 $ 11,732 $ 12,751
5/31/97 $ 11,828 $ 12,864
6/30/97 $ 11,957 $ 13,010
7/31/97 $ 12,265 $ 13,392
8/31/97 $ 12,152 $ 13,251
9/30/97 $ 12,324 $ 13,456
10/31/97 $ 12,499 $ 13,700
11/30/97 $ 12,544 $ 13,771
12/31/97 $ 12,666 $ 13,924
</TABLE>
The chart above shows the performance of the Fund since inception compared to
the JP Morgan US Government Bond Index for the same period. It assumes a
hypothetical $10,000 initial investment in the Fund and reflects all Fund
expenses but not expenses and charges of the separate account. Past performance
is no guarantee of future results.
(1) The J.P. Morgan U.S. Government Bond Index is a market-value weighted index
of U.S. Treasury issues with remaining maturities of at least one year. It
includes the effect of reinvested coupons and is measured in U.S. dollars.
Indices are unmanaged, not available for direct investment and do not incur
sales charges and professional management fees.
3
<PAGE>
GT GLOBAL
VARIABLE LATIN AMERICA FUND
TOTAL RETURNS THROUGH DECEMBER 31, 1997
Inception date: February 10, 1993
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
DIVISION PERFORMANCE
AVERAGE WITHOUT WITH APPLICABLE
ANNUALIZED SURRENDER CHARGE SURRENDER CHARGE
<S> <C> <C>
1 Year 12.93% 5.93%
Life of Fund 10.07% 9.64%
Fund Performance
Average Annualized
1 Year 14.53%
Life of Fund 11.62%
</TABLE>
PERFORMANCE
After an encouraging start, Latin American markets ended the second six months
of 1997 on a disappointing note. October was devastating, as effects of the
Asian currency crisis spread throughout the Latin American region. Against this
backdrop, the Fund returned a total of 14.53%. The Morgan Stanley Capital
International (MSCI) Emerging Markets Latin America Index returned 31.66% and
the IFC Investable Latin America Index(1) returned 29.38% over the same period.
As part of our commitment to strengthen Fund performance, we have recently
appointed David Manuel as one of the portfolio managers of the Latin America
Fund. Mr. Manuel joined us from Abbey Life Investment Services where he spent 10
years, the last three as head of Latin American equities. He holds a Ph.D. from
London University and a B.A. from Cambridge University.
While the Fund's underweighting in Chile contributed positively to performance
against the IFCI Index, poor stock selection in Brazil and Mexico was primarily
responsible for relative underperformance. Additionally, the Fund was
underweighted in Brazil over the first nine months of the period, a time when
the market was up close to 70% (U.S. dollars) as measured by the IFCI Index.
Within Brazil, the Fund was underweighted in state-owned companies, which
performed exceptionally well.
Most of the Fund's relative underperformance occurred in the first six months of
the period. Some of the evolutionary changes discussed in the semiannual report,
such as enhanced risk control guidelines and more disciplined stock selection,
began exerting a positive influence toward the end of the annual reporting
period.
MARKET REVIEW
The initial trigger of the downturn in emerging equity markets was a devaluation
in the Thai currency in early July, which highlighted the instability of its
banking sector and many years of excessive spending based on cheap U.S. dollar
financings. In the beginning, tremors were contained to Asia. In early October,
however, the sudden, sharp decline in the Hong Kong market -- a market
previously considered immune to regional malaise -- prompted fears of a global
meltdown. Even the U.S. suffered a severe bout of volatility as investors fled
to quality and liquidity.
As a result, within the region Brazil experienced the largest correction,
although its market ended the year with gains of approximately 26% (U.S.
dollars). In Brazil's case, the turmoil in Southeast Asian currency markets
intensified concerns about overvaluation of the real, which had been building
for some time.
OUTLOOK
Emerging markets have once again come under scrutiny, underscoring the
continuing importance of structural reform and political stability. As panic
subsides, however, we expect Latin American markets to decouple from events in
Asia. A decade of reform has delivered relatively stable growth and improved
inflation in many Latin American countries.
Although our expectations are more modest than several months ago, despite the
recent downturn, we are forecasting that the region as a whole will turn in its
best economic performance for a generation in 1998, with growth on average of
around 5.5% and inflation likely to be in the single digits. Meanwhile, reform
and privatization remain well entrenched in the region overall. At the extreme,
we think the level of foreign investment may take some time to recover as
perceptions of risk have been altered and confidence remains fragile.
PERFORMANCE SUMMARY
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
GT GLOBAL VARIABLE LATIN AMERICA MSCI EMG LATIN AMERICA IFCI LATIN AMERICA
<S> <C> <C> <C>
2/10/93 $ 10,000 $ 10,000 $10,000
2/28/93 $ 10,008 $ 9,892 $9,600
3/31/93 $ 9,983 $ 10,617 $10,417
4/30/93 $ 10,017 $ 10,112 $10,033
5/31/93 $ 10,167 $ 10,268 $10,167
6/30/93 $ 10,017 $ 10,938 $10,728
7/31/93 $ 10,358 $ 11,256 $11,035
8/31/93 $ 10,875 $ 12,224 $12,002
9/30/93 $ 11,192 $ 12,382 $12,198
10/31/93 $ 12,000 $ 12,832 $13,022
11/30/93 $ 12,767 $ 13,722 $14,017
12/31/93 $ 14,733 $ 15,509 $16,052
1/31/94 $ 17,058 $ 17,941 $18,208
2/28/94 $ 16,658 $ 17,351 $17,380
3/31/94 $ 15,708 $ 16,118 $16,214
4/30/94 $ 14,075 $ 14,901 $15,025
5/31/94 $ 14,285 $ 15,750 $15,810
6/30/94 $ 13,731 $ 14,692 $14,597
7/31/94 $ 14,779 $ 15,971 $15,994
8/31/94 $ 17,766 $ 18,560 $18,634
9/30/94 $ 18,688 $ 19,309 $19,461
10/31/94 $ 18,395 $ 18,359 $18,324
11/30/94 $ 18,395 $ 17,840 $18,004
12/31/94 $ 16,080 $ 14,938 $14,550
1/31/95 $ 13,765 $ 13,231 $12,236
2/28/95 $ 12,070 $ 11,235 $10,462
3/31/95 $ 10,820 $ 10,855 $10,149
4/30/95 $ 12,498 $ 12,469 $11,744
5/31/95 $ 12,339 $ 12,712 $11,775
6/30/95 $ 12,630 $ 12,923 $12,021
7/31/95 $ 13,102 $ 13,377 $12,665
8/31/95 $ 13,190 $ 13,541 $12,844
9/30/95 $ 12,817 $ 13,410 $12,680
10/31/95 $ 11,658 $ 12,301 $11,472
11/30/95 $ 11,736 $ 12,519 $11,869
12/31/95 $ 12,198 $ 12,916 $12,098
1/31/96 $ 13,377 $ 14,252 $13,235
2/29/96 $ 12,758 $ 13,432 $12,536
3/31/96 $ 12,994 $ 13,607 $12,737
4/30/96 $ 13,740 $ 14,354 $13,408
5/31/96 $ 14,084 $ 14,809 $13,758
6/30/96 $ 14,112 $ 15,176 $14,004
7/31/96 $ 13,496 $ 14,574 $13,386
8/31/96 $ 14,031 $ 14,993 $13,749
9/30/96 $ 14,455 $ 15,326 $14,015
10/31/96 $ 14,455 $ 15,170 $13,753
11/30/96 $ 14,607 $ 15,298 $13,816
12/31/96 $ 14,940 $ 15,753 $14,180
1/31/97 $ 16,101 $ 17,285 $15,487
2/28/97 $ 16,767 $ 18,423 $16,499
3/31/97 $ 16,282 $ 18,143 $16,325
4/30/97 $ 16,404 $ 19,026 $17,007
5/31/97 $ 17,332 $ 20,365 $18,379
6/30/97 $ 18,493 $ 22,132 $19,855
7/31/97 $ 19,472 $ 23,409 $20,955
8/31/97 $ 17,353 $ 21,197 $19,135
9/30/97 $ 18,927 $ 23,214 $20,748
10/31/97 $ 15,546 $ 18,781 $16,885
11/30/97 $ 16,141 $ 19,426 $17,403
12/31/97 $ 17,110 $ 20,740 $18,346
</TABLE>
The chart above shows the performance of the Fund since inception compared to
the various indices for the same period. It assumes a hypothetical $10,000
initial investment in the Fund and reflects all Fund expenses but not expenses
and charges of the separate account. Past performance is no guarantee of future
results.
(1) The MSCI Emerging Markets Latin America and IFC Investable Latin America
indices are market value-weighted averages of companies listed in Argentina,
Brazil, Chile, Colombia, Mexico, Peru and Venezuela. Both indices are
measured in U.S. dollars and include the effect of reinvested dividends. The
MSCI Emerging Markets Latin America Index has an aggregate market
capitalization of $351.88 billion, and the IFC Investable Latin America
Index has an aggregate market capitalization of $298.2 billion. The Fund has
changed benchmarks to the IFC Investable Latin America Index because we feel
it presents a more accurate reflection of investment opportunities for
foreign investors.
Indices are unmanaged, not available for direct investment and do not include
the effects of sales charges and professional management fees.
4
<PAGE>
GT GLOBAL
VARIABLE GROWTH & INCOME FUND
TOTAL RETURNS THROUGH DECEMBER 31, 1997
Inception date: February 10, 1993
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
DIVISION PERFORMANCE
AVERAGE WITHOUT WITH APPLICABLE
ANNUALIZED SURRENDER CHARGE SURRENDER CHARGE
<S> <C> <C>
1 Year 14.61% 7.61%
Life of Fund 11.04% 10.63%
Fund Performance
Average Annualized
1 Year 16.22%
Life of Fund 12.60%
</TABLE>
PERFORMANCE
For the 12-month reporting period to December 31, 1997, the Fund's total return
was 16.22%. Total return over the same period was 16.23% for the Morgan Stanley
Capital International (MSCI) World Index(1) and 1.40% for the J.P. Morgan Global
Government Bond Index.(2)
The Fund's equity holdings benefited from being considerably overweighted in
financial stocks, which enjoyed a global bull market on the back of a rally in
the U.S. long bond. The merger activity we've seen in U.S. financial companies
buoyed Fund returns and is also beginning to spill over into the rest of the
world. Additionally, the Fund has been underweighted in industrial cyclicals,
which lagged the overall market.
MARKET REVIEW
Over 1997, several events were significant. In the U.S., on October 27, the Dow
Jones Industrial Average reacted to events in Asia by posting its largest ever
one-day fall in points (554.26). By the end of the review period, however, the
market had indeed recovered lost ground, to end the year with strong gains.
In Europe, October 13, 1997, will be recorded in the annals as "Merger Monday."
Six mergers or takeovers in Europe alone, with an aggregate value of over US$110
billion, were announced that day. All of them represented attempts to build
multinational businesses (especially prior to the start of European Monetary
Union), and most have the potential to provide substantial cost savings and/or
increases in distribution/
pricing power.
Meanwhile, in the UK we believe the granting of complete operational
independence to the Bank of England was the single most bullish occurrence. This
enabled the Bank of England, no longer concerned with political issues, to
embark on an aggressive path of raising interest rates, thereby alleviating
current inflationary pressures.
OUTLOOK
We currently expect to remain overweighted in interest rate-sensitive stocks,
particularly financial services companies, until we believe U.S. bond yields
have bottomed out and prices have peaked. If markets continue to become more
expensive, however, we intend to build the Fund's exposure to defensive sectors.
We are likely to remain underweighted in capital goods until we feel the
inflation expectations cycle has turned. At the moment, the level of inflation
continues to surprise people by how low it remains. In this type of environment,
we think it premature to own capital goods companies.
Over the next few years, we also think relative returns between equity and bonds
are likely to converge and, therefore, expect to see the Fund's bond content
gradually rise. We believe our current sizeable holding of U.S. Treasuries
potentially could enable the Fund to benefit directly from any further fall in
inflation. We anticipate U.S. inflation should remain low. Consequently, it is
possible that real yields on U.S. Treasuries could fall to their long-term
average of around 3.5%. This suggests nominal yields could fall to around 5%
over coming years. The U.S. budget is virtually balanced. In other words, we
believe U.S. Treasuries have the potential to provide total returns, including
both income and capital appreciation, that will compare favorably with returns
from international equities.
PERFORMANCE SUMMARY
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
GT GLOBAL VARIABLE GROWTH & INCOME MSCI WORLD JPM GLOBAL GOVT.
<S> <C> <C> <C>
2/10/93 $ 10,000 $ 10,000 $10,000
2/28/93 $ 10,008 $ 10,102 $10,107
3/31/93 $ 10,228 $ 10,689 $10,154
4/30/93 $ 10,261 $ 11,187 $10,338
5/31/93 $ 10,361 $ 11,447 $10,404
6/30/93 $ 10,437 $ 11,352 $10,413
7/31/93 $ 10,673 $ 11,588 $10,417
8/31/93 $ 11,145 $ 12,121 $10,725
9/30/93 $ 11,155 $ 11,899 $10,839
10/31/93 $ 11,460 $ 12,229 $10,834
11/30/93 $ 11,333 $ 11,539 $10,754
12/31/93 $ 11,775 $ 12,106 $10,864
1/31/94 $ 12,135 $ 12,906 $10,967
2/28/94 $ 11,639 $ 12,741 $10,846
3/31/94 $ 11,312 $ 12,194 $10,796
4/30/94 $ 11,467 $ 12,573 $10,788
5/31/94 $ 11,355 $ 12,608 $10,699
6/30/94 $ 11,278 $ 12,575 $10,826
7/31/94 $ 11,573 $ 12,816 $10,928
8/31/94 $ 11,721 $ 13,204 $10,899
9/30/94 $ 11,455 $ 12,860 $10,954
10/31/94 $ 11,796 $ 13,228 $11,118
11/30/94 $ 11,394 $ 12,656 $10,977
12/31/94 $ 11,439 $ 12,781 $11,003
1/31/95 $ 11,360 $ 12,592 $11,226
2/28/95 $ 11,580 $ 12,778 $11,515
3/31/95 $ 11,590 $ 13,396 $12,101
4/30/95 $ 11,821 $ 13,866 $12,294
5/31/95 $ 12,114 $ 13,987 $12,637
6/30/95 $ 12,059 $ 13,986 $12,716
7/31/95 $ 12,417 $ 14,688 $12,776
8/31/95 $ 12,166 $ 14,363 $12,421
9/30/95 $ 12,471 $ 14,785 $12,701
10/31/95 $ 12,597 $ 14,555 $12,824
11/30/95 $ 12,813 $ 15,063 $12,968
12/31/95 $ 13,211 $ 15,506 $13,128
1/31/96 $ 13,301 $ 15,789 $12,994
2/29/96 $ 13,392 $ 15,888 $12,918
3/31/96 $ 13,410 $ 16,156 $12,898
4/30/96 $ 13,483 $ 16,538 $12,850
5/31/96 $ 13,647 $ 16,556 $12,863
6/30/96 $ 13,694 $ 16,642 $12,976
7/31/96 $ 13,602 $ 16,057 $13,215
8/31/96 $ 13,951 $ 16,245 $13,270
9/30/96 $ 14,200 $ 16,884 $13,343
10/31/96 $ 14,653 $ 17,005 $13,607
11/30/96 $ 15,245 $ 17,961 $13,802
12/31/96 $ 15,368 $ 17,676 $13,706
1/31/97 $ 15,247 $ 17,892 $13,363
2/28/97 $ 15,489 $ 18,101 $13,270
3/31/97 $ 15,555 $ 17,746 $13,170
4/30/97 $ 15,649 $ 18,329 $13,095
5/31/97 $ 16,295 $ 19,464 $13,404
6/30/97 $ 16,706 $ 20,438 $13,557
7/31/97 $ 17,257 $ 21,382 $13,507
8/31/97 $ 16,516 $ 19,955 $13,490
9/30/97 $ 17,477 $ 21,042 $13,790
10/31/97 $ 17,162 $ 19,938 $14,082
11/30/97 $ 17,315 $ 20,294 $13,913
12/31/97 $ 17,860 $ 20,544 $13,898
</TABLE>
The chart above shows the performance of the Fund since inception compared to
the various indices for the same period. It assumes a hypothetical $10,000
initial investment in the Fund and reflects all Fund expenses but not expenses
and charges of the separate account. Past performance is no guarantee of future
results.
(1) The MSCI World Index is a market value-weighted average of the performance
of 1,560 securities listed on major world stock exchanges -- the U.S.,
Europe, Canada, Australia, New Zealand and the Far East. It includes the
effect of reinvested dividends and is measured in U.S. dollars.
(2) The J.P. Morgan Global Government Bond Index is a market-value weighted
average of government bonds from 13 major bond markets. It includes the
effect of reinvested coupons and is measured in U.S. dollars.
Indices are unmanaged, not available for direct investment and do not include
the effects of sales charges and professional management fees.
5
<PAGE>
GT GLOBAL
VARIABLE TELECOMMUNICATIONS FUND
TOTAL RETURNS THROUGH DECEMBER 31, 1997
Inception date: October 18, 1993
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
DIVISION PERFORMANCE
AVERAGE WITHOUT WITH APPLICABLE
ANNUALIZED SURRENDER CHARGE SURRENDER CHARGE
<S> <C> <C>
1 Year 12.99% 5.99%
Life of Fund 15.93% 15.48%
Fund Performance
Average Annualized
1 Year 14.56%
Life of Fund 17.55%
</TABLE>
PERFORMANCE
Over the latter half of the year, consolidation was a major feature in the
telecommunications industry where, thanks to merger and acquisition activity,
many service stocks, including a number of competitive local exchange carriers
(CLECs), enjoyed impressive returns in their share prices. Against this
background, the Fund's total return for the 12 months ended December 31, 1997,
was 14.56%. Total return over the same investment period was 25.72% for the
Morgan Stanley Capital International (MSCI) Telecommunications Index,(1) 16.23%
for the MSCI World Index(2) and 28.55% for the Salomon Brothers Global
Telecommunications Index.(3)
Relative to the MSCI Telecommunications Index, the Fund primarily underperformed
as a result of its exposure to emerging telecommunications companies and
technology issues, neither of which are represented in the index. In the fourth
quarter of 1997, share prices of telecommunications technology companies were
particularly impacted by events in Asia as investors feared a decline in Asian
demand for such products.
MARKET REVIEW
The long-awaited beginning of open competition following the U.S.
Telecommunications Deregulation Act of 1996 took place during the review period.
Toward the end of the year, however, a portion of the Deregulation Act that
prevents baby bells from entering long-distance markets in their home states was
deemed unfair and unconstitutional. Already, Wall Street seems to have
discounted the ruling. Our own view is that time will be required to resolve the
issue and, in the meantime, we believe a number of opportunities will present
themselves.
Elsewhere, emerging market telecommunications companies were hit particularly
hard by currency devaluations in Asia and related events. Because of our
year-long relative underweighting in Asian markets within the portfolio, we
managed to avoid most of the major problems caused by the fourth-quarter
slowdown in the region. However, several of the Fund's most significant emerging
market holdings -- Russia and Brazil -- were among several markets we believe
were inappropriately and temporarily tarred with the same brush. Recently,
however, sentiment in these two markets has begun to turn around.
OUTLOOK
Although the telecommunications industry has weathered some difficult times over
the last few years, we see signs of improvement across the industry. We continue
to find fundamentals compelling, along with new industry trends that bode well
for the future. Deregulation and privatization of government-owned telephone
companies, for example, are speeding the breakdown of national monopolies, and
telecommunications companies must expand their markets. Corporate customers are
going global and want seamless, barrier-free and inexpensive service on a
worldwide basis.
Increased equipment spending is also good news, not just for equipment stocks
but for the industry as a whole. Since this time last year, overall equipment
spending is up nearly 20%, a trend we expect to continue in 1998. Now that
deregulation has taken place, U.S. companies are more willing to increase
capital expenditures. We estimate that CLECs will increase expenditures by about
55% in 1998, and long-distance carriers by somewhere between 20%-25%. Meanwhile,
we forecast that regional bell operating companies will expand capital spending
by approximately 9%.
The same dynamics are just beginning in continental Europe, which opened to
competition on January 1, 1998. Many European countries are deregulated to a
certain degree, especially in data transmission. Wireless communications is
somewhat deregulated, but the basic voice market is only starting to see serious
competition. Overall, we continue to find Europe an attractive and fairly stable
market for investment, with considerably more reasonable valuations than in the
U.S. Currently, we intend to continue concentrating on areas of Europe with
unusually strong growth prospects.
PERFORMANCE SUMMARY
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
GT GLOBAL VARIABLE MSCI MSCI
TELECOMMUNICATIONS WORLD TELECOMMUNICATIONS
<S> <C> <C> <C>
18-Oct-93 $10,000 $10,000 $10,000
31-Oct-93 $10,008 $10,020 $9,995
30-Nov-93 $9,942 $9,455 $9,469
31-Dec-93 $10,892 $9,919 $9,640
31-Jan-94 $11,358 $10,575 $10,078
28-Feb-94 $11,033 $10,440 $9,421
31-Mar-94 $10,167 $9,991 $9,138
30-Apr-94 $10,402 $10,302 $9,449
31-May-94 $10,485 $10,330 $9,517
30-Jun-94 $10,226 $10,303 $9,485
31-Jul-94 $10,927 $10,501 $9,783
31-Aug-94 $11,662 $10,819 $10,105
30-Sep-94 $11,562 $10,537 $9,830
31-Oct-94 $11,871 $10,838 $10,062
30-Nov-94 $11,370 $10,370 $9,390
31-Dec-94 $11,670 $10,473 $9,382
31-Jan-95 $11,529 $10,317 $9,610
28-Feb-95 $11,337 $10,470 $9,622
31-Mar-95 $11,345 $10,977 $9,829
30-Apr-95 $11,662 $11,361 $9,975
31-May-95 $12,422 $11,461 $10,147
30-Jun-95 $13,422 $11,459 $10,334
31-Jul-95 $14,552 $12,035 $10,600
31-Aug-95 $14,920 $11,769 $10,863
30-Sep-95 $15,399 $12,114 $11,533
31-Oct-95 $14,166 $11,926 $11,420
30-Nov-95 $14,423 $12,342 $11,519
31-Dec-95 $14,432 $12,705 $11,903
31-Jan-96 $14,594 $12,937 $12,136
29-Feb-96 $15,579 $13,018 $12,061
31-Mar-96 $15,476 $13,237 $11,908
30-Apr-96 $17,231 $13,551 $12,317
31-May-96 $18,018 $13,565 $12,215
30-Jun-96 $17,746 $13,636 $12,211
31-Jul-96 $16,208 $13,157 $11,419
31-Aug-96 $16,939 $13,311 $11,503
30-Sep-96 $17,024 $13,834 $11,666
31-Oct-96 $16,255 $13,933 $11,925
30-Nov-96 $17,024 $14,717 $12,603
31-Dec-96 $17,223 $15,083 $13,013
31-Jan-97 $18,524 $15,265 $13,375
28-Feb-97 $17,603 $15,464 $13,541
31-Mar-97 $16,673 $15,012 $13,454
30-Apr-97 $16,844 $15,212 $13,718
31-May-97 $18,363 $16,179 $14,859
30-Jun-97 $19,243 $16,895 $15,534
31-Jul-97 $21,044 $17,232 $15,806
31-Aug-97 $20,031 $16,182 $14,684
30-Sep-97 $21,897 $17,309 $15,669
31-Oct-97 $20,074 $17,088 $14,940
30-Nov-97 $19,603 $18,260 $16,059
31-Dec-97 $19,731 $18,961 $16,729
</TABLE>
The chart above shows the performance of the Fund since inception compared to
the various indices for the same period. It assumes a hypothetical $10,000
initial investment in the Fund and reflects all Fund expenses but not charges
and expenses of the separate account. Past performance is no guarantee of future
results.
(1) The MSCI Telecommunications Index is a market value-weighted average of the
performance of 33 securities listed on 10 major stock exchanges. It includes
the effect of reinvested dividends and is measured in U.S. dollars.
(2) The MSCI World Index is a market value-weighted average of the performance
of 1,560 securities listed on major world stock exchanges -- the U.S.,
Europe, Canada, Australia, New Zealand and the Far East. It includes the
effect of reinvested dividends and is measured in U.S. dollars.
(3) The Salomon Brothers Global Telecommunications Index is a market
value-weighted average of the performance of 80 securities. It consists of
telecommunications companies with total adjusted market capitalizations of
US$100 million or more, including those in emerging markets. It includes the
effect of reinvested dividends and is measured in U.S. dollars.
Indices are unmanaged, not available for direct investment and do not include
the effects of sales charges and professional management fees.
6
<PAGE>
GT GLOBAL
VARIABLE EMERGING MARKETS FUND
TOTAL RETURNS THROUGH DECEMBER 31, 1997
Inception date: July 5, 1994
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
DIVISION PERFORMANCE
AVERAGE WITHOUT WITH APPLICABLE
ANNUALIZED SURRENDER CHARGE SURRENDER CHARGE
<S> <C> <C>
1 Year -14.95% -20.90%
Life of Fund -0.10% -1.26%
Fund Performance
Average Annualized
1 Year -13.76%
Life of Fund 1.31%
</TABLE>
PERFORMANCE
The one-year period to December 31, 1997 ended on a disappointing note as
emerging markets outside Asia fell in sympathy with events in the region. The
Fund was not able to avoid the resulting volatility in worldwide emerging stock
markets and, against this backdrop, the Fund's total return was -13.76%. Total
return for the Morgan Stanley Capital International (MSCI) Emerging Markets
Index was -13.45%, while the International Finance Company (IFC) Investable
Composite Index(1) returned -14.90% for the same period.
The Fund ended the period slightly outperforming its benchmark, the IFC Index.
Toward the end of the current review period, some of the evolutionary changes
discussed in the semiannual report -- such as enhanced risk control guidelines
and more disciplined stock selection -- began exerting a positive influence,
following a major restructuring of the portfolio in June.
MARKET REVIEW
The trigger for the downturn in emerging equity markets was a devaluation in the
Thai currency in early July, which highlighted the instability of its banking
sector and many years of excessive spending based on cheap U.S. dollar
financings. While initially tremors were contained to Asia, in early October the
sudden, sharp decline in the Hong Kong market -- previously considered
relatively immune to regional malaise -- prompted fears of a global meltdown.
Even the U.S. suffered a severe bout of volatility as investors fled to quality
and liquidity.
Performance for the emerging markets universe in U.S. dollar terms, however,
ranged from about 150% for Russia to -78% for Thailand (based on the IFC Index),
reinforcing our focus on top-down asset allocation. Countries characterized by
significant current account deficits, budget deficits or political problems
generally experienced more volatile share prices.
OUTLOOK
While not without risk, we believe economic reform in many eastern Europe,
Middle East and African (EMEA) countries could provide attractive opportunities
for investors. In the portfolio, we continue to emphasize EMEA markets we feel
are relatively well insulated from instability. In Israel, for example, on the
back of positive budgetary news, we currently see potential for interest rates
to fall. Meanwhile, potential for a pickup in activity in Germany and other core
European economies augurs well for the eastern European region. In Hungary, in
particular, we believe valuations are looking more attractive following recent
weakness.
As panic subsides, we expect Latin America to decouple from events in Asia.
Although our expectations are more modest than several months ago, a decade of
reform has delivered relatively stable growth and tame inflation in many Latin
American countries. Simultaneously, reform and privatization remain well
entrenched. At the extreme, we think funding flows may take some time to
recover, as perceptions of risk have been altered and confidence remains
fragile.
Meanwhile in Asia, we are not yet convinced that policymakers are willing to
endure the pain required to restructure their financial and corporate sectors,
and therefore expect further currency weakness, slower growth and higher
inflation. Additionally, continued yen weakness will put pressure on Asian
export competitiveness. We believe the key to asset allocation in this region is
identifying competitive, fundamentally strong and reasonably valued companies.
Taiwan is currently the only market where we expect to increase weightings, as
we expect fundamentals there to improve with currency weakness. We remain
underweighted in financial services generally, especially banks, across the
region.
PERFORMANCE SUMMARY
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
GT GLOBAL VARIABLE EMERGING MARKETS MSCI EMERGING MARKETS IFC INVESTABLE COMPOSITE
<S> <C> <C> <C>
7/5/94 $ 10,000 $ 10,000 $ 10,000
7/31/94 $ 10,250 $ 10,552 $ 10,524
8/31/94 $ 10,408 $ 11,636 $ 11,669
9/30/94 $ 11,358 $ 11,952 $ 12,035
10/31/94 $ 11,400 $ 11,661 $ 11,780
11/30/94 $ 10,917 $ 11,115 $ 11,276
12/31/94 $ 10,012 $ 10,535 $ 10,653
1/31/95 $ 9,095 $ 9,381 $ 9,442
2/28/95 $ 8,337 $ 9,214 $ 9,324
3/31/95 $ 8,135 $ 9,343 $ 9,286
4/30/95 $ 8,867 $ 9,535 $ 9,432
5/31/95 $ 9,406 $ 9,870 $ 9,789
6/30/95 $ 9,398 $ 9,846 $ 9,770
7/31/95 $ 9,886 $ 9,995 $ 9,956
8/31/95 $ 9,381 $ 9,664 $ 9,568
9/30/95 $ 9,356 $ 9,771 $ 9,627
10/31/95 $ 9,103 $ 9,446 $ 9,343
11/30/95 $ 8,724 $ 9,210 $ 9,077
12/31/95 $ 9,257 $ 9,566 $ 9,340
1/31/96 $ 9,896 $ 10,001 $ 9,821
2/29/96 $ 10,381 $ 9,873 $ 9,759
3/31/96 $ 10,857 $ 10,013 $ 9,914
4/30/96 $ 11,699 $ 10,730 $ 10,652
5/31/96 $ 11,853 $ 10,522 $ 10,447
6/30/96 $ 11,614 $ 10,660 $ 10,600
7/31/96 $ 11,155 $ 9,937 $ 9,939
8/31/96 $ 11,291 $ 10,156 $ 10,160
9/30/96 $ 11,487 $ 10,244 $ 10,251
10/31/96 $ 11,521 $ 9,954 $ 10,022
11/30/96 $ 12,133 $ 10,133 $ 10,166
12/31/96 $ 12,133 $ 10,139 $ 10,076
1/31/97 $ 12,635 $ 10,800 $ 10,753
2/28/97 $ 13,112 $ 11,236 $ 11,242
3/31/97 $ 12,984 $ 10,960 $ 11,044
4/30/97 $ 12,984 $ 11,038 $ 11,045
5/31/97 $ 13,393 $ 11,311 $ 11,227
6/30/97 $ 13,899 $ 11,965 $ 11,801
7/31/97 $ 14,368 $ 12,183 $ 11,987
8/31/97 $ 12,227 $ 10,776 $ 10,689
9/30/97 $ 12,535 $ 10,858 $ 10,741
10/31/97 $ 10,644 $ 8,985 $ 9,107
11/30/97 $ 10,219 $ 8,639 $ 8,589
12/31/97 $ 10,464 $ 8,776 $ 8,625
</TABLE>
The chart above shows the performance of the Fund since inception compared to
the various indices for the same period. It assumes a hypothetical $10,000
initial investment in the Fund and reflects all Fund expenses but not charges
and expenses of the separate account. Past performance is no guarantee of future
results.
(1) The MSCI Emerging Markets and IFC Indices are market value-weighted averages
of the performance of securities listed on the exchanges of 26 countries.
They include the effect of reinvested dividends and are measured in U.S.
dollars. The Fund has changed benchmarks to the IFC Investable Composite
because we feel it presents a more accurate reflection of investable
opportunities available to foreign investors.
Indices are unmanaged, not available for direct investment and do not include
the effects of sales charges and professional management fees.
7
<PAGE>
GT GLOBAL
VARIABLE INFRASTRUCTURE FUND
TOTAL RETURNS THROUGH DECEMBER 31, 1997
Inception date: January 31, 1995
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
DIVISION PERFORMANCE
AVERAGE WITHOUT WITH APPLICABLE
ANNUALIZED SURRENDER CHARGE SURRENDER CHARGE
<S> <C> <C>
1 Year 3.55% -3.45%
Life of Fund 12.02% 10.62%
Fund Performance
Average Annualized
1 Year 5.00%
Life of Fund 13.59%
</TABLE>
PERFORMANCE
For the 12 months ended December 31, 1997, the Fund's total return was 5.0%.
Over the same period, the Morgan Stanley Capital International (MSCI) World
Index(1) returned a total of 16.23%. The index is designed to represent the
performance of all markets, however, and does not reflect the Fund's
concentration in infrastructure industries.
In North America, continued steady GDP growth, combined with a favorable
inflationary environment, provided a supportive economic setting for strong
gains in equity markets. Against this backdrop, companies such as Canadian
National Railway in Canada and Giant Cement and Caterpillar in the U.S.
performed well for the Fund. Similarly, improving economic recovery in Europe
fueled strong gains in many markets, with Spanish and Italian utilities among
the best performers.
Within the Asian region, investments in Thailand, Malaysia, Indonesia and Korea
dropped severely, leading to the Fund's correction during the second half of the
year. Most gains in Latin American securities were surrendered, as repercussions
from the Asian currency crisis were felt throughout emerging markets, driving
many of them down significantly over the final months of the year.
MARKET REVIEW
At the beginning of the year, many emerging market infrastructure opportunities
appeared very attractive and constituted a relatively high weighting within the
Fund. However, because of the currency crisis in Asia, emerging market countries
are expected to slow spending over the short term on infrastructure-related
projects. Consequently, we have shifted the Fund's focus more toward developed
markets for the time being, specifically Europe and North America.
OUTLOOK
For the foreseeable future we plan to continue emphasizing developed markets as
the primary area for new investments. We find Europe, in particular, an
attractive market because of what appear to be the early stages of
privatization, deregulation and restructuring of the utility industry throughout
the continent. We also believe that with little to no exposure to Asia, stable,
consistent cash flows, relatively high dividend yields and attractive
valuations, the European utility industry is set to perform well in an uncertain
global securities market.
Many emerging market investments now appear very attractive relative to their
historical valuations. Although volatility is likely to continue to characterize
many Latin American stock markets, we believe long-term opportunities in the
region justify investment in some of the best-positioned companies during this
uncertain period. We will look to expand our Latin American weighting once we
feel greater stability has returned to the markets.
On the other hand, we also expect a prolonged period of uncertainty and
volatility, and therefore underperformance, for most emerging Asian markets.
Although we are seeing some apparently undervalued stocks, we do not expect to
materially increase the Fund's exposure to Asia until stability returns, along
with signs that infrastructure-related spending is reaccelerating. Hong
Kong/China has remained one of the healthiest economies during the regional
turmoil and could, in our opinion, present some good investment opportunities as
its market is sold off with the rest of Asia.
PERFORMANCE SUMMARY
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
GT GLOBAL VARIABLE INFRASTRUCTURE MSCI WORLD
<S> <C> <C>
1/31/95 $ 10,000 $ 10,000
2/28/95 $ 9,942 $ 10,148
3/31/95 $ 9,967 $ 10,639
4/30/95 $ 10,467 $ 11,012
5/31/95 $ 10,742 $ 11,108
6/30/95 $ 11,025 $ 11,107
7/31/95 $ 11,550 $ 11,665
8/31/95 $ 11,250 $ 11,407
9/30/95 $ 11,225 $ 11,741
10/31/95 $ 10,700 $ 11,559
11/30/95 $ 10,900 $ 11,962
12/31/95 $ 11,058 $ 12,314
1/31/96 $ 11,308 $ 12,539
2/29/96 $ 11,392 $ 12,618
3/31/96 $ 11,508 $ 12,830
4/30/96 $ 12,450 $ 13,134
5/31/96 $ 12,925 $ 13,148
6/30/96 $ 13,033 $ 13,217
7/31/96 $ 12,608 $ 12,752
8/31/96 $ 12,925 $ 12,901
9/30/96 $ 13,181 $ 13,409
10/31/96 $ 13,038 $ 13,505
11/30/96 $ 13,508 $ 14,264
12/31/96 $ 13,809 $ 14,038
1/31/97 $ 14,262 $ 14,209
2/28/97 $ 14,120 $ 14,375
3/31/97 $ 13,860 $ 14,093
4/30/97 $ 13,759 $ 14,556
5/31/97 $ 14,489 $ 15,458
6/30/97 $ 14,926 $ 16,231
7/31/97 $ 15,733 $ 16,981
8/31/97 $ 14,961 $ 15,848
9/30/97 $ 15,795 $ 16,711
10/31/97 $ 14,526 $ 15,834
11/30/97 $ 14,438 $ 16,117
12/31/97 $ 14,500 $ 16,316
</TABLE>
The chart above shows the performance of the Fund since inception compared to
the MSCI World Index for the same period. It assumes a hypothetical $10,000
initial investment in the Fund and reflects all Fund expenses but not expenses
and charges of the separate account. Past performance is no guarantee of future
results.
(1) The MSCI World Index is a market value-weighted average of the performance
of 1,560 securities listed on major world stock exchanges -- the U.S.,
Europe, Canada, Australia, New Zealand and the Far East. It includes the
effect of reinvested dividends and is measured in U.S. dollars.
Indices are unmanaged, not available for direct investment and do not include
the effects of sales charges and professional management fees.
8
<PAGE>
GT GLOBAL
VARIABLE NATURAL RESOURCES FUND
TOTAL RETURNS THROUGH DECEMBER 31, 1997
Inception date: January 31, 1995
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
DIVISION PERFORMANCE
AVERAGE WITHOUT WITH APPLICABLE
ANNUALIZED SURRENDER CHARGE SURRENDER CHARGE
<S> <C> <C>
1 Year -0.11% -7.10%
Life of Fund 22.33% 21.05%
Fund Performance
Average Annualized
1 Year 1.29%
Life of Fund 23.97%
</TABLE>
PERFORMANCE
Following a strong rise from April to October, the year ended on a particularly
disappointing note. For the 12 months through December 31, 1997, total return
for the Fund was 1.29%. During the same period, the Morgan Stanley Capital
International (MSCI) World Index(1) returned 16.23%. Please bear in mind,
however, that because the index is designed to represent the performance of all
markets, it does not reflect the Fund's concentration in the natural resources
industries.
Based on our disciplined investment criteria, we look for companies growing
their reserves and/or earnings quickly -- faster than expectations -- and where
analysts are raising their forecasts for earnings and/or reserves. In addition,
companies must display strong fundamentals, such as a high return on equity, low
debt and high relative strength. We also look for companies undergoing
substantial restructuring and/or cost cutting.
Taking this criteria into consideration, the Fund was overweighted in oil
service stocks throughout the year. While we continue to find stocks of these
companies attractive investments, their share prices plunged in the last several
months of the year, having a considerable impact on the Fund's performance.
MARKET REVIEW
Share prices of oil service companies were on a roller coaster ride in 1997.
After gaining an average of 40% in October alone, they quickly reversed and
dropped as much and more over the last two months of the year. What could evoke
such a sudden change in investor sentiment?
Among other reasons, the economic downturn in Asia lowered demand for oil.
Simultaneously, demand in the U.S. decreased due to warmer than average
temperatures caused by El Nino. Meanwhile, the price of crude oil suffered
further blows as a climb in OPEC member quotas appears imminent and Iraq looks
set to step up its oil exports. Finally, momentum investors who jumped in for
the upward ride -- and typically have little understanding of the industry --
appear partly to blame as they quickly sold off their positions.
OUTLOOK
Despite the recent downturn, we continue to hold oil services companies because
we believe their fundamentals have continued to improve. We also feel there are
earning expansions ahead, based on increased demand for exploration equipment.
Most oil companies plan projects on long-term trends in prices, not on
short-term aberrations.
The industry has been going through a substantial recovery after being in
recession for 15 years. As oil consumption has again risen considerably over the
last few years, we have witnessed a huge increase in demand for equipment, which
has maximized capacity utilization of equipment. Yet, despite stretched
equipment levels, companies are still well below reinvestment needs, where it is
still not economically feasible to build new equipment. In our opinion, it will
be a multi-year cycle but, as we've seen, oil service stocks can be very
volatile. We believe the volatility, however, has very little to do with the
actual fundamentals of these companies. Instead, it is driven primarily by Wall
Street, which trades this industry off natural gas prices.
In the energy and production area, our emphasis continues to be on individual
holdings. We purchase a company when something very specific is going on such as
a new discovery, cost cutting or mispricing.
Outside of oil services and energy and production, most commodity prices are now
at depressed levels and, we think, are likely to remain so for the time being.
Currently, we hold no gold, commodity chemicals or base metals and very little
in forest products or special situations.
PERFORMANCE SUMMARY
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
GT GLOBAL VARIABLE NATURAL RESOURCES MSCI WORLD
<S> <C> <C>
1/31/95 $ 10,000 $ 10,000
2/28/95 $ 10,050 $ 10,148
3/31/95 $ 10,375 $ 10,639
4/30/95 $ 10,683 $ 11,012
5/31/95 $ 10,750 $ 11,108
6/30/95 $ 11,067 $ 11,107
7/31/95 $ 11,867 $ 11,665
8/31/95 $ 11,717 $ 11,407
9/30/95 $ 11,650 $ 11,741
10/31/95 $ 11,358 $ 11,559
11/30/95 $ 11,767 $ 11,962
12/31/95 $ 12,220 $ 12,314
1/31/96 $ 12,643 $ 12,539
2/29/96 $ 13,532 $ 12,618
3/31/96 $ 14,280 $ 12,830
4/30/96 $ 15,574 $ 13,134
5/31/96 $ 16,208 $ 13,148
6/30/96 $ 15,407 $ 13,217
7/31/96 $ 14,976 $ 12,752
8/31/96 $ 16,252 $ 12,901
9/30/96 $ 17,282 $ 13,409
10/31/96 $ 17,643 $ 13,505
11/30/96 $ 18,321 $ 14,264
12/31/96 $ 18,471 $ 14,038
1/31/97 $ 18,620 $ 14,209
2/28/97 $ 16,437 $ 14,375
3/31/97 $ 15,618 $ 14,093
4/30/97 $ 15,046 $ 14,556
5/31/97 $ 16,375 $ 15,458
6/30/97 $ 16,560 $ 16,231
7/31/97 $ 18,316 $ 16,981
8/31/97 $ 19,358 $ 15,848
9/30/97 $ 21,646 $ 16,711
10/31/97 $ 21,340 $ 15,834
11/30/97 $ 19,099 $ 16,117
12/31/97 $ 18,710 $ 16,316
</TABLE>
The chart above shows the performance of the Fund since inception compared to
the MSCI World Index for the same period. It assumes a hypothetical $10,000
initial investment in the Fund and reflects all Fund expenses but not charges
and expenses of the separate account. Past performance is no guarantee of future
results.
(1) The MSCI World Index is a market value-weighted average of the performance
of 1,560 securities listed on major world stock-exchanges -- the U.S.,
Europe, Canada, Australia, New Zealand and the Far East. It includes the
effect of reinvested dividends and is measured in U.S. dollars.
Indices are unmanaged, not available for direct investment and do not include
the effects of sales charges and professional management fees.
9
<PAGE>
GT GLOBAL
VARIABLE AMERICA FUND
TOTAL RETURNS THROUGH DECEMBER 31, 1997(1)
Inception date: February 10, 1993
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
DIVISION PERFORMANCE
AVERAGE WITHOUT WITH APPLICABLE
ANNUALIZED SURRENDER CHARGE SURRENDER CHARGE
<S> <C> <C>
1 Year 13.30% 6.30%
Life of Fund 17.21% 16.88%
Fund Performance
Average Annualized
1 Year 14.88%
Life of Fund 18.87%
</TABLE>
PERFORMANCE
The Fund has enjoyed considerable improvement in returns since our semiannual
report. For the 12 months ended December 31, 1997, the Fund returned a total of
14.88%. During the same period, the Russell Midcap Index(2) returned 29.01%.
While the Fund's absolute returns over the 12 months were disappointing, we are
encouraged by the Fund's performance over the last nine months of 1997. To put
performance in perspective, a shift in portfolio managers took place at the end
of 1996 and the Fund was repositioned during the first quarter toward a midcap
orientation. Regrettably, this was a detriment to performance but during the
transition period we were able to take advantage of the weakness in mid-cap
stocks to reposition the portfolio. As a result, the Fund was well positioned
coming out of the first quarter and experienced strong returns to finish the
year's remaining nine months above its benchmark. During the nine months through
December 31, 1997, the Fund returned 33.75%, versus 30.07% for the Russell
Midcap Index.
In this portfolio, we tend to favor businesses that have an element of recurring
revenue and some degree of pricing power. Historically, we have found these
characteristics can often lead to improved operating margins and, ultimately,
improved earnings multiples. Indeed, for the top performers in the portfolio,
pricing power has played out very well.
As an industry, the billboard sector performed strongly. Supply is limited and
many companies are realizing price increases of between 6% to 12% a year, while
costs have remained fixed. The industry has also been consolidating, which has
helped fundamentals and valuations. Moreover, there have been tremendous
synergies between billboard companies and other media companies. Looking ahead,
we expect the industry to continue its trend toward consolidation. As a result,
Outdoor Systems remains a core holding of the portfolio.
MARKET REVIEW
Strong performance of the equity market in 1997 was accompanied by higher
volatility than in the two previous years. In addition, better-than-expected
economic growth and resulting fears of higher interest rates clouded market
prospects during the first quarter. However, in the second and third quarters,
moderating growth and a continued deceleration of inflation reversed some of
these fears, resulting in a rally that broadened into small- and mid-cap issues
after three years of large-cap leadership.
With respect to the Asian influence, concern over the likely scope of weakness
in these markets had a chilling impact on equity markets worldwide in the fourth
quarter. Some companies' preannouncements of earning disappointments spurred a
flight to quality, as many investors either channeled their holdings into
large-cap, liquid stocks -- causing a slump in performance of small- and mid-cap
issues -- or reduced equity positions to buy bonds.
OUTLOOK
While markets may continue to be volatile, we are optimistic about the current
environment and look for 1998 to bring additional positive earnings revisions
for mid-cap stocks. We began to see an acceleration in earnings of small- and
mid-cap stocks relative to large-cap stocks in the second quarter of the year,
and remain encouraged that this trend will take root in 1998. Against this
background, we think it will very much be a stock-picker's market, something
that we believe could potentially play well to this particular Fund.
PERFORMANCE SUMMARY
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
GT GLOBAL VARIABLE AMERICA S&P 400 MIDCAP(3) RUSSELL 2000(3) RUSSELL MIDCAP
<S> <C> <C> <C> <C>
2/10/93 $ 10,000 $ 10,000 $ 10,000 $10,000
2/28/93 $ 10,008 $ 9,725 $ 9,733 $10,220
3/31/93 $ 9,908 $ 10,061 $ 10,049 $10,552
4/30/93 $ 9,525 $ 9,798 $ 9,772 $10,273
5/31/93 $ 10,150 $ 10,244 $ 10,205 $10,599
6/30/93 $ 9,817 $ 10,295 $ 10,268 $10,719
7/31/93 $ 9,992 $ 10,275 $ 10,410 $10,771
8/31/93 $ 10,308 $ 10,700 $ 10,859 $11,249
9/30/93 $ 10,417 $ 10,813 $ 11,166 $11,293
10/31/93 $ 11,108 $ 10,848 $ 11,453 $11,302
11/30/93 $ 11,225 $ 10,608 $ 11,080 $11,040
12/31/93 $ 11,467 $ 11,100 $ 11,459 $11,440
1/31/94 $ 11,650 $ 11,359 $ 11,818 $11,755
2/28/94 $ 12,033 $ 11,197 $ 11,775 $11,595
3/31/94 $ 12,275 $ 10,679 $ 11,155 $11,102
4/30/94 $ 12,502 $ 10,758 $ 11,221 $11,178
5/31/94 $ 12,675 $ 10,656 $ 11,095 $11,193
6/30/94 $ 12,666 $ 10,289 $ 10,720 $10,861
7/31/94 $ 12,640 $ 10,638 $ 10,897 $11,234
8/31/94 $ 13,365 $ 11,195 $ 11,504 $11,767
9/30/94 $ 13,485 $ 10,986 $ 11,465 $11,479
10/31/94 $ 13,511 $ 11,106 $ 11,418 $11,567
11/30/94 $ 13,339 $ 10,605 $ 10,957 $11,057
12/31/94 $ 13,632 $ 10,702 $ 11,250 $11,200
1/31/95 $ 13,761 $ 10,814 $ 11,108 $11,430
2/28/95 $ 14,442 $ 11,381 $ 11,570 $12,022
3/31/95 $ 14,986 $ 11,578 $ 11,769 $12,366
4/30/95 $ 15,606 $ 11,811 $ 12,030 $12,553
5/31/95 $ 16,003 $ 12,096 $ 12,237 $12,965
6/30/95 $ 17,028 $ 12,588 $ 12,872 $13,401
7/31/95 $ 17,968 $ 13,244 $ 13,613 $14,051
8/31/95 $ 18,135 $ 13,490 $ 13,895 $14,267
9/30/95 $ 18,222 $ 13,817 $ 14,143 $14,589
10/31/95 $ 17,555 $ 13,461 $ 13,511 $14,263
11/30/95 $ 18,012 $ 14,049 $ 14,078 $14,972
12/31/95 $ 17,089 $ 14,014 $ 14,450 $15,059
1/31/96 $ 17,204 $ 14,217 $ 14,434 $15,377
2/29/96 $ 17,581 $ 14,701 $ 14,884 $15,738
3/31/96 $ 17,766 $ 14,877 $ 15,187 $15,966
4/30/96 $ 19,180 $ 15,331 $ 15,999 $16,418
5/31/96 $ 19,294 $ 15,538 $ 16,629 $16,666
6/30/96 $ 18,574 $ 15,305 $ 15,947 $16,416
7/31/96 $ 17,424 $ 14,270 $ 14,554 $15,400
8/31/96 $ 18,338 $ 15,093 $ 15,399 $16,133
9/30/96 $ 19,581 $ 15,751 $ 16,001 $16,930
10/31/96 $ 19,592 $ 15,797 $ 15,754 $17,065
11/30/96 $ 20,445 $ 16,686 $ 16,403 $18,105
12/31/96 $ 20,260 $ 16,705 $ 16,833 $17,920
1/31/97 $ 20,599 $ 17,332 $ 17,170 $18,591
2/28/97 $ 19,037 $ 17,189 $ 16,753 $18,563
3/31/97 $ 17,402 $ 16,457 $ 15,963 $17,774
4/30/97 $ 17,752 $ 16,883 $ 16,007 $18,216
5/31/97 $ 19,324 $ 18,360 $ 17,788 $19,545
6/30/97 $ 19,958 $ 18,875 $ 18,550 $20,184
7/31/97 $ 21,675 $ 20,744 $ 19,414 $21,868
8/31/97 $ 21,278 $ 20,719 $ 19,858 $21,631
9/30/97 $ 23,307 $ 21,910 $ 21,311 $22,865
10/31/97 $ 22,191 $ 20,957 $ 20,375 $21,976
11/30/97 $ 22,502 $ 21,267 $ 20,243 $22,499
12/31/97 $ 23,275 $ 22,093 $ 20,597 $23,120
</TABLE>
The chart above shows the performance of the Fund since inception compared to
the various indices for the same period. It assumes a hypothetical $10,000
initial investment in the Fund and reflects all Fund expenses but not charges
and expenses of the separate account. Past performance is no guarantee of future
results.
(1) Prior to January 2, 1997, the Fund normally initially focused on companies
having a market capitalization of $2 billion or less at the time of
purchase. The Fund now normally invests primarily in companies having a
market cap of $1 to $5 billion at the time of purchase.
(2) The Russell Midcap Index is composed of the capitalization-weighted average
price of 800 selected common stocks of medium-size domestic companies. Its
performance includes the effect of reinvested dividends and is measured in
U.S. dollars. With the change in the Fund's name and the change in the
emphasis of the Fund more toward mid-cap stocks, the Fund has also changed
its benchmark to the Russell Midcap Index from the Russell 2000 and the S&P
Midcap 400. We feel the Russell Midcap Index is the most relevant comparable
index for the Fund with which to compare the Fund.
(3) The Russell 2000 Index is composed of 2,000 domiciled common stocks designed
to measure small company stock performance. The Index represents roughly 10%
of the U.S. stock market, and market capitalization of index companies
ranged from $171.7 million to $1.1 billion as of December 1997. The S&P
Midcap 400 Index is composed of the capitalization-weighted average price of
400 selected common stocks of medium-size domestic companies. Their
performance includes the effect of reinvested dividends and is measured in
U.S. dollars.
Indices are unmanaged, not available for direct investment and do not incur
sales charges and professional management fees.
10
<PAGE>
GT GLOBAL
VARIABLE NEW PACIFIC FUND(1)
TOTAL RETURNS THROUGH DECEMBER 31, 1997
Inception date: February 10, 1993
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
DIVISION PERFORMANCE
AVERAGE WITHOUT WITH APPLICABLE
ANNUALIZED SURRENDER CHARGE SURRENDER CHARGE
<S> <C> <C>
1 Year -41.93% -46.00%
Life of Fund -3.44% -4.04%
Fund Performance
Average Annualized
1 Year -41.11%
Life of Fund -2.08%
</TABLE>
PERFORMANCE
The savage bear market that has devastated Southeast Asian markets since early
spring 1997 has been unequaled in the Fund's history. Indeed, as asset prices
and currencies collapsed, regional markets experienced severe losses, some
exceeding 70% in dollar terms.
In this trying environment, the Fund's shares returned a disappointing -41.11%
over the 12-month period ended December 31, 1997. The Morgan Stanley Capital
International (MSCI) Pacific ex-Japan Index(2) returned -30.75% over the same
period.
The Fund was quite heavily weighted in emerging mid cap stocks, especially in
Malaysia and the Philippines, in late 1996. As economic conditions began to
deteriorate in Southeast Asia through the first half of 1997, the earnings
potential of many of these companies shrank dramatically. This happened for two
main reasons: (1) some of the large projects in which these companies were to
participate were postponed or canceled altogether; (2) the companies were unable
to access the capital required to sustain their growth. Unfortunately, we did
not sell off our holdings in these companies early enough to avoid negative
effects as events unfolded.
MARKET REVIEW
Concerns about political, economic and currency stability in Indonesia led us to
eliminate our holdings there, while also reducing our position in the
Philippines. Similarly, against a bleak corporate earnings outlook, a general
disregard for shareholder rights and ongoing payment problems, we eliminated our
position in South Korea. We also continued to avoid Thailand as we await
structural problems to be addressed sufficiently. In Malaysia, although we
sharply reduced our position, we held a 4.7% weighting at December 31, 1997, on
the expectation of corporate restructuring.
In contrast, we increased our holdings in Singapore and, to a lesser degree, in
New Zealand and India. Singapore is home to a number of attractive banks and
electronic stocks, and we remain convinced that Singapore's contract
manufacturers should continue to gain global market share. As of December 31,
1997, our largest holding in Singapore was the Overseas-Chinese Banking Corp.,
representing 2.9% of the Fund's net assets. In New Zealand, we have been looking
for corporate profits to recover at a time when equity valuations are low. We
think the positive outlook for bonds in general could provide support to the
stock market.
OUTLOOK
While we believe conditions are likely to remain volatile, we expect 1998 and
1999 to see good returns from certain companies with good fundamentals and whose
valuations have been pulled down in the overall market carnage. In particular,
we believe Asian exporters and companies with positive net cash flow from
non-tradable goods sectors, such as power utilities, and other recurrent income
streams may enjoy stronger share prices. We currently anticipate these types of
companies to remain the focus of our stock selection.
Along these lines, we have identified key, positive themes: companies in Hong
Kong and China benefiting from the economic upswing in China; companies that
survive and gain market share as a result of the current Asian turmoil,
particularly because there are plenty of companies losing market share; and
disinflationary growth in Australia and India.
Elsewhere in Asia, we have recently seen some signs of improvement. South Korea
reached an agreement with international banks to roll over US$25 billion in
short-term debt and has seemingly persuaded its labor unions to accept
retrenchment. Thailand abolished its two-tier currency system, and Malaysia is
making strides toward corporate restructuring to capitalize its banking system.
Indonesia, on the other hand, remains an uncertainty as it reviews the
possibility of a currency peg similar to the one governing U.S./Hong Kong
dollar. Although we believe it could be very difficult to implement successfully
without a strong banking system supported by local confidence, we will monitor
this key area over the near term.
PERFORMANCE SUMMARY
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
GT GLOBAL VARIABLE NEW PACIFIC MSCI PACIFIC EX-JAPAN
<S> <C> <C>
2/10/93 $ 10,000 $ 10,000
2/28/93 $ 10,008 $ 10,540
3/31/93 $ 10,308 $ 10,719
4/30/93 $ 10,833 $ 11,268
5/31/93 $ 11,258 $ 11,700
6/30/93 $ 10,892 $ 11,345
7/31/93 $ 11,308 $ 11,746
8/31/93 $ 11,692 $ 12,633
9/30/93 $ 11,808 $ 12,877
10/31/93 $ 12,425 $ 14,960
11/30/93 $ 11,992 $ 14,513
12/31/93 $ 13,392 $ 17,527
1/31/94 $ 13,425 $ 17,046
2/28/94 $ 12,900 $ 16,216
3/31/94 $ 11,808 $ 14,494
4/30/94 $ 12,174 $ 15,167
5/31/94 $ 12,417 $ 15,668
6/30/94 $ 11,990 $ 14,974
7/31/94 $ 12,425 $ 15,763
8/31/94 $ 13,262 $ 16,822
9/30/94 $ 13,019 $ 16,381
10/31/94 $ 12,960 $ 16,645
11/30/94 $ 11,940 $ 15,311
12/31/94 $ 11,722 $ 15,075
1/31/95 $ 10,526 $ 13,774
2/28/95 $ 10,818 $ 15,061
3/31/95 $ 10,869 $ 15,219
4/30/95 $ 11,028 $ 15,421
5/31/95 $ 11,638 $ 16,468
6/30/95 $ 11,655 $ 16,157
7/31/95 $ 12,226 $ 16,824
8/31/95 $ 11,773 $ 16,379
9/30/95 $ 11,714 $ 16,590
10/31/95 $ 11,319 $ 16,298
11/30/95 $ 11,134 $ 16,443
12/31/95 $ 11,697 $ 17,090
1/31/96 $ 13,025 $ 18,226
2/29/96 $ 13,008 $ 18,503
3/31/96 $ 12,941 $ 18,744
4/30/96 $ 13,630 $ 19,261
5/31/96 $ 14,269 $ 19,069
6/30/96 $ 13,875 $ 18,714
7/31/96 $ 13,467 $ 17,776
8/31/96 $ 14,232 $ 18,576
9/30/96 $ 14,351 $ 19,056
10/31/96 $ 14,461 $ 19,579
11/30/96 $ 15,295 $ 20,629
12/31/96 $ 15,320 $ 20,674
1/31/97 $ 15,609 $ 20,431
2/28/97 $ 16,051 $ 20,726
3/31/97 $ 14,946 $ 19,769
4/30/97 $ 14,138 $ 19,368
5/31/97 $ 15,031 $ 20,578
6/30/97 $ 15,090 $ 21,033
7/31/97 $ 15,271 $ 20,982
8/31/97 $ 12,807 $ 18,075
9/30/97 $ 12,996 $ 18,696
10/31/97 $ 9,580 $ 14,734
11/30/97 $ 9,168 $ 14,274
12/31/97 $ 9,022 $ 14,316
</TABLE>
The chart above shows the performance of the Fund since inception compared to
the MSCI Pacific ex-Japan Index for the same period. It assumes a hypothetical
$10,000 initial investment in the Fund and reflects all Fund expenses but not
charges and expenses of the separate account. Past performance is no guarantee
of future results.
(1) On July 5, 1994, the Fund eliminated Japan from its primary investment area.
(2) The MSCI Pacific ex-Japan Index is a market-value weighted average of the
performance of 214 securities listed on five major Pacific Rim stock
exchanges. It includes the effect of reinvested dividends and is measured in
U.S. dollars.
Indices are unmanaged, not available for direct investment and do not include
the effect of sales charges and professional management fees.
11
<PAGE>
GT GLOBAL
VARIABLE EUROPE FUND
TOTAL RETURNS THROUGH DECEMBER 31, 1997
Inception date: February 10, 1993
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
DIVISION PERFORMANCE
AVERAGE WITHOUT WITH APPLICABLE
ANNUALIZED SURRENDER CHARGE SURRENDER CHARGE
<S> <C> <C>
1 Year 13.56% 6.56%
Life of Fund 14.56% 14.29%
Fund Performance
Average Annualized
1 Year 15.15%
Life of Fund 16.26%
</TABLE>
PERFORMANCE
Overall, European markets enjoyed a strong year, although returns over the
second half of the year were considerably more mixed. Against this backdrop, the
Fund returned a total of 15.15%. The Morgan Stanley Capital International (MSCI)
Europe Index(1) returned 24.20% over the same period.
During the course of 1997, a "nifty 10" phenomena was apparent in European
markets, where the stocks of the 10 largest companies contributed to a majority
of the markets' positive performance. And, as overall market performance was
generally driven by large index constituents, the Fund's bias toward mid cap
growth companies caused it to underperform its benchmark.
In terms of stocks, Gucci was a large underperformer for the Fund due to
concerns about the impact of a weak yen on Japanese spending and their demand
for Gucci's luxury products. We believe, however, that the long-term prospects
for the company -- which has retained a high level of profitability and is still
growing its brand globally -- continue to be sound. Other disappointments
included Castorama, the do-it-yourself home repair tools, materials and
equipment chain, and Premier Farnell,(2) the electrical distributor. Both were
negatively impacted by weak European growth.
MARKET REVIEW
In the past year, merger and acquisition activity was a dominant theme for
European markets and a key driver of returns. Two of three large Swiss banks,
for example, combined to form United Bank of Switzerland (UBS), now the largest
global asset manager and the leading European investment bank. Where costs
overlap and the potential to strengthen competitive positions exists, we believe
these deals stand to enhance returns to shareholders. We currently hold shares
of Swiss Bank Corp., and estimate that over 20% cost savings are likely to be
achieved as a result of the consolidation with UBS.
Markets also focused on European Monetary Union. This possibility was priced
into bond and equity markets in 1997, as yields in peripheral countries such as
Spain converged with German levels.
OUTLOOK
We feel the Fund is well positioned to take advantage of opportunities in the
European marketplace over the coming year. Currently, the Fund is concentrated
in companies with visible earnings growth and those we believe have the ability
to rerate substantially against their global peers.
We believe consolidation and restructuring will continue to be key themes for
Europe, a very fragmented marketplace with few companies ranking highly within
their global industries.
Industries still exist that yield very low returns in Europe compared to their
U.S. peers, specifically, banks, food and drinks producers and insurers. We find
many of these companies attractive because they tend to have managements
committed to improving returns with few structural impediments. Toward the end
of the year we purchased BNP, the French retail and corporate banking group,
which has low but improving profitability. French bank valuations are at low
levels, reflecting historically low levels of profitability. The entire
French-quoted banking sector is only valued at 1.0% of the MSCI Europe Index,
which compares to 1.5% for Lloyds TSB, the most profitable retail franchise in
the UK market. Overall, we believe European markets will continue to provide
attractive returns over the next year boosted by consolidation and increasing
emphasis on the creation of shareholder value.
PERFORMANCE SUMMARY
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
GT GLOBAL VARIABLE EUROPE MSCI EUROPE
<S> <C> <C>
2/10/93 $ 10,000 $ 10,000
2/28/93 $ 10,008 $ 10,164
3/31/93 $ 10,133 $ 10,690
4/30/93 $ 10,525 $ 10,930
5/31/93 $ 10,858 $ 11,051
6/30/93 $ 10,842 $ 10,893
7/31/93 $ 11,183 $ 10,934
8/31/93 $ 11,875 $ 11,897
9/30/93 $ 11,958 $ 11,864
10/31/93 $ 12,400 $ 12,362
11/30/93 $ 12,075 $ 12,099
12/31/93 $ 12,775 $ 13,011
1/31/94 $ 13,708 $ 13,677
2/28/94 $ 13,158 $ 13,196
3/31/94 $ 12,758 $ 12,826
4/30/94 $ 13,083 $ 13,361
5/31/94 $ 12,557 $ 12,798
6/30/94 $ 12,399 $ 12,667
7/31/94 $ 12,950 $ 13,335
8/31/94 $ 13,225 $ 13,763
9/30/94 $ 12,891 $ 13,221
10/31/94 $ 13,292 $ 13,802
11/30/94 $ 12,674 $ 13,277
12/31/94 $ 12,699 $ 13,357
1/31/95 $ 12,457 $ 13,257
2/28/95 $ 12,290 $ 13,562
3/31/95 $ 11,907 $ 14,197
4/30/95 $ 12,466 $ 14,656
5/31/95 $ 12,783 $ 14,961
6/30/95 $ 13,033 $ 15,107
7/31/95 $ 13,598 $ 15,900
8/31/95 $ 13,362 $ 15,291
9/30/95 $ 13,842 $ 15,758
10/31/95 $ 13,673 $ 15,689
11/30/95 $ 13,699 $ 15,806
12/31/95 $ 13,926 $ 16,313
1/31/96 $ 14,264 $ 16,425
2/29/96 $ 14,904 $ 16,730
3/31/96 $ 15,621 $ 16,936
4/30/96 $ 16,211 $ 17,064
5/31/96 $ 16,573 $ 17,201
6/30/96 $ 16,916 $ 17,397
7/31/96 $ 16,074 $ 17,185
8/31/96 $ 16,899 $ 17,701
9/30/96 $ 16,924 $ 18,079
10/31/96 $ 17,187 $ 18,505
11/30/96 $ 17,833 $ 19,449
12/31/96 $ 18,139 $ 19,831
1/31/97 $ 18,453 $ 19,891
2/28/97 $ 18,768 $ 20,159
3/31/97 $ 19,116 $ 20,817
4/30/97 $ 18,564 $ 20,719
5/31/97 $ 18,972 $ 21,610
6/30/97 $ 20,144 $ 22,697
7/31/97 $ 20,515 $ 23,766
8/31/97 $ 19,226 $ 22,414
9/30/97 $ 20,923 $ 24,594
10/31/97 $ 20,135 $ 23,391
11/30/97 $ 20,274 $ 23,756
12/31/97 $ 20,886 $ 24,630
</TABLE>
The chart above shows the performance of the Fund since inception compared to
the MSCI Europe Index for the same period. It assumes a hypothetical $10,000
initial investment in the Fund and reflects all Fund expenses but not charges
and expenses of the separate account. Past performance is no guarantee of future
results.
(1) The MSCI Europe Index is a market value-weighted average of the performance
of 566 securities listed on 14 major European stock exchanges. It includes
the effect of reinvested dividends and is measured in U.S. dollars.
(2) Premier Farnell and Castorama were sold prior to December 31, 1997.
Indices are unmanaged, not available for direct investment and do not include
the effects of sales charges and professional management fees.
12
<PAGE>
GT GLOBAL
MONEY MARKET FUND
PERFORMANCE
The Fund's total return for the 12 months ended December 31, 1997, was 4.96%. As
of December 31, the Fund's SEC seven-day yield was 3.33%. Because the Fund
invests only in short-term debt obligations with remaining maturities of 13
months or less, its performance generally reflects the level of short-term
interest rates. Please bear in mind that an investment in the Fund is neither
insured nor guaranteed by the U.S. government and that there can be no assurance
that the Fund will be able to maintain a stable net asset value of $1.00 per
share.
MARKET REVIEW
The U.S. bond market produced excellent returns in 1997. After a 25-basis point
increase in the Federal funds rate in March, the market began an upswing in the
second quarter that lasted throughout the last three quarters of the year. In
addition, interest rates fell after it became clear that the benign economic
environment in the U.S. would forestall additional interest rate increases by
the Federal Reserve (the Fed) in 1997.
In total, 1997 produced the lowest rates of U.S. inflation in decades, while the
economy enjoyed continued steady growth. That combination, along with a stable
dollar, beckoned global investors in the fourth quarter. In addition, yields on
money market instruments have been fairly stable throughout the period and the
90-day Treasury bill yield ended the year about 18 basis points higher than it
began, at 5.35%.
OUTLOOK
We believe the overall environment for fixed income markets should continue to
be attractive in 1998. Short-term rates have remained in a narrow range for some
time, and we feel the economic environment augurs well for continued stability.
We concur with Federal Reserve Chairman Greenspan's recent comments that the
effects of the Asian crisis have not yet fully impacted U.S. markets. We expect
weakness in Asia to moderate economic growth somewhat, but believe its potential
negative effect on U.S. profits and growth in 1998 could be counterbalanced by
its positive effect on inflation and interest rates.
Additionally, we see reasonable potential for further declines in interest
rates. Inflation is at its lowest level in over 40 years, and productivity is
strong -- all positive cost factors we think will support U.S. profitability
even as product pricing remains under pressure. This environment (a new one for
investors) may necessitate a shift in policy stance by the Fed, whereby, instead
of constantly fighting inflation, they must also be concerned with deflation.
Our concerns about Fed tightening have been virtually erased, and we feel the
potential grows that the Fed may soon lower interest rates. In keeping with our
outlook, the average maturity of holdings in the Fund has been increased
moderately while still maintaining a high degree of liquidity for investors.
13
<PAGE>
GT GLOBAL
VARIABLE INTERNATIONAL FUND
TOTAL RETURNS THROUGH DECEMBER 31, 1997
Inception date: July 5, 1994
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
DIVISION PERFORMANCE
AVERAGE WITHOUT WITH APPLICABLE
ANNUALIZED SURRENDER CHARGE SURRENDER CHARGE
<S> <C> <C>
1 Year 5.44% -1.56%
Life of Fund 0.81% -0.33%
Fund Performance
Average Annualized
1 Year 6.93%
Life of Fund 2.25%
</TABLE>
PERFORMANCE
Concern over the likely scope of Asian weakness had a chilling impact on
worldwide equity markets in the fourth quarter. Taking into account this
difficult environment, the Fund returned 6.93% for the 12 months to December 31,
1997. During the same period, the Morgan Stanley Capital International Europe,
Australia, Far East (MSCI-EAFE) Index(1) returned 2.06%.
Although global equity markets were considerably more volatile in 1997, during
this period the Fund outperformed the index. The Fund's overweighting to several
continental European countries -- Sweden, Norway and Italy, in particular --
contributed positively to performance. Most continental bourses continued to
advance, thanks to a rally in bond markets and low inflation. We were also
significantly underweighted in Japan, relative to the index. We invested
cautiously in this difficult market and benefited from security selection there.
Similarly, the Fund was buoyed by holdings in Brazil, Mexico and Portugal
(Brazil and Mexico are not represented in the index while the index held a small
allocation to Portugal). These markets posted solid returns for the year,
although they were tempered in the final few months.
MARKET REVIEW
European markets enjoyed another strong year in 1997 as the interest rate
background continued to be supportive and inflation moderate. At the same time,
corporate earnings have remained healthy. Meanwhile, the possibility of monetary
union going forward in May 1998 was priced into bond and equity markets in 1997,
as bond yields fell in peripheral countries such as Spain to converge with
German levels.
Conditions in Japan, on the other hand, continued to be difficult in 1997. For
the first six months, optimism over the prospects for Japan, even after the
April rise in the consumption tax from 3% to 5%, fueled market gains. In
contrast, the second half of 1997 was marked by a
sharp deterioration in the Japanese economy and domestic sentiment was reversed
as many investors began to realize that long term fundamental structural
problems were not being addressed sufficiently.
Despite our positive outlook, the second half of the year was disappointing for
investors in both Australia and New Zealand. A downturn in share prices
transpired because many experts felt prospects for economic and corporate
earnings growth would be constrained by the financial crises in Asia. Weaker
commodity prices also contributed.
OUTLOOK
We feel the portfolio is well positioned to take advantage of opportunities in
the European marketplace over the coming year. We believe European markets will
continue to provide attractive returns boosted by consolidation and increasing
emphasis on the creation of shareholder value. Currently, the Fund is
concentrated in companies with visible earnings growth and those we believe have
the ability to rerate substantially against their global peers.
In Latin America, we have investments in Brazil and Mexico. While both markets
were not immune to the Asian turmoil, Brazil, in particular, suffered as
volatility in Southeast Asian currency markets intensified concerns about
overvaluation of the real. Renewed momentum of the reform process and
privatization, however, are seemingly back on track and we feel the state sector
continues to be compelling. Mexico, on the other hand, has been the least
affected of all the Latin American markets. Moreover, with the U.S. as its
largest trading partner (nearly 85% of exports are bound for the U.S.), we
expect Mexico to continue to benefit from steady, relatively low inflationary
growth in the U.S.
Conversely, as we enter 1998, we believe Asian recovery will take time and its
stock markets are likely to remain extremely volatile. At present, we anticipate
maintaining our Hong Kong presence and will continue to invest elsewhere on a
very selective basis.
PERFORMANCE SUMMARY
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
GT GLOBAL VARIABLE INTERNATIONAL MSCI EAFE
<S> <C> <C>
7/5/94 $ 10,000 $ 10,000
7/31/94 $ 10,025 $ 10,045
8/31/94 $ 10,217 $ 10,285
9/30/94 $ 9,800 $ 9,963
10/31/94 $ 10,083 $ 10,297
11/30/94 $ 9,625 $ 9,805
12/31/94 $ 9,420 $ 9,868
1/31/95 $ 8,817 $ 9,492
2/28/95 $ 8,599 $ 9,467
3/31/95 $ 8,557 $ 10,060
4/30/95 $ 8,792 $ 10,441
5/31/95 $ 8,750 $ 10,319
6/30/95 $ 8,913 $ 10,141
7/31/95 $ 9,374 $ 10,775
8/31/95 $ 9,240 $ 10,367
9/30/95 $ 9,391 $ 10,572
10/31/95 $ 9,081 $ 10,290
11/30/95 $ 9,089 $ 10,579
12/31/95 $ 9,313 $ 11,008
1/31/96 $ 9,456 $ 11,056
2/29/96 $ 9,473 $ 11,096
3/31/96 $ 9,600 $ 11,335
4/30/96 $ 9,795 $ 11,667
5/31/96 $ 9,795 $ 11,455
6/30/96 $ 9,843 $ 11,522
7/31/96 $ 9,325 $ 11,188
8/31/96 $ 9,546 $ 11,216
9/30/96 $ 9,707 $ 11,517
10/31/96 $ 9,673 $ 11,402
11/30/96 $ 10,072 $ 11,858
12/31/96 $ 10,106 $ 11,708
1/31/97 $ 10,080 $ 11,301
2/28/97 $ 10,106 $ 11,489
3/31/97 $ 10,199 $ 11,533
4/30/97 $ 10,267 $ 11,597
5/31/97 $ 10,581 $ 12,355
6/30/97 $ 10,925 $ 13,039
7/31/97 $ 11,112 $ 13,253
8/31/97 $ 10,551 $ 12,266
9/30/97 $ 11,299 $ 12,956
10/31/97 $ 10,475 $ 11,963
11/30/97 $ 10,466 $ 11,843
12/31/97 $ 10,806 $ 11,949
</TABLE>
The chart above shows the performance of the Fund since inception compared to
the MSCI-EAFE Index for the same period. It assumes a hypothetical $10,000
initial investment in the Fund and reflects all Fund expenses but not charges
and expenses of the separate account. Past performance is no guarantee of future
results.
(1) The MSCI-EAFE is a market value-weighted average of the performance of 1,086
securities listed on 20 major world stock exchanges. It includes the effect
of reinvested dividends and is measured in U.S. dollars.
Indices are unmanaged, not available for direct investment and do not include
the effects of sales charges and professional management fees.
14
<PAGE>
GT GLOBAL
ALLOCATOR
DIVISIONS'
FINANCIAL
STATEMENTS
<PAGE>
SECURITY EQUITY SEPARATE ACCOUNT TWENTY-SIX AND
SECURITY EQUITY SEPARATE ACCOUNT TWENTY-SEVEN
INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------
The Board of Directors
Security Equity Life Insurance Company
and Contractholders of Security Equity Separate Account Twenty-six
and Separate Account Twenty-seven:
We have audited the statements of assets and liabilities, including the schedule
of investments, of the Money Market, Variable Strategic Income, and Variable
U.S. Government Income Divisions of Security Equity Separate Account Twenty-six
and of the Variable New Pacific, Variable Europe, Variable America, Variable
Growth & Income, Variable Latin America, Variable Telecommunications, Variable
International, Variable Emerging Markets, Variable Natural Resources, and
Variable Infrastructure Divisions of Security Equity Separate Account
Twenty-seven as of December 31, 1997, and the related statements of operations
for the year then ended, changes in net assets for each of the years in the
two-year period then ended, and the condensed financial information for the
periods presented. These financial statements and condensed financial
information are the responsibility of the management of Security Equity Separate
Accounts Twenty-six and Twenty-seven. Our responsibility is to express an
opinion on these financial statements, and condensed financial information 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 condensed
financial information 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 investments
owned as of December 31, 1997 by correspondence with GT Global Variable
Investment Funds. 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 condensed financial information
referred to above present fairly, in all material respects, the financial
position of the Money Market, Variable Strategic Income, and Variable U.S.
Government Income Divisions of Security Equity Separate Account Twenty-six and
of the Variable New Pacific, Variable Europe, Variable America, Variable Growth
& Income, Variable Latin America, Variable Telecommunications, Variable
International, Variable Emerging Markets, Variable Natural Resources, and
Variable Infrastructure Divisions of Security Equity Separate Account
Twenty-seven as of December 31, 1997, the results of their operations for the
year then ended, the changes in their net assets for each of the years in the
two-year period then ended, and the condensed financial information for the
periods presented, in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
ST. LOUIS, MISSOURI
FEBRUARY 12, 1998
D1
<PAGE>
(THIS PAGE INTENTIONALLY LEFT BLANK)
D2
<PAGE>
SECURITY EQUITY SEPARATE ACCOUNT TWENTY-SIX
STATEMENTS OF ASSETS
AND LIABILITIES
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VARIABLE
VARIABLE U.S.
MONEY STRATEGIC GOVERNMENT
MARKET INCOME INCOME
DIVISION DIVISION DIVISION
--------- --------- -----------
<S> <C> <C> <C>
Assets:
Investments in GT Global Variable
Investment Funds, at market value
(see Schedule of Investments)........ $ 228,914 $ 645,459 $ 32,120
Receivable from Security Equity Life
Insurance Company.................... 0 10,499 0
Receivable from GT Global Financial
Services............................. 815 0 0
--------- --------- -----------
Total assets........................ 229,729 655,958 32,120
--------- --------- -----------
Liability:
Payable to Security Equity Life
Insurance Company.................... 38,058 0 112
--------- --------- -----------
Total net assets.................... $ 191,671 $ 655,958 $ 32,008
--------- --------- -----------
--------- --------- -----------
Total net assets represented by:
Individual variable annuity contracts
cash value invested in Separate
Account.............................. $ 191,671 $ 655,958 $ 32,008
--------- --------- -----------
--------- --------- -----------
Total individual units held............. 15,631 44,913 2,518
Accumulation unit value................. $ 12.26 $ 14.61 $ 12.71
Cost of investments..................... $ 228,914 $ 650,310 $ 31,068
</TABLE>
See accompanying notes to the financial statements.
D3
<PAGE>
SECURITY EQUITY SEPARATE ACCOUNT TWENTY-SIX
STATEMENTS OF OPERATIONS
For the period ended December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VARIABLE
VARIABLE U.S.
MONEY STRATEGIC GOVERNMENT
MARKET INCOME INCOME
DIVISION DIVISION DIVISION *
--------- ----------- -----------
<S> <C> <C> <C>
Investment income:
Dividend income....................... $ 6,207 $ 33,037 $ 1,039
Expenses:
Mortality, expense and administrative
charges.............................. (1,819) (6,417) (270)
--------- ----------- -----------
Net investment income................. 4,388 26,620 769
--------- ----------- -----------
Net realized gain on investments:
Realized gain on sales................ 0 23,729 186
--------- ----------- -----------
Net realized gain on investments...... 0 23,729 186
--------- ----------- -----------
Net unrealized gain (loss) on
investments:
Unrealized gain on investments,
beginning of period.................. 0 9,046 0
Unrealized gain (loss) on investments,
end of period........................ 0 (4,851) 1,053
--------- ----------- -----------
Net unrealized gain (loss) on
investments.......................... 0 (13,897) 1,053
--------- ----------- -----------
Net gain on investments............... 0 9,832 1,239
--------- ----------- -----------
Net increase in net assets resulting
from operations...................... $ 4,388 $ 36,452 $ 2,008
--------- ----------- -----------
--------- ----------- -----------
</TABLE>
- ----------------
* The Variable U.S. Government Income Division commenced operations June
4, 1997.
See accompanying notes to the financial statements.
D4
<PAGE>
SECURITY EQUITY SEPARATE ACCOUNT TWENTY-SIX
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
For the periods ended December 31, 1997 and 1996
<TABLE>
<CAPTION>
VARIABLE
U.S.
GOVERNMENT
MONEY MARKET STRATEGIC INCOME INCOME
DIVISION * DIVISION ** DIVISION***
-------------------- -------------------- -----------
1997 1996 1997 1996 1997
--------- --------- --------- --------- -----------
<S> <C> <C> <C> <C> <C>
Operations:
Net investment income................................................. $ 4,388 $ 1,398 $ 26,620 $ 3,271 $ 769
Net realized gain on investments...................................... 0 0 23,729 14 186
Net unrealized gain (loss) on investments............................. 0 0 (13,897) 9,046 1,053
--------- --------- --------- --------- -----------
Net increase in net assets resulting from operations................ 4,388 1,398 36,452 12,331 2,008
--------- --------- --------- --------- -----------
Deposits into Separate Account........................................ 145,058 8,500 25,039 108,470 0
Transfers into (from) Separate Account................................ 43,617 (9,898) 495,534 2,126 30,000
Withdrawals from Separate Account..................................... (1,392) 0 (2,104) (21,890) 0
--------- --------- --------- --------- -----------
Net deposits into (withdrawals from) Separate Account............... 187,283 (1,398) 518,469 88,706 30,000
--------- --------- --------- --------- -----------
Increase in net assets................................................ 191,671 0 554,921 101,037 32,008
Net assets, beginning of period....................................... 0 0 101,037 0 0
--------- --------- --------- --------- -----------
Net assets, end of period............................................. $ 191,671 $ 0 $ 655,958 $ 101,037 $ 32,008
--------- --------- --------- --------- -----------
--------- --------- --------- --------- -----------
<FN>
- ----------------
* The Money Market Division commenced operations July 26, 1996.
** The Variable Strategic Income Division commenced operations January 30,
1996.
*** The Variable U.S. Government Income Division commenced operations June 4,
1997.
</TABLE>
See accompanying notes to the financial statements.
D5
<PAGE>
SECURITY EQUITY SEPARATE ACCOUNT TWENTY-SEVEN
STATEMENTS OF ASSETS
AND LIABILITIES
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VARIABLE VARIABLE VARIABLE
NEW PACIFIC EUROPE AMERICA
DIVISION DIVISION DIVISION
----------- --------- --------
<S> <C> <C> <C>
Assets:
Investments in GT Global Variable
Investment Funds, at market value
(see Schedule of Investments)........ $ 259,774 $ 142,709 $ 94,360
Receivable from Security Equity Life
Insurance Company.................... 0 0 0
----------- --------- --------
Total assets........................ 259,774 142,709 94,360
----------- --------- --------
Liability:
Payable to Security Equity Life
Insurance Company.................... 837 503 515
----------- --------- --------
Total net assets.................... $ 258,937 $ 142,206 $ 93,845
----------- --------- --------
----------- --------- --------
Total net assets represented by:
Individual variable annuity contracts
cash value invested in Separate
Account.............................. $ 258,937 $ 142,206 $ 93,845
----------- --------- --------
----------- --------- --------
Total individual units held............. 28,896 8,163 6,419
Accumulation unit value................. $ 8.96 $ 17.42 $ 14.62
Cost of investments..................... $ 316,319 $ 138,192 $ 93,576
</TABLE>
See accompanying notes to the financial statements.
D6
<PAGE>
SECURITY EQUITY SEPARATE ACCOUNT TWENTY-SEVEN
STATEMENTS OF ASSETS
AND LIABILITIES (cont'd)
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VARIABLE VARIABLE VARIABLE VARIABLE
GROWTH & VARIABLE TELECOM- VARIABLE EMERGING NATURAL
INCOME LATIN AMERICA MUNICATIONS INTERNATIONAL MARKETS RESOURCES
DIVISION DIVISION DIVISION DIVISION DIVISION DIVISION
------------ ------------- ----------- ------------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments in GT Global Variable
Investment Funds, at market value
(see Schedule of Investments)........ $ 29,472 $ 200,394 $ 557,154 $ 64,443 $33,345 $ 92,197
Receivable from Security Equity Life
Insurance Company.................... 0 0 0 0 25,046 0
------------ ------------- ----------- ------------- -------- ---------
Total assets........................ 29,472 200,394 557,154 64,443 58,391 92,197
------------ ------------- ----------- ------------- -------- ---------
Liability:
Payable to Security Equity Life
Insurance Company.................... 103 375 1,967 227 0 325
------------ ------------- ----------- ------------- -------- ---------
Total net assets.................... $ 29,369 $ 200,019 $ 555,187 $ 64,216 $58,391 $ 91,872
------------ ------------- ----------- ------------- -------- ---------
------------ ------------- ----------- ------------- -------- ---------
Total net assets represented by:
Individual variable annuity contracts
cash value invested in Separate
Account.............................. $ 29,369 $ 200,019 $ 555,187 $ 64,216 $58,391 $ 91,872
------------ ------------- ----------- ------------- -------- ---------
------------ ------------- ----------- ------------- -------- ---------
Total individual units held............. 2,116 13,385 37,030 4,879 5,161 6,760
Accumulation unit value................. $ 13.88 $ 14.94 $ 14.99 $ 13.16 $ 11.31 $ 13.59
Cost of investments..................... $ 26,553 $ 195,228 $ 562,466 $ 59,677 $44,707 $ 97,582
<CAPTION>
VARIABLE
INFRASTRUCTURE
DIVISION
--------------
<S> <C>
Assets:
Investments in GT Global Variable
Investment Funds, at market value
(see Schedule of Investments)........ $ 10,360
Receivable from Security Equity Life
Insurance Company.................... 0
--------------
Total assets........................ 10,360
--------------
Liability:
Payable to Security Equity Life
Insurance Company.................... 36
--------------
Total net assets.................... $ 10,324
--------------
--------------
Total net assets represented by:
Individual variable annuity contracts
cash value invested in Separate
Account.............................. $ 10,324
--------------
--------------
Total individual units held............. 780
Accumulation unit value................. $ 13.24
Cost of investments..................... $ 10,859
</TABLE>
See accompanying notes to the financial statements.
D7
<PAGE>
SECURITY EQUITY SEPARATE ACCOUNT TWENTY-SEVEN
STATEMENTS OF OPERATIONS
For the period ended December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VARIABLE VARIABLE VARIABLE
NEW PACIFIC EUROPE AMERICA
DIVISION DIVISION DIVISION
----------- ----------- -----------
<S> <C> <C> <C>
Investment income:
Dividend income....................... $ 3,507 $ 321 $ 195
Expenses:
Mortality, expense and administrative
charges.............................. (6,842) (1,902) (1,251)
----------- ----------- -----------
Net investment income (loss)............ (3,335) (1,581) (1,056)
----------- ----------- -----------
Net realized gain on investments:
Realized gain from distributions...... 2,769 11,185 1,436
Realized gain (loss) on sales......... (108,996) 13,386 6,016
----------- ----------- -----------
Net realized gain (loss) on
investments........................ (106,227) 24,571 7,452
----------- ----------- -----------
Net unrealized gain (loss) on
investments:
Unrealized gain (loss) on investments,
beginning of period.................. 48,545 8,201 (66)
Unrealized gain (loss) on investments,
end of period........................ (56,545) 4,517 783
----------- ----------- -----------
Net unrealized gain (loss) on
investments........................ (105,090) (3,684) 849
----------- ----------- -----------
Net gain (loss) on investments...... (211,317) 20,887 8,301
----------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations.............. $(214,652) $ 19,306 $ 7,245
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
- ----------------
* The Variable Growth & Income Division commenced operations April 8,
1997.
See accompanying notes to the financial statements.
D8
<PAGE>
SECURITY EQUITY SEPARATE ACCOUNT TWENTY-SEVEN
STATEMENTS OF OPERATIONS (cont'd)
For the period ended December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VARIABLE VARIABLE VARIABLE VARIABLE
GROWTH & VARIABLE TELECOM- VARIABLE EMERGING NATURAL
INCOME LATIN AMERICA MUNICATIONS INTERNATIONAL MARKETS RESOURCES
DIVISION * DIVISION DIVISION DIVISION DIVISION DIVISION
----------- ------------- ----------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Dividend income....................... $ 650 $ 0 $ 0 $ 80 $ 158 $ 0
Expenses:
Mortality, expense and administrative
charges.............................. (268) (3,220) (7,287) (773) (663) (1,108)
----------- ------------- ----------- ------------- ----------- -----------
Net investment income (loss)............ 382 (3,220) (7,287) (693) (505) (1,108)
----------- ------------- ----------- ------------- ----------- -----------
Net realized gain on investments:
Realized gain from distributions...... 54 0 62,148 0 2,479 3,662
Realized gain (loss) on sales......... 14 717 908 128 5,855 (70)
----------- ------------- ----------- ------------- ----------- -----------
Net realized gain (loss) on
investments........................ 68 717 63,056 128 8,334 3,592
----------- ------------- ----------- ------------- ----------- -----------
Net unrealized gain (loss) on
investments:
Unrealized gain (loss) on investments,
beginning of period.................. 0 9,746 (13,796) 1,799 681 149
Unrealized gain (loss) on investments,
end of period........................ 2,919 5,166 (5,313) 4,766 (11,362) (5,384)
----------- ------------- ----------- ------------- ----------- -----------
Net unrealized gain (loss) on
investments........................ 2,919 (4,580) 8,483 2,967 (12,043) (5,533)
----------- ------------- ----------- ------------- ----------- -----------
Net gain (loss) on investments...... 2,987 (3,863) 71,539 3,095 (3,709) (1,941)
----------- ------------- ----------- ------------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations.............. $ 3,369 $ (7,083) $ 64,252 $ 2,402 $ (4,214) $ (3,049)
----------- ------------- ----------- ------------- ----------- -----------
----------- ------------- ----------- ------------- ----------- -----------
<CAPTION>
VARIABLE
INFRASTRUCTURE
DIVISION
---------------
<S> <C>
Investment income:
Dividend income....................... $ 56
Expenses:
Mortality, expense and administrative
charges.............................. (105)
-------
Net investment income (loss)............ (49)
-------
Net realized gain on investments:
Realized gain from distributions...... 514
Realized gain (loss) on sales......... 5
-------
Net realized gain (loss) on
investments........................ 519
-------
Net unrealized gain (loss) on
investments:
Unrealized gain (loss) on investments,
beginning of period.................. 76
Unrealized gain (loss) on investments,
end of period........................ (498)
-------
Net unrealized gain (loss) on
investments........................ (574)
-------
Net gain (loss) on investments...... (55)
-------
Net increase (decrease) in net assets
resulting from operations.............. $ (104)
-------
-------
</TABLE>
- ----------------
* The Variable Growth & Income Division commenced operations April 8,
1997.
See accompanying notes to the financial statements.
D9
<PAGE>
SECURITY EQUITY SEPARATE ACCOUNT TWENTY-SEVEN
STATEMENTS OF CHANGES IN NET ASSETS
For the periods ended December 31, 1997 and 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VARIABLE VARIABLE VARIABLE
NEW PACIFIC DIVISION EUROPE DIVISION * AMERICA DIVISION
-------------------- -------------------- --------------------
1997 1996 1997 1996 1997 1996
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Operations:
Net investment income (loss).......... $ (3,335) $ (25) $ (1,581) $ (362) $ (1,056) $ 10
Net realized gain (loss) on
investments.......................... (106,227) 38,523 24,571 39 7,452 2,430
Net unrealized gain (loss) on
investments.......................... (105,090) 48,539 (3,684) 8,201 849 391
--------- --------- --------- --------- --------- ---------
Net increase (decrease) in net
assets resulting from operations... (214,652) 87,037 19,306 7,878 7,245 2,831
--------- --------- --------- --------- --------- ---------
Deposits into Separate Account........ 322,717 856,376 97,213 58,056 9,078 22,561
Transfers into (from) Separate
Account.............................. (746,617) 3,519 (41,369) 2,126 50,662 0
Withdrawals from Separate Account..... (17,643) (39,770) (1,004) 0 (1,989) (2,060)
--------- --------- --------- --------- --------- ---------
Net deposits into (withdrawals from)
Separate Account................... (441,543) 820,125 54,840 60,182 57,751 20,501
--------- --------- --------- --------- --------- ---------
Increase (decrease) in net assets..... (656,195) 907,162 74,146 68,060 64,996 23,332
Net assets, beginning of period....... 915,132 7,970 68,060 0 28,849 5,517
--------- --------- --------- --------- --------- ---------
Net assets, end of period............. $ 258,937 $ 915,132 $ 142,206 $ 68,060 $ 93,845 $ 28,849
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
</TABLE>
<TABLE>
<CAPTION>
VARIABLE VARIABLE VARIABLE
EMERGING MARKETS NATURAL RESOURCES INFRASTRUCTURE
DIVISION * * DIVISION * * * * DIVISION * * * *
-------------------- -------------------- --------------------
1997 1996 1997 1996 1997 1996
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Operations:
Net investment income (loss).......... $ (505) $ (56) $ (1,108) $ (6) $ (49) $ (1)
Net realized gain (loss) on
investments.......................... 8,334 0 3,592 0 519 0
Net unrealized gain (loss) on
investments.......................... (12,043) 681 (5,533) 149 (574) 76
--------- --------- --------- --------- --------- ---------
Net increase (decrease) in net
assets resulting from operations... (4,214) 625 (3,049) 143 (104) 75
--------- --------- --------- --------- --------- ---------
Deposits into Separate Account........ 38,043 34,636 3,358 1,300 3,352 1,301
Transfers into (from) Separate
Account.............................. 11,719 2,126 90,120 0 5,700 0
Withdrawals from Separate Account..... (1,684) (22,860) 0 0 0 0
--------- --------- --------- --------- --------- ---------
Net deposits into (withdrawals from)
Separate Account................... 48,078 13,902 93,478 1,300 9,052 1,301
--------- --------- --------- --------- --------- ---------
Increase (decrease) in net assets..... 43,864 14,527 90,429 1,443 8,948 1,376
Net assets, beginning of period....... 14,527 0 1,443 0 1,376 0
--------- --------- --------- --------- --------- ---------
Net assets, end of period............. $ 58,391 $ 14,527 $ 91,872 $ 1,443 $ 10,324 $ 1,376
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
</TABLE>
- ----------------
* The Variable Europe division and the Variable Latin America Division
commenced operations January 30, 1996.
* * The Variable Emerging Markets Division commenced operations March 25,
1996.
* * * The Variable International Division commenced operations April 9,
1996.
* * * * The Variable Natural Resources Division and the Variable
Infrastructure Division commenced operations August 26, 1996.
* * * * * The Variable Growth & Income Division commenced operations April 8,
1997.
See accompanying notes to the financial statements.
D10
<PAGE>
SECURITY EQUITY SEPARATE ACCOUNT TWENTY-SEVEN
STATEMENTS OF CHANGES IN NET ASSETS (cont'd)
For the periods ended December 31, 1997 and 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VARIABLE VARIABLE VARIABLE VARIABLE
GROWTH & INCOME LATIN AMERICA TELECOMMUNICATIONS INTERNATIONAL
DIVISION * * * * * DIVISION * DIVISION DIVISION * * *
--------------- -------------------- -------------------- --------------------
1997 1997 1996 1997 1996 1997 1996
--------------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Operations:
Net investment income (loss).......... $ 382 $ (3,220) $ 408 $ (7,287) $ (3,005) $ (693) $ (390)
Net realized gain (loss) on
investments.......................... 68 717 47 63,056 27,064 128 120
Net unrealized gain (loss) on
investments.......................... 2,919 (4,580) 9,746 8,483 (13,458) 2,967 1,799
--------------- --------- --------- --------- --------- --------- ---------
Net increase (decrease) in net
assets resulting from operations... 3,369 (7,083) 10,201 64,252 10,601 2,402 1,529
--------------- --------- --------- --------- --------- --------- ---------
Deposits into Separate Account........ 16,000 66,495 110,075 74,000 450,796 12,347 39,574
Transfers into (from) Separate
Account.............................. 10,000 35,358 0 5,276 0 10,000 0
Withdrawals from Separate Account..... 0 (5,000) (10,027) (4,804) (50,570) (691) (945)
--------------- --------- --------- --------- --------- --------- ---------
Net deposits into (withdrawals from)
Separate Account................... 26,000 96,853 100,048 74,472 400,226 21,656 38,629
--------------- --------- --------- --------- --------- --------- ---------
Increase (decrease) in net assets..... 29,369 89,770 110,249 138,724 410,827 24,058 40,158
Net assets, beginning of period....... 0 110,249 0 416,463 5,636 40,158 0
--------------- --------- --------- --------- --------- --------- ---------
Net assets, end of period............. $ 29,369 $ 200,019 $ 110,249 $ 555,187 $ 416,463 $ 64,216 $ 40,158
--------------- --------- --------- --------- --------- --------- ---------
--------------- --------- --------- --------- --------- --------- ---------
</TABLE>
- ----------------
* The Variable Europe division and the Variable Latin America Division
commenced operations January 30, 1996.
* * The Variable Emerging Markets Division commenced operations March 25,
1996.
* * * The Variable International Division commenced operations April 9,
1996.
* * * * The Variable Natural Resources Division and the Variable
Infrastructure Division commenced operations August 26, 1996.
* * * * * The Variable Growth & Income Division commenced operations April 8,
1997.
See accompanying notes to the financial statements.
D11
<PAGE>
SECURITY EQUITY SEPARATE ACCOUNT TWENTY-SIX AND
SECURITY EQUITY SEPARATE ACCOUNT TWENTY-SEVEN
NOTES TO FINANCIAL STATEMENTS
December 31, 1997
- --------------------------------------------------------------------------------
NOTE 1 -- ORGANIZATION
Security Equity Separate Account Twenty-six commenced operations on January 30,
1996, and Security Equity Separate Account Twenty-seven commenced operations on
September 7, 1995. The Separate Accounts are registered under the Investment
Company Act of 1940 (1940 Act) as unit investment trusts. The Separate Accounts
receive purchase payments from individual variable annuity contracts issued by
Security Equity Life Insurance Company (Security Equity) which may be qualified
or non-tax qualified.
Separate Account Twenty-six is divided into four divisions and Separate Account
Twenty-seven is divided into ten divisions. Each Division invests exclusively in
shares of a single fund of GT Global Variable Investment Funds (the Funds), an
open-end diversified management investment company. Separate Account Twenty-six
has the ability to invest in the Money Market, Variable Strategic Income,
Variable Global Government Income, and Variable U.S. Government Income Funds.
Separate Account Twenty-seven has the ability to invest in the Variable New
Pacific, Variable Europe, Variable America, Variable Growth & Income, Variable
Latin America, Variable Telecommunications, Variable International, Variable
Emerging Markets, Variable Natural Resources and Variable Infrastructure Funds.
Contractholders have the option of directing their deposits into one or more of
the Divisions. The unit values for Separate Account Twenty-six began at $12.00
on January 30, 1996, for the Variable Strategic Income Division; on July 26,
1996, for the Money Market Division; and on June 4, 1997, for the Variable U.S.
Government Income Division. The unit values for Separate Account Twenty-seven
began at $12.00 on September 7, 1995, for the Variable New Pacific Division,
Variable America Division and the Variable Telecommunications Division; on
January 30, 1996, for the Variable Europe Division and Variable Latin America
Division; on March 25, 1996, for the Variable Emerging Markets Division; on
April 9, 1996, for the Variable International Division, on August 26, 1996, for
the Variable Natural Resources Division and the Variable Infrastructure
Division; and on April 8, 1997, for the Variable Growth & Income Division. As of
December 31, 1997, no deposits have been directed into the Variable Global
Government Income Division of Separate Account Twenty-six. As such, no financial
statements for this Division are included.
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by the
Separate Accounts in the preparation of financial statements. The policies
followed are in conformity with generally accepted accounting principles.
(A) INVESTMENTS
The Separate Accounts' investments in the GT Global Variable Funds are valued
daily on the respective shares held and based on the net asset values as
reported to Security Equity by the Funds at the close of each business day. The
specific identification method is used in determining the cost of shares sold on
withdrawals by the Separate Account. Share transactions are recorded on the
trade date which is generally consistent with the settlement date.
(B) FEDERAL INCOME TAXES
Under current Federal income tax law, the investment income and capital gains
from sales of investments of the Separate Accounts are not taxable. Therefore,
no Federal income tax expense has been provided.
(C) DIVIDEND REINVESTMENT
Dividends are recorded on the ex-dividend date and immediately reinvested on the
pay date.
(D) USE OF ESTIMATES
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 increase and decrease in net assets from operations
during the period. Actual results could differ from those estimates.
NOTE 3 -- CONTRACT CHARGES
MORTALITY AND EXPENSE RISK CHARGE: Security Equity assumes the mortality and
expense risks and provides certain administrative services related to operating
the Separate Accounts for which the Separate Accounts are charged an annual fee
of 1.25% based on the values at the end of each valuation period. Mortality and
expense charges for Separate Account Twenty-six totaled $7,594 for the period
ended December 31, 1997. Mortality and expense charges for Separate Account
Twenty-seven totaled $20,910 for the period ended December 31, 1997.
SURRENDER CHARGE (CONTINGENT DEFERRED SALES CHARGE): Under Separate Account
contractual arrangements, Security Equity is entitled to collect payment for
sales charges. Contracts are subject to a deferred sales charge contingent upon
surrender of the contract or a greater than 10% partial withdrawal of funds on
deposit. The sales charge is 7% the first contract year, decreasing by 1% each
subsequent year. The contingent deferred sales charge will be waived in the
event of annuitization after the third year or on death. Sales charges as a
result of surrenders are disclosed in Note 6.
ACCOUNT FEE AND ADMINISTRATIVE CHARGES: Security Equity has the responsibility
for the administration of the contract. As reimbursement for account
administrative expenses, on the last day of the contract year, Security Equity
deducts an account fee. For contracts with accumulated values less than $20,000,
the fee is the lesser of $30 or 2% of the accumulated value for contract years
ending prior to December 31, 1999. Thereafter, the account fee may be adjusted
annually. The account fee is waived for contracts with
D12
<PAGE>
SECURITY EQUITY SEPARATE ACCOUNT TWENTY-SIX AND
SECURITY EQUITY SEPARATE ACCOUNT TWENTY-SEVEN
NOTE 3 -- CONTRACT CHARGES (CONTINUED)
accumulated values of $20,000 or more. Security Equity charges $25 for each
transfer in excess of twelve (12) during the Contract Year, excluding transfers
made under the Dollar Cost Averaging program and reserves the right to charge a
fee to cover the expenses for special handling. Account fees are disclosed in
Note 6. Security Equity also provides certain administrative services for which
it charges an administrative charge to the Separate Accounts at an annual rate
of 0.15% at the end of each valuation period. Administrative charges for
Separate Account Twenty-six totaled $912 for the period ended December 31, 1997.
Administrative charges for Separate Account Twenty-seven totaled $2,509 for the
period ended December 31, 1997.
PREMIUM TAXES: In states which charge premium taxes, the taxes are withdrawn
from the purchase payment or the accumulated value of the contract. Premium
taxes are disclosed in Note 6.
NOTE 4 -- PURCHASES AND SALES OF GT GLOBAL VARIABLE INVESTMENT FUND SHARES
During the period ended December 31, 1997, cost of purchases and proceeds from
sales of GT Global Variable Investment Fund shares were as follows:
<TABLE>
<CAPTION>
SEPARATE ACCOUNT TWENTY-SIX PURCHASES SALES
- -------------------------------------------------------------------------------- ---------- ----------
<S> <C> <C>
Money Market Fund............................................................... $2,433,398 $2,204,949
Variable Strategic Income Fund.................................................. 1,329,939 795,680
Variable U.S. Government Income Fund............................................ 41,039 10,158
<CAPTION>
SEPARATE ACCOUNT TWENTY-SEVEN
- --------------------------------------------------------------------------------
<S> <C> <C>
Variable New Pacific Fund....................................................... $1,340,278 $1,785,657
Variable Europe Fund............................................................ 213,689 148,966
Variable America Fund........................................................... 548,363 489,806
Variable Growth & Income Fund................................................... 26,703 165
Variable Latin America Fund..................................................... 607,874 514,232
Variable Telecommunications Fund................................................ 141,424 11,578
Variable International Fund..................................................... 22,427 1,379
Variable Emerging Markets Fund.................................................. 205,784 180,808
Variable Natural Resources Fund................................................. 98,520 2,168
Variable Infrastructure Fund.................................................... 9,622 73
</TABLE>
There were no purchases or sales of GT Global Variable Investment Fund shares
for the Variable Global Government Income Fund Division of Separate Account
Twenty-six.
NOTE 5 -- ACCUMULATION UNIT ACTIVITY
The following is a summary of the accumulation unit activity for the Variable
Strategic Income Division for the period from January 30, 1996 (inception) to
December 31, 1997, for the Money Market Division for the period from July 26,
1996 (inception) to December 31, 1997, and for the Variable U.S. Government
Income Division for the period from June 4, 1997 (inception) to December 31,
1997 for Separate Account Twenty-six:
<TABLE>
<CAPTION>
VARIABLE U.S.
VARIABLE GOVERNMENT
MONEY MARKET STRATEGIC INCOME INCOME
DIVISION DIVISION DIVISION
---------------- ---------------- -------------
1997 1996 1997 1996 1997
------- ------- ------- ------- -------------
<S> <C> <C> <C> <C> <C>
Individual units held:
Deposits........................................ 11,950 705 1,797 8,823 0
Transfers....................................... 3,796 (705) 35,859 156 2,518
Withdrawals..................................... (115) 0 (53) (1,669) 0
Outstanding units, beginning of period.......... 0 0 7,310 0 0
------- ------- ------- ------- -------------
Outstanding units, end of period................ 15,631 0 44,913 7,310 2,518
------- ------- ------- ------- -------------
------- ------- ------- ------- -------------
</TABLE>
D13
<PAGE>
SECURITY EQUITY SEPARATE ACCOUNT TWENTY-SIX AND
SECURITY EQUITY SEPARATE ACCOUNT TWENTY-SEVEN
NOTE 5 -- ACCUMULATION UNIT ACTIVITY (CONTINUED)
The following is a summary of the accumulation unit activity for the year ended
December 31, 1997 and the year ended December 31, 1996 for all divisions except
the Variable Europe Division and the Variable Latin America Division which show
the unit activity for the period from January 30, 1996 (inception) to December
31, 1997; the Variable Emerging Markets Division which shows the unit activity
from March 25, 1996 (inception) to December 31, 1997; the Variable International
Division which shows the unit activity from April 9, 1996 (inception) to
December 31, 1997; the Variable Natural Resources Division and the Variable
Infrastructure Division which show the unit activity from August 26, 1996
(inception) to December 31, 1997; and for the Variable Growth & Income Division
which shows the unit activity from April 8, 1997 (inception) to December 31,
1997 for Separate Account Twenty-seven:
<TABLE>
<CAPTION>
VARIABLE
GROWTH &
VARIABLE NEW VARIABLE EUROPE VARIABLE AMERICA INCOME VARIABLE LATIN
PACIFIC DIVISION DIVISION DIVISION DIVISION AMERICA DIVISION
---------------- ---------------- ---------------- ------------ ----------------
1997 1996 1997 1996 1997 1996 1997 1997 1996
------- ------- ------- ------- ------- ------- ------------ ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Individual units held:
Deposits.............................. 20,759 62,117 6,235 4,293 758 1,910 1,333 4,756 9,128
Transfers............................. (49,925) (643) (2,448) 144 3,425 0 783 347 0
Withdrawals........................... (1,240) (2,839) (61) 0 0 (174) 0 (50) (796)
Outstanding units, beginning of
period............................... 59,302 667 4,437 0 2,236 500 0 8,332 0
------- ------- ------- ------- ------- ------- ------------ ------- -------
Outstanding units, end of period...... 28,896 59,302 8,163 4,437 6,419 2,236 2,116 13,385 8,332
------- ------- ------- ------- ------- ------- ------------ ------- -------
------- ------- ------- ------- ------- ------- ------------ ------- -------
</TABLE>
<TABLE>
<CAPTION>
VARIABLE
TELECOMMUN- VARIABLE VARIABLE VARIABLE NATURAL VARIABLE
ICATIONS INTERNATIONAL EMERGING MARKETS RESOURCES INFRASTRUCTURE
DIVISION GROWTH DIVISION DIVISION DIVISION DIVISION
---------------- ---------------- ---------------- ---------------- ----------------
1997 1996 1997 1996 1997 1996 1997 1996 1997 1996
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Individual units held:
Deposits......................... 5,614 34,680 947 3,294 2,634 2,727 263 106 249 108
Transfers........................ 372 0 767 0 1,549 162 6,391 0 423 0
Withdrawals...................... (347) (3,789) (52) (77) (114) (1,797) 0 0 0 0
Outstanding units, beginning of
period.......................... 31,391 500 3,217 0 1,092 0 106 0 108 0
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Outstanding units, end of
period.......................... 37,030 31,391 4,879 3,217 5,161 1,092 6,760 106 780 108
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
</TABLE>
NOTE 6 -- SUMMARY OF GROSS AND NET DEPOSITS INTO SEPARATE ACCOUNT
Deposits into the Separate Account are used to purchase shares in the GT Global
Variable Investment Funds. Net deposits represent the amounts available for
investment in such shares after deduction of premium taxes, administrative
costs, and surrender charges. Activity for Separate Account Twenty-six follows:
<TABLE>
<CAPTION>
VARIABLE U.S.
GOVERNMENT
MONEY MARKET VARIABLE STRATEGIC INCOME
DIVISION INCOME DIVISION DIVISION*
-------------------- -------------------- -------------
1997 1996 1997 1996 1997
--------- --------- --------- --------- -------------
<S> <C> <C> <C> <C> <C>
Total gross deposits.............................. $ 145,058 $ 8,500 $ 25,099 $ 108,470 $ 0
Transfers between fund divisions and Security
Equity........................................... 43,617 (9,898) 495,534 2,126 30,000
Surrenders and withdrawals........................ (1,336) 0 (2,104) (21,890) 0
--------- --------- --------- --------- -------------
Total gross deposits, transfers, and
surrenders between fund divisions............ 187,339 (1,398) 518,529 88,706 30,000
--------- --------- --------- --------- -------------
Deductions:
Account fees.................................... 0 0 (60) 0 0
Surrender charges............................... (56) 0 0 0 0
--------- --------- --------- --------- -------------
Total deductions.............................. (56) 0 (60) 0 0
--------- --------- --------- --------- -------------
Net deposits into (deductions from) Separate
Account.......................................... $ 187,283 $ (1,398) $ 518,469 $ 88,706 $ 30,000
--------- --------- --------- --------- -------------
--------- --------- --------- --------- -------------
</TABLE>
- --------------
* The Variable U.S. Government Income Division commenced operations on June
4, 1997.
D14
<PAGE>
SECURITY EQUITY SEPARATE ACCOUNT TWENTY-SIX AND
SECURITY EQUITY SEPARATE ACCOUNT TWENTY-SEVEN
NOTE 6 -- SUMMARY OF GROSS AND NET DEPOSITS INTO SEPARATE ACCOUNT (CONTINUED)
Deposits into the Separate Account are used to purchase shares in the GT Global
Variable Investment Funds. Net deposits represent the amounts available for
investment in such shares after deduction of premium taxes, administrative
costs, and surrender charges. Activity for Separate Account Twenty-seven
follows:
<TABLE>
<CAPTION>
VARIABLE NEW PACIFIC VARIABLE EUROPE VARIABLE AMERICA
DIVISION DIVISION* DIVISION
-------------------- -------------------- --------------------
1997 1996 1997 1996 1997 1996
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits.............................. $ 322,747 $ 856,376 $ 97,213 $ 58,056 $ 9,078 $ 22,561
Transfers between fund divisions and Security
Equity........................................... (746,617) 3,519 (41,369) 2,126 50,662 0
Surrenders and withdrawals........................ (17,609) (39,770) (1,004) 0 (1,989) (2,060)
--------- --------- --------- --------- --------- ---------
Total gross deposits, transfers, and
surrenders between fund divisions............ (441,479) 820,125 54,840 60,182 57,751 20,501
--------- --------- --------- --------- --------- ---------
Deductions:
Account fees.................................... (30) 0 0 0 0 0
Surrender charges............................... (34) 0 0 0 0 0
--------- --------- --------- --------- --------- ---------
Total deductions.............................. (64) 0 0 0 0 0
--------- --------- --------- --------- --------- ---------
Net deposits into (deductions from) Separate
Account.......................................... $(441,543) $ 820,125 $ 54,840 $ 60,182 $ 57,751 $ 20,501
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
</TABLE>
<TABLE>
<CAPTION>
VARIABLE GROWTH VARIABLE VARIABLE
& INCOME VARIABLE LATIN TELECOMMUNICATIONS INTERNATIONAL
DIVISION***** AMERICA DIVISION* DIVISION DIVISION***
--------------- -------------------- -------------------- --------------------
1997 1997 1996 1997 1996 1997 1996
--------------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Total gross deposits.................... $ 16,000 $ 66,585 $ 110,075 $ 74,120 $ 450,796 $ 12,347 $ 39,574
Transfers between fund divisions and
Security Equity........................ 10,000 35,358 0 5,276 0 10,000 0
Surrenders and withdrawals.............. 0 (5,000) (10,027) (4,474) (50,570) (691) (945)
--------------- --------- --------- --------- --------- --------- ---------
Total gross deposits, transfers, and
surrenders between fund
divisions.......................... 26,000 96,943 100,048 74,922 400,226 21,656 38,629
--------------- --------- --------- --------- --------- --------- ---------
Deductions:
Account fees.......................... 0 (90) 0 (120) 0 0 0
Surrender charges..................... 0 0 0 (330) 0 0 0
--------------- --------- --------- --------- --------- --------- ---------
Total deductions.................... 0 (90) 0 (450) 0 0 0
--------------- --------- --------- --------- --------- --------- ---------
Net deposits into (deductions from)
Separate Account....................... $ 26,000 $ 96,853 $ 100,048 $ 74,472 $ 400,226 $ 21,656 $ 38,629
--------------- --------- --------- --------- --------- --------- ---------
--------------- --------- --------- --------- --------- --------- ---------
</TABLE>
<TABLE>
<CAPTION>
VARIABLE NATURAL VARIABLE
VARIABLE EMERGING RESOURCES INFRASTRUCTURE
MARKETS DIVISION** DIVISION**** DIVISION****
-------------------- -------------------- --------------------
1997 1996 1997 1996 1997 1996
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Total gross deposits.............................. $ 38,043 $ 34,636 $ 3,358 $ 1,300 $ 3,352 $ 1,301
Transfers between fund divisions and Security
Equity........................................... 11,719 2,126 90,120 0 5,700 0
Surrenders and withdrawals........................ (1,684) (22,860) 0 0 0 0
--------- --------- --------- --------- --------- ---------
Total gross deposits, transfers, and
surrenders between fund divisions............ 48,078 13,902 93,478 1,300 9,052 1,301
--------- --------- --------- --------- --------- ---------
Deductions:
Account fees.................................... 0 0 0 0 0 0
Surrender charges............................... 0 0 0 0 0 0
--------- --------- --------- --------- --------- ---------
Total deductions.............................. 0 0 0 0 0 0
--------- --------- --------- --------- --------- ---------
Net deposits into (deductions from) Separate
Account.......................................... $ 48,078 $ 13,902 $ 93,478 $ 1,300 $ 9,052 $ 1,301
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
</TABLE>
- --------------
<TABLE>
<C> <S>
* The Variable Europe Division and the Variable Latin America Division commenced operations January
30, 1996.
** The Variable Emerging Markets Division commenced operations March 25, 1996.
*** The Variable International Division commenced operations April 9, 1996.
**** The Variable Natural Resources Division and the Variable Infrastructure Division commenced
operations August 26, 1996.
***** The Variable Growth & Income Division commenced operations April 8, 1997.
</TABLE>
D15
<PAGE>
SECURITY EQUITY SEPARATE ACCOUNT TWENTY-SIX AND
SECURITY EQUITY SEPARATE ACCOUNT TWENTY-SEVEN
SCHEDULE OF INVESTMENTS*
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SEPARATE ACCOUNT TWENTY-SIX: NO. OF SHARES MARKET VALUE
- -------------------------------------------------------------------------------- ------------- ------------
<S> <C> <C>
GT Global: Money Market Fund.................................................. 228,914 $ 228,914
GT Global: Variable Strategic Income Fund..................................... 48,205 645,459
GT Global: U.S. Government Income Fund........................................ 2,745 32,120
<CAPTION>
SEPARATE ACCOUNT TWENTY-SEVEN:
- --------------------------------------------------------------------------------
<S> <C> <C>
GT Global: Variable New Pacific Fund.......................................... 24,717 259,774
GT Global: Variable Europe Fund............................................... 6,337 142,709
GT Global: Variable America Fund.............................................. 4,352 94,360
GT Global: Variable Growth & Income Fund...................................... 1,584 29,472
GT Global: Variable Latin America Fund........................................ 11,823 200,394
GT Global: Variable Telecommunications Fund................................... 30,280 557,154
GT Global: Variable International Fund........................................ 5,066 64,443
GT Global: Variable Emerging Markets Fund..................................... 2,882 33,345
GT Global: Variable Natural Resources Fund.................................... 4,564 92,197
GT Global: Variable Infrastructure Fund....................................... 634 10,360
</TABLE>
- --------------
* There were no investments of GT Global Investment Fund shares for the Variable
Global Government Income Fund.
See accompanying independent auditors' report.
D16
<PAGE>
SECURITY EQUITY SEPARATE ACCOUNT TWENTY-SIX AND
SECURITY EQUITY SEPARATE ACCOUNT TWENTY-SEVEN
CONDENSED FINANCIAL INFORMATION
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ACCUMULATION
ACCUMULATION UNIT VALUE: TOTAL UNITS
UNIT VALUE: END OF OUTSTANDING,
BEGINNING OF PERIOD* PERIOD END OF PERIOD
-------------------- ------------ --------------
<S> <C> <C> <C> <C>
SEPARATE ACCOUNT TWENTY-SIX:
Money Market Division............................................... 1997 N/A 12.26 15,631
1996 12.00 N/A 0
Variable Strategic Income Division.................................. 1997 13.82 14.61 44,913
1996 12.00 13.82 7,310
Variable U.S. Government Income Division............................ 1997 12.00 12.71 2,518
SEPARATE ACCOUNT TWENTY-SEVEN:
Variable New Pacific Division....................................... 1997 15.43 8.96 28,896
1996 11.95 15.43 59,302
1995 12.00 11.95 677
Variable Europe Division............................................ 1997 15.34 17.42 8,163
1996 12.00 15.34 4,437
Variable America Division........................................... 1997 12.90 14.62 6,419
1996 11.03 12.90 2,236
1995 12.00 11.03 500
Variable Growth & Income Division................................... 1997 12.00 13.88 2,116
Variable Latin America Division..................................... 1997 13.23 14.94 13,385
1996 12.00 13.23 8,332
Variable Telecommunications Division................................ 1997 13.27 14.99 37,030
1996 11.27 13.27 31,391
1995 12.00 11.27 500
Variable International Division..................................... 1997 12.48 13.16 4,879
1996 12.00 12.48 3,217
Variable Emerging Markets Division.................................. 1997 13.30 11.31 5,161
1996 12.00 13.30 1,092
Variable Natural Resources Division................................. 1997 13.60 13.59 6,760
1996 12.00 13.60 106
Variable Infrastructure Division.................................... 1997 12.79 13.24 780
1996 12.00 12.79 108
</TABLE>
- --------------
* At inception of Separate Account on September 7, 1995, except for the Variable
Strategic Income Division, the Variable Europe Division, and the Variable
Latin America Division, which commenced operations on January 30, 1996; the
Variable Emerging Markets Division, which commenced operations on March 25,
1996; the Variable International Division, which commenced operations on April
9, 1996; the Money Market Division, which commenced operations on July 26,
1996; the Variable Natural Resources Division the Variable Infrastructure
Division which commenced operations on August 26, 1996; the Variable Growth &
Income Division which commenced operations on April 8, 1997; and the Variable
U.S. Government Division which commenced operations on June 4, 1997.
See accompanying independent auditors' report.
D17
<PAGE>
GT GLOBAL
ALLOCATOR
FUNDS'
FINANCIAL
STATEMENTS
<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
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- ------------------------------------------------------------ -------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Corporate Bonds (Continued)
Chancellor Media Corp., 8.125% due 12/15/07 -
144A{.} ............................................... USD 75,000 $ 73,313 0.3
Penn National Gaming, Inc., 10.625% due 12/15/04 -
144A{.} ............................................... USD 55,000 57,475 0.2
Delco Remy International, Inc., 8.625% due 12/15/07 .... USD 40,000 40,811 0.1
Pillowtex Corp., 9% due 12/15/07 - 144A{.} ............. USD 25,000 25,625 0.1
-----------
Total Corporate Bonds (cost $3,659,189) .................... 3,517,320
-----------
Mortgage Backed (8.2%)
Denmark (1.0%)
Realkredit Danmark, 6% due 10/1/26 ..................... DKK 1,963,000 278,121 1.0
United States (7.2%)
Government National Mortgage Association TBA Pass Thru
Pool, 6.5% due 1/15/28[::] ............................ USD 1,300,000 1,287,000 4.5
Federal National Mortgage Association Pool #313439, 7%
due 3/1/04 ............................................ USD 751,475 762,278 2.7
-----------
Total Mortgage Backed (cost $2,302,342) .................... 2,327,399
----------- -----
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>
PRINCIPAL VALUE % OF NET
SHORT-TERM INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- ------------------------------------------------------------ -------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Commercial Paper - Discounted (4.4%)
United States (4.4%)
Ford Motor Credit Corp., effective yield 5.80%, due
1/22/98
(cost $1,245,785) ..................................... USD 1,250,000 1,245,785 4.4
----------- -----
</TABLE>
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
<TABLE>
<CAPTION>
MARKET VALUE UNREALIZED
(U.S. CONTRACT DELIVERY APPRECIATION
CONTRACTS TO BUY: DOLLARS) PRICE DATE (DEPRECIATION)
- ---------------------------------------- ------------ ------------ -------- ------------
<S> <C> <C> <C> <C>
British Pounds.......................... 1,331,887 0.62123 2/5/98 $ 19,981
British Pounds.......................... 653,687 0.60397 2/5/98 (8,593)
Deutsche Marks.......................... 1,603,656 1.81000 2/5/98 13,656
Deutsche Marks.......................... 1,578,855 1.77087 2/5/98 (21,145)
Deutsche Marks.......................... 745,780 1.74950 2/5/98 (19,220)
Deutsche Marks.......................... 445,785 1.70250 2/5/98 (24,112)
Deutsche Marks.......................... 325,089 1.82070 2/5/98 4,663
Deutsche Marks.......................... 175,930 1.77285 2/5/98 (2,157)
Italian Liras........................... 480,917 1697.67998 2/5/98 (20,061)
Italian Liras........................... 50,891 1766.50009 2/5/98 (58)
Netherland Guilders..................... 405,446 1.97453 2/5/98 (9,843)
Spanish Pesetas......................... 538,929 148.86800 2/5/98 (11,894)
------------ ------------
Total Contracts to Buy (Payable
amount $8,415,635)................. 8,336,852 (78,783)
------------ ------------
THE VALUE OF CONTRACTS TO BUY AS PERCENTAGE OF NET ASSETS IS 29.26%.
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
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- --------------------------------------------------------------- -------- ----------- ---------- -------------
<S> <C> <C> <C> <C>
Corporate Bonds (Continued)
Tunisia (2.9%)
Banque Centrais de Tunisie, 8.25% due 9/19/27 ............. USD 250,000 $ 241,250 2.9
United Kingdom (4.4%)
SBC Jersey, 8.75% due 6/20/05 ............................. GBP 200,000 359,297 4.4
----------
Total Corporate Bonds (cost $1,527,587) ....................... 1,441,550
----------
Mortgage Backed (13.5%)
Denmark (5.4%)
Realkredit Bank, 7% due 10/1/29 ........................... DKK 3,093,000 447,049 5.4
United States (8.1%)
Government National Mortgage Association:
Pool #462363, 7% due 11/15/27 ........................... USD 271,976 274,228 3.3
Pool #780515, 9.5% due 12/15/21 ......................... USD 123,991 134,879 1.6
Salomon Brothers Mortgage Securities VII Series 1997 - HUD1
Class AWAC, 6.0867% due 12/25/30 ......................... USD 176,549 179,409 2.2
Federal Home Loan Mortgage Association Pool #E62449, 8.5%
due 3/1/10 ............................................... USD 75,886 80,911 1.0
----------
Total Mortgage Backed (cost $1,108,067) ....................... 1,116,476
---------- -----
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>
- --------------
{.} 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 $7,358,003 and
appreciation (depreciation) is as follows:
<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
---------- -----
<CAPTION>
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
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Consumer Non-Durables (Continued)
Vina Concha Y Toro S.A. - ADR{\/} .......................... CHLE 11,500 $ 290,375 1.0
BEVERAGES - ALCOHOLIC
Companhia Cervejaria Brahma Preferred ...................... BRZL 416,000 279,570 1.0
BEVERAGES - ALCOHOLIC
Mavesa S.A. - ADR{\/} ...................................... VENZ 4,480 28,560 0.1
FOOD
Embotelladora Andina S.A. - ADR{\/} ........................ CHLE 1,200 24,975 0.1
BEVERAGES - NON-ALCOHOLIC
Sudamtex de Venezuela "B" - ADR{\/} ........................ VENZ 2,100 18,900 0.1
TEXTILES & APPAREL
Cerveceria Backus & Johnston S.A. "T" ...................... PERU 5,419 4,975 --
BEVERAGES - ALCOHOLIC
-----------
2,195,754
-----------
Consumer Durables (0.5%)
Brasmotor S.A. Preferred ................................... BRZL 1,567,800 154,532 0.5
APPLIANCES & HOUSEHOLD
----------- -----
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:
<TABLE>
<CAPTION>
PERCENTAGE OF NET ASSETS
{D}
---------------------------
SHORT-TERM
COUNTRY (COUNTRY CODE/CURRENCY CODE) EQUITY & OTHER TOTAL
- -------------------------------------- ------ ---------- -----
<S> <C> <C> <C>
Argentina (ARG/ARS) .................. 8.7 8.7
Brazil (BRZL/BRL) .................... 36.5 36.5
Chile (CHLE/CLP) ..................... 14.0 14.0
Mexico (MEX/MXN) ..................... 27.9 27.9
Panama (PAN/PND) ..................... 1.1 1.1
Peru (PERU/PES) ...................... 2.6 2.6
United States (US/USD) ............... 1.4 3.5 4.9
Venezuela (VENZ/VEB) ................. 4.3 4.3
------ ----- -----
Total ............................... 96.5 3.5 100.0
------ ----- -----
------ ----- -----
</TABLE>
- --------------
{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
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- ------------------------------------------------------------ -------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Multi-Industry/Miscellaneous (1.8%)
Mannesmann AG ............................................ GER 770 $ 389,174 0.8
MULTI-INDUSTRY
Siemens AG ............................................... GER 4,270 252,852 0.5
MULTI-INDUSTRY
ICI Australia Ltd. ....................................... AUSL 34,300 240,227 0.5
MULTI-INDUSTRY
-----------
882,253
-----------
Consumer Durables (0.4%)
GKN PLC .................................................. UK 10,400 212,952 0.4
AUTO PARTS
----------- -----
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
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- ------------------------------------------------------------ -------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Government & Government Agency Obligations (Continued)
Federal National Mortgage Association, 6.375% due
8/15/07 ............................................... AUD 335,000 $ 221,121 0.4
-----------
Total Government & Government Agency Obligations (cost
$12,341,938) .............................................. 12,399,004
-----------
Corporate Bonds (2.3%)
Germany (1.5%)
Commerzbank AG, Convertible Bond, 9.45% due
12/31/00+ ............................................. DEM 187,000 343,119 0.7
Siemens Capital Corp., 8% due 6/24/02+/+ ............... USD 180,000 313,650 0.6
Deutsche Bank AG, 9.00% due 12/31/02+/+ ................ DEM 175,000 119,051 0.2
IKB Deutsche Industriebank, 6.45% due 3/31/06 .......... DEM 1,500 863 --
United Kingdom (0.8%)
Daily Mail & General Trust, Convertible Bond, 5.75% due
9/26/03 ............................................... GBP 167,000 386,650 0.8
-----------
Total Corporate Bonds (cost $867,223) ...................... 1,163,333
----------- -----
TOTAL FIXED INCOME INVESTMENTS (cost $13,209,161) .......... 13,562,337 26.9
----------- -----
<CAPTION>
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:
<TABLE>
<CAPTION>
PERCENTAGE OF NET ASSETS {D}
-------------------------------------------
FIXED INCOME,
RIGHTS & SHORT-TERM
COUNTRY (COUNTRY CODE/CURRENCY CODE) EQUITY WARRANTS & OTHER TOTAL
- -------------------------------------- ------ ------------- ---------- -----
<S> <C> <C> <C> <C>
Australia (AUSL/AUD) ................. 6.9 0.9 7.8
Belgium (BEL/BEF) .................... 4.3 4.3
Canada (CAN/CAD) ..................... 1.1 1.1
Denmark (DEN/DKK) .................... 0.6 0.6
France (FR/FRF) ...................... 2.2 2.2
Germany (GER/DEM) .................... 7.6 4.9 12.5
Italy (ITLY/ITL) ..................... 1.6 1.6
Netherlands (NETH/NLG) ............... 8.7 8.7
New Zealand (NZ/NZD) ................. 1.3 0.3 1.6
Sweden (SWDN/SEK) .................... 0.6 0.6
Switzerland (SWTZ/CHF) ............... 6.8 6.8
United Kingdom (UK/GBP) .............. 13.8 3.9 17.7
United States (US/USD) ............... 18.6 13.0 2.9 34.5
------ ----- ----- -----
Total ............................... 70.2 26.9 2.9 100.0
------ ----- ----- -----
------ ----- ----- -----
</TABLE>
- --------------
{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%.
<CAPTION>
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
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Telecom Technology (1.3%)
Uniphase Corp.-/- .......................................... US 21,000 $ 868,871 1.3
-----------
Semiconductors (0.4%)
DSP Communications, Inc.-/- ................................ US 23,400 280,800 0.4
----------- -----
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%.
<CAPTION>
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
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL VALUE % OF NET
FIXED INCOME INVESTMENTS CURRENCY AMOUNT (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Government & Government Agency Obligations (0.1%)
Pakistan (0.1%)
Republic of Pakistan, 6% due 2/26/02 - Reg S-/- {c} (cost
$13,764) ................................................ USD 15,000 $ 13,650 0.1
----------- -----
<CAPTION>
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
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- --------------------------------------------------------------- -------- ----------- ---------- -------------
<S> <C> <C> <C> <C>
Transportation - Shipping (0.0%)
International Container Terminal Services (ICTS)-/- ......... PHIL 6,768 $ 846 --
---------- -----
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
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Metals - Steel (Continued)
Maverick Tube Corp.-/- ..................................... US 4,000 $ 101,250 0.6
-----------
1,679,235
-----------
Forest Products (5.0%)
The TimberWest Timber Trust: ............................... CAN -- -- 5.0
Common ................................................... -- 61,000 441,874 --
Installment Receipts ..................................... -- 110,200 408,777 --
-----------
850,651
-----------
Coal (5.0%)
Manalta Coal Income Trust Units ............................ CAN 137,500 413,809 2.5
Luscar Coal Income Fund-/- ................................. CAN 65,600 218,085 1.3
Westshore Terminals, Inc. - Installment Receipts ........... CAN 76,600 193,001 1.2
-----------
824,895
-----------
Chemicals (3.9%)
Giant Industries, Inc. ..................................... US 22,700 431,300 2.6
ERG SpA-/- ................................................. ITLY 59,000 219,982 1.3
-----------
651,282
-----------
Gas Production & Distribution (3.3%)
Berkley Petroleum Corp.-/- ................................. CAN 35,800 375,840 2.2
Comstock Resources, Inc.-/- ................................ US 15,100 180,256 1.1
-----------
556,096
-----------
Paper/Packaging (3.0%)
Fort James Corp. ........................................... US 10,000 382,500 2.3
Jefferson Smurfit Corp.-/- ................................. US 8,000 113,000 0.7
-----------
495,500
-----------
Machinery & Engineering (2.8%)
Enerflex Systems Ltd. ...................................... CAN 20,900 475,399 2.8
----------- -----
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:
<TABLE>
<CAPTION>
PERCENTAGE OF NET ASSETS {D}
-----------------------------------
SHORT-TERM
COUNTRY (COUNTRY CODE/CURRENCY CODE) EQUITY & OTHER TOTAL
- -------------------------------------- ------ ------------- ----------
<S> <C> <C> <C>
Australia (AUSL/AUD) ................. 1.6 1.6
Brazil (BRZL/BRL) .................... 2.8 2.8
Canada (CAN/CAD) ..................... 27.6 27.6
France (FR/FRF) ...................... 2.5 2.5
Italy (ITLY/ITL) ..................... 1.3 1.3
Mexico (MEX/MXN) ..................... 3.1 3.1
Norway (NOR/NOK) ..................... 1.4 1.4
United States (US/USD) ............... 56.1 3.6 59.7
------ --- ----------
Total ............................... 96.4 3.6 100.0
------ --- ----------
------ --- ----------
</TABLE>
- --------------
{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
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Energy (Continued)
Smith International, Inc.-/- ............................... US 9,500 $ 583,063 1.3
ENERGY EQUIPMENT & SERVICES
-----------
3,624,038
-----------
Consumer Durables (4.5%)
Avis Rent A Car, Inc.-/- ................................... US 27,500 878,281 2.0
AUTOMOBILES
Hertz Corp. "A" ............................................ US 17,000 684,250 1.6
AUTOMOBILES
Dollar Thrifty Automotive Group, Inc.-/- ................... US 19,000 389,500 0.9
AUTOMOBILES
-----------
1,952,031
-----------
Multi-Industry/Miscellaneous (2.7%)
Corrections Corporation of America-/- ...................... US 32,200 1,193,413 2.7
-----------
MISCELLANEOUS
Consumer Non-Durables (1.2%)
International Home Foods, Inc.-/- .......................... US 19,200 537,600 1.2
-----------
FOOD
Capital Goods (1.2%)
U.S. Filter Corp.-/- ....................................... US 17,400 520,913 1.2
ENVIRONMENTAL
----------- -----
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 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:
<TABLE>
<CAPTION>
PERCENTAGE OF NET ASSETS
{D}
---------------------------
SHORT-TERM
COUNTRY (COUNTRY CODE/CURRENCY CODE) EQUITY & OTHER TOTAL
- -------------------------------------- ------ ---------- -----
<S> <C> <C> <C>
Australia (AUSL/AUD) ................. 29.8 29.8
Hong Kong (HK/HKD) ................... 41.0 41.0
India (IND/INR) ...................... 0.6 0.6
Malaysia (MAL/MYR) ................... 4.7 4.7
Philippines (PHIL/PHP) ............... 3.0 3.0
Singapore (SING/SGD) ................. 11.2 11.2
United States (US/USD) ............... 9.7 9.7
------ ----- -----
Total ............................... 90.3 9.7 100.0
------ ----- -----
------ ----- -----
</TABLE>
- --------------
{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
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- -------------------------------------------------------------- -------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Materials/Basic Industry (6.8%)
Ciba Specialty Chemicals AG-/- ............................. SWTZ 9,000 $ 1,072,162 3.9
CHEMICALS
Akzo Nobel N.V. ............................................ NETH 4,600 793,291 2.9
CHEMICALS
-----------
1,865,453
-----------
Capital Goods (6.4%)
Nokia AB "A" ............................................... FIN 14,500 1,014,284 3.7
TELECOM EQUIPMENT
Alcatel Alsthom Compagnie Generale d'Electricite ........... FR 5,800 737,227 2.7
TELECOM EQUIPMENT
-----------
1,751,511
----------- -----
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
----------- -----
<CAPTION>
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
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE % OF NET
EQUITY INVESTMENTS COUNTRY SHARES (NOTE 1) ASSETS
- --------------------------------------------------------------- -------- ----------- ---------- -------------
<S> <C> <C> <C> <C>
Consumer Non-Durables (Continued)
South African Breweries Ltd. ................................ SAFR 1,000 $ 24,671 0.4
BEVERAGES - ALCOHOLIC
----------
262,590
----------
Capital Goods (3.5%)
Canon, Inc. ................................................. JPN 3,000 69,885 1.2
OFFICE EQUIPMENT
Nokia AB "A" ................................................ FIN 900 62,956 1.1
TELECOM EQUIPMENT
Coflexip - ADR{\/} .......................................... FR 890 49,395 0.8
CONSTRUCTION
Kurita Water Industries Ltd. ................................ JPN 2,200 22,421 0.4
ENVIRONMENTAL
----------
204,657
----------
Multi-Industry/Miscellaneous (3.1%)
Shanghai Industrial Holdings Ltd. ........................... HK 20,000 74,337 1.3
MULTI-INDUSTRY
BBA Group PLC ............................................... UK 11,000 73,695 1.2
MULTI-INDUSTRY
Hutchison Whampoa ........................................... HK 6,000 37,633 0.6
MULTI-INDUSTRY
----------
185,665
----------
Consumer Durables (2.1%)
Futuris Corp., Ltd. ......................................... AUSL 63,700 69,722 1.2
AUTO PARTS
Uny Co., Ltd. ............................................... JPN 4,000 54,866 0.9
APPLIANCES & HOUSEHOLD
----------
124,588
---------- -----
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 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
---------- ---------- ---------- ----------- ---------- ---------- ----------
---------- ---------- ---------- ----------- ---------- ---------- ----------
<CAPTION>
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
------------ ----------- ----------- -------------- ----------- ---------- ------------
------------ ----------- ----------- -------------- ----------- ---------- ------------
<CAPTION>
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 $ -- $ --
------------- ------------- ------------- -------------- ------------- -------------
------------- ------------- ------------- -------------- ------------- -------------
<CAPTION>
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
------------- ------------- ------------- -------------- ------------- -------------
------------- ------------- ------------- -------------- ------------- -------------
<CAPTION>
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
<CAPTION>
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)
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share outstanding
throughout the period, total investment return, ratios and supplemental data.
This information has been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
GT GLOBAL
---------------------------------------------------------
VARIABLE EMERGING MARKETS FUND
---------------------------------------------------------
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)
- --------------------------------------------------------------------------------
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
------------------------------------------------------------------------
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
-------------- --------------- --------------- ---------------
-------------- --------------- --------------- ---------------
<CAPTION>
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
-------------- --------------- --------------- ---------------
-------------- --------------- --------------- ---------------
<CAPTION>
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
- ------------------------------------------------------------ -----------------
<S> <C>
Variable Strategic Income Fund.............................. $ --
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 AIM 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
<PAGE>
GT GLOBAL
GT Global, Inc.
Fifty California Street
27th Floor
San Francisco, CA
94111-4624
GT GLOBAL, INC., PRINCIPAL UNDERWRITER AND DISTRIBUTOR
Policy Form #6000531
VARAR802.100M.016
February 1998
