<PAGE>
AIM VARIABLE INSURANCE FUNDS, INC.
AIM V.I. CAPITAL APPRECIATION FUND
AIM V.I. DIVERSIFIED INCOME FUND
AIM V.I. GLOBAL UTILITIES FUND
AIM V.I. GOVERNMENT SECURITIES FUND
AIM V.I. GROWTH FUND
AIM V.I. GROWTH AND INCOME FUND
AIM V.I. INTERNATIONAL EQUITY FUND
AIM V.I. MONEY MARKET FUND
AIM V.I. VALUE FUND
Supplement dated August 28, 1995
to the Statement of Additional Information
dated May 1, 1995
The following sentence is inserted after the first sentence of the third
full paragraph on Page 29 under the caption "Determination of Net Asset Value"
in the Statement of Additional Information:
"Exchange listed convertible debt securities are valued at the mean between
the last bid and asked prices obtained from broker-dealers."
<PAGE>
STATEMENT OF
ADDITIONAL INFORMATION
A I M V A R I A B L E I N S U R A N C E F U N D S, I N C.
11 GREENWAY PLAZA
SUITE 1919
HOUSTON, TX 77046-1173
(713) 626-1919
AIM V.I. CAPITAL APPRECIATION FUND AIM V.I. DIVERSIFIED INCOME FUND
AIM V.I. GLOBAL UTILITIES FUND AIM V.I. GOVERNMENT SECURITIES FUND
AIM V.I. GROWTH FUND AIM V.I. GROWTH AND INCOME FUND
AIM V.I. INTERNATIONAL EQUITY FUND AIM V.I. MONEY MARKET FUND
AIM V.I. VALUE FUND
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS.
IT SHOULD BE READ IN CONJUNCTION WITH THE PROSPECTUS, WHICH
MAY BE OBTAINED FROM AUTHORIZED DEALERS OR BY WRITING
A I M DISTRIBUTORS, INC., P. O. BOX 4739,
HOUSTON, TX 77210-4739
OR BY CALLING (713) 626-1919 (HOUSTON RESIDENTS)
OR (800) 347-1919 (ALL OTHERS).
---------------------------------
STATEMENT OF ADDITIONAL INFORMATION DATED: MAY 1, 1995
RELATING TO PROSPECTUS DATED: MAY 1, 1995
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
INTRODUCTION..................................................... 1
GENERAL INFORMATION ABOUT THE FUNDS.............................. 1
The Company and Its Shares.................................. 1
PERFORMANCE...................................................... 2
Total Return Calculations................................... 2
Historical Portfolio Results................................ 2
Yield Information........................................... 3
PORTFOLIO TRANSACTIONS AND BROKERAGE............................. 4
General Brokerage Policy.................................... 4
Section 28(e) Standards..................................... 6
Portfolio Turnover.......................................... 7
Brokerage Commissions Paid.................................. 7
INVESTMENT PROGRAMS.............................................. 7
Money Market Obligations.................................... 8
Repurchase Agreements....................................... 9
Lending of Portfolio Securities............................. 9
Reverse Repurchase Agreements............................... 9
Delayed Delivery Agreements................................. 10
When-Issued Securities...................................... 10
Special Situations.......................................... 11
Warrants.................................................... 11
Short Sales................................................. 11
Rule 144A Securities........................................ 11
Utilities Industry.......................................... 12
HEDGING AND OTHER INVESTMENT TECHNIQUES.......................... 13
INVESTMENT RESTRICTIONS.......................................... 15
Fundamental Restrictions.................................... 15
Non-fundamental Restrictions................................ 16
MANAGEMENT....................................................... 17
Directors and Officers...................................... 17
Investment Advisory and Administrative Services Agreements.. 23
The Distribution Agreement.................................. 27
DETERMINATION OF NET ASSET VALUE................................. 27
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS......................... 30
MISCELLANEOUS INFORMATION........................................ 30
Audit Reports............................................... 30
Legal Matters............................................... 31
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
Custodian and Transfer Agent................................ 31
Principal Holders of Securities............................. 31
Other Information........................................... 34
FINANCIAL STATEMENTS............................................. FS
ii
</TABLE>
<PAGE>
INTRODUCTION
AIM Variable Insurance Funds, Inc. (the "Company") is a mutual fund. The
rules and regulations of the United States Securities and Exchange Commission
(the "SEC") require all mutual funds to furnish prospective investors certain
information concerning the activities of the fund being considered for
investment. This information is included in a Prospectus dated May 1, 1995,
which relates to the nine series portfolios of the Company (referred to
collectively as the "Funds" and separately as a "Fund"). Additional copies of
the Prospectus and this Statement of Additional Information may be obtained
without charge by writing the principal distributor of the Funds' shares, A I M
Distributors, Inc. ("AIM Distributors"), P. O. Box 4739, Houston, TX 77210-4739
or by calling (713) 626-1919. Investors must receive a Prospectus before they
invest.
This Statement of Additional Information is intended to furnish prospective
investors with additional information concerning the Funds. Some of the
information required to be in this Statement of Additional Information is also
included in the Funds' current Prospectus; and, in order to avoid repetition,
reference will be made to sections of the Prospectus. Additionally, the
Prospectus and this Statement of Additional Information omit certain information
contained in the Registration Statement filed with the SEC. Copies of the
Registration Statement, including items omitted from the Prospectus and this
Statement of Additional Information, may be obtained from the SEC by paying the
charges prescribed under its rules and regulations.
GENERAL INFORMATION ABOUT THE FUNDS
THE COMPANY AND ITS SHARES
The Company was organized on January 22, 1993, as a Maryland corporation,
and is registered with the SEC as an open-end, series, management investment
company. The Company currently consists of nine separate portfolios (i.e., the
"Funds") as follows: the AIM V.I. Capital Appreciation Fund ("Capital
Appreciation Fund"), the AIM V.I. Diversified Income Fund ("Diversified Income
Fund"), the AIM V.I. Global Utilities Fund ("Global Utilities Fund") (formerly
known as the AIM V.I. Utilities Fund), the AIM V.I. Government Securities Fund
("Government Fund"), the AIM V.I. Growth Fund ("Growth Fund"), the AIM V.I.
Growth and Income Fund ("Growth & Income Fund"), the AIM V.I. International
Equity Fund ("International Fund"), the AIM V.I. Money Market Fund ("Money
Market Fund"), and the AIM V.I. Value Fund ("Value Fund").
Each share of a Fund is entitled to one vote, to participate equally in
dividends and distributions declared by the Board of Directors with respect to
the Fund and, upon liquidation of the Fund, to participate in its proportionate
share of the net assets allocable to the Fund remaining after satisfaction of
outstanding liabilities of the Fund. Fund shares are fully paid, non-assessable
and fully transferable when issued and have no preemptive, conversion or
exchange rights. Fractional shares have proportionately the same rights,
including voting rights, as are provided for a full share.
Shareholders of the Funds do not have cumulative voting rights, and
therefore the holders of more than 50% of the outstanding shares of all Funds
voting together for election of directors may elect all of the members of the
Board of Directors of the Company. In such event, the remaining holders cannot
elect any directors of the Company. See "General Information" in the Prospectus.
1
<PAGE>
PERFORMANCE
TOTAL RETURN CALCULATIONS
Total returns quoted in advertising reflect all aspects of the applicable
Fund's return, including the effect of reinvesting dividends and capital gain
distributions, and any change in such Fund's net asset value per share (NAV)
over the period. Average annual returns are calculated by determining the growth
or decline in value of a hypothetical investment in a particular Fund over a
stated period, and then calculating the annually compounded percentage rate that
would have produced the same result if the rate of growth or decline in value
had been constant over the period. While average annual returns are a convenient
means of comparing investment alternatives, investors should realize that a
Fund's performance is not constant over time, but changes from year to year, and
that average annual returns do not represent the actual year-to-year performance
of such Fund.
In addition to average annual returns, each Fund may quote unaveraged or
cumulative total returns reflecting the simple change in value of an investment
over a stated period. Average annual and cumulative total returns may be quoted
as a percentage or as a dollar amount, and may be calculated for a single
investment, a series of investments, and/or a series of redemptions, over any
time period. Total returns may be broken down into their components of income
and capital (including capital gains and changes in share price) in order to
illustrate the relationship of these factors and their contributions to total
return. Total returns and other performance information may be quoted
numerically or in a table, graph, or similar illustration.
HISTORICAL PORTFOLIO RESULTS
The Funds' average annual and cumulative total return for the one year
period ended January 31, 1995 and average annual and cumulative total returns
for the period May 5, 1993 (commencement of operations) through January 31,
1995, were as follows:
<TABLE>
<CAPTION>
Since
Inception
--------------------
Average
One Annual Cumulative
Year Return Return
------ ------- ----------
<S> <C> <C> <C>
AIM V.I. Capital Appreciation Fund -3.91% 11.55% 20.97%
AIM V.I. Diversified Income Fund -6.35% .83% 1.46%
AIM V.I. Global Utilities Fund* -.56% -.56% -.56%
AIM V.I. Government Securities Fund -3.42% .69% 1.20%
AIM V.I. Growth Fund -7.11% 4.42% 7.82%
AIM V.I. Growth and Income Fund* .90% .90% .90%
AIM V.I. International Equity Fund -11.48% 5.94% 10.57%
AIM V.I. Money Market Fund 3.98% 3.22% 5.67%
AIM V.I. Value Fund -2.03% 10.75% 19.46%
</TABLE>
* The inception date of the AIM V.I. Global Utilities Fund and the AIM
V.I. Growth and Income Fund was May 2, 1994.
The total returns quoted above do not reflect charges levied at the
insurance company separate account level. For a complete description of the
applicable charges, see the fee table in the prospectus for the appropriate
insurance company separate account.
2
<PAGE>
Each Fund's performance may be compared in advertising to the
performance of other mutual funds in general, or of particular types of mutual
funds, especially those with similar objectives. Such performance data may be
prepared by Lipper Analytical Services, Inc., Morningstar, Inc. and other
independent services which monitor the performance of mutual funds. The Funds
may also advertise mutual fund performance rankings which have been assigned to
each respective Fund by such monitoring services.
Each Fund's performance may also be compared in advertising to the
performance of comparative benchmarks such as the Consumer Price Index ("CPI"),
the Standard & Poor's ("S&P") 500 Stock Index, and fixed-price investments such
as bank certificates of deposit and/or savings accounts.
The International Fund's performance may also be compared in advertising
to performance of comparative benchmarks such as The Financial Times--Actuaries
World Indices (a wide range of comprehensive measures of stock price performance
for the major stock markets and regional areas), Morgan Stanley Capital
International Indices, including the EAFE Index, Pacific Basin Index and Pacific
Ex Japan Index (a widely recognized series of indices in international market
performance), and indices of stocks comparable to those in which the Fund
invests.
Each Fund's advertising may from time to time include historical
discussions of general economic conditions such as inflation rates and changes
in the stock market, foreign and domestic interest rates and foreign and
domestic political circumstances and events.
In addition, each Fund's long-term performance may be described in
advertising in relation to historical, political and/or economic events.
From time to time, the Funds' sales literature and/or advertisements may
discuss generic topics pertaining to the mutual fund industry. This includes,
but is not limited to, literature addressing general information about mutual
funds, variable annuities, dollar-cost averaging, stocks, bonds, money markets,
certificates of deposit, retirement, retirement plans, asset allocation, tax-
free investing, college planning and inflation.
YIELD INFORMATION
Quotations of yield on the Money Market Fund may appear from time to
time in the financial press and in advertisements.
The standard formula for calculating yield for the Money Market Fund is
as follows:
The Money Market Fund's yield is its investment income, less expenses,
expressed as a percentage of assets on an annualized basis for an identified
period, usually seven days. The yield is expressed as a simple annualized yield
and as a compounded effective yield. The yield does not reflect the fees and
charges imposed on the assets of the insurance company separate account.
The simple annualized yield is computed by determining the net change
(exclusive of realized gains and losses from the sale of securities and
unrealized appreciation and depreciation) in the value of a hypothetical pre-
existing account having a balance of one share at the beginning of the period,
dividing the net change in account value by the value of the account at the
beginning of the period, and annualizing the resulting quotient (base period
return) on a 365-day basis. The net change in account value reflects the value
of additional shares purchased with dividends from the original shares in the
account during the period, dividends declared on such additional shares during
the period, and expenses accrued during the period.
3
<PAGE>
The compounded effective yield is computed by determining the
unannualized base period return, adding one to the base period return, raising
the sum to a power equal to 365 divided by the number of days in the period, and
subtracting one from the result. Historical yields are not necessarily
indicative of future yields. Rates of return will vary as interest rates and
other conditions affecting money market instruments change. Yields also depend
on the quality, length of maturity and type of instruments in the Fund's
portfolio and the Fund's operating expenses. Quotations of yield will be
accompanied by information concerning the average weighted maturity of the Fund.
Comparison of the quoted yields of various investments is valid only if yields
are calculated in the same manner and for identical limited periods. When
comparing the yield for a Fund with yields quoted with respect to other
investments, shareholders should consider (a) possible differences in time
periods, (b) the effect of the methods used to calculate quoted yields, (c) the
quality and average-weighted maturity of portfolio investments, expenses,
convenience, liquidity and other important factors, and (d) the taxable or tax-
exempt character of all or part of dividends received.
The simple annualized yield and compounded effective yield for the Money
Market Fund for the 7 days ended January 31, 1995 were 5.49% and 5.64%,
respectively.
PORTFOLIO TRANSACTIONS AND BROKERAGE
GENERAL BROKERAGE POLICY
Subject to policies established by the Board of Directors of the
Company, A I M Advisors, Inc. ("AIM") is responsible for decisions to buy and
sell securities for each Fund, for the selection of broker-dealers, for the
execution of the Fund's investment portfolio transactions, for the allocation of
brokerage fees in connection with such transactions and, where applicable, for
the negotiation of commissions and spreads on transactions. AIM's primary
consideration in effecting a security transaction is to obtain the best net
price and the most favorable execution of the order. While AIM generally seeks
reasonably competitive commission rates, each Fund does not necessarily pay the
lowest commission or spread available.
Purchases and sales of portfolio securities for the Diversified Income
Fund, the Money Market Fund and the Government Fund are generally transacted
with the issuer or a primary market maker. In addition, a portion of the
securities in which the Funds invest may be traded in over-the-counter ("OTC")
markets. In such transactions, the Fund deals directly with the dealers who make
markets in the securities involved, except in those circumstances where better
prices and executions are available elsewhere. Portfolio transactions placed
through dealers serving as primary market makers are effected at net prices,
without commissions as such, but which include compensation to the dealer in the
form of mark up or mark down.
Traditionally, commission rates have not been negotiated on stock
markets outside the United States. In recent years, however, an increasing
number of overseas stock markets have adopted a system of negotiated rates,
although a number of markets continue to be subject to an established schedule
of minimum commission rates.
Foreign equity securities may be held by the Fund in the form of
American Depositary Receipts ("ADRs") or European Depositary Receipts ("EDRs"),
or other securities representing underlying securities of foreign issuers, or
securities convertible into foreign equity securities. These securities may not
necessarily be denominated in the same currency as the securities into which
they may be converted. ADRs are receipts typically issued by a United States
bank or trust company which evidence ownership of underlying securities issued
by a foreign corporation. EDRs are receipts issued in Europe which evidence a
similar ownership arrangement. Generally, ADRs, in registered form, are designed
for use in the United States securities markets, and EDRs, in bearer form, are
designed for use in European securities markets.
4
<PAGE>
ADRs and EDRs may be listed on stock exchanges, or traded in OTC markets in the
United States or Europe, as the case may be. ADRs, like other securities traded
in the United States, will be subject to negotiated commission rates.
The Funds are not under any obligation to deal with any broker or group
of brokers in the execution of transactions in portfolio securities. Brokers who
provide supplemental investment research to AIM may receive orders for
transactions by a Fund. Information so received will be in addition to and not
in lieu of the services required to be performed by AIM under its agreements
with the Fund, and the expenses of AIM will not necessarily be reduced as a
result of the receipt of such supplemental information. Certain research
services furnished by broker-dealers may be useful to AIM in connection with its
services to other advisory clients, including the other AIM Funds. Also, a Fund
may pay a higher price for securities or higher commissions in recognition of
research services furnished by broker-dealers.
AIM may from time to time determine target levels of commission business
for AIM to transact with various brokers on behalf of its clients (including the
Funds) over a certain time period. The target levels will be determined based
upon the following factors, among others: (1) the execution services provided by
the broker; (2) the research services provided by the broker; and (3) the
broker's attitude toward and interest in mutual funds in general and in the
Funds and other mutual funds advised by AIM (collectively, the "AIM Funds") in
particular. No specific formula will be used in connection with any of the
foregoing considerations in determining the target levels. However, if a broker
has indicated a certain level of desired commissions in return for certain
research services provided by the broker, this factor will be taken into
consideration by AIM.
Subject to the overall objective of obtaining best price and execution
for the Funds, AIM may also consider sales of shares of each Fund and of the
other AIM Funds as a factor in the selection of broker-dealers to execute
portfolio transactions for a Fund.
AIM will seek, whenever possible, to recapture for the benefit of a Fund
any commissions, fees, brokerage or similar payments paid by the Fund on
portfolio transactions. Normally, the only fees which may be recaptured are the
soliciting dealer fees on the tender of a Fund's portfolio securities in a
tender or exchange offer.
AIM and its affiliates manage several other investment accounts, some of
which may have investment objectives similar to those of the Funds. It is
possible that, at times, identical securities will be appropriate for investment
by one or more of such investment accounts. The position of each account,
however, in the securities of the same issue may vary and the length of time
that each account may choose to hold its investment in the securities of the
same issue may likewise vary. The timing and amount of purchases by each account
will also be determined by its cash position. If the purchase or sale of
securities is consistent with the investment policies of a Fund(s) and one or
more of these accounts is considered at or about the same time. AIM may combine
such transactions, in accordance with applicable laws and regulations, in order
to obtain the best net price and most favorable execution. Simultaneous
transactions could, however, adversely affect the ability of a Fund to obtain or
dispose of the full amount of a security which it seeks to purchase or sell.
These combined transactions, and related brokerage charges, will be
allocated among the Fund(s) and such accounts in a manner deemed equitable by
AIM. In some cases the procedure for allocating portfolio transactions among the
various investment accounts advised by AIM could have an adverse effect on the
price or amount of securities available to a Fund. In making such allocations,
the main factors considered by AIM are the respective investment objectives and
policies of its advisory clients, the relative size of portfolio holdings of the
same or comparable securities, the availability of cash for investment, the size
of investment commitments generally held and the judgments of the persons
responsible for recommending the investment.
5
<PAGE>
From time to time, an identical security may be sold by an AIM Fund or
another investment account advised by AIM or A I M Capital Management, Inc.
("AIM Capital") and simultaneously purchased by another investment account
advised by AIM or AIM Capital, when such transactions comply with applicable
rules and regulations and are deemed consistent with the investment objective(s)
and policies of the investment accounts advised by AIM or AIM Capital.
Procedures pursuant to Rule 17a-7 under the Investment Company Act of 1940, as
amended (the "1940 Act") regarding transactions between investment accounts
advised by AIM or AIM Capital have been adopted by the Boards of
Directors/Trustees of the various AIM Funds, including the Company. Although
such transactions may result in custodian, tax or other related expenses, no
brokerage commissions or other direct transaction costs are generated by
transactions among the investment accounts advised by AIM or AIM Capital.
SECTION 28(e) STANDARDS
As permitted by Section 28(e) of the Securities Exchange Act of 1934,
AIM may cause a Fund to pay a broker that provides brokerage and research
services to AIM an amount of commission for effecting a securities transaction
for the Fund in excess of the commission another broker would have charged for
effecting that transaction. To obtain the benefit of Section 28(e), AIM must
make a good faith determination that the commissions paid are "reasonable in
relation to the value of the brokerage and research services provided . . .
viewed in terms of either that particular transaction or [its] overall
responsibilities with respect to the accounts as to which [it] exercises
investment discretion" and that the services provided by a broker provide AIM
with lawful and appropriate assistance in the performance of its investment
decision-making responsibilities. Accordingly, the price to a Fund in any
transaction may be less favorable than that available from another broker-dealer
if the difference is reasonably justified by other aspects of the portfolio
execution services offered. The Funds will not knowingly pay a higher spread
than the lowest available in principal transactions as a result of its receipt
of research services from a dealer.
Broker-dealers utilized by AIM may furnish statistical, research and
other information or services which are deemed by AIM to be beneficial to the
Funds' investment programs. Research services received from brokers supplement
AIM's own research (and the research of sub-advisors to other clients of AIM)
and may include the following types of information: statistical and background
information on industry groups and individual companies; forecasts and
interpretations with respect to U.S. and foreign economies, securities markets,
specific industry groups and individual companies; information on political
developments; portfolio management strategies; performance information on
securities and information concerning prices of securities; and information
supplied by specialized services to AIM and to the Company's directors with
respect to the performance, investment activities and fees and expenses of other
mutual funds. Such information may be communicated electronically, orally or in
written form. Research services may also include the providing of equipment used
to communicate research information, the arranging of meetings with management
of companies and the providing of access to consultants who supply research
information.
The outside research assistance is useful to AIM since the brokers
utilized by AIM as a group tend to follow a broader universe of securities and
other matters than AIM's staff can follow. In addition, this research provides
AIM with a diverse perspective on financial markets. Research services which are
provided to AIM by brokers are available for the benefit of all accounts managed
or advised by AIM (or by sub-advisors to accounts managed or advised by AIM). In
some cases, the research services are available only from the broker providing
such services. In other cases, the research services may be obtainable from
alternative sources in return for cash payments. AIM is of the opinion that
because the broker research supplements rather than replaces its research, the
receipt of such research does not tend to decrease its expenses, but tends to
improve the quality of its investment advice. However, to the extent that AIM
would have purchased any such research services had such services not been
provided by brokers, the expenses of such services to AIM could be considered to
have been reduced accordingly.
6
<PAGE>
For the fiscal year ended January 31, 1995, certain Funds paid brokerage
commissions to certain brokers for research services. The amount of such
transactions and related commissions paid by each Fund were as follows:
<TABLE>
<CAPTION>
Fund Commissions Transactions
---- ----------- --------------
<S> <C> <C>
Capital Appreciation Fund $11,111.16 $ 5,296,689.18
Global Utilities Fund $ 392.70 $ 211,559.08
Growth Fund $10,561.16 $ 6,353,020.77
Growth & Income Fund $ 941.16 $ 576,983.05
Value Fund $24,700.34 $12,315,083.32
</TABLE>
As of the fiscal year ended January 31, 1995, no Funds held securities of
their regular brokers.
PORTFOLIO TURNOVER
The portfolio turnover rate of each Fund is shown under "Financial
Highlights" in the Prospectus. In any particular year, however, market
conditions could result in portfolio activity at a rate greater or lesser than
anticipated. Higher portfolio turnover increases transaction costs to the Fund.
BROKERAGE COMMISSIONS PAID
Brokerage commissions paid by each of the Funds listed below were as
follows for the fiscal year ended January 31, 1995 and for the period May 5,
1993 (date operations commenced) through January 31, 1994.
<TABLE>
<CAPTION>
1995 1994
----- ----
<S> <C> <C>
AIM V.I. Capital Appreciation Fund... $161,528 $48,753
AIM V.I. Diversified Income Fund..... $ 17,471 $ -0-
AIM V.I. Global Utilities Fund....... $ 9,280* N/A
AIM V.I. Government Securities Fund.. $ -0- $ -0-
AIM V.I. Growth Fund................. $173,691 $54,735
AIM V.I. Growth and Income Fund...... $ 20,436* N/A
AIM V.I. International Equity Fund... $ 89,187 $85,606
AIM V.I. Money Market Fund........... $ -0- $ -0-
AIM V.I. Value Fund.................. $362,162 $76,623
</TABLE>
* Commissions paid are for the period May 2, 1994 (date operations
commenced) through January 31, 1995.
INVESTMENT PROGRAMS
Information concerning each Fund's fundamental investment objective is
set forth in the Prospectus under the heading "Investment Objectives and
Programs." There can be no assurance that any Fund will achieve its objective.
The principal features of each Fund's investment program and the primary risks
associated with that investment program are discussed in the Prospectus under
the heading "Investment Objectives and Programs--Certain Investment Strategies
and Techniques." The following discussion of
7
<PAGE>
investment policies supplements the discussion of the investment objectives and
policies set forth in the Prospectus.
MONEY MARKET OBLIGATIONS
As set forth in the Prospectus, the Money Market Fund will limit its
purchases of Money Market Obligations to U.S. dollar denominated securities
which are
(i) "First Tier" securities, as such term is defined from time to
time in Rule 2a-7 under the Investment Company Act of 1940 (the "1940
Act"), or
(ii) securities guaranteed as to payment of principal and
interest by the U.S. Government.
As of the date of this Statement of Additional Information, Rule 2a-7
defines a "First Tier Security" as any "Eligible Security" (as defined in Rule
2a-7 and set forth in this Statement of Additional Information under
"Determination of Net Asset Value") that:
(i) is rated (or that has been issued by an issuer that is rated
with respect to a class of short-term debt obligations, or any
security within that class, that is comparable in priority and
security with the security) by the Requisite NRSROs(1) in the highest
rating category for short-term debt obligations (within which there
may be sub-categories or gradations indicating relative standing); or
(ii) is a security described in paragraph (a)(5)(ii) of Rule 2a-7
(i.e. a security that at the time of issuance was a long-term security
but that has a remaining maturity of 397 days or less) whose issuer
has received from the Requisite NRSROs a rating, with respect to a
class of short-term debt obligations (or any security within that
class) that now is comparable in priority and security with the
security, in the highest rating category for short-term debt
obligations (within which there may be sub-categories or gradations
indicating relative standing); or
(iii) is an Unrated Security that is of comparable quality to a
security meeting the requirements of clauses (i) and (ii) above, as
determined by the Company's Board of Directors.
Subsequent to its purchase by the Fund, an issue of Money Market
Obligations may cease to be a First Tier security. Subject to certain
exceptions set forth in Rule 2a-7, such an event will not require the
elimination of the security from the Fund, but AIM will consider such an event
to be relevant in its determination of whether the Fund should continue to hold
the security. To the extent that the ratings applied by an NRSRO to Money
Market Obligations may change as a result of changes in these rating systems,
the Fund will attempt to use comparable ratings as standards for its investments
in Money Market Obligations in accordance with the investment policies described
herein.
----------
(1) "Requisite NRSRO" shall mean (a) any two nationally recognized statistical
rating organizations that have issued a rating with respect to a security
or class of debt obligations of an issuer, or (b) if only one NRSRO has
issued a rating with respect to such security or issuer at security, that
NRSRO. At present the NRSROs are: Standard & Poor's Corp., Moody's
Investors Service, Inc., Duff and Phelps, Inc., Fitch Investors Services,
Inc. and, with respect to certain types of securities, IBCA Limited and its
affiliate, IBCA Inc. Subcategories or gradations in ratings (such as a "+"
or "-") do not count as rating categories.
8
<PAGE>
REPURCHASE AGREEMENTS
The Funds may each enter into repurchase agreements. A repurchase
agreement is an instrument under which a Fund acquires ownership of a debt
security and the seller (usually a broker or bank) agrees, at the time of the
sale, to repurchase the obligation at a mutually agreed upon time and price,
thereby determining the yield during the Fund's holding period.
Although the underlying collateral for repurchase agreements may have
maturities exceeding one year, the Funds will not enter into repurchase
agreements expiring in more than seven days. The Fund may, however, enter into a
"continuing contract" or "open" repurchase agreement under which the seller is
under a continuing obligation to repurchase the underlying obligation from the
Fund on demand and the effective interest rate is negotiated on a daily basis.
Repurchase agreements are considered to be loans by the Fund under the 1940 Act.
Securities subject to repurchase agreements will be held in the custodian's
account with the Federal Book-Entry System on behalf of the Fund.
LENDING OF PORTFOLIO SECURITIES
For the purpose of realizing additional income, each Fund (except the
Money Market Fund) may lend portfolio securities in amounts not to exceed
33 1/3% of a Fund's total assets. Securities loans are made to banks, brokers
and other financial institutions pursuant to agreements requiring that the loans
be continuously secured by collateral at least equal at all times to the value
of the securities lent, marked to market on a daily basis. The collateral
received will consist of cash, U.S. Government securities, letters of credit or
such other collateral as may be permitted under each such Fund's investment
program. While the securities are being lent, a Fund will continue to receive
the equivalent of the interest or dividends paid by the issuer on the
securities, as well as interest on the investment of the collateral or a fee
from the borrower. A Fund has a right to call each loan and obtain the
securities on five business days' notice or, in connection with securities
trading on foreign markets, within such longer period of time which coincides
with the normal settlement period for purchases and sales of such securities in
such foreign markets. A Fund will not have the right to vote securities while
they are being lent, but it will call a loan in anticipation of any important
vote. The risks in lending portfolio securities, as with other extensions of
secured credit, consist of possible delay in receiving additional collateral or
in the recovery of the securities or possible loss of rights in the collateral
should the borrower fail financially. Loans will only be made to persons deemed
by AIM to be of good standing and will not be made unless, in the judgment of
AIM, the consideration to be earned from such loans would justify the risk.
REVERSE REPURCHASE AGREEMENTS
Each of the Funds may enter into reverse repurchase agreements, which
involve the sale of securities (i.e., money market instruments in the case of
the Money Market Fund) held by the Fund, with an agreement that the Fund will
repurchase the securities at an agreed upon price and date. The Funds may employ
reverse repurchase agreements when necessary to meet unanticipated net
redemptions so as to avoid liquidating other portfolio securities during
unfavorable market conditions and only in amounts up to 33 1/3% of the value of
each Fund's total assets at the time any such Fund enters into a reverse
repurchase agreement. At the time it enters into a reverse repurchase agreement,
a Fund will segregate high-quality debt securities having a dollar value equal
to the repurchase price. The segregated securities will be marked-to-market, and
additional securities will be segregated if necessary to maintain adequate
coverage. The Funds will utilize reverse repurchase agreements when the
interest income to be earned from portfolio investments which would otherwise
have to be liquidated to meet redemptions is greater than the interest expense
incurred as a result of the reverse repurchase transactions.
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DELAYED DELIVERY AGREEMENTS
Each of the Funds may enter into delayed delivery agreements, which
involve commitments by each such Fund to dealers or issuers to acquire
securities or instruments at a specified future date beyond the customary
settlement date for such securities. These commitments fix the payment price and
interest rate to be received on the investment. Delayed delivery agreements will
not be used as a speculative or leverage technique. Rather, from time to time,
AIM can anticipate that cash for investment purposes will result from scheduled
maturities of existing portfolio instruments or from net sales of shares of the
Fund. Until the settlement date, the Fund will segregate cash or other high-
quality debt securities of a dollar value sufficient at all times to make
payment for the delayed delivery securities. The delayed delivery securities,
which will not begin to accrue interest until the settlement date, will be
recorded as an asset of the Fund and will be subject to the risks of market
fluctuation. The purchase price of the delayed delivery securities is a
liability of the Fund until settlement. If cash is not available to the Fund at
the time of settlement, the Fund may be required to dispose of portfolio
securities that it would otherwise hold to maturity in order to meet its
obligation to accept delivery under a delayed delivery agreement. The Board of
Directors has determined that entering into delayed delivery agreements does not
present a materially increased risk of loss to shareholders, but the Board of
Directors may restrict the use of delayed delivery agreements if the risk of
loss is determined to be material or if it affects the constant net asset value
of the Money Market Fund.
WHEN-ISSUED SECURITIES
Each of the Funds may purchase securities on a "when-issued" basis.
Many new issues of debt securities are offered on a "when-issued" basis, that
is, the date for delivery of and payment for the securities is not fixed at the
date of purchase, but is set after the securities are issued (normally within
forty-five days after the date of the transaction). The payment obligation and
the interest rate that will be received on the securities are fixed at the time
the buyer enters into the commitment. The Funds will only make commitments to
purchase such debt securities with the intention of actually acquiring such
securities, but the Funds may each sell these securities before the settlement
date if it is deemed advisable. The Fund holds, and maintains until the
settlement date segregated cash or other high quality debt securities of a
dollar value sufficient at all times to make payment for the when-issued
securities. The securities will be marked-to-market and additional cash or
securities will be segregated if necessary to maintain adequate coverage of the
when-issued commitments.
Securities purchased on a when-issued basis and the securities held in
the Funds' portfolios are subject to changes in market value based upon the
public's perception of the creditworthiness of the issuer and changes in the
level of interest rates (which will generally result in all of those securities
changing in value in the same way, i.e., all those securities experiencing
appreciation when interest rates rise). Therefore, if, in order to achieve
higher interest income, a Fund is to remain substantially fully invested at the
same time that it has purchased securities on a when-issued basis, there will be
a possibility that the market value of the Fund's assets will fluctuate to a
greater degree. Furthermore, when the time comes for the Fund to meet its
obligations under when-issued commitments, the Fund will do so by using then-
available cash flow, by sale of the segregated securities, by the sale of other
securities or, although it would not normally expect to do so, by directing the
sale of the when-issued securities themselves (which may have a market value
greater or less than the applicable Fund's payment obligation).
A sale of securities to meet such obligations carries with it a
greater potential for the realization of net short-term capital gains, which are
not exempt from federal income taxes. The value of when-issued securities on the
settlement date may be more or less than the purchase price.
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SPECIAL SITUATIONS
Although the Capital Appreciation Fund does not currently intend to do
so, it may invest in "special situations." A special situation arises when, in
the opinion of the Fund's management, the securities of a particular company
will, within a reasonably estimable period of time, be accorded market
recognition at an appreciated value solely by reason of a development applicable
to that company, and regardless of general business conditions or movements of
the market as a whole. Developments creating special situations might include,
among others: liquidations, reorganizations, recapitalizations, mergers,
material litigation, technical breakthroughs and new management or management
policies. Although large and well known companies may be involved, special
situations more often involve comparatively small or unseasoned companies.
Investments in unseasoned companies and special situations often involve much
greater risk than is inherent in ordinary investment securities. The Capital
Appreciation Fund will not, however, purchase securities of any company with a
record of less than three years' continuous operation (including that of
predecessors) if such purchase would cause the Fund's investment in all such
companies, taken at cost, to exceed 5% of the value of the Fund's total assets.
WARRANTS
The Growth & Income Fund may, from time to time, invest in warrants.
Warrants are, in effect, longer-term call options. They give the holder the
right to purchase a given number of shares of a particular company at specified
prices within certain periods of time. The purchaser of a warrant expects that
the market price of the security will exceed the purchase price of the warrant
plus the exercise price of the warrant, thus giving him a profit. Of course,
since the market price may never exceed the exercise price before the expiration
date of the warrant, the purchaser of the warrant risks the loss of the entire
purchase price of the warrant. Warrants generally trade in the open market and
may be sold rather than exercised. Warrants are sometimes sold in unit form
with other securities of an issuer. Units of warrants and common stock may be
employed in financing young, unseasoned companies. The purchase price of a
warrant varies with the exercise price of a warrant, the current market value of
the underlying security, the life of the warrant and various other investment
factors. The investment in warrants by the Fund, valued at the lower of cost or
market, may not exceed 5% of the value of its net assets and not more than 2% of
such value may be warrants which are not listed on the New York or American
Stock Exchanges.
SHORT SALES
Each of the Funds (except the Money Market Fund) may enter into short
sales transactions from time to time. None of these Funds will make short sales
of securities nor maintain a short position unless at all times when a short
position is open, the Fund owns an equal amount of such securities or securities
convertible into or exchangeable, without payment of any further consideration,
for securities of the same issue as, and equal in amount to, the securities sold
short. This is a technique known as selling short "against the box." Such short
sales will be used by each of the Funds for the purpose of deferring recognition
of gain or loss for federal income tax purposes. In no event may more than 10%
of the value of any such Fund's total assets be deposited or pledged as
collateral for such sales at any time.
RULE 144A SECURITIES
Each of the Funds may purchase securities which, while privately
placed, are eligible for purchase and sale pursuant to Rule 144A under the
Securities Act of 1933 (the "1933 Act"). This Rule permits certain qualified
institutional buyers, such as the Funds, to trade in privately placed securities
even though such securities are not registered under the 1933 Act. AIM, under
the supervision of the Company's Board of Directors, will consider whether
securities purchased under Rule 144A are illiquid and thus subject to the Fund's
restriction of investing no more than 15% of its assets (10% in the case of the
Money Market Fund) in illiquid securities. Determination of whether a Rule 144A
security is liquid or not is a question of fact. In making this determination
AIM will consider the trading markets for the specific security taking into
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account the unregistered nature of a Rule 144A security. In addition, AIM could
consider the (i) frequency of trades and quotes, (ii) number of dealers and
potential purchasers, (iii) dealer undertakings to make a market, and (iv)
nature of the security and of market place trades (for example, the time needed
to dispose of the security, the method of soliciting offers and the mechanics of
transfer). The liquidity of Rule 144A securities will also be monitored by AIM
and, if as a result of changed conditions, it is determined that a Rule 144A
security is no longer liquid, the Fund's holdings of illiquid securities will be
reviewed to determine what, if any, action is required to assure that the Fund
does not invest more than 15% of its assets (10% in the case of the Money Market
Fund) in illiquid securities. Investing in Rule 144A securities could have the
effect of increasing the amount of each Fund's investments in illiquid
securities if qualified institutional buyers are unwilling to purchase such
securities. At the present time, it is not possible to predict with certainty
how the market for Rule 144A securities will develop.
UTILITIES INDUSTRY
The following is a general description of the particular types of
utilities industries in which the Global Utilities Fund may invest.
Electric Utility Industry. Electric utilities are heavily regulated.
Local rates are subject to the review of state commissions, and sales either
between companies or that cross state lines are subject to review by the Federal
Energy Regulatory Commission. The industry is also subject to regulation by the
SEC under the Public Utility Holding Company Act of 1935. In addition,
companies constructing or operating nuclear powered generating stations are
subject to extensive regulation by the Nuclear Regulatory Commission.
Electric utility companies are also subject to extensive local
regulation in environmental and site location matters. Future legislation with
regard to the issues of acid rain and toxic and radioactive wastes could have a
significant impact on the manner in which utility companies conduct their
business, and the costs that they incur. Since the late 1970s, investor-owned
utilities have experienced a number of unfavorable regulatory trends, including
increased regulatory resistance to price increases and new legislation
encouraging competition.
Natural Gas Industry. The natural gas industry is comprised primarily
of many small distribution companies and a few large interstate pipeline
companies. The Public Utility Holding Company Act of 1935 has generally acted
as a bar to the consolidation of pipeline and distribution companies.
Regulation of these companies is similar to that of electric companies. The
performance of natural gas utilities may also be substantially affected by
fluctuations in energy prices.
Communications Industry. Most of the communications industry capacity
is concentrated in the hands of a few very large publicly-held companies, unlike
the situation in the electric and gas industries. Significant risks for the
investor to overcome still exist, however, including risk relating to pricing at
marginal versus embedded cost. New entrants may have lower costs of material
due to newer technologies or lower standards of reliability than those
heretofore imposed by American Telephone & Telegraph ("AT&T") on the industry.
Accordingly, the marginal cost of incremental service is much lower than the
costs embedded in an existing network. Communications companies are not subject
to the Public Utility Holding Company Act of 1935.
Interstate communications service may be subject to Federal
Communications Commission regulation. Local service may be regulated by the
states. In addition, AT&T and its former subsidiaries are still subject to
judicial review pursuant to the settlement of the antitrust case brought against
them by the Department of Justice.
Water Utility Industry. The water utility industry is composed of
regulated public utilities that are involved in the distribution of drinking
water to densely populated areas. The industry is geographically diverse and
subject to the same rate base and rate of return regulations as are other public
utilities.
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Demand for water is most heavily influenced by the local weather, population
growth in the service area and new construction. Supplies of clean, drinkable
water are limited and are primarily a function of the amount of past rainfall.
Other. In addition to the particular types of utilities industries
described above, the Fund may invest in developing utility technology companies
(such as cellular telephone, fiber optics and satellite communications firms)
and in holding companies which derive a substantial portion of their revenues
from utility-related activities.
HEDGING AND OTHER INVESTMENT TECHNIQUES
As described in the Prospectus under "Certain Investment Strategies
and Techniques," each of the Funds, other than the Money Market Fund, may enter
into transactions in options, futures and forward contracts on a variety of
instruments and indexes, in order to protect against declines in the value of
portfolio securities and increases in the cost of securities to be acquired as
well as to increase a Fund's return. The discussion below supplements the
discussion in the Prospectus.
Options. A Fund may write covered call options both to reduce the
risks associated with certain of its investments and to increase total
investment return through the receipt of premiums. In return for the premium
income, the Fund loses any opportunity to profit from an increase in the market
price of the underlying securities, above the exercise price, while the contract
is outstanding, except to the extent the premium represents a profit. The Fund
also retains the risk of loss if the price of the security declines, although
the premium is intended to offset that loss in whole or in part. As long as its
obligations under the option continue, a Fund must assume that the call may be
exercised at any time and that the net proceeds realized from the sale of the
underlying securities pursuant to the call may be substantially below the
prevailing market price.
A Fund may enter into a "closing purchase transaction", by purchasing
an option identical to the one it has written, and terminate its obligations
under the covered call. The Fund will realize a gain (or loss) from a closing
purchase transaction if the amount paid to purchase a call option is less (or
more) than the premium received upon writing the corresponding call option. Any
loss resulting from the exercise or closing out of a call option is likely to be
offset in whole or in part by unrealized appreciation of the underlying security
owned by the Fund primarily because a price increase of a call option generally
reflects an increase in the market price of the securities on which the option
is based. In order to sell portfolio securities that cover a call option, a Fund
will effect a closing purchase transaction so as to close out any existing
covered call option on those securities. A closing purchase transaction for
exchange-traded options may be made only on a national securities exchange. A
liquid secondary market on an exchange may not always exist for any particular
option, or at any particular time, and, for some options, such as over-the-
counter options, no secondary market on an exchange may exist. If a Fund is
unable to effect a closing purchase transaction, the Fund will not sell the
underlying security until the option expires or the Fund delivers the underlying
security upon exercise.
A Fund may write put options to earn additional income in the form of
option premiums if it expects the price of the underlying securities to remain
stable or rise during the option period so that the option will not be
exercised. A Fund may also write put options if it expects a decline in the
price of the underlying securities and intends to exercise the option at a price
which, offset by the option premium, is less than the current price. The risk of
either strategy is that the price of the underlying securities may decline by an
amount greater than the premium received.
A Fund may effect a closing purchase transaction to realize a profit
on an outstanding put option or to prevent an outstanding put option from being
exercised. If a Fund is able to enter into a closing purchase transaction, the
Fund will realize a profit (or loss) from that transaction if the cost of the
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transaction is less (or more) than the premium received from the writing of the
option. After writing a put option, a Fund may incur a loss equal to the
difference between the exercise price of the option and the sum of the market
value of the underlying securities plus the premiums received from the sale of
the option.
The purchase of put options on securities enables a Fund to preserve,
at least partially, unrealized gains in an appreciated security in its portfolio
without actually selling the security. In addition, the Fund may continue to
receive interest or dividend income on the security.
An option on a securities index, unlike a stock option (which gives
the holder the right to purchase or sell a specified stock at a specified price)
gives the holder the right to receive a cash "exercise settlement amount" equal
to (i) the difference between the exercise price of the option and the value of
the underlying stock index on the exercise date, multiplied by (ii) a fixed
"index multiplier." A securities index fluctuates with changes in the market
values of the securities included in the index. For example, some securities
index options are based on a broad market index such as the S&P 500 or the NYSE
Composite Index, or a narrower market index such as the S&P 100. Indexes may
also be based on an industry or market segment such as the AMEX Oil and Gas
Index or the Computer and Business Equipment Index. Options on stock indexes are
currently traded on the following exchanges, among others: The Chicago Board
Options Exchange, New York Stock Exchange, and American Stock Exchange. Options
on indexes of debt securities and other types of securities indexes are not
currently available. If such options are introduced and traded on exchanges in
the future, the Funds may use them.
The value of securities index options in any investment strategy
depends upon the extent to which price movements in the portion of the
underlying securities correlate with price movements in the selected securities
index. Perfect correlation is not possible because the securities held or to be
acquired by a Fund will not exactly match the composition of the securities
indexes on which options are written. In the purchase of securities index
options the principal risk is that the premium and transaction costs paid by a
Fund in purchasing an option will be lost if the changes (increase in the case
of a call, decrease in the case of a put) in the level of the index do not
exceed the cost of the option. In writing securities index options, the
principal risk is that a Fund could bear a loss on the options that would be
only partially offset (or not offset at all) by the increased value or reduced
cost of the hedged securities. Moreover, in the event the Fund were unable to
close an option it had written, it might be unable to sell the securities used
as cover.
Futures Contracts. A futures contract is a bilateral agreement to buy
or sell a security (or deliver a cash settlement price, in the case of an index
future) for a set price in the future. When the contract is entered into a good
faith deposit, known as initial margin, is made with the broker. Subsequent
daily payments, known as variation margin, are made to and by the broker
reflecting changes in the value of the security or level of the index. Futures
contracts are authorized by boards of trade designated as "contracts markets" by
the Commodity Futures Trading Commission ("CFTC"). Certain results may be
accomplished more quickly, and with lower transaction costs, in the futures
market (because of its greater liquidity) than in the cash market.
A Fund will incur brokerage fees when it purchases and sells futures
contracts, and it will be required to maintain margin deposits. Positions taken
in the futures markets are typically liquidated through offsetting transactions,
which may result in a gain or a loss, before delivery or cash settlement is
required. However, a Fund may close out a position by making or taking delivery
of the underlying securities wherever it appears economically advantageous to do
so.
Purchases of options on futures contracts may present less risk than
the purchase and sale of the underlying futures contracts, since the potential
loss is limited to the amount of the premium plus related transaction costs. A
call option on a futures contract gives the purchaser the right, in return for
the premium paid, to purchase a futures contract (assume a "long" position) at a
specified exercise price at any time before the option expires. A put option
gives the purchaser the right, in return for the premium paid, to sell
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a futures contract (assume a "short" position), for a specified exercise price,
at any time before the option expires.
Positions in futures contracts may be closed out only on an exchange
or a board of trade which provides the market for such futures. Although the
Funds intend to purchase or sell futures only on exchanges or boards of trade
where there appears to be an active market, there may not always be a liquid
market, and it may not be possible to close a futures position at that time; in
the event of adverse price movements, a Fund would continue to be required to
make daily cash payments of maintenance margin. Whenever futures positions are
used to hedge portfolio securities, however, any increase in the price of the
underlying securities held by the Fund may partially or completely offset losses
on the futures contracts.
If a broker or clearing member of an options or futures clearing
corporation were to become insolvent, the Funds could experience delays and
might not be able to trade or exercise options or futures purchased through that
broker. In addition, the Funds could have some or all of their positions closed
out without their consent. If substantial and widespread, these insolvencies
could ultimately impair the ability of the clearing corporations themselves.
While the principal purpose of engaging in these transactions is to limit the
effects of adverse market movements, the attendant expense may cause the Funds'
returns to be less than if the transactions had not occurred. Their overall
effectiveness, therefore, depends on AIM's accuracy in predicting future changes
in interest rate levels or securities price movements, as well as on the expense
of engaging in these transactions.
INVESTMENT RESTRICTIONS
FUNDAMENTAL RESTRICTIONS
The following restrictions apply to all of the Funds and are
fundamental. Unless permitted by law, they will not be changed for any Fund
without approval of that Fund's voting securities.
None of the Funds will:
(1) invest for the purpose of exercising control over or management
over a company;
(2) act as an underwriter, except to the extent that, in connection
with the disposition of portfolio securities, the fund may be deemed to be an
underwriter for purposes of the 1933 Act;
(3) purchase or sell real estate or any interest therein, except that
each Fund may, as appropriate and consistent with its investment policies and
other investment restrictions, invest in securities of corporate or governmental
entities secured by real estate or marketable interests therein or securities of
issuers that engage in real estate operations or interests therein, and may hold
and sell real estate acquired as a result of ownership in such securities;
(4) purchase or sell commodity contracts, except that each Fund may,
as appropriate and consistent with its investment policies and other investment
restrictions, enter into futures contracts on securities, securities indices and
currency, options on such futures contracts, forward foreign currency exchange
contracts, forward commitments and repurchase agreements;
(5) make loans, except for collateralized loans of portfolio
securities in an amount not exceeding 33 1/3% of the applicable Fund's total
assets. This restriction does not prevent a Fund from purchasing government
obligations, short-term commercial paper, or publicly traded debt, including
bonds, notes, debentures, certificates of deposit, bankers acceptances and
equipment trust certificates, nor does this
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restriction apply to loans made under insurance policies, or through entry into
repurchase agreements, to the extent they may be viewed as loans;
(6) invest in securities of any other investment company except as
part of a merger, consolidation or acquisition of assets and except for the
investment in such securities of funds representing compensation otherwise
payable to Directors of the Company pursuant to any deferred compensation plan
existing at any time between the Company and one or more of its Directors.
Additionally, the International Fund may purchase such securities of investment
companies, provided that such purchase does not cause the Fund (i) to have more
than 5% of the Fund's total assets, taken at market value, invested in any one
such company, (ii) to have an aggregate investment in such companies of more
than 10% of its total assets, taken at market value, or (iii) to own more than
3% of the total outstanding voting stock of any such company;
(7) purchase the securities of issuers conducting their principal
business activity in the same industry if, immediately after such purchase, the
value of its investments in such industry would exceed 25% of its total assets
at market value at the time of each investment, except that the Money Market
Fund may invest up to 100% of its assets in obligations issued by banks. This
limitation does not apply to the Global Utilities Fund or to investments in
obligations of the U.S. Government or any of its agencies or instrumentalities
but will apply to foreign government obligations unless the Securities and
Exchange Commission permits their exclusion;
(8) issue senior securities, except to the extent permitted by the
1940 Act, including permitted borrowings;
(9) purchase securities of an issuer (other than investments in
obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities), if as a result with respect to 75% of the value of the
Fund's total assets, taken at market value, (i) more than 5% of the Fund's total
assets taken at market value would be invested in the securities of such issuer,
except that up to 25% of the Fund's total assets may be invested in securities
issued or guaranteed by any foreign government or its agencies or
instrumentalities, or (ii) such purchase would at the time result in more than
10% of the outstanding voting securities of such issuer being held by the Fund.
As a matter of operating policy, the Money Market Fund will invest no more than
5% of the value of that Fund's total assets in securities, other than U.S.
Government securities of any one issuer, except that the Money Market Fund may
invest up to 25% of its total assets in First Tier Securities (as defined in
Rule 2a-7 under the 1940 Act) of a single issuer for a period of up to three
business days after the purchase of such security. This restriction does not
apply to the Global Utilities Fund; and
(10) Each Fund may, not withstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of a single
open-end management investment company with substantially the same fundamental
investment objectives, policies and limitations as that Fund.
NON-FUNDAMENTAL RESTRICTIONS
The following investment restrictions apply to all of the Funds but
are not fundamental. They may be changed for any Fund without approval of that
Fund's voting securities.
(1) None of the Funds will invest more than 15% (10% for the Money
Market Fund) of its assets in securities restricted as to disposition under
federal securities laws, or securities otherwise considered illiquid or not
readily marketable, including repurchase agreements having a maturity of more
than seven days.
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(2) None of the Funds will purchase or retain the securities of any
issuer if, to the knowledge of AIM, those officers and Directors of the Company,
its adviser or distributor owning individually more than 1/2 of 1% of the
securities of such issuer together own more than 5% of the securities of such
issuer.
(3) The Company does not currently intend to invest all of the assets
of any Fund in the securities of a single open-end management investment company
with the same fundamental investment objectives, policies and limitations as
that Fund.
MANAGEMENT
DIRECTORS AND OFFICERS
The directors and officers of the Company and their principal
occupations during the last five years are set forth below. Unless otherwise
indicated, the address of each director and officer is 11 Greenway Plaza, Suite
1919, Houston, Texas 77046-1173.
*CHARLES T. BAUER, Director and Chairman (76)
Director and Chairman and Chief Executive Officer, A I M Management
Group Inc.; Chairman of the Board of Directors, A I M Advisors, Inc., A I M
Capital Management, Inc., A I M Distributors, Inc., A I M Fund Services, Inc.,
A I M Global Associates, Inc., A I M Global Holdings, Inc., A I M Institutional
Fund Services, Inc. and Fund Management Company; Director, AIM Global Advisors
Limited, A I M Global Management Company Limited and AIM Global Ventures Co.
BRUCE L. CROCKETT, Director (51)
COMSAT Corporation
6560 Rock Spring Drive
Bethesda, MD 20817
Director, President and Chief Executive Officer, COMSAT Corporation
(includes COMSAT World Systems, COMSAT Mobile Communications, COMSAT Video
Enterprises, COMSAT RSI and COMSAT International Ventures.) Previously,
President and Chief Operating Officer, COMSAT Corporation; President, World
Systems Division, COMSAT Corporation; and Chairman, Board of Governors of
INTELSAT, (each of the COMSAT companies listed above is an international
communication, information and entertainment-distribution services company).
OWEN DALY II, Director (70)
Six Blythewood Road
Baltimore, MD 21210
Director, Cortland Trust Inc. (investment company). Formerly,
Director, CF & I Steel Corp., Monumental Life Insurance Company and Monumental
General Insurance Company; and Chairman of the Board of Equitable
Bancorporation.
*CARL FRISCHLING, Director (58)
919 Third Avenue
New York, NY 10022
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* A director who is an "interested person" of the Company as defined in the
1940 Act.
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Partner, Kramer, Levin, Naftalis, Neesan, Kamin & Frankel (law firm).
Formerly, Partner, Reid & Priest (law firm); and, prior thereto, Partner,
Spengler Carlson Gubar Brodsky & Frischling (law firm).
**ROBERT H. GRAHAM, Director and President (48)
Director, President and Chief Operating Officer, A I M Management
Group Inc.; Director and President, A I M Advisors, Inc.; Director and Executive
Vice President, A I M Distributors, Inc.; Director and Senior Vice President,
A I M Capital Management, Inc., AIM Global Advisors Limited, A I M Global
Associates, Inc., A I M Global Holdings, Inc., AIM Global Ventures Co., A I M
Institutional Fund Services, Inc., A I M Fund Services, Inc. and Fund Management
Company; and Director, A I M Global Management Company Limited.
JOHN F. KROEGER, Director (70)
Box 464
24875 Swan Road - Martingham
St. Michaels, MD 21663
Trustee, Flag Investors International Trust; and Director, Flag
Investors Emerging Growth Fund, Inc., Flag Investors Telephone Income Fund,
Inc., Flag Investors Quality Growth Fund, Inc., Flag Investors Total Return U.S.
Treasury Fund, Inc., Flag Investors Intermediate Term Income Fund, Inc., Managed
Municipal Fund, Inc. and Flag Investors Value Builder Fund, Inc., Flag Investors
Maryland Intermediate Tax-Free Income Fund, Inc., Alex. Brown Cash Reserve Fund,
Inc. and North American Government Bond Fund, Inc. (investment companies).
Formerly, Consultant, Wendell & Stockel Associates, Inc. (consulting firm).
LEWIS F. PENNOCK, Director (52)
8955 Katy Freeway, Suite 204
Houston, TX 77024
Attorney in private practice in Houston, Texas.
IAN W. ROBINSON, Director (72)
183 Rivers Drive
Tequesta, FL 33469
Formerly, Executive Vice President and Chief Financial Officer, Bell
Atlantic Management Services, Inc. (provider of centralized management services
to telephone companies); Executive Vice President, Bell Atlantic Corporation
(parent of seven telephone companies); Vice President and Chief Financial
Officer, Bell Telephone Company of Pennsylvania and Diamond State Telephone
Company.
LOUIS S. SKLAR, Director (55)
Transco Tower, 50th Floor
2800 Post Oak Road
Houston, TX 77056
Executive Vice President, Development and Operations, Hines Interests
Limited Partnership (real estate development).
----------
** A director who is an "interested person" of the Company and AIM as defined in
the 1940 Act.
18
<PAGE>
WILLIAM H. KLEH, Senior Vice President (49)
Director, Chairman and President, AIM Global Ventures Co.; Director
and Managing Director, AIM Global Advisors Limited; Director and Senior Vice
President, A I M Advisors, Inc.; Director and President, A I M Global
Associates, Inc. and A I M Global Holdings, Inc.; Director and Vice President,
A I M Capital Management, Inc. and Fund Management Company; Director, A I M
Global Management Company Limited; Senior Vice President, A I M Management Group
Inc.; and Vice President, A I M Distributors, Inc. and A I M Fund Services, Inc.
JOHN J. ARTHUR, Senior Vice President and Treasurer (50)
Senior Vice President and Treasurer, A I M Advisors, Inc.; and Vice
President and Treasurer, A I M Management Group Inc., A I M Distributors, Inc.,
A I M Capital Management, Inc., A I M Fund Services, Inc., A I M Institutional
Fund Services, Inc. and Fund Management Company; Vice President, AIM Global
Advisors Limited, A I M Global Associates, Inc., A I M Global Holdings, Inc.,
and AIM Global Ventures Co.
GARY T. CRUM, Senior Vice President (47)
Director and President, A I M Capital Management, Inc.; Director and
Senior Vice President, A I M Management Group Inc., A I M Advisors, Inc., AIM
Global Advisors Limited, A I M Global Associates, Inc., A I M Global Holdings,
Inc., and AIM Global Ventures Co.; and Director, A I M Distributors, Inc. and
A I M Global Management Company Limited.
CAROL F. RELIHAN, Secretary and Vice President (40)
Vice President, General Counsel and Secretary, A I M Advisors, Inc.,
A I M Fund Services, Inc., A I M Institutional Fund Services, Inc., A I M
Management Group Inc. and Fund Management Company; Vice President and Secretary,
A I M Distributors, Inc., A I M Global Associates, Inc., and A I M Global
Holdings, Inc.; Vice President and Assistant Secretary, AIM Global Ventures Co.
and AIM Global Advisors Limited; and Secretary, A I M Capital Management, Inc.
DANA R. SUTTON, Vice President and Assistant Treasurer (36)
Vice President and Fund Controller, A I M Advisors, Inc.; and
Assistant Vice President and Assistant Treasurer, Fund Management Company.
ROBERT G. ALLEY, Vice President (46)
Senior Vice President, A I M Capital Management, Inc. and Vice
President, A I M Advisors, Inc. Formerly, Senior Fixed Income Money Manager,
Waddell and Reed, Inc.
STUART W. COCO, Vice President (39)
Senior Vice President, A I M Capital Management, Inc. and Vice
President, A I M Advisors, Inc.
19
<PAGE>
MELVILLE B. COX, Vice President (51)
Vice President, A I M Advisors, Inc., A I M Capital Management, Inc.,
A I M Fund Services, Inc. and A I M Institutional Fund Services, Inc.; and
Assistant Vice President, A I M Distributors, Inc. and Fund Management Company.
Formerly, Vice President, Charles Schwab & Co., Inc.; Assistant Secretary,
Charles Schwab Family of Funds and Schwab Investments; Chief Compliance Officer,
Charles Schwab Investment Management, Inc.; and Vice President, Integrated
Resources Life Insurance Co. and Capitol Life Insurance Co.
KAREN DUNN KELLEY, Vice President (34)
Director, A I M Global Management Company Limited; Senior Vice
President, A I M Capital Management, Inc. and AIM Global Advisors Limited; and
Vice President, A I M Advisors, Inc. and AIM Global Ventures Co.
JONATHAN C. SCHOOLAR, Vice President (33)
Director and Senior Vice President, A I M Capital Management, Inc.;
and Vice President, A I M Advisors, Inc.
The standing committees of the Board of Directors are the Audit
Committee, the Investments Committee and the Nominating and Compensation
Committee.
The members of the Audit Committee are Messrs. Daly, Kroeger
(Chairman), Pennock and Robinson. The Audit Committee is responsible for meeting
with the Company's auditors to review audit procedures and results and to
consider any matters arising from an audit to be brought to the attention of the
directors as a whole with respect to the Company's fund accounting or its
internal accounting controls, or for considering such matters as may from time
to time be set forth in a charter adopted by the Board of Directors and such
Committee.
The members of the Investments Committee are Messrs. Bauer, Crockett,
Daly (Chairman), Kroeger and Pennock. The Investments Committee is responsible
for reviewing portfolio compliance, brokerage allocation, portfolio investment
pricing issues, interim dividend and distribution issues, or considering such
matters as may from time to time be set forth in a charter adopted by the Board
of Directors and such Committee.
The members of the Nominating and Compensation Committee are Messrs.
Crockett, Daly, Kroeger, Pennock (Chairman) and Sklar. The Nominating and
Compensation Committee is responsible for considering and nominating individuals
to stand for election as directors who are not interested persons, reviewing
from time to time the compensation payable to the disinterested directors, or
considering such matters as may from time to time be set forth in a charter
adopted by the Board of Directors of such Committee.
All of the Company's directors also serve as directors or trustees of
some or all of the other mutual funds advised or managed by AIM. All of the
Company's executive officers hold similar offices with some or all of such
mutual funds.
Remuneration of Directors
Each director is reimbursed for expenses incurred in connection with
each meeting of the Board of Directors or any Committee attended. The directors
of the Company who do not serve as officers of the Company are compensated for
their services according to a fee schedule which recognizes the fact that they
also serve as directors or trustees of certain other investment companies
advised or managed by AIM.
20
<PAGE>
Each such director receives a fee, allocated among the AIM Funds for which he
serves as a director or trustee, which consists of an annual retainer component
and a meeting fee component.
Set forth below is information regarding compensation paid or accrued
during the fiscal year ended January 31, 1995 for each director of the Company:
<TABLE>
<CAPTION>
RETIREMENT
BENEFITS
AGGREGATE ACCRUED TOTAL
COMPENSATION BY ALL AIM COMPENSATION
DIRECTOR FROM COMPANY(1) FUNDS(2) FROM ALL AIM FUNDS(3)
-------- --------------- ---------- ---------------------
<S> <C> <C> <C>
Charles T. Bauer $ 0 $ 0 $ 0
Bruce L. Crockett 5,901.00 2,814.00 45,093.75
Owen Daly II 5,836.00 14,375.00 45,843.75
Carl Frischling 5,901.00 7,542.00 45,093.75
Robert H. Graham 0 0 0
John F. Kroeger 5,836.00 20,517.00 45,843.75
Lewis F. Pennock 5,836.00 5,093.00 45,843.75
Ian W. Robinson 5,901.00 10,396.00 45,093.75
Louis S. Sklar 5,901.00 4,682.00 45,093.75
</TABLE>
----------
(1) The total amount of compensation deferred by all Directors of the Company
during the fiscal year ended January 31, 1995, including interest earned
thereon, was $25,124.
(2) During the fiscal year ended January 31, 1995, the total amount of
expenses allocated to the Company in respect of such retirement benefits
was $739.
(3) Messrs. Bauer, Daly, Graham, Kroeger and Pennock each serves as a Director
or Trustee of a total of 11 AIM Funds. Messrs. Crockett, Frischling,
Robinson and Sklar each serves as a Director or Trustee of a total of 10
AIM Funds. Data reflects compensation earned for the calendar year ended
December 31, 1994.
AIM Funds Retirement Plan for Eligible Directors/Trustees
Under the terms of the AIM Funds Retirement Plan for Eligible
Directors/Trustees (the "Plan"), each director (who is not a employee of any of
the AIM Funds, A I M Management Group Inc. or any of their affiliates) may be
entitled to certain benefits upon retirement from the Board of Directors.
Pursuant to the Plan, the normal retirement date is the date on which the
eligible director has attained age 65 and has completed at least five years of
continuous service with one or more of the regulated investment companies
managed, administered or distributed by AIM or its affiliates (the "AIM Funds").
Each eligible director is entitled to receive an annual benefit from the AIM
Funds commencing on the first day of the calendar quarter coincident with or
following his date of retirement equal to 5% of such Director's compensation
paid
21
<PAGE>
by the AIM Funds multiplied by the number of such Director's years of service
(not in excess of 10 years of service) completed with respect to any of the AIM
Funds. Such benefit is payable to each eligible director in quarterly
installments for a period of no more than five years. If an eligible director
dies after attaining the normal retirement date but before receipt of any
benefits under the Plan commences, the director's surviving spouse (if any)
shall receive a quarterly survivor's benefit equal to 50% of the amount payable
to the deceased director, for no more than five years beginning the first day of
the calendar quarter following the date of the director's death. Payments under
the Plan are not secured or funded by any AIM Fund.
Set forth below is a table that shows the estimated annual benefits
payable to an eligible director upon retirement assuming various compensation
and years of service classifications. The estimated credited years of service
as of December 31, 1994 for Messrs. Crockett, Daly, Frischling, Kroeger,
Pennock, Robinson and Sklar are 7, 8, 17, 17, 13, 7 and 5 years, respectively.
<TABLE>
<CAPTION>
Annual Compensation Paid By All AIM Funds
$40,000 $45,000 $50,000 $55,000
<S> <C> <C> <C> <C> <C>
Number of 10 $20,000 $22,500 $25,000 $27,500
Years of
Service With 9 $18,000 $20,250 $22,500 $24,750
the
AIM Funds 8 $16,000 $18,000 $20,000 $22,000
7 $14,000 $15,750 $17,500 $19,250
6 $12,000 $13,500 $15,000 $16,500
5 $10,000 $11,250 $12,500 $13,750
</TABLE>
Deferred Compensation Agreements
Messrs. Daly, Frischling, Kroeger, Robinson and Sklar (for purposes of
this paragraph only, the "deferring directors") have each executed a Deferred
Compensation Agreement (collectively, the "Agreements"). Pursuant to the
Agreements, the deferring directors elected to defer receipt of 100% of their
compensation payable by the Company, and such amounts are placed into a deferral
account. Currently, the deferring directors may select various AIM Funds in
which all or part of his deferral account shall be deemed to be invested.
Distributions from the deferring directors' deferral accounts will be paid in
cash, in generally equal quarterly installments over a period of five years
beginning on the date the deferring director's retirement benefits commence
under the Plan. The Company's Board of Directors, in its sole discretion, may
accelerate or extend the distribution of such deferral accounts after the
deferring director's termination of service as a director of the Company. If a
deferring director dies prior to the distribution of amounts in his deferral
account, the balance of the deferral account will be distributed to his
designated beneficiary in a single lump sum payment as soon as practicable after
such deferring director's death. The Agreements are not funded and, with
respect to the payments of amounts held in the deferral accounts, the deferring
directors have the status of unsecured creditors of the Company and of each
other AIM Fund from which they are deferring compensation.
AIM and the Company have adopted a Code of Ethics which requires
investment personnel (a) to pre-clear all personal securities transactions, (b)
to file reports regarding such transactions, and (c) to refrain from personally
engaging in (i) short-term trading of a security, (ii) transactions involving a
security within seven days of an AIM Fund transaction involving the same
security, and (iii) transactions involving securities being considered for
investment by an AIM Fund. The Code also prohibits investment personnel
22
<PAGE>
from purchasing securities in an initial public offering. Personal trading
reports are reviewed periodically by AIM, and the Board of Directors reviews
annually such reports (including information on any substantial violations of
the Code). Violations of the Code may result in censure, monetary penalties,
suspension or termination of employment.
During the year ended January 31, 1995, AIM V.I. Capital Appreciation
Fund, AIM V.I. Diversified Income Fund, AIM V.I. Global Utilities Fund, AIM V.I.
Government Securities Fund, AIM V.I. Growth Fund, AIM V.I. Growth and Income
Fund, AIM V.I. International Equity Fund, AIM V.I. Money Market Fund and AIM
V.I. Value Fund each paid $3,375, $3,161, $886, $2,998, $3,250, $895, $3,276,
$3,190 and $2,867, respectively, in legal fees to Reid & Priest, the law firm in
which Mr. Frischling, a director of the Company, is a partner, as counsel to the
Board of Directors. Effective September 1994, Kramer, Levin, Naftalis, Nessen,
Kamin & Frankel was appointed as counsel to the Board of Directors. A member of
the Funds' new counsel is also a Director. Each of these funds paid the
following legal fees to Kramer, Levin, Naftalis, Nessen, Kamin & Frankel for
services rendered: AIM V.I. Capital Appreciation Fund, AIM V.I. Diversified
Income Fund, AIM V.I. Global Utilities Fund, AIM V.I. Government Securities
Fund, AIM V.I. Growth Fund, AIM V.I. Growth and Income Fund, AIM V.I.
International Equity Fund, AIM V.I. Money Market Fund and AIM V.I. Value Fund
paid $445, $409, $403, $403, $421, $403, $432, $417 and 456, respectively.
INVESTMENT ADVISORY AND ADMINISTRATIVE SERVICES AGREEMENTS
Each Fund has entered into a master investment advisory agreement (the
"Advisory Agreement") and a master administrative services agreement (the
"Administrative Services Agreement") with AIM. See "Management" in the
Prospectus.
AIM was organized in 1976, and along with its affiliates, manages or
advises 37 investment company portfolios. As of April 3, 1995, the total assets
advised or managed by AIM and its affiliates were approximately $28.5 billion.
The Advisory Agreement for the Funds provides that each Fund will pay
all expenses of the Fund, including, without limitation: brokerage commissions,
taxes, legal, auditing, or governmental fees, the cost of preparing share
certificates, custodian, transfer and shareholder service agent costs, expenses
of issue, sale, redemption and repurchase of shares, expenses of registering and
qualifying shares for sale, expenses relating to directors and shareholder
meetings, the cost of preparing and distributing reports and notices to
shareholders, the fees and other expenses incurred by the Company on behalf of
the Funds in connection with membership in investment company organizations, the
cost of printing copies of prospectuses and statements of additional information
distributed to the Fund's shareholders; and all other charges and costs of the
Fund's operations unless otherwise explicitly provided.
The Advisory Agreement for the Funds provides that the agreement will
remain in effect for the initial term and continue in effect from year to year
thereafter only if such continuance is specifically approved at least annually
(i) by the Company's Board of Directors or by the vote of a majority of the
outstanding voting securities of the Funds (as defined in the 1940 Act); and
(ii) by the affirmative vote of a majority of the directors who are not parties
to the agreement or "interested persons" of any such party (the "Non-Interested
Directors") by votes cast in person at a meeting called for such purpose. The
Advisory Agreement was initially approved by the Company's Board of Directors
(including the affirmative vote of all of the Non-Interested Directors) on July
19, 1993. The Board of Directors of the Company approved the continuance of the
Agreement until June 30, 1995. The Advisory Agreement became effective on
October 18, 1993 and was amended April 28, 1994 to include the Global Utilities
Fund and the Growth & Income Fund. The Advisory Agreement provides that the
Company or AIM may terminate such agreement with respect to any Fund(s) on sixty
(60) days' written notice without penalty. The Advisory Agreement terminates
automatically in the event of its assignment.
23
<PAGE>
Pursuant to the Advisory Agreement, AIM receives a fee from each of
AIM V.I. Capital Appreciation Fund, AIM V.I. Global Utilities Fund, AIM V.I.
Growth Fund, AIM V.I. Growth and Income Fund and AIM V.I. Value Fund calculated
at the following annual rate, based on the average daily net assets of the Fund
during the year:
Net Assets Annual Rate
---------- -----------
First $250,000,000 0.65%
Over $250,000,000 0.60%
Pursuant to the Advisory Agreement, AIM receives a fee from AIM V.I.
Diversified Income Fund calculated at the following annual rate, based on the
average daily net assets of the Fund during the year:
Net Assets Annual Rate
---------- -----------
First $250,000,000 0.60%
Over $250,000,000 0.55%
Pursuant to the Advisory Agreement, AIM receives a fee from AIM V.I.
Government Securities Fund calculated at the following annual rate, based on the
average daily net assets of the Fund during the year:
Net Assets Annual Rate
---------- -----------
First $250,000,000 0.50%
Over $250,000,000 0.45%
Pursuant to the Advisory Agreement, AIM receives a fee from AIM V.I.
International Equity Fund calculated at the following annual rate, based on the
average daily net assets of the Fund during the year:
Net Assets Annual Rate
---------- -----------
First $250,000,000 0.75%
Over $250,000,000 0.70%
Pursuant to the Advisory Agreement, AIM receives a fee from AIM V.I. Money
Market Fund calculated at the following annual rate, based on the average daily
net assets of the Fund during the year:
Net Assets Annual Rate
---------- -----------
First $250,000,000 0.40%
Over $250,000,000 0.35%
24
<PAGE>
Each Fund paid to AIM a management fee (net of fee waivers) for the fiscal
year ended January 31, 1995 and for the period May 5, 1993 (date operations
commenced) through January 31, 1994, under the Advisory Agreement and a prior,
substantially identical advisory agreement, as follows:
<TABLE>
<CAPTION>
Fiscal Period Ended
-------------------
1995 1994
-------- -------
<S> <C> <C>
AIM V.I. Capital Appreciation Fund... $402,307 $23,119
AIM V.I. Diversified Income Fund..... $ 98,044 $ -0-
AIM V.I. Global Utilities Fund....... $ -0-* $ N/A
AIM V.I. Government Securities Fund.. $ 42,430 $ -0-
AIM V.I. Growth Fund................. $231,152 $ -0-
AIM V.I. Growth and Income Fund...... $ -0-* $ N/A
AIM V.I. International Equity Fund... $317,747 $ -0-
AIM V.I. Money Market Fund........... $ 85,967 $ -0-
AIM V.I. Value Fund.................. $489,030 $27,729
</TABLE>
* Fees paid were for the period May 2, 1994 (date operations
commenced) through January 31, 1995.
For the fiscal year ended January 31, 1995 and for the period May 5,
1993 (date operations commenced) through January 31, 1994, AIM waived management
fees for each Fund as follows:
<TABLE>
<CAPTION>
Fiscal Period Ended
-------------------
1995 1994
------- -------
<S> <C> <C>
AIM V.I. Capital Appreciation Fund... $ -0- $35,486
AIM V.I. Diversified Income Fund..... $25,046 $28,217
AIM V.I. Global Utilities Fund....... $ 9,264* N/A
AIM V.I. Government Securities Fund.. $18,907 $16,775
AIM V.I. Growth Fund................. $ -0- $48,427
AIM V.I. Growth and Income Fund...... $20,806* N/A
AIM V.I. International Equity Fund... $ 5,010 $39,537
AIM V.I. Money Market Fund........... $18,531 $19,489
AIM V.I. Value Fund.................. $ -0- $31,977
</TABLE>
* Fees waived were for the period May 2, 1994 (date operations
commenced) through January 31, 1995.
In addition to the management fees paid by each Fund for the fiscal
year ended January 31, 1995 and for the period May 5, 1993 (date operations
commenced) through January 31, 1994, AIM absorbed other expenses, as follows:
25
<PAGE>
<TABLE>
<CAPTION>
Fiscal Period Ended
--------------------
1995 1994
------- -------
<S> <C> <C>
AIM V.I. Capital Appreciation Fund... $ -0- $ -0-
AIM V.I. Diversified Income Fund..... $ -0- $ 2,000
AIM V.I. Global Utilities Fund....... $12,000* N/A
AIM V.I. Government Securities Fund.. $ -0- $10,000
AIM V.I. Growth Fund................. $ -0- $ -0-
AIM V.I. Growth and Income Fund...... $ -0-* N/A
AIM V.I. International Equity Fund... $ -0- $17,600
AIM V.I. Money Market Fund........... $ -0- $ 8,800
AIM V.I. Value Fund.................. $ -0- $ -0-
</TABLE>
* Fee amounts are for the period May 2, 1994 (date operations
commenced) through January 31, 1995.
The Administrative Services Agreement for the Funds provides that AIM
may perform certain accounting and other administrative services to each Fund
which are not required to be performed by AIM under the Advisory Agreement. For
such services, AIM would be entitled to receive from each Fund reimbursement of
its expenses.
The Administrative Services Agreement for the Funds provides that the
agreement will remain in effect for the initial term and continue in effect from
year to year thereafter only if such continuance is specifically approved at
least annually (i) by the Company's Board of Directors or by the vote of a
majority of the outstanding voting securities of the Funds (as defined in the
1940 Act); and (ii) by the affirmative vote of a majority of the Non-Interested
Directors, by votes cast in person at a meeting called for such purpose. The
Board of Directors of the Company approved the continuance of the Agreement
until June 30, 1995. The Administrative Services Agreement was initially
approved by the Company's Board of Directors (including the Non-Interested
Directors) on July 19, 1993. The agreement terminates automatically in the event
of its assignment.
For the fiscal year ended January 31, 1995 and for the period May 5,
1993 (date operations commenced) through January 31, 1994, AIM received
reimbursement of administrative services costs from each of the Funds pursuant
the Administrative Services Agreement and a prior, substantially identical
administrative services agreement, as follows:
<TABLE>
<CAPTION>
Fiscal Period Ended
--------------------
<S> <C> <C>
1995 1994
------- -------
AIM V.I. Capital Appreciation Fund... $23,992 $12,770
AIM V.I. Diversified Income Fund..... $35,441 $12,736
AIM V.I. Global Utilities Fund....... $13,577* N/A
AIM V.I. Government Securities Fund.. $23,230 $10,458
AIM V.I. Growth Fund................. $23,537 $12,766
AIM V.I. Growth and Income Fund...... $13,596* N/A
AIM V.I. International Equity Fund... $12,000 $ 7,000
AIM V.I. Money Market Fund........... $21,019 $11,288
AIM V.I. Value Fund.................. $21,568 $13,572
</TABLE>
* Fees paid were for the period May 2, 1994 (date operations
commenced) through January 31, 1995.
26
<PAGE>
THE DISTRIBUTION AGREEMENT
The Funds have entered into a master distribution agreement (the
"Distribution Agreement") with AIM Distributors, dated October 18, 1993 and was
amended April 28, 1994. The Distribution Agreement was amended on April 28,
1994 to include the Global Utilities Fund and the Growth & Income Fund.
Information concerning AIM Distributors and the continuous offering of the
Funds' shares is set forth in the Prospectus under the heading "Management."
The Distribution Agreement was initially approved by the Board of Directors
(including the affirmative vote of all the directors who were not parties to the
Distribution Agreement or "interested persons" of any such party) of the Company
on July 19, 1993. The Distribution Agreement provides that AIM Distributors
will bear the expenses of printing from the final proof and distributing
prospectuses and statements of additional information of the Funds relating to
the sale of Fund shares. The Distribution Agreement provides that the Funds
shall bear the expenses of qualification of shares of the Fund for sale in
connection with the public offering in any jurisdictions where qualification is
required by law. AIM Distributors has not undertaken to sell any specified
number of shares of the Funds.
The Distribution Agreement for the Funds provides that it will
continue in effect until June 30, 1994, and from year to year thereafter only if
such continuance is specifically approved at least annually (i) by the Company's
Board of Directors or by the vote of a majority of the outstanding voting
securities of the Funds (as defined in the 1940 Act); and (ii) by the
affirmative vote of a majority of the directors who are not parties to the
agreement or "interested persons" of any such party (the "Non-Interested
Directors") by votes cast in person at a meeting called for such purpose. The
Company or AIM Distributors may terminate its Distribution Agreement on sixty
(60) days' written notice without penalty. The Distribution Agreement will
terminate automatically in the event of its assignment.
DETERMINATION OF NET ASSET VALUE
For the Money Market Fund: The net asset value per share of the Fund
is determined daily as of 4:15 p.m. Eastern time on each business day of the
Fund. Net asset value per share is determined by dividing the value of the
Fund's securities, cash and other assets (including interest accrued but not
collected), less all its liabilities (including accrued expenses and dividends
payable), by the number of shares outstanding of the Fund and rounding the
resulting per share net asset value to the nearest one cent. In the event the
New York Stock Exchange closes early (i.e. before 4:00 p.m. Eastern Time) on a
particular day, the net asset value of a Fund share is determined 15 minutes
following the close of the New York Stock Exchange on such day. Determination
of the Fund's net asset value per share is made in accordance with generally
accepted accounting principles.
The securities of the Fund are valued on the basis of amortized cost.
This method values a security at its cost on the date of purchase and thereafter
assumes a constant amortization to maturity of any discount or premium,
regardless of the impact of fluctuating interest rates on the market value of
the security. While this method provides certainty in valuation, it may result
in periods during which value, as determined by amortized cost, is higher or
lower than the price the Fund would receive if the security were sold. During
such periods, the daily yield on shares of the Fund computed as described under
"Yield Information" may differ somewhat from an identical computation made by
another investment company with identical investments utilizing available
indications as to the market value of its portfolio securities.
The valuation of the portfolio instruments based upon their amortized
cost and the concomitant maintenance of the net asset value per share of $1.00
for the Fund is permitted in accordance with applicable rules and regulations of
the SEC which require the Fund to adhere to certain conditions. These rules
require, among other things, that the Fund maintain a dollar-weighted average
portfolio maturity of 90 days or less, purchase only instruments having
remaining maturities of 397 calendar days or less and
27
<PAGE>
invest only in securities determined by the Board of Directors to be "Eligible
Securities" and to present minimal credit risk to the Fund.
Rule 2a-7, promulgated under the 1940 Act, which governs the operation
of money market funds, defines an "Eligible Security" as follows:
(i) a security with a remaining maturity of 397 days or less that is rated
(or that has been issued by an issuer that is rated with respect to a
class of short-term debt obligations, or any security within that
class, that is comparable in priority and security with the security)
by the Requisite NRSROs in one of the two highest rating categories
for short-term debt obligations (within which there may be sub-
categories or gradations indicating relative standing); or
(ii) a security:
(A) that at the time of issuance was a long-term security but that has
a remaining maturity of 397 calendar days or less; and
(B) whose issuer has received from the Requisite NRSROs a rating, with
respect to a class of short-term debt obligations (or any security
within that class) that is now comparable in priority and security
with the security, in one of the two highest rating categories for
short-term debt obligations (within which there may be sub-
categories or gradations indicating relative standing); or
(iii) an unrated security that is of comparable quality to a security
meeting the requirements of paragraphs (a)(5)(i) or (ii) of this
section, as determined by the money market fund's board of directors;
provided, however, that:
(A) the board of directors may base its determination that a standby
commitment is an Eligible Security upon a finding that the issuer
of the commitment presents a minimal risk of default; and
(B) a security that at the time of issuance was a long-term security
but that has a remaining maturity of 397 calendar days or less and
that is an unrated security(1) is not an Eligible Security if the
security has a long-term rating from any NRSRO that is not within
the NRSRO's two highest categories (within which there may be sub-
categories or gradations indicating relative standing).
The Board of Directors is required to establish procedures designed to
stabilize, to the extent reasonably practicable, the Fund's price per share at
$1.00 for the Fund as computed for the purpose of sales and redemptions. Such
procedures include review of the Fund's holdings by the Board of Directors
----------
(1) An "unrated security" is a security (i) issued by an issuer that does not
have a current short-term rating from any NRSRO, either as to the particular
security or as to any other short-term obligations of comparable priority
and security; (ii) that was a long-term security at the time of issuance and
whose issuer has not received from any NRSRO a rating with respect to a
class of short-term debt obligations now comparable in priority and
security; or (iii) a security that is rated but which is the subject of an
external credit support agreement not in effect when the security was
assigned its rating, provided that a security is not an unrated security if
any short-term debt obligation issued by the issuer and comparable in
priority and security is rated by any NRSRO.
28
<PAGE>
at such intervals as they may deem appropriate, to determine whether the net
asset value calculated by using available market quotations or other reputable
sources for the Fund deviates from $1.00 per share and, if so, whether such
deviation may result in material dilution or is otherwise unfair to existing
holders of the Fund's shares. In the event the Board of Directors determines
that such a deviation exists for the Fund, it will take such corrective action
as the Board of Directors deems necessary and appropriate with respect to the
Fund, including the sale of portfolio instruments prior to maturity to realize
capital gains or losses or to shorten the average portfolio maturity; the
withholding of dividends; redemption of shares in kind; or the establishment of
a net asset value per share by using available market quotations.
The Fund intends to comply with any amendments made to Rule 2a-7 which
may require corresponding changes in the Fund's procedures which are designed to
stabilize the Fund's price per share at $1.00.
For All Other Funds: The net asset value per share of each Fund is
normally determined daily as of 4:15 p.m. Eastern time on each business day of
the Company. Net asset value per share is determined by dividing the value of
the Fund's securities, cash and other assets (including interest accrued but not
collected), less all its liabilities (including accrued expenses and dividends
payable), by the total number of shares outstanding of the Fund's shares. In
the event the New York Stock Exchange closes early (i.e. before 4:00 p.m.
Eastern Time) on a particular day, the net asset value of a Fund share is
determined 15 minutes following the close of the New York Stock Exchange on such
day. Determination of the Fund's net asset value per share is made in
accordance with generally accepted accounting principles.
Each equity security held by the Fund is valued at its last sales
price on the exchange where the security is principally traded or, lacking any
sales on a particular day, the security is valued at the mean between the
closing bid and asked prices on that day. Each security traded in the over-the-
counter market (but not including securities reported on the NASDAQ National
Market System) is valued at the mean between the last bid and asked prices based
upon quotes furnished by market makers for such securities. Each security
reported on the NASDAQ National Market System is valued at the last sales price
on the valuation date. Non-convertible debt securities are valued on the basis
of prices provided by an independent pricing service. Prices provided by the
pricing service may be determined without exclusive reliance on quoted prices,
and may reflect appropriate factors such as institution-size trading in similar
groups of securities, developments related to special securities, yield,
quality, coupon rate, maturity, type of issue, individual trading
characteristics and other market data. Securities for which market quotations
are not readily available are valued at fair value as determined in good faith
by or under the supervision of the Company's officers in a manner specifically
authorized by the Board of Directors of the Company. Short-term obligations
having 60 days or less to maturity are valued on the basis of amortized cost.
Generally, trading in foreign securities is substantially completed each
day at various times prior to the close of the New York Stock Exchange. The
values of such foreign securities used in computing the net asset value of each
Fund's shares are determined at such times as trading is completed. Foreign
currency exchange rates are also generally determined prior the close of the New
York Stock Exchange. Occasionally, events affecting the values of such foreign
securities and such foreign securities exchange rates may occur after the time
at which such values are determined and prior to the close of the New York Stock
Exchange that will not be reflected in the computation of a Fund's net asset
value. If events materially affecting the value of such securities occur during
such period, then these securities will be valued at their fair value as
determined in good faith by or under the supervision of the Board of Directors.
29
<PAGE>
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
Each Fund is treated as a separate association taxable as a
corporation.
Each Fund intends to qualify under the Internal Revenue Code of 1986,
as amended (the "Code"), as a regulated investment company ("RIC") for each
taxable year. Accordingly, each Fund must, among other things, meet the
following requirements: A. Each Fund must generally derive at least 90% of its
gross income from dividends, interest, payments with respect to securities
loans, gains from the sale or other disposition of stock, securities, foreign
currencies, or other income derived with respect to its business of investing in
such stock, securities or currencies. B. Each Fund must diversify its holdings
so that, at the end of each fiscal quarter: i) at least 50% of the market value
of the Fund's assets is represented by cash, cash items (including receivables),
U.S. Government securities, securities of other RICs, and other securities, with
such other securities limited, with respect to any one issuer, to an amount not
greater than 5% of the Fund's assets and not more than 10% of the outstanding
voting securities of such issuer, and ii) not more than 25% of the value of its
assets is invested in the securities of any one issuer (other than U.S.
Government securities).
As a RIC, each Fund will not be subject to federal income tax on its
income and gains distributed to shareholders if it distributes at least a) 90%
of its investment company taxable income for the taxable year; and b) 90% of the
excess of its tax-exempt interest income under Code Section 103(a) over its
deductions disallowed under Code Sections 265 and 171(a)(2).
The Fund intends to comply with the diversification requirements
imposed by section 817(h) of the Code and the regulations thereunder. These
requirements, which are in addition to the diversification requirements imposed
on the Fund by the 1940 Act and Subchapter M of the Code, place certain
limitations on the assets of the insurance company separate accounts that may be
invested in securities of a single issuer. Because section 817(h) and those
regulations treat the assets of the Fund as assets of the insurance company
separate accounts, the Fund intends to comply with these diversification
requirements. Specifically, the regulations provide that, except as permitted by
the "safe harbor" described below, as of the end of each calendar quarter or
within 30 days thereafter no more than 55% of the Fund's total assets may be
represented by any one investment, no more than 70% by any two investments, no
more than 80% by any three investments and no more than 90% by any four
investments. For this purpose, all securities of the same issuer are considered
a single investment, and while each U.S. Government agency and instrumentality
is considered a separate issuer, a particular foreign government and its
agencies, instrumentalities and political subdivisions all will be considered
the same issuer. Section 817(h) provides, as a safe harbor, that a separate
account will be treated as being adequately diversified if the diversification
requirements under Subchapter M are satisfied and no more than 55% of the value
of the account's total assets are cash and cash items, government securities and
securities of other RICs. Failure of the Fund to satisfy the section 817(h)
requirements would result in taxation of and treatment of the Contract holders
other than as described in the applicable prospectuses of the various insurance
company separate accounts.
MISCELLANEOUS INFORMATION
AUDIT REPORTS
The Company furnishes semi-annual reports containing information about the
Funds and their operations, including a list of the investments held in each
Fund's portfolio and their respective financial statements. Financial
statements, audited by independent auditors, will be issued annually. The firm
of Tait, Weller & Baker, Two Penn Center Plaza, Philadelphia, PA 19102, serves
as the auditors of each Fund.
30
<PAGE>
LEGAL MATTERS
Freedman, Levy, Kroll & Simonds, Washington, D.C. has advised the
Company on certain federal securities law matters.
CUSTODIAN AND TRANSFER AGENT
State Street Bank and Trust Company ("State Street"), 225 Franklin
Street, Boston, MA 02110, is custodian of all securities and cash of the Funds.
The custodian attends to the collection of principal and income, pays and
collects all monies for securities bought and sold by the Portfolios, and
performs certain other ministerial duties. State Street also acts as transfer
and dividend disbursing agent for the Funds. These services do not include any
supervisory function over management or provide any protection against any
possible depreciation of assets. The Funds pay State Street such compensation as
may be agreed upon from time to time.
PRINCIPAL HOLDERS OF SECURITIES
To the best of the knowledge of each Fund, the names of the record
holders of 5% or more of the outstanding shares of the Fund as of April 3, 1995
and the percentage of the outstanding shares of such Fund owned by such
shareholders as of such date are set out below. The address of A I M Advisors,
Inc. is 11 Greenway Plaza, Suite 1919, Houston TX, 77046. The address of
Connecticut General Life Insurance Company and CG Variable Annuity Separate
Account is 900 Cottage Grove Road, Bloomfield, CT, 06002:
AIM V.I. CAPITAL APPRECIATION FUND
<TABLE>
<CAPTION>
PERCENT OWNED PERCENT OWNED
NAME OF OF RECORD BENEFICIALLY PERCENT OWNED
RECORD OWNER AND BENEFICIALLY ONLY OF RECORD ONLY
------------ ---------------- ------------- --------------
<S> <C> <C> <C>
CG Variable Annuity -0- -0- 99.87%*
Separate Account
</TABLE>
AIM V.I. DIVERSIFIED INCOME FUND
<TABLE>
<CAPTION>
PERCENT OWNED PERCENT OWNED
NAME OF OF RECORD BENEFICIALLY PERCENT OWNED
RECORD OWNER AND BENEFICIALLY ONLY OF RECORD ONLY
------------ ----------------- ------------- --------------
<S> <C> <C> <C>
CG Variable Annuity -0- -0- 96.28%*
Separate Account
</TABLE>
----------
* A shareholder who beneficially owns more than 25% of the voting securities
of a Fund may be presumed to "control" the Fund. The Funds understand that
insurance company separate accounts owning shares of the Funds will vote
their shares in accordance with instructions received from Contract owners,
annuitants and beneficiaries. If an insurance company determines, however,
that it is permitted to vote any such shares of the Funds in its own right,
it may elect to do so, subject to the then current interpretation of the
1940 Act and the rules thereunder.
31
<PAGE>
AIM V.I. GLOBAL UTILITIES FUND
<TABLE>
<CAPTION>
PERCENT OWNED PERCENT OWNED
NAME OF OF RECORD BENEFICIALLY PERCENT OWNED
RECORD OWNER AND BENEFICIALLY ONLY OF RECORD ONLY
------------ ---------------- ------------- --------------
<S> <C> <C> <C>
CG Variable Annuity -0- -0- 74.63%*
Separate Account
Connecticut General Life 12.88% -0- -0-
Insurance Company
A I M Advisors, Inc. 12.48% -0- -0-
</TABLE>
AIM V.I. GOVERNMENT SECURITIES FUND
<TABLE>
<CAPTION>
PERCENT OWNED PERCENT OWNED
NAME OF OF RECORD BENEFICIALLY PERCENT OWNED
RECORD OWNER AND BENEFICIALLY ONLY OF RECORD ONLY
------------ ----------------- ------------- --------------
<S> <C> <C> <C>
CG Variable Annuity -0- -0- 92.55%*
Separate Account
Connecticut General Life 7.45% -0- -0-
Insurance Company
</TABLE>
AIM V.I. GROWTH FUND
<TABLE>
<CAPTION>
PERCENT OWNED PERCENT OWNED
NAME OF OF RECORD BENEFICIALLY PERCENT OWNED
RECORD OWNER AND BENEFICIALLY ONLY OF RECORD ONLY
------------ ---------------- ------------- --------------
<S> <C> <C> <C>
CG Variable Annuity -0- -0- 100.00%*
Separate Account
</TABLE>
----------
* A shareholder who beneficially owns more than 25% of the voting securities
of a Fund may be presumed to "control" the Fund. The Funds understand that
insurance company separate accounts owning shares of the Funds will vote
their shares in accordance with instructions received from Contract owners,
annuitants and beneficiaries. If an insurance company determines, however,
that it is permitted to vote any such shares of the Funds in its own right,
it may elect to do so, subject to the then current interpretation of the
1940 Act and the rules thereunder.
32
<PAGE>
AIM V.I. GROWTH AND INCOME FUND
<TABLE>
<CAPTION>
PERCENT OWNED PERCENT OWNED
NAME OF OF RECORD BENEFICIALLY PERCENT OWNED
RECORD OWNER AND BENEFICIALLY ONLY OF RECORD ONLY
------------ ---------------- ------------- --------------
<S> <C> <C> <C>
CG Variable Annuity -0- -0- 88.92%*
Separate Account
Connecticut General Life 5.60% -0- -0-
Insurance Company
A I M Advisors, Inc. 5.48% -0- -0-
</TABLE>
AIM V.I. INTERNATIONAL EQUITY FUND
<TABLE>
<CAPTION>
PERCENT OWNED PERCENT OWNED
NAME OF OF RECORD BENEFICIALLY PERCENT OWNED
RECORD OWNER AND BENEFICIALLY ONLY OF RECORD ONLY
------------ ---------------- ------------- --------------
<S> <C> <C> <C>
CG Variable Annuity -0- -0- 100.00%*
Separate Account
</TABLE>
AIM V.I. MONEY MARKET FUND
<TABLE>
<CAPTION>
PERCENT OWNED PERCENT OWNED
NAME OF OF RECORD BENEFICIALLY PERCENT OWNED
RECORD OWNER AND BENEFICIALLY ONLY OF RECORD ONLY
------------ ---------------- ------------- --------------
<S> <C> <C> <C>
CG Variable Annuity -0- -0- 99.83%*
Separate Account
</TABLE>
AIM V.I. VALUE FUND
<TABLE>
<CAPTION>
PERCENT OWNED PERCENT OWNED
NAME OF OF RECORD BENEFICIALLY PERCENT OWNED
RECORD OWNER AND BENEFICIALLY ONLY OF RECORD ONLY
------------ ---------------- ------------- --------------
<S> <C> <C> <C>
CG Variable Annuity -0- -0- 100.00%*
Separate Account
</TABLE>
----------
* A shareholder who beneficially owns more than 25% of the voting securities of
a Fund may be presumed to "control" the Fund. The Funds understand that
insurance company separate accounts owning shares of the Funds will vote
their shares in accordance with instructions received from Contract owners,
annuitants and beneficiaries. If an insurance company determines, however,
that it is permitted to vote any such shares of the Funds in its own right,
it may elect to do so, subject to the then current interpretation of the 1940
Act and the rules thereunder.
33
<PAGE>
As of April 3, 1995, the directors and officers of the Company as a group
owned beneficially less than 1% of the outstanding shares of the Company.
OTHER INFORMATION
The Prospectus and this Statement of Additional Information omit
certain information contained in the Registration Statement which the Funds have
filed with the Securities and Exchange Commission under the Securities Act of
1933 and reference is hereby made to the Registration Statement for further
information with respect to the Funds and the securities offered hereby. The
Registration Statement is available for inspection by the public at the
Securities and Exchange Commission in Washington, D.C.
34
<PAGE>
FINANCIAL STATEMENTS
FS
<PAGE>
REPORT OF To the Shareholders and Board of Directors
INDEPENDENT AIM Variable Insurance Funds, Inc.
CERTIFIED PUBLIC
ACCOUNTANTS
We have audited the accompanying statement of assets and
liabilities of AIM V.I. Capital Appreciation Fund, a
series of shares of common stock of AIM Variable
Insurance Funds, Inc. including the schedule of
investments as of January 31, 1995 and the related
statement of operations for the year then ended and the
statement of changes in net assets and the financial
highlights for the year then ended and the period May 5,
1993 (commencement of operations) through January 31,
1994. These financial statements and financial highlights
are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these
financial statements and financial highlights based on
our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that
we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and
financial highlights are free of material misstatement.
An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of
securities owned as of January 31, 1995, by
correspondence with the custodian and brokers. Where
brokers did not reply to our confirmation requests, we
carried out other appropriate auditing procedures. An
audit also includes assessing the accounting principles
used and significant estimates made by management, as
well as evaluating the overall financial statement
presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial
highlights referred to above present fairly, in all
material respects, the financial position of AIM V.I.
Capital Appreciation Fund, as of January 31, 1995, the
results of its operations for the year then ended and the
changes in its net assets and the financial highlights
for the year then ended and the period May 5, 1993
through January 31, 1994, in conformity with generally
accepted accounting principles.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
February 24, 1995
FS-1
<PAGE>
<TABLE>
<CAPTION>
<C> <C> <S> <C>
AIM V.I. CAPITAL MARKET
APPRECIATION FUND SHARES VALUE
SCHEDULE OF ------ ------
INVESTMENTS COMMON STOCKS - 75.14%
January 31, 1995
ADVERTISING/BROADCASTING - 0.41%
2,300 Belo (A.H.) Corporation............................... $ 130,525
7,200 Infinity Broadcasting Corp.(a)........................ 229,500
-----------
360,025
-----------
AIRLINES - 0.03%
2,300 SKYWEST Inc........................................... 30,763
-----------
APPLIANCES - 0.16%
6,000 Sunbeam-Oster Co., Inc................................ 140,250
-----------
AUTOMOBILE/TRUCKS PARTS & TIRES - 0.43%
2,500 Automotive Industries Holdings, Inc.(a)............... 44,375
5,200 Echlin Inc............................................ 171,600
4,000 Mark IV Industries, Inc. ............................. 77,000
3,500 Superior Industries International, Inc................ 85,313
-----------
378,288
-----------
BEVERAGES - 0.64%
11,300 Canandaigua Wine Co., Inc. - Class A(a)............... 412,450
7,400 Coca-Cola Enterprises Inc............................. 154,475
-----------
566,925
-----------
BIOTECHNOLOGY - 0.36%
5,000 AMGEN Inc.(a)......................................... 318,125
-----------
BUILDING MATERIALS - 0.27%
9,800 Black & Decker Corp................................... 235,200
-----------
BUSINESS SERVICES - 1.49%
700 Diebold, Inc.......................................... 24,063
3,400 Equifax, Inc.......................................... 96,475
7,000 Healthcare Compare Corp.(a)........................... 243,250
2,000 Interim Services Inc.(a).............................. 46,750
10,900 Manpower Inc.......................................... 277,950
11,100 Olsten Corp........................................... 367,688
3,100 Pittston Services Group............................... 83,312
6,000 Sensormatic Electronics Corp.......................... 174,750
-----------
1,314,238
-----------
CHEMICALS - 0.80%
6,500 Geon Co............................................... 172,250
6,150 Hanna (M.A.) Co....................................... 148,368
4,200 Rohm & Haas Co........................................ 227,850
6,000 Wellman Inc........................................... 157,500
-----------
705,968
-----------
CHEMICALS (SPECIALTY) - 0.55%
10,000 Airgas Inc.(a)........................................ 240,000
2,500 Albermarle Corp....................................... 32,813
4,700 IMC Global Inc........................................ 214,437
-----------
487,250
-----------
COMPUTER MAINFRAMES - 0.52%
23,600 Amdahl Corp.(a)....................................... 241,900
13,500 Sequent Computer Systems, Inc.(a)..................... 217,688
-----------
459,588
-----------
</TABLE>
FS-2
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
---------- ------
<C> <C> <S> <C>
COMPUTER MINI/PC - 1.67%
9,400 Apple Computer, Inc................................... $ 379,525
7,200 Dell Computer Corp.(a)................................ 306,900
2,200 Stratus Computer, Inc.(a)............................. 58,575
22,100 Sun Microsystems Inc.(a).............................. 723,775
-----------
1,468,775
-----------
COMPUTER NETWORKING - 3.41%
14,900 Bay Networks, Inc.(a)................................. 437,687
16,000 Cabletron Systems, Inc.(a)............................ 604,000
7,500 Chipcom Corp.(a)...................................... 294,375
16,500 Cisco Systems, Inc.(a)................................ 550,688
11,000 Madge N.V.(a)......................................... 144,375
9,200 Network Equipment Technologies, Inc.(a)............... 224,250
16,400 3 Com Corp.(a)........................................ 751,325
-----------
3,006,700
-----------
COMPUTER PERIPHERALS - 4.17%
18,300 Adaptec Inc.(a)....................................... 500,963
10,200 Alliance Semiconductor Corp.(a)....................... 272,850
23,800 American Power Conversion Corp.(a).................... 371,875
5,100 Digi International, Inc.(a)........................... 109,650
39,900 EMC Corp.(a).......................................... 743,138
8,500 Exabyte Corp.(a)...................................... 145,562
6,900 Filenet Corporation(a)................................ 212,175
14,900 Komag, Inc.(a)........................................ 348,287
14,000 Microchip Technology, Inc.(a)......................... 313,250
15,000 Read-Rite Corp.(a).................................... 226,875
9,000 U.S. Robotics, Inc.(a)................................ 436,500
-----------
3,681,125
-----------
COMPUTER SOFTWARE & SERVICES - 8.58%
10,000 Adobe System, Inc..................................... 289,375
4,450 American Management Systems, Inc.(a).................. 83,716
10,500 Autodesk Inc.......................................... 347,813
5,500 BMC Software, Inc.(a)................................. 316,250
19,600 Cadence Design System, Inc.(a)........................ 428,750
13,500 Computer Associates International, Inc................ 673,313
12,000 Corel Corp.(a)........................................ 132,750
6,500 Fiserv, Inc.(a)....................................... 140,156
12,700 HBO & Co.............................................. 452,437
6,000 Microsoft Corp.(a).................................... 356,250
8,200 Network General Corp.(a).............................. 194,750
19,100 Oracle Systems Corp.(a)............................... 814,137
17,800 Parametric Technology Corp.(a)........................ 654,150
6,200 Platinum Technology, Inc.(a).......................... 128,650
5,200 Policy Management Systems Corp.(a).................... 215,800
14,800 Silicon Graphics Inc.(a).............................. 462,500
10,000 Sterling Software, Inc.(a)............................ 357,500
16,800 Sybase, Inc.(a)....................................... 730,800
15,000 Symantec Corp.(a)..................................... 296,250
10,900 Synopsys, Inc.(a)..................................... 493,225
-----------
7,568,572
-----------
CONGLOMERATES - 0.21%
3,884 Tyco Laboratories, Inc................................ 187,888
-----------
</TABLE>
FS-3
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
---------- ------
<C> <C> <S> <C>
ELECTRONIC COMPONENTS - 3.00%
4,000 Ametek Inc............................................ $ 64,500
4,500 Amphenol Corp.(a)..................................... 102,375
3,800 Augat Inc............................................. 60,800
8,000 KLA Instruments Corp.(a).............................. 400,000
6,100 Methode Electronics, Inc.............................. 89,975
3,125 Molex Inc. Class A.................................... 95,312
1,250 Molex Inc............................................. 40,625
2,500 Parker-Hannifin Corp.................................. 117,813
16,800 Philips Electronics N.V.-New York Shares-ADR.......... 529,200
7,000 Symbol Technologies, Inc.(a).......................... 182,000
8,500 Tektronix Inc......................................... 283,688
21,000 Teradyne Inc.(a)...................................... 682,500
-----------
2,648,788
-----------
ELECTRONIC/PC DISTRIBUTORS - 0.86%
8,600 Arrow Electronics, Inc.(a)............................ 317,125
12,000 Avnet, Inc............................................ 444,000
-----------
761,125
-----------
FINANCE (ASSET MANAGEMENT) - 0.11%
2,000 XTRA Corp............................................. 99,250
-----------
FINANCE (CONSUMER CREDIT) - 1.27%
2,500 ADVANTA Corp.......................................... 77,500
14,000 First USA, Inc........................................ 483,000
10,500 Green Tree Acceptance Corp............................ 332,062
9,000 MBNA Corp............................................. 229,500
-----------
1,122,062
-----------
GAMING - 0.51%
10,000 Autotote Corp.-Class C(a)............................. 67,500
6,100 MGM Grand, Inc.(a).................................... 159,362
10,000 Mirage Resorts, Inc.(a)............................... 223,750
-----------
450,612
-----------
HOMEBUILDING - 0.06%
2,400 Oakwood Homes Corp.................................... 54,000
-----------
HOTELS/MOTELS - 0.75%
13,000 Hospitality Franchise Systems, Inc.(a)................ 364,000
15,000 La Quinta Motor Inns, Inc............................. 294,375
-----------
658,375
-----------
INSURANCE (LIFE AND HEALTH) - 0.37%
7,000 Bankers Life Holding Corp............................. 144,375
6,000 Equitable of Iowa Companies........................... 177,000
-----------
321,375
-----------
LEISURE & RECREATION - 2.00%
5,800 Avid Technology, Inc.(a).............................. 160,225
15,000 Brunswick Corp........................................ 294,375
13,300 Callaway Golf Co...................................... 427,263
16,000 Carnival Cruise Lines, Inc.-Class C................... 336,000
7,500 Harley-Davidson, Inc.................................. 204,375
10,000 Mattel, Inc........................................... 206,250
5,000 Royal Caribbean Cruises Ltd........................... 137,500
-----------
1,765,988
-----------
MACHINE TOOLS - 0.31%
7,200 Cincinnati Milacron, Inc.............................. 165,600
4,100 Kennametal Inc........................................ 106,600
-----------
272,200
-----------
</TABLE>
FS-4
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
---------- ------
<C> <C> <S> <C>
MACHINERY - 0.53%
10,400 Thermo Electron Corp.(a).............................. $ 464,100
-----------
MACHINERY-HEAVY - 0.55%
5,700 AGCO Corp............................................. 167,438
6,000 Clark Equipment Co.(a)................................ 321,750
-----------
489,188
-----------
MEDICAL (DRUGS) - 1.59%
9,555 Bergen Brunswig Corp.................................. 218,571
6,250 Cardinal Health, Inc.................................. 288,281
6,000 Elan Corp.-PLC-ADR(a)................................. 211,500
9,900 Forest Laboratories, Inc.(a).......................... 490,050
7,000 Mylan Laboratories, Inc............................... 196,000
-----------
1,404,402
-----------
MEDICAL INSTRUMENTS/PRODUCTS - 2.00%
15,400 Biomet, Inc. (a)...................................... 232,925
10,000 Cordis Corp.(a)....................................... 627,500
6,600 Heart Technology Inc.(a).............................. 131,175
3,500 Nellcor Inc.(a)....................................... 118,562
6,000 St. Jude Medical, Inc................................. 228,000
900 Sunrise Medical, Inc.(a).............................. 27,732
14,700 Ventritex Inc.(a)..................................... 396,900
-----------
1,762,794
-----------
MEDICAL SERVICES - 9.58%
3,600 Charter Medical Corp.(a).............................. 55,800
9,000 Coastal Healthcare Group, Inc.(a)..................... 225,000
9,500 Columbia Healthcare Corp.............................. 381,187
5,300 Coventry Corp.(a)..................................... 137,800
1,900 Foundation Health Corp.(a)............................ 56,050
2,600 Genesis Health Ventures, Inc.(a)...................... 78,650
7,000 Health Care & Retirement Corp.(a)..................... 204,750
7,550 Health Management Associates, Inc.(a)................. 207,625
8,300 Healthsource, Inc.(a)................................. 354,825
16,500 HealthSouth Rehabilitation Corp.(a)................... 627,000
11,000 HealthTrust Inc.-The Hospital Co.(a).................. 385,000
6,500 Homedco Group, Inc.(a)................................ 269,343
13,700 Horizon Healthcare Corp.(a)........................... 363,050
26,000 Humana Inc.(a)........................................ 594,750
11,500 Integrated Health Services, Inc....................... 431,250
13,800 Lincare Holdings, Inc.(a)............................. 358,800
5,000 Mariner Health Group, Inc.(a)......................... 94,375
18,400 Mid-Atlantic Medical Services, Inc.(a)................ 437,000
15,000 OrNda HealthCorp(a)................................... 217,500
2,200 Oxford Health Plans, Inc.(a).......................... 186,725
3,000 Pacificare Health Systems, Inc.-Class A(a)............ 192,000
3,100 Pacificare Health Systems, Inc.-Class B(a)............ 199,950
4,400 Quantum Health Resources, Inc.(a)..................... 133,650
13,300 Sun Healthcare Group, Inc.(a)......................... 354,113
17,400 U.S. Healthcare, Inc. ................................ 796,050
13,300 United Healthcare Corp. .............................. 645,050
15,000 Vencor, Inc.(a)....................................... 457,500
-----------
8,444,793
-----------
METALS - 0.17%
4,600 Timken Co. (The)...................................... 150,075
-----------
</TABLE>
FS-5
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
---------- ------
<C> <C> <S> <C>
OFFICE AUTOMATION - 0.17%
6,400 Danka Business Systems PLC-ADR........................ $ 151,200
-----------
OFFICE PRODUCTS - 0.70%
7,000 Avery Dennison Corp. ................................. 246,750
15,400 Reynolds & Reynolds Co.-Class A....................... 365,750
-----------
612,500
-----------
OIL EQUIPMENT & SUPPLIES - 0.06%
4,500 Smith International, Inc.(a).......................... 52,313
-----------
PAPER & FOREST PRODUCTS - 0.22%
5,000 Champion International Corp. ......................... 191,250
-----------
RESTAURANTS - 0.46%
3,900 Morrison Restaurants, Inc............................. 101,400
6,000 Outback Steakhouse, Inc.(a)........................... 159,000
9,000 Wendy's International, Inc. .......................... 145,125
-----------
405,525
-----------
RETAIL-FOOD & DRUG - 2.06%
6,400 Casey's General Stores, Inc. ......................... 94,400
13,500 Eckerd Corp.(a)....................................... 354,375
8,700 Kroger Co. (The)(a)................................... 205,537
8,800 Revco D.S., Inc.(a)................................... 195,800
17,400 Safeway Inc.(a)....................................... 558,975
7,100 Smith's Food & Drug Centers, Inc. .................... 182,825
9,700 Stop & Shop Companies, Inc. (The)(a).................. 225,525
-----------
1,817,437
-----------
RETAIL-STORES - 5.59%
5,000 Ann Taylor Stores Corp.(a)............................ 167,500
1,200 Baker (J.), Inc. ..................................... 16,650
2,000 Bed Bath & Beyond Inc.(a)............................. 53,500
18,500 Circuit City Stores, Inc. ............................ 416,250
15,000 Consolidated Stores Corp.(a).......................... 277,500
9,000 Dollar General Corp. ................................. 290,250
11,100 Gateway 2000 Inc.(a).................................. 231,712
11,300 General Nutrition(a).................................. 276,850
3,000 Gymboree Corp.(a)..................................... 72,000
5,900 Hechinger Co. ........................................ 60,475
19,300 Lowe's Companies, Inc. ............................... 709,275
8,500 Mac Frugal's Bargains-Close-outs Inc.(a).............. 139,187
10,400 Michaels Stores, Inc.(a).............................. 343,200
9,000 Office Depot, Inc.(a)................................. 234,000
5,500 Pep Boys - Manny, Moe & Jack.......................... 179,438
11,000 Pier 1 Imports Inc. .................................. 104,500
19,500 Staples, Inc.(a)...................................... 492,375
3,200 Sunglass Hut International(a)......................... 74,400
4,000 Talbots, Inc. ........................................ 121,500
11,600 Tech Data Corp.(a).................................... 153,700
11,000 Viking Office Products Inc.(a)........................ 286,000
4,600 Waban Inc.(a)......................................... 79,925
6,075 Williams-Sonoma, Inc.(a).............................. 148,838
-----------
4,929,025
-----------
SCIENTIFIC INSTRUMENTS - 0.36%
8,700 Varian Associates, Inc. .............................. 320,813
-----------
</TABLE>
FS-6
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
---------- ------
<C> <C> <S> <C>
SEMICONDUCTORS - 10.45%
13,500 Altera Corp.(a)....................................... $ 600,750
23,250 Analog Devices, Inc.(a)............................... 499,875
20,400 Applied Materials, Inc.(a)............................ 785,400
16,800 Atmel Corp.(a)........................................ 527,100
8,300 Credence Systems Corp.(a)............................. 188,825
14,000 Cypress Semiconductor Corp.(a)........................ 329,000
7,000 Electroglas Inc.(a)................................... 200,375
8,500 Integrated Device Technology, Inc.(a)................. 255,000
9,200 Intel Corp. .......................................... 638,250
10,700 International Rectifier Corp.(a)...................... 251,450
16,000 LAM Research Corp.(a)................................. 600,000
7,500 Lattice Semiconductor Corp.(a)........................ 162,187
9,300 Linear Technology Corp. .............................. 460,350
18,600 LSI Logic Corp.(a).................................... 790,500
14,400 Micron Technology Inc. ............................... 635,400
12,500 Motorola, Inc. ....................................... 739,062
9,500 Novellus Systems, Inc.(a)............................. 410,875
6,000 SCI Systems, Inc.(a).................................. 109,500
10,200 Texas Instruments Inc. ............................... 703,800
5,000 Xilinx Inc.(a)........................................ 288,750
1,200 Zilog Inc.(a)......................................... 34,800
-----------
9,211,249
-----------
SHOES & RELATED APPAREL - 0.38%
6,100 Reebok International, Ltd. ........................... 231,800
4,000 Wolverine World Wide, Inc. ........................... 100,500
-----------
332,300
-----------
STEEL - 0.20%
4,000 AK Steel Holding Corp(a).............................. 102,000
5,000 LTV Corp.(a).......................................... 70,000
-----------
172,000
-----------
TELECOMMUNICATIONS - 5.67%
4,900 ADC Telecommunications, Inc.(a)....................... 240,100
13,100 ALC Communications Corp.(a)........................... 379,900
8,100 Allen Group Inc....................................... 187,312
4,250 Andrew Corp.(a)....................................... 225,250
4,800 Aspect Telecommunications Corp.(a).................... 163,200
2,500 California Microwave, Inc.(a)......................... 72,500
21,900 DSC Communications Corp.(a)........................... 703,538
13,300 Ericsson (L.M.) Telephone Co., Inc.................... 716,537
12,300 General Instrument Corp.(a)........................... 335,175
7,000 Nokia Corp.-ADR(a).................................... 511,875
10,400 Northern Telecom Ltd.................................. 354,900
21,500 Scientific-Atlantic Inc............................... 432,688
4,400 StrataCom, Inc.(a).................................... 157,300
10,400 Tellabs, Inc.(a)...................................... 517,400
-----------
4,997,675
-----------
TEXTILES - 0.69%
5,000 Nautica Enterprises Inc.(a)........................... 141,875
7,600 Tommy Hilfiger Corp.(a)............................... 154,850
11,300 Unifi, Inc............................................ 307,925
-----------
604,650
-----------
</TABLE>
FS-7
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
---------- ------
<C> <C> <S> <C>
TRUCKING - 0.36%
12,000 TNT Freightways Corp......................... $ 321,000
-----------
UTILITIES - 0.41%
5,900 Century Telephone Enterprises, Inc.......... 185,850
4,000 Telephone and Data Systems, Inc............. 175,000
-----------
360,850
-----------
Total Common Stocks.......................... 66,258,594
-----------
<CAPTION>
PRINCIPAL
AMOUNT
----------
<C> <C> <S> <C>
U.S. TREASURY
SECURITIES - 16.50%
U.S. Treasury Bills(b)
$7,280,000(c) 5.05%, 03/23/95.............................. 7,225,109
7,397,000(c) 5.78%, 04/06/95.............................. 7,322,142
-----------
Total U.S. Treasury Securities............... 14,547,251
-----------
REPURCHASE AGREEMENTS -
8.93%(d)
874,339 Goldman, Sachs & Co.
5.80%, 02/01/95(e).......................... 874,339
7,000,000 Swiss Bank Government Securities, Inc.
5.80%, 02/01/95(f).......................... 7,000,000
-----------
Total Repurchase Agreements.................. 7,874,339
-----------
TOTAL INVESTMENT SECURITIES - 100.57%........ 88,680,184
LIABILITIES IN EXCESS OF
OTHER ASSETS - (0.57%)...................... (502,912)
-----------
NET ASSETS - 100.00%......................... $88,177,272
===========
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Non-income producing security.
(b) U.S. Treasury Bills are traded on a discount basis. In such cases the
interest rate shown represents the rate of discount paid or received at the
time of purchase by the Fund.
(c) A portion of the principal amount was pledged as collateral for open
futures contracts at 01/31/95. See Note 6.
(d) Collateral on repurchase agreements, including the Fund's pro-rata interest
in joint repurchase agreements, is taken into possession by the Fund upon
entering into the repurchase agreement.The collateral is marked to market
daily to ensure its market value as being 102% of the sales price of the
repurchase agreement.
(e) Joint repurchase agreement entered into 01/31/95 with a maturing value of
$550,371,439. Collateralized by $546,482,000 U.S. Treasury Obligations,
4.25% to 10.375% due 02/15/95 to 05/15/21. The aggregate market value of
the collateral at 01/31/95 was $561,314,868. The Fund's pro-rata interest
in the collateral at 01/31/95 was $891,867.
(f) Joint repurchase agreement entered into 01/31/95 with a maturing value of
$160,025,778. Collateralized by $166,659,000 U.S. Treasury Bills, due
02/16/95 to 01/11/96. The aggregate market value of the collateral at
01/31/95 was $163,218,410. The Fund's pro-rata interest in the collateral
at 01/31/95 was $7,140,805.
See Notes to Financial Statements.
</TABLE>
FS-8
<PAGE>
<TABLE>
<CAPTION>
<C> <S> <C>
AIM V.I. CAPITAL ASSETS:
APPRECIATION FUND Investments, at value (cost $83,100,845)........................... $88,680,184
STATEMENT OF Receivables for:
ASSETS AND Investments sold................................................. 1,545,282
LIABILITIES Capital stock sold............................................... 94,079
January 31, 1995 Dividends and interest........................................... 10,732
Investment for deferred compensation plan.......................... 3,551
Organizational costs, net.......................................... 9,400
Other assets....................................................... 74,506
-----------
Total assets................................................... 90,417,734
-----------
LIABILITIES:
Payables for:
Investments purchased............................................ 2,161,473
Deferred compensation............................................ 3,551
Accrued advisory fees.............................................. 48,069
Accrued directors' fees............................................ 1,296
Accrued administrative service fees................................ 2,183
Accrued operating expenses......................................... 23,890
-----------
Total liabilities.............................................. 2,240,462
-----------
Net assets applicable to shares outstanding........................ $88,177,272
===========
Capital shares, $.001 par value per share:
Authorized....................................................... 250,000,000
===========
Outstanding...................................................... 7,318,355
===========
Net asset value, offering and redemption price per share........... $ 12.05
===========
See Notes to Financial Statements.
</TABLE>
FS-9
<PAGE>
<TABLE>
<CAPTION>
<C> <S> <C>
AIM V.I. CAPITAL INVESTMENT INCOME:
APPRECIATION FUND Interest....................................................... $ 610,216
STATEMENT OF Dividends...................................................... 193,993
OPERATIONS -----------
For the year ended Total investment income....................................... 804,209
January 31, 1995 -----------
EXPENSES:
Advisory fees.................................................. 402,307
Custodian fees................................................. 40,695
Administrative service fees.................................... 23,992
Directors' fees and expenses................................... 4,825
Organizational costs........................................... 2,892
Other.......................................................... 43,604
-----------
Total expenses................................................ 518,315
-----------
Net investment income............................................ 285,894
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT SECURITIES AND
FUTURES CONTRACTS:
Net realized gain (loss) on:
Investment securities.......................................... (3,409,542)
Futures contracts.............................................. (424,599)
-----------
(3,834,141)
-----------
Unrealized appreciation of:
Investment securities.......................................... 1,708,541
Futures contracts.............................................. 434,025
-----------
2,142,566
-----------
Net gain (loss) on investment securities and futures contracts... (1,691,575)
-----------
Net increase (decrease) in net assets resulting from operations.. $(1,405,681)
===========
See Notes to Financial Statements.
</TABLE>
FS-10
<PAGE>
<TABLE>
<CAPTION>
<C> <S> <C> <C>
AIM V.I. CAPITAL 1995 1994
APPRECIATION FUND ----------- -----------
STATEMENT OPERATIONS:
OF CHANGES Net investment income.............................. $ 285,894 $ 6,264
IN NET ASSETS Net realized gain (loss) on sales of investment
For the year ended securities and futures contracts.................. (3,834,141) (178,125)
January 31, 1995 and the Unrealized appreciation of investment securities
period May 5, 1993 (date and futures contracts ............................ 2,142,566 3,870,798
operations commenced) ----------- -----------
through January 31, 1994 Net increase (decrease) in net assets resulting
from operations.................................. (1,405,681) 3,698,937
Net increase from capital stock transactions....... 54,473,386 31,674,011
Distributions to shareholders from net investment
income............................................ (244,886) (18,495)
----------- -----------
Net increase in net assets........................ 52,822,819 35,354,453
NET ASSETS:
Beginning of period................................ 35,354,453 --
----------- -----------
End of period...................................... $88,177,272 $35,354,453
=========== ===========
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in)......... $86,147,397 $31,674,011
Undistributed net investment income................ 28,777 (12,231)
Undistributed net realized gain (loss) on sales of
investment securities and futures contracts ...... (4,012,266) (178,125)
Unrealized appreciation of investment securities
and futures contracts ............................ 6,013,364 3,870,798
----------- -----------
$88,177,272 $35,354,453
=========== ===========
See Notes to Financial Statements.
</TABLE>
FS-11
<PAGE>
<TABLE>
<C> <S>
AIM V.I. CAPITAL NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
APPRECIATION FUND AIM Variable Insurance Funds, Inc. (the "Company"), is a Maryland corporation
NOTES TO organized on January 22, 1993, and is registered under the Investment Company
FINANCIAL Act of 1940 (the "1940 Act"), as amended, as an open-end, series, management
STATEMENTS investment company consisting of nine portfolios: AIM V.I. Capital Appreciation
January 31, 1995 Fund (the "Capital Appreciation Fund"), AIM V.I. Diversified Income Fund, AIM
V.I. Government Securities Fund, AIM V.I. Growth Fund, AIM V.I. Growth and
Income Fund, AIM V.I. International Equity Fund, AIM V.I. Money Market Fund,
AIM V.I. Utilities Fund and AIM V.I. Value Fund (each a "Fund" collectively,
the "Funds"). Matters affecting each Fund are voted on exclusively by the
shareholders of such Fund. The assets, liabilities and operations of each Fund
are accounted for separately. Information presented in these financial
statements pertains only to the Capital Appreciation Fund. Shares of the Funds
are sold only to insurance company separate accounts to fund the benefits of
variable annuity contracts.
The following is a summary of the significant accounting policies followed by
the Capital Appreciation Fund in the presentation of its financial statements.
A. Security Valuations - A security listed or traded on an exchange is valued
at its last sales price on the exchange where the security is principally
traded, or lacking any sales on a particular day, the security is valued at
the mean between the closing bid and asked prices on that day. Each security
traded in the over-the-counter market (but not including securities reported
on the NASDAQ National Market System) is valued at the mean between the last
bid and asked prices based upon quotes furnished by market makers for such
securities. Each security reported on the NASDAQ National Market System is
valued at the last sales price on the valuation date. Securities for which
market quotations are not readily available are valued at fair value as
determined in good faith by or under the supervision of the Fund's officers
in a manner specifically authorized by the Board of Directors. Short-term
obligations having 60 days or less to maturity are valued at amortized cost
which approximates market value.
B. Securities Transactions, Investment Income and Distributions - Securities
transactions are accounted for on a trade date basis. Interest income is
recorded as earned from settlement date and is recorded on the accrual
basis. Dividend income and distributions to shareholders are recorded on the
ex-dividend date. Realized gains or losses from securities transactions are
recorded on the identified cost basis.
C. Stock Index Futures Contracts - The Capital Appreciation Fund may purchase
or sell stock index futures contracts as a hedge against changes in market
conditions. Initial margin deposits required upon entering into futures
contracts are satisfied by the segregation of specific securities or cash,
and/or by securing a standby letter of credit from a major commercial bank,
as collateral, for the account of the broker (the Fund's agent in acquiring
the futures position). During the period the futures contract is open,
changes in the value of the contract are recognized as unrealized gains or
losses by "marking to market" on a daily basis to reflect the market value
of the contract at the end of each day's trading. Variation margin payments
are made or received depending upon whether unrealized gains or losses are
incurred. When the contract is closed, the Fund records a realized gain or
loss equal to the difference between the proceeds from (or cost of) the
closing transaction and the Fund's basis in the contract. Risks include the
possibility of an illiquid market and the change in the value of the
contract may not correlate with changes in the securities being hedged.
D. Federal Income Taxes - For federal income tax purposes, each Fund in the
Company is taxed as a separate entity. It is the Capital Appreciation Fund's
policy to continue to comply with the requirements of the Internal Revenue
Code applicable to regulated investment companies and to distribute all of
its taxable income and capital gains to its shareholders. Therefore, no
provision for federal income taxes is recorded in the financial statements.
Capital Appreciation Fund had capital loss carryforwards (which may be
carried forward to offset future taxable capital gains, if any) of
$3,293,451, which expires, if not previously utilized, through the year
2003.
E. Expenses - Operating expenses directly attributable to a Fund are charged to
that Fund's operations. Expenses of the Company which are not directly
attributable to the operations of any Fund of the Company are allocated to
the Funds to which the expense relates based upon methods approved by the
Board of Directors of the Company.
F. Organizational Costs - Organizational costs for the Capital Appreciation
Fund of $14,461, are being amortized over five years.
</TABLE>
FS-12
<PAGE>
<TABLE>
<C> <S>
NOTE 2 - INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master advisory agreement, the
Capital Appreciation Fund pays an advisory fee to AIM at an annual rate of
0.65% of the first $250 million of the Capital Appreciation Fund's average
daily net assets, plus 0.60% of the Fund's average daily net assets in excess
of $250 million.
Pursuant to a master administrative services agreement between the Company and
AIM, with respect to the Capital Appreciation Fund, the Company has agreed to
reimburse certain administrative costs incurred in providing accounting
services to the Fund. During the year ended January 31, 1995, AIM was
reimbursed $23,992 for such services.
The Company has entered into a master distribution agreement with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Capital Appreciation Fund.
Certain officers and directors of the Company are officers of AIM and AIM
Distributors.
The Capital Appreciation Fund incurred legal fees of $3,375 for services
rendered by Reid & Priest as counsel to the Company's directors. In September
1994, the firm of Kramer, Levin, Naftalis, Nessen, Kamin & Frankel was
appointed counsel to the Directors. A member of that firm is a director of the
Company and, prior to September 1994, was a member of Reid & Priest.
NOTE 3 - DIRECTORS' FEES
Directors' fees represent remuneration paid or accrued to each director who is
not an "interested person" of the Company. The Company may invest a directors
fees, if so elected by such director, in mutual fund shares in accordance with
a deferred compensation plan.
NOTE 4 - INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term
securities) purchased and sold by the Capital Appreciation Fund during the year
ended January 31, 1995 was $77,433,515 and $40,249,880, respectively.
The amount of unrealized appreciation (depreciation) of investment securities
on a tax basis as of January 31, 1995 is as follows:
</TABLE>
<TABLE>
<C> <S> <C>
Aggregate unrealized appreciation of investment securities........ $ 7,338,866
Aggregate unrealized (depreciation) of investment securities...... (1,784,489)
-----------
Net unrealized appreciation (depreciation) of investment
securities....................................................... $ 5,554,377
===========
Cost of investments for tax purposes is $83,125,807.
</TABLE>
<TABLE>
<C> <S>
NOTE 5 - CAPITAL STOCK
Changes in capital stock outstanding during the years ended January 31, 1995
and the period May 5, 1993 (date operations commenced) through January 31, 1994
were as follows:
</TABLE>
<TABLE>
<CAPTION>
1995 1994
---------------------- ----------------------
Shares Amount Shares Amount
--------- ----------- --------- -----------
<C> <S> <C> <C> <C> <C>
Sold........................... 4,817,657 $58,178,417 2,818,768 $31,776,855
Issued as reinvestment of
distributions................. 20,683 244,886 1,637 18,495
Reacquired..................... (330,372) (3,949,917) (10,018) (121,339)
--------- ----------- --------- -----------
4,507,968 $54,473,386 2,810,387 $31,674,011
========= =========== ========= ===========
</TABLE>
<TABLE>
<C> <S>
NOTE 6 - OPEN FUTURES CONTRACTS
On January 31, 1995, $712,000 principal amount of U.S. Treasury Bills were
pledged as collateral to cover margin requirements for open futures contracts:
Open futures contracts at January 31, 1995 were as follows:
</TABLE>
<TABLE>
<CAPTION>
UNREALIZED
CONTRACT NO. OF CONTRACTS/MONTH/COMMITMENT APPRECIATION
<C> <S> <C> <C>
S&P 500 Index 64 contracts/March/Buy $434,025
</TABLE>
FS-13
<PAGE>
<TABLE>
<C> <S>
NOTE 7 - FINANCIAL HIGHLIGHTS
Shown below are the condensed financial highlights for a share outstanding of
the Capital Appreciation Fund during the year ended January 31, 1995, and the
period May 5, 1993 (date operations commenced) through January 31, 1994.
</TABLE>
<TABLE>
<CAPTION>
1995 1994
------- -------
<S> <C> <C>
Net asset value, beginning of period................... $ 12.58 $ 10.00
------- -------
Income from investment operations:
Net investment income................................ 0.05 --
Net gains (losses) on securities (both realized and
unrealized)......................................... (0.54) 2.59
------- -------
Total from investment operations.................... (0.49) 2.59
------- -------
Less distributions:
Dividends from net investment income................. (0.04) (0.01)
------- -------
Net asset value, end of period......................... $ 12.05 $ 12.58
======= =======
Total return(a)........................................ (3.91)% 25.90%
======= =======
Ratios/supplemental data:
Net assets, end of period (000s omitted)............... $88,177 $35,354
======= =======
Ratio of expenses to average net assets................ 0.84%(b) 1.06%(c)
======= =======
Ratio of net investment income to average net assets... 0.46%(b) 0.07%(c)
======= =======
Portfolio turnover rate................................ 81% 34%
======= =======
------
(a) Total returns are not annualized for periods less than one year.
(b) Ratios are based on average net assets of $61,893,337.
(c) Annualized ratios of expenses and net investment income (loss) to average
net assets prior to waiver of advisory fees are 1.45% and (0.32)%,
respectively. Ratios are based on average net assets of $12,095,128.
</TABLE>
FS-14
<PAGE>
REPORT OF To the Shareholders and Board of Directors
INDEPENDENT AIM Variable Insurance Funds, Inc.
CERTIFIED PUBLIC
ACCOUNTANTS We have audited the accompanying statement of
assets and liabilities of AIM V.I. Diversified
Income Fund, a series of shares of common stock
of AIM Variable Insurance Funds, Inc. including
the schedule of investments as of January 31,
1995, the related statement of operations for
the year then ended and the statement of
changes in net assets and the financial
highlights for the year then ended and the
period May 5, 1993 (commencement of operations)
through January 31, 1994. These financial
statements and financial highlights are the
responsibility of the Fund's management. Our
responsibility is to express an opinion on
these financial statements and financial
highlights based on our audits.
We conducted our audits in accordance with
generally accepted auditing standards. Those
standards require that we plan and perform the
audit to obtain reasonable assurance about
whether the financial statements and financial
highlights are free of material misstatement.
An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures
in the financial statements. Our procedures
included confirmation of securities owned as of
January 31, 1995, by correspondence with the
custodian and brokers. Where brokers did not
reply to our confirmation requests, we carried
out other appropriate auditing procedures. An
audit also includes assessing the accounting
principles used and significant estimates made
by management, as well as evaluating the
overall financial statement presentation. We
believe that our audits provide a reasonable
basis for our opinion.
In our opinion, the financial statements and
financial highlights referred to above present
fairly, in all material respects, the financial
position of AIM V.I. Diversified Income Fund,
as of January 31, 1995, the results of its
operations for the year then ended, and the
changes in its net assets and the financial
highlights for the year then ended and the
period May 5, 1993 through January 31, 1994, in
conformity with generally accepted accounting
principles.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
February 24, 1995
FS-15
<PAGE>
<TABLE>
<CAPTION>
<C> <C> <S> <C>
AIM V.I. DIVERSIFIED PRINCIPAL MARKET
INCOME FUND AMOUNT(a) VALUE
SCHEDULE OF -------------- ------
INVESTMENTS NON-CONVERTIBLE BONDS AND NOTES - 79.36%
January 31, 1995
AUTOMOBILE MANUFACTURERS - 1.65%
$ 400,000 General Motors Corp., Deb., 8.80%, 03/01/21...... $ 417,160
-----------
BANKING - 1.04%
300,000 Mercantile Bank, Sub. Notes, 6.375%, 01/15/04.... 263,025
-----------
BEVERAGES - 1.23%
Lion Nathan Ltd. (Australia), Sub. Deb., 12.00%,
450,000 09/30/00(b)..................................... 311,903
-----------
BUILDING MATERIALS - 1.11%
200,000 Congoleum Corp., Sr. Notes, 9.00%, 02/01/01...... 183,750
100,000 Triangle Pacific, Sr. Notes, 10.50%, 08/01/03.... 96,000
-----------
279,750
-----------
CABLE TV - 3.22%
Marcus Cable Operating Co., Sr. Disc. Notes,
750,000 13.50%, 08/01/04(c)............................. 393,750
250,000 Rogers Cablesystem Inc. (Canada), Sr. Secured 2nd
Priority Deb., 9.65%, 01/15/14(b)............... 145,019
Videotron Ltd., Sr. Sub. Notes, 11.125%,
490,000 07/01/04(c)..................................... 274,400
-----------
813,169
-----------
CONGLOMERATES - 3.39%
Freeport-McMoRan, Sr. Sub. Notes, 8.75%,
500,000 02/15/04........................................ 448,125
400,000 ITT Corp., Deb., 9.50%, 04/15/21................. 410,048
-----------
858,173
-----------
CONSUMER ELECTRONICS - 1.26%
Harman International, Sr. Sub. Notes, 12.00%,
300,000 08/01/02........................................ 318,000
-----------
CONTAINERS - 2.96%
Anchor Glass Container, Sr. Sub Deb., 9.875%,
300,000 12/15/08........................................ 258,000
Ivex Packaging Inc., Sr. Sub. Notes, 12.50%,
390,000 12/15/02........................................ 390,000
Owens-Illinois Inc., Sr. Sub. Notes, 10.50%,
100,000 06/15/02........................................ 99,250
-----------
747,250
-----------
ELECTRIC POWER - 1.58%
Commonwealth Edison, First Mortgage Notes, 9.75%,
400,000 02/15/20........................................ 399,952
-----------
FINANCE - CONSUMER CREDIT - 6.11%
Ash Capital Finance (United Kingdom), Gtd. Bonds,
50,000 9.50%, 07/15/06(b).............................. 48,237
500,000 GMAC, Notes, 5.50%, 10/15/02(d).................. 500,705
500,000 GPA Delaware Inc., Deb., 8.75%, 12/15/98......... 367,500
KFW International Finance (Italy), Gtd. Notes,
1,000,000,000 11.625%, 11/27/98(b)............................ 626,847
-----------
1,543,289
-----------
FOOD/PROCESSING - 1.19%
Curtice-Burns Foods Inc., Sr. Sub. Notes, 12.25%,
120,000 02/01/05........................................ 122,100
Fleming Companies Inc., Sr. Notes, 10.625%,
175,000 12/15/01........................................ 177,187
-----------
299,287
-----------
HOMEBUILDING - 2.88%
Continental Homes Holdings, Sr. Notes, 12.00%,
500,000 08/01/99........................................ 490,000
270,000 Ryland Group, Sr. Sub. Notes, 10.50%, 07/15/02... 238,950
-----------
728,950
-----------
HOTELS/MOTELS - 1.22%
Four Seasons Hotel (Canada), Deb., 11.05%,
250,000 03/25/96(b)..................................... 176,896
John Q. Hammons Hotels, Gtd. First Mortgage
150,000 Notes, 8.875%, 02/15/04......................... 132,750
-----------
309,646
-----------
</TABLE>
FS-16
<PAGE>
<TABLE>
<CAPTION>
<C> <C> <S> <C>
PRINCIPAL MARKET
AMOUNT(a) VALUE
-------------- ------
INSURANCE - LIFE & HEALTH - 1.03%
American Life Holding, Sr. Sub. Notes, 11.25%,
$ 200,000 09/15/04........................................ $ 198,000
Americo Life Inc., Sr. Sub. Notes, 9.25%,
75,000 06/01/05........................................ 63,375
-----------
261,375
-----------
LEISURE & RECREATION - 4.10%
380,000 Aztar Corp., Sr. Sub. Notes, 13.75%, 10/01/04.... 393,300
Boomtown Inc., Unit Mortgage Notes, 11.50%,
75,000 11/01/03(e)..................................... 73,500
(acquired 11/03/93; cost $75,000)
Harrah's Jazz Co., First Mortgage Notes, 14.25%,
100,000 11/15/01........................................ 106,750
Icon Health & Fitness, Sr. Sub. Notes, 13.00%,
200,000 07/15/02(e)..................................... 202,000
(acquired 11/04/94-12/07/94; cost $196,929)
260,000 Showboat, Inc., Sr. Sub. Notes, 13.00%, 08/01/09. 260,000
-----------
1,035,550
-----------
MEDICAL SERVICES - 2.05%
OrNda Healthcorp, Sr. Sub. Notes, 11.375%,
500,000 08/15/04........................................ 517,500
-----------
METALS - 0.41%
Carbide Graphite Group, Sr. Notes, 11.50%,
100,000 09/01/03........................................ 102,500
-----------
NATURAL GAS - 1.57%
450,000 Enron Corp., Sr. Sub. Deb., 6.75%, 07/01/05...... 396,041
-----------
OIL AND GAS - 1.45%
Canadian Oil Debco Inc. (Canada), Deb., 11.00%,
500,000 10/31/00(b)..................................... 365,784
-----------
PAPER & FOREST PRODUCTS - 0.33%
90,000 Pacific Lumber, Sr. Notes, 10.50%, 03/01/03...... 83,588
-----------
RESTAURANTS - 2.46%
250,000 Carrols Corp., Sr. Notes, 11.50%, 08/15/03....... 230,000
425,000 Flagstar Corp., Sr. Notes, 10.875%, 12/01/02..... 391,000
-----------
621,000
-----------
RETAIL - FOOD & DRUG - 2.99%
Food 4 Less Supermarkets, Sr. Notes, 10.45%,
380,000 04/15/00........................................ 370,500
390,000 Penn Traffic Co., Sr. Notes, 10.65%, 11/01/04.... 386,100
-----------
756,600
-----------
RETAIL - STORES - 3.83%
Apparel Retailer Inc., Sr. Disc. Deb., 12.75%,
400,000 8/15/05(c)...................................... 224,000
County Seat Stores, Sr. Sub. Notes, 12.00%,
200,000 10/01/01........................................ 199,000
150,000 Pamida Inc., Sr. Sub. Notes, 11.75%, 03/15/03.... 135,000
270,000 Southland Corp., Sr. Sub. Deb., 4.50%, 06/15/04.. 167,400
Specialty Retail, Sr. Sub. Notes, 11.00%,
275,000 08/15/03........................................ 242,000
-----------
967,400
-----------
STEEL - 0.73%
GS Technologies Inc., Sr. Notes, 12.00%,
185,000 09/01/04........................................ 184,075
-----------
SUPRANATIONAL ORGANIZATION - 4.14%
International Bank for Reconstruction &
Development (Germany)
700,000 Unsub. Global Bonds, 7.25%, 10/13/99(b).......... 461,793
1,000,000 Unsub. Global Bonds, 5.875%, 11/10/03(b)......... 585,550
-----------
1,047,343
-----------
</TABLE>
FS-17
<PAGE>
<TABLE>
<CAPTION>
<C> <C> <S> <C>
PRINCIPAL MARKET
AMOUNT(a) VALUE
-------------- ------
TELECOMMUNICATIONS - 3.19%
$ 735,000 Bell Canada (Canada), Deb., 13.875%, 05/01/00(b). $ 553,349
Cellular Inc., Sr. Sub. Notes, 11.75%,
250,000 09/01/03(c)..................................... 166,250
100,000 Northern Telecom, Notes, 6.00%, 09/01/03......... 85,696
-----------
805,295
-----------
TEXTILES - 2.37%
Consoltex Group, Sr. Sub. Notes, 11.00%,
300,000 10/01/03........................................ 268,500
Fieldcrest Cannon Inc., Sr. Sub. Deb., 11.25%,
330,000 06/15/04........................................ 331,650
-----------
600,150
-----------
TRANSPORTATION - 2.81%
Sea-Containers Ltd., Sr. Sub. Deb., 12.50%,
400,000 12/01/04........................................ 406,000
Trans Ocean Container, Sr. Sub. Notes, 12.25%,
320,000 07/01/04........................................ 304,000
-----------
710,000
-----------
FOREIGN GOVERNMENTS - 17.06%
1,250,000 Australian Government (Australia), Foreign
Government Guarantee, 7.50%, 07/15/05(b)........ 774,428
Bundesschatzanweisungen (Germany), Notes, 6.375%,
2,500,000 08/14/98(b)..................................... 1,612,151
New Brunswick (Province of) (Canada), Deb.,
850,000 8.94%, 01/15/05(b).............................. 590,470
Ontario Province (United Kingdom), Sr. Unsub.
465,000 Notes 6.875%, 09/15/00(b)....................... 660,325
Quebec (Province of) (Canada), Sr. Deb., 9.375%,
100,000 01/16/23(b)..................................... 65,139
Queensland Treasury Corp. (Australia), Gtd.
820,000 Notes, 8.875%, 11/08/96(b)...................... 609,024
-----------
4,311,537
-----------
Total Non-Convertible Bonds and Notes............ 20,055,292
-----------
CONVERTIBLE BONDS AND NOTES - 6.96%
BANKING - 1.06%
Societe Generale (France), Deb., 3.50%,
1,419,000 01/01/00(b)..................................... 268,496
-----------
FINANCE - CONSUMER CREDIT - 3.10%
320,000 ELF Enterprise Finance PLC (United Kingdom),
Gtd. Conv. Bonds, 8.75%, 06/27/06(b)............ 497,232
300,000 Henderson Capital, Conv. Bonds, 4.00%, 10/27/96.. 286,500
-----------
783,732
-----------
OIL EQUIPMENT & SUPPLIES - 1.59%
Lasmo PLC (United Kingdom), Conv. Deb., 7.75%,
300,000 10/04/05(b)..................................... 402,104
-----------
PAPER & FOREST PRODUCTS - 1.21%
Repap Enterprise (Canada), Conv. Deb., 9.00%,
500,000 06/30/98(b)..................................... 305,116
-----------
Total Convertible Bonds and Notes................ 1,759,448
-----------
<CAPTION>
SHARES
------
<C> <S> <C>
COMMON STOCKS & WARRANTS - 0.02%
LEISURE & RECREATION - 0.00%
150 Boomtown Inc., Wt., expiring 11/01/98(f)......... 900
-----------
RETAIL - STORES - 0.02%
200 County Seat, Inc., Wt., expiring 10/01/01(f)..... 4,500
-----------
Total Common Stocks & Warrants................... 5,400
-----------
</TABLE>
FS-18
<PAGE>
<TABLE>
<CAPTION>
<C> <C> <S> <C>
PRINCIPAL MARKET
AMOUNT(a) VALUE
------------ ------
U.S. TREASURY SECURITIES - 6.46%
$ 1,340,000 U.S. Treasury Notes, 7.50%, 12/31/96.............. $ 1,346,700
150,000 U.S. Treasury Notes, 5.75%, 08/15/03.............. 132,692
120,000 U.S. Treasury Notes, 11.625%, 11/15/04............ 152,324
-----------
Total U.S. Treasury Securities.................... 1,631,716
-----------
REPURCHASE AGREEMENT - 3.87%(g)
977,641 Goldman Sachs & Co., 5.80%, 02/01/95(h)........... 977,641
-----------
Total Repurchase Agreement........................ 977,641
-----------
TOTAL INVESTMENTS - 96.67%........................ 24,429,497
OTHER ASSETS LESS LIABILITIES - 3.33%............. 841,688
-----------
NET ASSETS - 100.00%.............................. $25,271,185
===========
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Principal amount are in U.S. Dollars, except as indicated by note (b).
(b) Foreign denominated security. Par value is denominated in currency of
country indicated.
(c) Discounted bond at purchase. Interest rate represents coupon rate at which
the bond will accrue at a specified future date.
(d) Coupon resets to 9.00% effective 10/15/95.
(e) Restricted securities. May be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1933, as amended. The valuation of these securities has been determined in
accordance with procedures established by the Board of Directors. The
aggregate market value of these securities at January 31, 1995 was $275,500
which represented 1.09% of the Fund's net assets.
(f) Non-income producing security acquired as part of a unit with or in
exchange for other securities.
(g) Collateral on repurchase agreements, including the Fund's pro-rata interest
in joint repurchase agreements, is taken into possession by the Fund upon
entering into the repurchase agreement. The collateral is marked to market
daily to ensure its market value as being 102% of the sales price of the
repurchase agreement.
(h) Joint repurchase agreement entered into 01/31/95 with a maturing value of
$550,371,439. Collateralized by $546,482,000 U.S. Treasury obligations,
4.25% to 10.375% due 02/15/95 to 05/15/21. The aggregate market value of
the collateral at 01/31/95 was $561,314,868. The Fund's pro-rata interest
in the collateral at 01/31/95 was $997,241.
Abbreviations:
Conv.-Convertible
Deb.-Debentures
Disc.-Discounted
Gtd.-Guaranteed
Sr.-Senior
Sub.-Subordinated
Unsub.-Unsubordinated
See Notes to Financial Statements.
</TABLE>
FS-19
<PAGE>
<TABLE>
<CAPTION>
<C> <S> <C>
AIM V.I. DIVERSIFIED ASSETS:
INCOME FUND Investments, at value (cost $25,424,817)........................... $ 24,429,497
STATEMENT OF Foreign currencies, at value (cost $260,454)....................... 267,723
ASSETS AND Receivables for:
LIABILITIES Forward currency contracts closed................................ 7,498
January 31, 1995 Forward currency contracts open, at cost......................... 2,070,129
Investments sold................................................. 121,029
Capital stock sold............................................... 8,778
Interest......................................................... 572,484
Investment for deferred compensation............................... 3,458
Organizational costs, net.......................................... 9,400
Other assets....................................................... 102
------------
Total assets................................................... 27,490,098
------------
LIABILITIES:
Payables for:
Forward currency contracts open, at value (cost $2,070,129)...... 2,089,364
Investments purchased............................................ 97,450
Deferred compensation............................................ 3,458
Accrued advisory fees.............................................. 12,599
Accrued directors' fees............................................ 1,491
Accrued administrative service fees................................ 5,224
Accrued operating expenses......................................... 9,327
------------
Total liabilities.............................................. 2,218,913
------------
Net assets applicable to shares outstanding........................ $ 25,271,185
============
Capital shares, $.001 par value per share:
Authorized....................................................... 250,000,000
============
Outstanding...................................................... 2,770,435
============
Net asset value, offering and redemption price per share........... $ 9.12
============
See Notes to Financial Statements.
</TABLE>
FS-20
<PAGE>
<TABLE>
<CAPTION>
<C> <S> <C>
AIM V.I. DIVERSIFIED INVESTMENT INCOME:
INCOME FUND Interest....................................................... $ 1,840,928
STATEMENT OF -----------
OPERATIONS EXPENSES:
For the year ended Advisory fees.................................................. 123,090
January 31, 1995 Custodian fees................................................. 14,894
Administrative service fees.................................... 35,441
Directors' fees and expenses................................... 4,843
Organizational costs........................................... 2,892
Other.......................................................... 29,673
-----------
Total expenses................................................ 210,833
Less expenses assumed by advisor................................. (25,046)
-----------
Net expenses.................................................. 185,787
-----------
Net investment income............................................ 1,655,141
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT SECURITIES,
FOREIGN CURRENCIES AND FORWARD CONTRACTS:
Net realized gain (loss) on:
Investment securities.......................................... (1,447,337)
Foreign currency transactions.................................. (2,101)
Forward contracts.............................................. (92,646)
-----------
(1,542,084)
-----------
Unrealized appreciation (depreciation) of:
Investment securities.......................................... (1,150,860)
Foreign currencies............................................. 7,163
Forward contracts.............................................. (12,397)
-----------
(1,156,094)
-----------
Net gain (loss) on investment securities, foreign currencies and
forward contracts............................................... (2,698,178)
-----------
Net increase (decrease) in net assets resulting from operations.. $(1,043,037)
===========
See Notes to Financial Statements.
</TABLE>
FS-21
<PAGE>
<TABLE>
<CAPTION>
<C> <S> <C> <C>
AIM V.I. DIVERSIFIED 1995 1994
INCOME FUND ----------- -----------
STATEMENT OPERATIONS:
OF CHANGES Net investment income.............................. $ 1,655,141 $ 317,196
IN NET ASSETS Net realized gain (loss) on sales of investment
For the year ended securities, foreign currency transactions and
January 31, 1995 forward contracts................................. (1,542,084) 13,828
and the period Unrealized appreciation (depreciation) of
May 5, 1993 (data operations investment securities, foreign currencies and
commenced) through forward contracts................................. (1,156,094) 148,918
January 31, 1994 ----------- -----------
Net increase (decrease) in net assets resulting
from operations.................................. (1,043,037) 479,942
Net equalization credits........................... 286,609 204,734
Net increase from capital stock transactions....... 12,953,629 14,119,253
Distributions to shareholders from net investment
income............................................ (1,455,969) (254,943)
Distributions to shareholders from net realized
gains............................................. -- (19,033)
----------- -----------
Net increase in net assets........................ 10,741,232 14,529,953
NET ASSETS:
Beginning of period................................ 14,529,953 --
----------- -----------
End of period...................................... $25,271,185 $14,529,953
=========== ===========
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in)......... $27,072,882 $14,119,253
Undistributed net investment income................ 752,768 266,987
Undistributed net realized gain (loss) on sales of
investment securities, foreign currencies and
forward contracts ................................ (1,547,289) (5,205)
Unrealized appreciation (depreciation) of
investment securities, foreign currencies and
forward contracts................................. (1,007,176) 148,918
----------- -----------
$25,271,185 $14,529,953
=========== ===========
See Notes to Financial Statements.
</TABLE>
FS-22
<PAGE>
<TABLE>
<C> <S>
AIM V.I. DIVERSIFIED NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
INCOME FUND AIM Variable Insurance Funds, Inc. (the "Company"), is a Maryland corporation
NOTES TO FINANCIAL organized on January 22, 1993, and is registered under the Investment Company
STATEMENTS Act of 1940 (the "1940 Act"), as amended, as an open-end, series, management
January 31, 1995 investment company consisting of nine portfolios: AIM V.I. Capital Appreciation
Fund, AIM V.I. Diversified Income Fund (the "Diversified Income Fund"), AIM
V.I. Government Securities Fund, AIM V.I. Growth Fund, AIM V.I. Growth and
Income Fund, AIM V.I. International Equity Fund, AIM V.I. Money Market Fund,
AIM V.I. Utilities Fund and AIM V.I. Value Fund (each, a "Fund", collectively,
the "Funds"). Matters affecting each Fund are voted on exclusively by the
shareholders of such Fund. The assets, liabilities and operations of each Fund
are accounted for separately. Information presented in these financial
statements pertains only to the Diversified Income Fund. Shares of the Funds
are sold only to insurance company separate accounts to fund the benefits of
variable annuity contracts.
The following is a summary of the significant accounting policies followed by
the Fund in the presentation of its financial statements.
A. Security Valuations--Non-convertible bonds and notes are valued on the basis
of prices provided by an independent pricing service. Prices provided by the
pricing service may be determined without exclusive reliance on quoted
prices, and may reflect appropriate factors such as institution-size trading
in similar groups of securities, developments related to special securities,
yield, quality, coupon rate, maturity, type of issue, individual trading
characteristics and other market data. Investment securities for which
prices are not provided by the pricing service and which are listed or
traded on an exchange are valued at the last sales price on the exchange
where the security is principally traded or, lacking any sales on a
particular day, at the mean between the closing bid and asked prices on that
day unless the Board of Directors, or persons designated by the Board of
Directors, determines that the over-the-counter quotations more closely
reflect the current market value of the security. Securities traded in the
over-the-counter market, except (i) securities priced by the pricing
service, (ii) securities for which representative exchange prices are
available, and (iii) securities reported in the NASDAQ National Market
System, are valued at the mean between representative last bid and asked
prices obtained from an electronic quotation reporting system, if such
prices are available, or from established market makers. Each security
reported in the NASDAQ National Market System is valued at the last sales
price on the valuation date. Securities for which market quotations are not
readily available and "restricted securities" are valued at fair value as
determined in good faith by or under the supervision of the Fund's officers
in accordance with methods which are specifically authorized by the Board of
Directors. Short-term obligations having 60 days or less to maturity are
valued at amortized cost which approximates market value.
B. Foreign Currency Translation - Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S.
dollars at date of valuation. Purchases and sales of portfolio securities
and income items denominated in foreign currencies are translated into U.S.
dollar amounts on the respective dates of such transactions.
C. Forward Currency Contracts - A forward currency contract is an obligation to
purchase or sell a specific currency for an agreed-upon price at a future
date. The Diversified Income Fund may enter into a forward contract to
attempt to minimize the risk to the Fund from adverse changes in the
relationship between currencies. The Diversified Income Fund may also enter
into a currency contract for the amount of a purchase or sale of a security
denominated in a foreign currency in order to "lock-in" the U.S. dollar
price of that security. The Diversified Income Fund could be exposed to risk
if counterparties to the contracts are unable to meet the terms of their
contracts or if the value of the foreign currency changes unfavorably.
D. Securities Transactions, Investment Income and Distributions - Securities
transactions are accounted for on a trade date basis. Interest income is
recorded as earned from settlement date and is recorded on the accrual
basis. Dividend income and distributions to shareholders are recorded on the
ex-dividend date. It is the policy of the Diversified Income Fund not to
amortize market discounts and premiums on bonds for financial reporting
purposes. Realized gains or losses from securities transactions are recorded
on the identified cost basis.
E. Federal Income Taxes - For federal income tax purposes, each Fund in the
Company is taxed as a separate entity. It is the Diversified Income Fund's
policy to continue to comply with the requirements of the Internal Revenue
Code applicable to regulated investment companies and to distribute all of
its taxable income and capital gains to its shareholders. Therefore, no
provision for federal income taxes is recorded in the financial statements.
The Diversified Income Fund had capital loss carryforwards (which may be
carried forward to offset future taxable capital gains, if any) of
$1,045,562, which expires, if not previously utilized, through the year
2003.
</TABLE>
FS-23
<PAGE>
<TABLE>
<C> <S>
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
F. Expenses - Operating expenses directly attributable to a Fund are charged to
that Fund's operations. Expenses of the Company which are not directly
attributable to the operations of any Fund of the Company are allocated to
the Funds to which the expense relates based upon methods approved by the
Board of Directors of the Company.
G. Equalization - The Diversified Income Fund follows the accounting practice
known as equalization by which a portion of the proceeds from sales and the
costs of repurchases of fund shares, equivalent on a per share basis to the
amount of undistributed net investment income, is credited or charged to
undistributed net income when the transaction is recorded so that
undistributed net investment income per share is unaffected by sales or
redemptions of Fund shares.
H. Organizational Costs - Organizational costs of the Diversified Income Fund
of $14,461 are being amortized over five years.
NOTE 2 - INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Diversified Income Fund pays an advisory fee to AIM at an annual
rate of 0.60% of the first $250 million of the Diversified Income Fund's
average daily net assets, plus 0.55% of such Fund's average daily net assets in
excess of $250 million.
During the year ended January 31, 1995, AIM voluntarily waived advisory fees
for the Diversified Income Fund of $25,046.
Pursuant to a master administrative services agreement between the Company and
AIM, with respect to the Diversified Income Fund, the Company has agreed to
reimburse certain administrative costs incurred in providing accounting
services to the Fund. During the year ended January 31, 1995, AIM was
reimbursed $35,441 for such services.
The Company has entered into a master distribution agreement with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Diversified Income Fund.
Certain officers and directors of the Company are officers of AIM and AIM
Distributors.
The Diversified Income Fund incurred legal fees of $3,161 for services
rendered by Reid & Priest as counsel to the Company's directors. In September
1994, the firm of Kramer, Levin, Naftalis, Nessen, Kamin & Frankel was
appointed counsel to the Directors. A member of that firm is a director of the
Company and prior to September 1994, was a member of Reid & Priest..
NOTE 3 - DIRECTORS' FEES
Directors' fees represent remuneration paid or accrued to each director who is
not an "interested person" of the Company. The Company may invest directors'
fees, if so elected by a director, in mutual fund shares in accordance with a
deferred compensation plan.
NOTE 4 - INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term
securities) purchased and sold by the Diversified Income Fund during the year
ended January 31, 1995 was $31,432,483 and $18,635,421, respectively.
The amount of unrealized appreciation (depreciation) of investment securities
on a tax basis as of January 31, 1995 is as follows:
</TABLE>
<TABLE>
<C> <S> <C>
Aggregate unrealized appreciation of investment securities........ $ 129,764
Aggregate unrealized (depreciation) of investment securities...... (1,125,084)
-----------
Net unrealized appreciation (depreciation) of investment
securities....................................................... $ (995,320)
===========
</TABLE>
<TABLE>
Investments have the same cost for tax and financial statement purposes.
NOTE 5 - OPEN FORWARD CURRENCY CONTRACTS
Outstanding contracts at January 31, 1995 were as follows:
<CAPTION>
Unrealized
Contract to Appreciation
Settlement Date Deliver Receive Value (Depreciation)
--------------- ------------- ---------- ---------- --------------
<C> <S> <C> <C> <C> <C>
02/28/95........ DM 600,000 $ 384,344 $ 394,446 $(10,102)
02/28/95........ GBP 400,000 $ 625,340 $ 632,776 (7,436)
03/13/95........ CAD 1,500,000 $1,060,445 $1,062,142 (1,697)
---------- ---------- --------
$2,070,129 $2,089,364 $(19,235)
========== ========== ========
</TABLE>
FS-24
<PAGE>
<TABLE>
<C> <S>
NOTE 6 - CAPITAL STOCK
Changes in capital stock outstanding during the year ended January 31, 1995
and the period May 5, 1993 (date operations commenced) through January 31, 1994
were as follows:
</TABLE>
<TABLE>
<CAPTION>
1995 1994
---------------------- ----------------------
Shares Amount Shares Amount
--------- ----------- --------- -----------
<C> <S> <C> <C> <C> <C>
Sold........................... 1,633,696 $15,317,067 1,465,781 $14,894,966
Issued as reinvestment of
distributions................. 155,537 1,431,155 26,732 271,497
Reacquired..................... (408,146) (3,794,593) (103,165) (1,047,210)
--------- ----------- --------- -----------
1,381,087 $12,953,629 1,389,348 $14,119,253
========= =========== ========= ===========
</TABLE>
<TABLE>
<C> <S>
NOTE 7 - FINANCIAL HIGHLIGHTS
Shown below are the condensed financial highlights for a share outstanding of
the Diversified Income Fund during the year ended January 31, 1995, and the
period May 5, 1993 (date operations commenced) through January 31, 1994.
</TABLE>
<TABLE>
<CAPTION>
1995 1994
------- -------
<C> <S> <C> <C>
Net asset value, beginning of period........................ $ 10.46 $ 10.00
------- -------
Income from investment operations:
Net investment income..................................... 0.76 0.54
Net gains (losses) on securities (both realized and
unrealized).............................................. (1.42) 0.29
------- -------
Total from investment operations......................... (0.66) 0.83
------- -------
Less distributions:
Dividends from net investment income...................... (0.68) (0.35)
Distributions from net realized capital gains............. -- (0.02)
------- -------
Total distributions...................................... (0.68) (0.37)
------- -------
Net asset value, end of period.............................. $ 9.12 $ 10.46
======= =======
Total return(a)............................................. (6.35)% 8.33%
======= =======
Ratios/supplemental data:
Net assets, end of period (000s omitted).................... $25,271 $14,530
======= =======
Ratio of expenses to average net assets(b)(c)............... 0.91% 1.05%
======= =======
Ratio of net investment income to average net assets(b)(d).. 8.07% 6.78%
======= =======
Portfolio turnover rate..................................... 100% 57%
======= =======
------
(a) Total returns for periods less than one year are not annualized.
(b) Ratios are based on average net assets of $20,514,857 and $6,276,018 for
the year ended January 31, 1995 and the period ended January 31, 1994,
respectively.
(c) After waiver of advisory fee and expense reimbursement. Ratios of expenses
to average net assets prior to waiver of advisory fees and/or expense
reimbursements are 1.03% and 1.69% (annualized) for 1995 and 1994,
respectively.
(d) After waiver of advisory fee and expense reimbursement. Ratios of net
investment income to average net assets prior to waiver of advisory fees
and/or expense reimbursement are 7.95% and 6.14% (annualized) for 1995 and
1994, respectively.
</TABLE>
FS-25
<PAGE>
REPORT OF To the Shareholders and Board of Directors
INDEPENDENT AIM Variable Insurance Funds, Inc.
CERTIFIED PUBLIC
ACCOUNTANTS We have audited the accompanying statement of
assets and liabilities of AIM V.I. Government
Securities Fund, a series of shares of common
stock of AIM Variable Insurance Funds, Inc.
including the schedule of investments as of
January 31, 1995, the related statement of
operations for the year then ended and the
statement of changes in net assets and the
financial highlights for the year then ended
and the period May 5, 1993 (commencement of
operations) through January 31, 1994. These
financial statements and financial highlights
are the responsibility of the Fund's
management. Our responsibility is to express an
opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with
generally accepted auditing standards. Those
standards require that we plan and perform the
audit to obtain reasonable assurance about
whether the financial statements and financial
highlights are free of material misstatement.
An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures
in the financial statements. Our procedures
included confirmation of securities owned as of
January 31, 1995, by correspondence with the
custodian and brokers. Where brokers did not
reply to our confirmation requests, we carried
out other appropriate auditing procedures. An
audit also includes assessing the accounting
principles used and significant estimates made
by management, as well as evaluating the
overall financial statement presentation. We
believe that our audits provide a reasonable
basis for our opinion.
In our opinion, the financial statements and
financial highlights referred to above present
fairly, in all material respects, the financial
position of AIM V.I. Government Securities
Fund, as of January 31, 1995, the results of
its operations for the year then ended, and the
changes in its net assets and the financial
highlights for the year then ended and the
period May 5, 1993 through January 31, 1994, in
conformity with generally accepted accounting
principles.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
February 24, 1995
FS-26
<PAGE>
<TABLE>
<CAPTION>
<C> <C> <S> <C>
AIM V.I. GOVERNMENT PRINCIPAL MARKET
SECURITIES FUND AMOUNT VALUE
SCHEDULE OF --------- ------
INVESTMENTS U.S. GOVERNMENT AGENCIES - 85.75%
January 31, 1995
FEDERAL FARM CREDIT BANK - 1.36%
Medium term notes
$200,000 5.96%, 07/14/03....................................... $ 175,514
-----------
FEDERAL HOME LOAN BANK BOARD - 6.46%
Medium term notes
500,000 8.375%, 10/25/99....................................... 510,035
350,000 5.85%, 02/24/00........................................ 322,039
-----------
832,074
-----------
FEDERAL HOME LOAN MORTGAGE CORPORATION - 27.20%
Debentures
250,000 5.18%, 08/26/98........................................ 230,547
150,000 6.13%, 08/19/99........................................ 141,073
200,000 6.60%, 11/12/99........................................ 191,180
500,000 6.44%, 01/28/00........................................ 472,730
500,000 7.90%, 09/19/01........................................ 500,225
300,000 6.185%, 11/26/03....................................... 264,810
Pass through certificates
363,445 6.00%, 11/01/08........................................ 329,707
491,442 10.50%, 08/01/19....................................... 523,382
597,799 6.50%, 12/01/08 to 07/01/23............................ 543,657
309,246 8.50%, 08/01/24........................................ 308,372
-----------
3,505,683
-----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 25.46%
Debentures
500,000 6.40%, 06/02/99........................................ 499,200
500,000 8.50%, 02/01/05........................................ 505,800
Medium term notes
300,000 4.16%, 10/16/95........................................ 294,909
400,000 7.68%, 12/01/97........................................ 400,100
Pass through certificates
100,412 7.50%, 11/01/09........................................ 96,739
830,917 8.25%, 04/01/22........................................ 818,969
191,775 6.50%, 06/01/23........................................ 172,176
495,498 8.50%, 09/01/24........................................ 493,323
-----------
3,281,216
-----------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 8.88%
Pass through certificates
62,101 11.00%, 10/15/15....................................... 67,808
131,261 9.50%, 08/15/03 to 09/15/16............................ 136,674
338,075 9.00%, 07/15/16 to 10/15/16............................ 346,734
97,909 10.50%, 09/15/17 to 11/15/19........................... 105,374
553,743 6.50%, 12/15/23........................................ 488,323
-----------
1,144,913
-----------
PRIVATE EXPORT FUNDING COMPANY - 2.06%
Debentures
280,000 5.75%, 04/30/98........................................ 264,900
-----------
</TABLE>
FS-27
<PAGE>
<TABLE>
<CAPTION>
<C> <C> <S> <C>
PRINCIPAL MARKET
AMOUNT VALUE
--------- ------
STUDENT LOAN MARKETING ASSOCIATION - 10.36%
Debentures
$500,000 6.16%, 02/22/99 ....................................... $ 499,965
600,000 4.50%, 02/24/99........................................ 559,530
150,000 5.55%, 12/15/99........................................ 135,993
150,000 6.50%, 08/01/02........................................ 139,064
-----------
1,334,552
-----------
WORLD BANK AGENCY - 3.97%
Debentures
500,000 8.75%, 03/01/97........................................ 512,195
-----------
Total U.S. Government Agencies......................... 11,051,047
-----------
U.S. TREASURY SECURITIES - 9.93%
U.S. TREASURY NOTES - 9.62%
300,000 5.50%, 09/30/97........................................ 286,653
200,000 6.00%, 11/30/97........................................ 192,990
100,000 5.125%, 06/30/98....................................... 93,016
200,000 5.875%, 03/31/99....................................... 188,352
300,000 6.875%, 08/31/99....................................... 292,410
200,000 6.375%, 08/15/02....................................... 186,100
-----------
1,239,521
-----------
U.S. TREASURY STRIPS - 0.31%(A)
150,000 7.88%, 02/15/12........................................ 40,200
-----------
Total U.S. Treasury Securities......................... 1,279,721
-----------
REPURCHASE AGREEMENT - 2.95%(b)
Goldman, Sachs & Co., Inc.
379,831 5.80%, 02/01/95(c)..................................... 379,831
-----------
Total Repurchase Agreement............................. 379,831
-----------
TOTAL INVESTMENTS - 98.63%............................. 12,710,599
OTHER ASSETS LESS LIABILITIES - 1.37%.................. 176,617
-----------
NET ASSETS - 100.00%................................... $12,887,216
===========
NOTES TO SCHEDULE OF INVESTMENTS:
(a) U.S. Treasury STRIPS are traded on a discount basis. In such cases the
interest rate shown represents the rate of discount paid or received at the
time of purchase by the Fund.
(b) Collateral on repurchase agreements, including the Fund's pro-rata interest
in joint repurchase agreements, is taken into possession by the Fund upon
entering into the repurchase agreement. The collateral is marked to market
daily to ensure its market value as being 102% of the sales price of the
repurchase agreement.
(c) Joint repurchase agreement entered into 01/31/95 with a maturing value of
$550,371,439. Collateralized by $546,482,000 U.S. Treasury obligations,
4.25% to 10.375% due 02/15/95 to 05/15/21. The aggregate market value of
collateral at 01/31/95 was $561,314,868. The Fund's pro-rata interest in
the collateral at 01/31/95 was $387,446.
See Notes to Financial Statements.
</TABLE>
FS-28
<PAGE>
<TABLE>
<C> <S> <C>
AIM V.I. GOVERNMENT ASSETS:
SECURITIES FUND Investments, at value (cost $13,419,152)........................... $12,710,599
STATEMENT OF Receivable for:
ASSETS AND Interest......................................................... 174,728
LIABILITIES Investment for deferred compensation plan.......................... 31
January 31, 1995 Organizational costs, net.......................................... 9,389
Other assets....................................................... 11,577
-----------
Total assets................................................... 12,906,324
-----------
LIABILITIES:
Payables for:
Capital stock redeemed........................................... 551
Deferred compensation............................................ 31
Accrued advisory fees.............................................. 16,531
Accrued directors' fees............................................ 928
Accrued administrative service fees................................ 964
Accrued operating expenses......................................... 103
-----------
Total liabilities.............................................. 19,108
-----------
Net assets applicable to shares outstanding........................ $12,887,216
===========
Capital shares, $.001 par value per share:
Authorized....................................................... 250,000,000
===========
Outstanding...................................................... 1,372,034
===========
Net asset value, offering and redemption price per share........... $9.39
=====
See Notes to Financial Statements.
</TABLE>
FS-29
<PAGE>
<TABLE>
<C> <S> <C>
AIM V.I. GOVERNMENT INVESTMENT INCOME:
SECURITIES FUND Interest......................................................... $ 791,745
STATEMENT OF -----------
OPERATIONS EXPENSES:
For the year ended Advisory fees.................................................... 61,337
January 31, 1995 Custodian fees................................................... 10,337
Administrative service fees...................................... 23,230
Directors' fees and expenses..................................... 4,734
Professional fees................................................ 16,591
Organizational costs............................................. 2,903
Other............................................................ 15,972
-----------
Total expenses.................................................. 135,104
Less expenses assumed by advisor................................... (18,907)
-----------
Net expenses.................................................... 116,197
-----------
Net investment income.............................................. 675,548
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT SECURITIES:
Net realized gain (loss) on sales of investment securities......... (282,363)
Unrealized appreciation (depreciation) of investment securities.... (760,122)
-----------
Net gain (loss) on investment securities........................... (1,042,485)
-----------
Net increase (decrease) in net assets resulting from operations.... $ (366,937)
===========
See Notes to Financial Statements.
</TABLE>
FS-30
<PAGE>
<TABLE>
<CAPTION>
<C> <S> <C> <C>
AIM V.I. GOVERNMENT 1995 1994
SECURITIES FUND ----------- -----------
STATEMENT OPERATIONS:
OF CHANGES Net investment income.............................. $ 675,548 $ 158,922
IN NET ASSETS Net realized gain (loss) on sales of investment
For the year ended securities........................................ (282,363) (19,367)
January 31, 1995 Unrealized appreciation (depreciation) of
and the period investment securities............................. (760,122) 51,569
May 5, 1993 (date operations ----------- -----------
commenced) through January Net increase (decrease) in net assets resulting
31, 1994 from operations.................................. (366,937) 191,124
Net equalization credits........................... 46,268 102,779
Net increase from capital stock transactions....... 3,196,439 10,459,482
Distributions to shareholders from net investment
income............................................ (631,778) (110,161)
----------- -----------
Net increase in net assets........................ 2,243,992 10,643,224
NET ASSETS:
Beginning of period................................ 10,643,224 --
----------- -----------
End of period...................................... $12,887,216 $10,643,224
=========== ===========
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in)......... $13,655,921 $10,459,482
Undistributed net investment income................ 241,578 151,540
Undistributed net realized gain (loss) on sales of
investment securities ............................ (301,730) (19,367)
Unrealized appreciation (depreciation) of
investment securities............................. (708,553) 51,569
----------- -----------
$12,887,216 $10,643,224
=========== ===========
See Notes to Financial Statements.
</TABLE>
FS-31
<PAGE>
<TABLE>
<C> <S>
AIM V.I. GOVERNMENT NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
SECURITIES FUND AIM Variable Insurance Funds, Inc. (the "Company"), is a Maryland corporation
NOTES TO FINANCIAL organized on January 22, 1993, and is registered under the Investment Company
STATEMENTS Act of 1940 (the "1940 Act"), as amended, as an open-end, series, management
January 31, 1995 investment company consisting of nine portfolios: AIM V.I. Capital Appreciation
Fund, AIM V.I. Diversified Income Fund, AIM V.I. Government Securities Fund
(the "Government Securities Fund"), AIM V.I. Growth Fund, AIM V.I. Growth and
Income Fund, AIM V.I. International Equity Fund, AIM V.I. Money Market Fund,
AIM V.I. Utilities Fund and AIM V.I. Value Fund (each a "Fund", collectively,
the "Funds"). Matters affecting each Fund are voted on exclusively by the
shareholders of such Fund. The assets, liabilities and operations of each Fund
are accounted for separately. Information presented in these financial
statements pertains only to the Government Securities Fund. Shares of the Funds
are sold only to insurance company separate accounts to fund the benefits of
variable annuity contracts.
The following is a summary of the significant accounting policies followed by
the Government Securities Fund in the presentation of its financial statements.
A. Security Valuations - Debt obligations that are issued or guaranteed by the
U.S. Government, its agencies, authorities, and instrumentalities are valued
on the basis of prices provided by an independent pricing service. Prices
provided by the pricing service may be determined without exclusive reliance
on quoted prices, and may reflect appropriate factors such as yield, type of
issue, coupon rate, maturity and seasoning differential. Securities for
which market prices are not provided by the pricing service are valued at
the mean between last bid and asked prices based upon quotes furnished by
independent sources. Securities for which market quotations are not readily
available are valued at fair value as determined in good faith by or under
the supervision of the Company's officers in a manner specifically
authorized by the Board of Directors. Short-term obligations having 60 days
or less to maturity are valued at amortized cost which approximates market
value.
B. Securities Transactions, Investment Income and Distributions - Securities
transactions are accounted for on a trade date basis. Interest income is
recorded as earned from settlement date and is recorded on the accrual
basis. Distributions to shareholders are recorded on the ex-dividend date.
It is the policy of the Fund not to amortize market discounts and premiums
on bonds for financial reporting purposes. Realized gains or losses from
securities transactions are recorded on the identified cost basis.
C. Federal Income Taxes - For federal income tax purposes, each Fund in the
Company is taxed as a separate entity. It is the Government Securities
Fund's policy to continue to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
all of its taxable income and capital gains to its shareholders. Therefore,
no provision for federal income taxes is recorded in the financial
statements. Government Securities Fund had capital loss carryforwards (which
may be carried forward to offset future taxable capital gains, if any) of
$74,320, which expires, if not previously utilized, through the year 2003.
D. Expenses - Operating expenses directly attributable to a Fund are charged to
that Fund's operations. Expenses of the Company which are not directly
attributable to the operations of any Fund of the Company are allocated to
the Funds to which the expense relates based upon methods approved by the
Board of Directors of the Company.
E. Equalization - Government Securities Fund follows the accounting practice
known as equalization by which a portion of the proceeds from sales and the
costs of repurchases of Fund shares, equivalent on a per share basis to the
amount of undistributed net investment income, is credited or charged to
undistributed net income when the transaction is recorded so that
undistributed net investment income per share is unaffected by sales or
redemptions of Fund shares.
F. Organizational Costs - Organizational costs for the Government Securities
Fund of $14,461, are being amortized over five years.
NOTE 2 - INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master advisory agreement, the
Government Securities Fund pays an advisory fee to AIM at an annual rate of
0.50% of the first $250 million of the Fund's average daily net assets, plus
0.45% of the Fund's average daily net assets in excess of $250 million.
During the year ended January 31, 1995, AIM voluntarily waived advisory fees
for the Government Securities Fund of $18,907.
</TABLE>
FS-32
<PAGE>
<TABLE>
<C> <S>
Pursuant to a master administrative services agreement between the Company and
AIM, with respect to the Government Securities Fund, the Company has agreed to
reimburse certain administrative costs incurred in providing accounting
services to the Government Securities Fund. During the year ended January 31,
1995, AIM was reimbursed $23,230 for such services.
The Company has entered into a master distribution agreement with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Government Securities Fund.
Certain officers and directors of the Company are officers of AIM and AIM
Distributors.
The Government Securities Fund incurred legal fees of $2,998 for services
rendered by Reid & Priest as counsel to the Company's directors. In September
1994, the firm of Kramer, Levin, Naftalis, Nessen, Kamin & Frankel was
appointed counsel to the Directors. A member of that firm is a director of the
Company and prior to September 1994, was a member of Reid & Priest.
NOTE 3 - DIRECTORS' FEES
Directors' fees represent remuneration paid or accrued to each director who is
not an "interested person" of the Company. The Company may invest a directors
fees, if so elected by such director, in mutual fund shares in accordance with
a deferred compensation plan.
NOTE 4 - INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term
securities) purchased and sold by the Government Securities Fund during the
year ended January 31, 1995 was $7,555,199 and $3,314,243, respectively.
The amount of unrealized appreciation (depreciation) of investment securities
on a tax basis as of January 31, 1995 is as follows:
</TABLE>
<TABLE>
<C> <S> <C>
Aggregate unrealized appreciation of investment securities.......... $ 10,499
Aggregate unrealized (depreciation) of investment securities........ (719,052)
---------
Net unrealized appreciation (depreciation) of investment securities. $(708,553)
=========
</TABLE>
<TABLE>
<C> <S>
Investments have the same cost for tax and financial statement purposes.
NOTE 5 - CAPITAL STOCK
Changes in capital stock outstanding during the year ended January 31, 1995
and the period May 5, 1993 (date operations commenced) through January 31, 1994
were as follows:
</TABLE>
<TABLE>
<CAPTION>
1995 1994
--------------------- ----------------------
Shares Amount Shares Amount
-------- ----------- --------- -----------
<C> <S> <C> <C> <C> <C>
Sold............................ 500,188 $ 4,784,080 1,034,792 $10,410,105
Issued as reinvestment of
distributions.................. 66,676 631,778 10,858 108,686
Reacquired...................... (234,604) (2,219,419) (5,876) (59,309)
-------- ----------- --------- -----------
332,260 $ 3,196,439 1,039,774 $10,459,482
======== =========== ========= ===========
</TABLE>
FS-33
<PAGE>
<TABLE>
<C> <S>
NOTE 6 - FINANCIAL HIGHLIGHTS
Shown below are the condensed financial highlights for a share outstanding of
the Government Securities Fund during the year ended January 31, 1995, and the
period May 5, 1993 (date operations commenced) through January 31, 1994.
</TABLE>
<TABLE>
<CAPTION>
1995 1994
------- -------
<S> <C> <C>
Net asset value, beginning of period........................ $ 10.24 $ 10.00
------- -------
Income from investment operations:
Net investment income..................................... 0.53 0.38
Net gains on (losses) securities (both realized and
unrealized).............................................. (0.88) 0.10
------- -------
Total from investment operations......................... (0.35) 0.48
------- -------
Less distributions:
Dividends from net investment income...................... (0.50) (0.24)
------- -------
Total distributions...................................... (0.50) (0.24)
------- -------
Net asset value, end of period.............................. $ 9.39 $ 10.24
======= =======
Total return(a)............................................. (3.42)% 4.78%
======= =======
Ratios/supplemental data:
Net assets, end of period (000s omitted).................... $12,887 $10,643
======= =======
Ratio of expenses to average net assets(b).................. 0.95% 1.00%
======= =======
Ratio of net investment income to average net assets(c)..... 5.51% 4.74%
======= =======
Portfolio turnover rate..................................... 29% 0%
======= =======
------
(a) Total returns for periods less than one year are not annualized.
(b) Ratios are based on average net assets of $12,267,302 and $4,502,215 for
the period ended January 31, 1995 and 1994, respectively.
Ratios of expenses to average net assets prior to waiver of advisory fees
and/or expense reimbursements are 1.10% and 1.80% (annualized) for 1995 and
1994, respectively.
(c) Ratios of net investment income to average net assets prior to waiver of
advisory fees and/or expense reimbursement are 5.35% and 3.94% (annualized)
for 1995 and 1994, respectively.
</TABLE>
FS-34
<PAGE>
REPORT OF To the Shareholders and Board of Directors
INDEPENDENT AIM Variable Insurance Funds, Inc.
CERTIFIED PUBLIC
ACCOUNTANTS We have audited the accompanying statement of
assets and liabilities of AIM V.I. Growth Fund,
a series of shares of common stock of AIM
Variable Insurance Funds, Inc. including the
schedule of investments as of January 31, 1995,
the related statement of operations for the
year then ended and the statement of changes in
net assets and the financial highlights for the
year then ended and the period May 5, 1993
(commencement of operations) through January
31, 1994. These financial statements and
financial highlights are the responsibility of
the Fund's management. Our responsibility is to
express an opinion on these financial
statements and financial highlights based on
our audits.
We conducted our audits in accordance with
generally accepted auditing standards. Those
standards require that we plan and perform the
audit to obtain reasonable assurance about
whether the financial statements and financial
highlights are free of material misstatement.
An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures
in the financial statements. Our procedures
included confirmation of securities owned as of
January 31, 1995, by correspondence with the
custodian and brokers. Where brokers did not
reply to our confirmation requests, we carried
out other appropriate auditing procedures. An
audit also includes assessing the accounting
principles used and significant estimates made
by management, as well as evaluating the
overall financial statement presentation. We
believe that our audits provide a reasonable
basis for our opinion.
In our opinion, the financial statements and
financial highlights referred to above present
fairly, in all material respects, the financial
position of AIM V.I. Growth Fund, as of January
31, 1995, the results of its operations for the
year then ended, and the changes in its net
assets and the financial highlights for the
year then ended and the period May 5, 1993
through January 31, 1994, in conformity with
generally accepted accounting principles.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
February 24, 1995
FS-35
<PAGE>
<TABLE>
<CAPTION>
<C> <C> <S> <C>
AIM V.I. GROWTH MARKET
FUND SHARES VALUE
SCHEDULE OF ---------- ------
INVESTMENTS COMMON STOCKS - 78.87%
January 31, 1995
ADVERTISING/BROADCASTING - 0.92%
4,600 British Sky Broadcasting-ADR(a)....................... $ 110,975
1,500 Capital Cities/ABC, Inc............................... 124,500
5,500 Interpublic Group of Companies, Inc................... 184,937
-----------
420,412
-----------
APPLIANCES - 1.49%
12,300 Newell Co............................................. 276,750
9,800 Premark International Inc............................. 403,025
-----------
679,775
-----------
AUTOMOBILE - MANUFACTURERS - 0.25%
4,500 Ford Motor Co......................................... 113,625
-----------
AUTOMOBILE/TRUCKS PARTS & TIRES - 0.13%
1,300 Eaton Corp............................................ 59,963
-----------
BANKING - 0.47%
7,600 Bank of Boston Corp................................... 212,800
-----------
BEVERAGES - 0.99%
2,000 Coca-Cola Co. (The)................................... 105,000
2,500 Coca-Cola Enterprises Inc............................. 52,188
8,000 PepsiCo Inc........................................... 295,000
-----------
452,188
-----------
BIOTECHNOLOGY - 0.85%
6,100 Amgen Inc.(a)......................................... 388,112
-----------
BUILDING MATERIALS - 0.72%
13,200 Black & Decker Corp................................... 316,800
600 USG Corp.(a).......................................... 12,525
-----------
329,325
-----------
BUSINESS SERVICES - 2.20%
5,100 Equifax Inc........................................... 144,713
9,300 Healthcare Compare Corp.(a)........................... 323,175
5,700 Manpower Inc.......................................... 145,350
10,700 Olsten Corp........................................... 354,436
1,200 Pittston Co. (The).................................... 32,250
-----------
999,924
-----------
CHEMICALS - 1.00%
2,500 Dow Chemical Co....................................... 155,938
1,500 Goodrich (B.F.) Co.................................... 65,062
3,000 PPG Industries, Inc................................... 105,375
1,000 Rohm & Haas Co........................................ 54,250
3,000 Union Carbide Corp.................................... 76,500
-----------
457,125
-----------
CHEMICALS - SPECIALTY - 1.39%
3,900 Georgia Gulf Corp.(a)................................. 120,900
2,600 IMC Global Inc........................................ 118,625
2,700 Loctite Corp.......................................... 120,825
5,500 Morton International, Inc............................. 154,000
5,800 Praxair, Inc.......................................... 116,725
-----------
631,075
-----------
</TABLE>
FS-36
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
---------- ------
<C> <S> <C>
COMPUTER MAINFRAMES - 1.28%
13,100 Amdahl Corp.(a)....................................... $ 134,275
6,200 International Business Machines Corp.................. 447,175
-----------
581,450
-----------
COMPUTER MINI/PC - 2.96%
6,700 Apple Computer, Inc................................... 270,513
2,800 Dell Computer Corp.(a)................................ 119,350
3,700 Digital Equipment Corp.(a)............................ 125,337
2,400 Hewlett-Packard Co.................................... 241,200
1,200 Stratus Computer, Inc.(a)............................. 31,950
10,000 Sun Microsystems Inc.(a).............................. 327,500
13,000 Tandem Computers Inc.(a).............................. 232,375
-----------
1,348,225
-----------
COMPUTER NETWORKING - 1.83%
5,450 Cabletron Systems, Inc.(a)............................ 205,739
1,200 Chipcom Corp.(a)...................................... 47,100
7,800 Cisco Systems, Inc.(a)................................ 260,325
7,000 3Com Corp.(a)......................................... 320,687
-----------
833,851
-----------
COMPUTER PERIPHERALS - 2.07%
9,200 Adaptec Inc.(a)....................................... 251,850
13,600 EMC Corp.(a).......................................... 253,300
4,000 Komag, Inc.(a)........................................ 93,500
8,000 Oracle Systems Corp.(a)............................... 341,000
-----------
939,650
-----------
COMPUTER SOFTWARE & SERVICES - 4.11%
3,500 Adobe System, Inc..................................... 101,282
5,700 Autodesk Inc.......................................... 188,812
8,000 Bay Networks, Inc..................................... 235,000
6,300 Cadence Design Systems, Inc.(a)....................... 137,812
7,000 Computer Associates International, Inc................ 349,125
1,800 Computer Sciences Corp.(a)............................ 86,625
1,800 Microsoft Corp.(a).................................... 106,875
5,900 Parametric Technology Corp.(a)........................ 216,825
11,500 Silicon Graphics, Inc.(a)............................. 359,375
2,000 Sybase, Inc.(a)....................................... 87,000
-----------
1,868,731
-----------
CONGLOMERATES - 0.39%
3,500 Federal Signal Corp................................... 69,562
2,200 Tyco Laboratories, Inc................................ 106,425
-----------
175,987
-----------
</TABLE>
FS-37
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
---------- ------
<C> <C> <S> <C>
CONTAINERS - 0.77%
3,500 Ball Corp............................................. $ 106,750
6,000 Crown Cork & Seal Co., Inc.(a)........................ 242,250
-----------
349,000
-----------
COSMETICS & TOILETRIES - 0.61%
2,000 Colgate-Palmolive Co.................................. 125,750
2,000 Gillette Co. (The).................................... 153,750
-----------
279,500
-----------
ELECTRONIC COMPONENTS - 2.25%
5,100 KLA Instruments Corp.(a).............................. 255,000
18,300 Philips Electronics N.V.-New York Shares-ADR.......... 576,450
5,900 Teradyne, Inc.(a)..................................... 191,750
-----------
1,023,200
-----------
ELECTRONIC/PC DISTRIBUTORS - 0.83%
4,200 Arrow Electronics, Inc.(a)............................ 154,875
6,000 Avnet, Inc............................................ 222,000
-----------
376,875
-----------
FINANCE - CONSUMER CREDIT - 1.85%
2,100 Federal National Mortgage Association................. 150,150
7,000 First USA, Inc........................................ 241,500
7,000 Green Tree Acceptance, Inc............................ 221,375
8,900 MBNA Corp............................................. 226,950
-----------
839,975
-----------
FINANCE - SAVINGS & LOAN - 0.09%
2,000 G. P. Financial Corp.................................. 43,125
-----------
FOOD PROCESSING - 1.85%
11,250 Archer Daniels Midland Co............................. 226,406
6,000 ConAgra, Inc.......................................... 185,250
7,366 Lancaster Colony Corp................................. 228,346
3,200 Ralcorp Holdings Inc.(a).............................. 75,600
1,100 Sara Lee Corp......................................... 29,012
4,100 Tyson Foods, Inc...................................... 98,913
-----------
843,527
-----------
FUNERAL SERVICES - 0.16%
2,500 Service Corp. International........................... 71,563
-----------
HOME BUILDING - 0.45%
11,300 Fleetwood Enterprises, Inc............................ 204,812
-----------
HOTELS/MOTELS - 0.92%
5,600 Hospitality Franchise Systems Inc.(a)................. 156,800
8,000 La Quinta Motor Inns Inc.............................. 157,000
3,400 Marriott International, Inc........................... 102,850
-----------
416,650
-----------
INSURANCE-LIFE & HEALTH - 0.22%
2,900 AFLAC Inc............................................. 100,412
-----------
</TABLE>
FS-38
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
---------- ------
<C> <C> <S> <C>
LEISURE & RECREATION - 1.72%
8,000 Brunswick Corp........................................ $ 157,000
10,300 Callaway Golf Co...................................... 330,888
4,200 Harley-Davidson Inc................................... 114,450
5,500 Mattel, Inc........................................... 113,437
1,300 Walt Disney Co. (The)................................. 66,137
-----------
781,912
-----------
MACHINERY-HEAVY - 0.88%
11,300 Case Corp............................................. 255,663
2,000 Deere & Co............................................ 142,500
-----------
398,163
-----------
MACHINERY-MISCELLANEOUS - 0.79%
8,100 Thermo Electron Corp.(a).............................. 361,462
-----------
MEDICAL-DRUGS -- 2.51%
1,100 Cardinal Health Inc................................... 50,737
7,700 Forest Laboratories, Inc.(a).......................... 381,150
2,000 Johnson & Johnson..................................... 116,250
4,000 Mylan Laboratories, Inc............................... 112,000
3,000 Pfizer Inc............................................ 245,250
3,000 Schering-Plough Corp.................................. 235,500
-----------
1,140,887
-----------
MEDICAL INSTRUMENTS/PRODUCTS - 2.26%
2,300 Becton, Dickinson and Co.............................. 120,750
8,400 Biomet, Inc.(a)....................................... 127,050
5,000 Cordis Corp.(a)....................................... 313,750
2,900 Medtronic, Inc........................................ 172,187
3,500 St. Jude Medical, Inc................................. 133,000
4,000 Stryker Corp.......................................... 161,000
-----------
1,027,737
-----------
MEDICAL SERVICES - 4.36%
9,000 Columbia Healthcare Corp.............................. 361,125
700 Foundation Health Corp.(a)............................ 20,650
5,900 Health Management Associates, Inc.(a)................. 162,250
1,300 Healthsource, Inc.(a)................................. 55,575
3,200 Healthsouth Rehabilitation Corp.(a)................... 121,600
14,000 Humana Inc.(a)........................................ 320,250
10,000 Mid Atlantic Medical Services, Inc.(a)................ 237,500
4,800 United Healthcare Corp................................ 232,800
10,300 U.S. Healthcare, Inc.................................. 471,225
-----------
1,982,975
-----------
METALS - 1.18%
8,400 Alcan Aluminum Ltd.................................... 202,650
4,600 Alumax, Inc.(a)....................................... 116,725
1,200 Aluminum Company of America........................... 94,350
4,600 ASARCO Inc............................................ 121,325
-----------
535,050
-----------
OFFICE AUTOMATION - 0.84%
3,500 Xerox Corp............................................ 382,813
-----------
</TABLE>
FS-39
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
---------- ------
<C> <C> <S> <C>
OFFICE PRODUCTS - 0.62%
3,400 Avery Dennison Corp................................... $ 119,850
6,900 Reynolds & Reynolds Co. - Class A..................... 163,875
-----------
283,725
-----------
OIL & GAS - 0.16%
3,300 Lyondell Petrochemical Co............................. 73,012
-----------
OIL EQUIPMENT & SUPPLIES - 0.24%
3,000 Halliburton Co........................................ 108,750
-----------
PAPER & FOREST PRODUCTS - 0.77%
2,600 Boise Cascade Corp.................................... 70,200
2,600 Federal Paper Board Co., Inc.......................... 72,800
1,600 Georgia-Pacific Corp.................................. 115,200
2,000 Union Camp Corp....................................... 94,250
-----------
352,450
-----------
RESTAURANTS - 0.52%
5,200 McDonald's Corp....................................... 169,650
2,500 Morrison Restaurants Inc.............................. 65,000
-----------
234,650
-----------
RETAIL-FOOD & DRUGS - 3.39%
6,000 Albertson's Inc....................................... 178,500
2,600 American Stores Co.................................... 61,100
600 Bruno's, Inc.......................................... 5,550
8,200 Hannaford Bros. Co.................................... 209,100
4,700 Jack Eckerd Corp.(a).................................. 123,375
5,100 Kroger Co.(a)......................................... 120,489
15,000 Rite Aid Corp. ....................................... 376,875
10,700 Safeway Inc.(a)....................................... 343,737
5,300 Stop & Shop Cos.(a)................................... 123,225
-----------
1,541,951
-----------
RETAIL STORES - 7.00%
3,400 Ann Taylor Stores Corp.(a)............................ 113,900
10,000 Circuit City Stores, Inc. ............................ 225,000
7,500 Consolidated Stores Corp.(a).......................... 138,750
1,600 Dayton-Hudson Corp. .................................. 109,800
7,200 Dollar General Corp. ................................. 232,200
7,200 Federated Department Stores, Inc.(a).................. 135,900
5,000 Gateway 2000 Inc.(a).................................. 104,375
3,000 Hechinger Co. ........................................ 30,750
7,500 Home Depot, Inc. ..................................... 350,625
12,200 Lowe's Companies, Inc. ............................... 448,350
6,400 Michaels Stores, Inc.(a).............................. 211,200
12,000 Office Depot, Inc.(a)................................. 312,000
5,100 Pep Boys - Manny, Moe & Jack.......................... 166,388
11,500 Sysco Corp. .......................................... 311,938
1,500 Tandy Corp. .......................................... 66,375
4,000 Toys "R' Us Inc.(a)................................... 117,000
4,300 Viking Office Products Inc.(a)........................ 111,800
-----------
3,186,351
-----------
</TABLE>
FS-40
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
---------- ------
<C> <C> <S> <C>
SCIENTIFIC INSTRUMENTS - 0.71%
8,800 Varian Associates, Inc. .............................. $ 324,500
-----------
SEMICONDUCTORS - 10.01%
4,400 Altera Corp.(a)....................................... 195,807
9,000 Analog Devices, Inc.(a)............................... 193,500
10,700 Applied Materials, Inc.(a)............................ 411,950
8,400 Atmel Corp.(a)........................................ 263,550
7,500 Cypress Semiconductor Corp.(a)........................ 176,250
4,600 Integrated Device Technology, Inc.(a)................. 138,000
3,300 Intel Corp. .......................................... 228,936
6,300 LAM Research Corp.(a)................................. 236,250
4,600 Linear Technology Corp. .............................. 227,700
7,700 LSI Logic Corp.(a).................................... 327,250
6,800 Micron Technology, Inc. .............................. 300,050
7,000 Motorola, Inc. ....................................... 413,874
2,600 National Semiconductor Corp.(a)....................... 47,450
5,600 Novellus Systems, Inc.(a)............................. 242,200
10,500 Texas Instruments Inc. ............................... 724,500
5,700 Vishay Intertechnology, Inc.(a)....................... 283,575
2,500 Xilinx, Inc.(a)....................................... 144,375
-----------
4,555,217
-----------
SHOES & RELATED APPAREL - 0.52%
6,200 Reebok International, Ltd. ........................... 235,600
-----------
STEEL - 0.17%
5,400 LTV Corp.(a).......................................... 75,600
-----------
TELECOMMUNICATIONS - 5.09%
2,200 ADC Telecommunications, Inc.(a)....................... 107,800
6,000 ALC Communications Corp.(a)........................... 174,000
9,500 DSC Communications Corp.(a)........................... 305,187
6,900 General Instrument Corp.(a)........................... 188,025
4,500 Nokia Corp. - ADR(a).................................. 329,062
4,000 Northern Telecom Ltd.................................. 136,500
10,900 Scientific-Atlantic Inc............................... 219,363
1,350 Telefonaktiebolaget L.M. Ericsson..................... 72,732
9,350 Telefonaktiebolaget L.M. Ericsson-ADR................. 503,731
5,600 Tellabs, Inc.(a)...................................... 278,600
-----------
2,315,000
-----------
TELEPHONE - 0.53%
3,700 Century Telephone Enterprises, Inc. .................. 116,550
2,800 Telephone and Data Systems, Inc. ..................... 122,500
-----------
239,050
-----------
TOBACCO - 1.55%
3,900 Philip Morris Companies, Inc. ........................ 232,537
40,000 RJR Nabisco Holdings Corp.(a)......................... 235,000
8,000 UST, Inc. ............................................ 236,000
-----------
703,537
-----------
Total Common Stocks................................... 35,881,249
-----------
</TABLE>
FS-41
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
--------- ------
<C> <S> <C>
U.S. TREASURY SECURITIES - 13.49%
$6,203,000(b) U.S. Treasury Bills 5.78%, 04/06/95(c).......... $ 6,140,225
-----------
Total U.S. Treasury Securities................... 6,140,225
-----------
REPURCHASE AGREEMENTS - 9.82%(d)
467,312 Goldman, Sachs & Co. Inc. 5.80%, 02/01/95(e)..... 467,312
4,000,000 Swiss Bank Government Securities, Inc.
5.80%, 02/01/95(f).............................. 4,000,000
-----------
Total Repurchase Agreements...................... 4,467,312
-----------
TOTAL INVESTMENTS - 102.18%...................... 46,488,786
LIABILITIES IN EXCESS OF OTHER ASSETS - (2.18)%.. (991,770)
-----------
NET ASSETS - 100.00%............................. $45,497,016
===========
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Non-income producing security.
(b) A portion of the principal balance was pledged as collateral to cover margin
requirements for open futures contracts. See Note 6.
(c) U.S. Treasury bills are traded on a discount basis. In such cases the interest
rate shown represents the rate of discount paid or received at the time of
purchase by the Fund.
(d) Collateral on repurchase agreements, including the Fund's pro-rata interest in
joint repurchase agreements, is taken into possession by the Fund upon
entering into the repurchase agreement. The collateral is marked to market
daily to ensure its market value as being 102 percent of the sales
price of the repurchase agreement.
(e) Joint repurchase agreement entered into 01/31/95 with a maturing value of
$550,371,439. Collateralized by $546,482,000 U.S. Treasury obligations,
4.25% to 10.375% due 02/15/95 to 05/15/21. The aggregate market value of
the collateral at 01/31/95 was $561,314,868. The Fund's pro-rata interest
in the collateral at 01/31/95 was $476,528.
(f) Joint repurchase agreement entered into 01/31/95 with a maturing value of
$160,025,778. Collateralized by $166,659,000 U.S. Treasury obligations,
0.00% due 02/16/95 to 01/11/96. The aggregate market value of the
collateral at 01/31/95 was $163,218,410. The Fund's pro-rata interest in
the collateral at 01/31/95 was $4,080,400.
See Notes to Financial Statements.
</TABLE>
FS-42
<PAGE>
<TABLE>
<C> <S> <C>
AIM V.I. GROWTH FUND ASSETS:
STATEMENT OF ASSETS Investments, at value (cost $44,740,068)........................... $46,488,786
AND LIABILITIES Receivables for:
January 31, 1995 Investments sold................................................. 1,337,783
Dividends and interest........................................... 25,107
Variation margin................................................. 30,375
Organizational costs, net.......................................... 9,400
Investment for deferred compensation plan.......................... 4,357
Other assets....................................................... 156
-----------
Total assets................................................... 47,895,964
-----------
LIABILITIES:
Payables for:
Investments purchased............................................ 2,320,845
Capital stock repurchased........................................ 10,673
Amount due to custodian bank..................................... 8,877
Deferred compensation plan....................................... 4,357
Market value of outstanding call options (premiums received
$9,120)........................................................... 3,725
Accrued advisory fees.............................................. 25,002
Accrued directors' fees............................................ 1,432
Accrued administrative service fees................................ 2,120
Accrued operating expenses......................................... 21,917
-----------
Total liabilities.............................................. 2,398,948
-----------
Net assets applicable to shares outstanding........................ $45,497,016
===========
Capital shares, $.001 par value per share:
Authorized....................................................... 250,000,000
===========
Outstanding...................................................... 4,248,627
===========
Net asset value, offering and redemption price per share........... $10.71
======
See Notes to Financial Statements.
</TABLE>
FS-43
<PAGE>
<TABLE>
<C> <S> <C>
AIM V.I. GROWTH FUND INVESTMENT INCOME:
STATEMENT OF OPERATIONS Dividends...................................................... $ 327,328
For the year ended Interest....................................................... 262,265
January 31, 1995 -----------
Total investment income....................................... 589,593
-----------
EXPENSES:
Advisory fees.................................................. 231,152
Custodian fees................................................. 42,537
Administrative service fees.................................... 23,537
Directors' fees and expenses................................... 4,859
Professional fees.............................................. 18,047
Organizational costs........................................... 2,892
Other.......................................................... 14,909
-----------
Total expenses................................................ 337,933
-----------
Net investment income............................................ 251,660
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT SECURITIES,
FUTURES AND OPTIONS CONTRACTS:
Net realized gain (loss) on:
Investment securities.......................................... (1,856,155)
Futures contracts.............................................. (160,360)
Options contracts.............................................. 32,962
-----------
(1,983,553)
-----------
Unrealized appreciation (depreciation) of:
Investment securities.......................................... (311,874)
Futures contracts.............................................. 172,469
Options contracts.............................................. 5,395
-----------
(134,010)
-----------
Net gain (loss) on investment securities, futures and option
contracts....................................................... (2,117,563)
-----------
Net increase (decrease) in net assets resulting from operations.. $(1,865,903)
===========
See Notes to Financial Statements.
</TABLE>
FS-44
<PAGE>
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<C> <S> <C> <C>
AIM V.I. GROWTH FUND OPERATIONS:
STATEMENT OF CHANGES Net investment income.............................. $ 251,660 $ 37,824
IN NET ASSETS Net realized gain (loss) on sales of investment
For the year ended securities, futures and options contracts......... (1,983,553) (460,342)
January 31, 1995 and the Net unrealized appreciation (depreciation) of
period May 5, 1993 investment securities, futures and options
(date operations commenced) contracts......................................... (134,010) 2,060,592
through January 31, 1994 ----------- -----------
Net increase (decrease) in net assets resulting
from operations.................................. (1,865,903) 1,638,074
Net increase from capital stock transactions....... 22,469,536 23,504,992
Distributions to shareholders from net investment
income............................................ (221,516) (28,167)
----------- -----------
Net increase in net assets........................ 20,382,117 25,114,899
NET ASSETS:
Beginning of period................................ 25,114,899 --
----------- -----------
End of period...................................... $45,497,016 $25,114,899
=========== ===========
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in)......... $45,974,528 $23,504,992
Undistributed net investment income................ 39,801 9,657
Undistributed net realized gain (loss) on sales of
investment securities, futures and options
contracts ........................................ (2,443,895) (460,342)
Unrealized appreciation of investment securities,
futures and options contracts..................... 1,926,582 2,060,592
----------- -----------
$45,497,016 $25,114,899
=========== ===========
See Notes to Financial Statements.
</TABLE>
FS-45
<PAGE>
<TABLE>
<C> <S>
AIM V.I. GROWTH FUND NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
NOTES TO FINANCIAL AIM Variable Insurance Funds, Inc. (the "Company"), is a Maryland corporation
STATEMENTS organized on January 22, 1993, and is registered under the Investment Company
January 31, 1995 Act of 1940 (the "1940 Act"), as amended, as an open-end, series, management
investment company consisting of nine portfolios: AIM V.I. Growth Fund, AIM
V.I. Capital Appreciation Fund, AIM V.I. Diversified Income Fund, AIM V.I.
Government Securities Fund, AIM V.I. Growth and Income Fund, AIM V.I.
International Equity Fund, AIM V.I. Money Market Fund, AIM V.I. Utilities Fund
and AIM V.I. Value Fund. Matters affecting each portfolio are voted on
exclusively by the shareholders of such portfolio. The assets, liabilities and
operations of each portfolio are accounted for separately. Information
presented in these financial statements pertains only to the V.I. Growth Fund
(the "Fund"). Shares of the Fund are sold only to insurance company separate
accounts to fund the benefits of variable annuity contracts.
The following is a summary of the significant accounting policies followed by
the Fund in the presentation of its financial statements.
A. Security Valuations - Equity securities, including warrants, that are listed
on a national securities exchange or part of the NASDAQ National Market
System are valued at the last reported sales price or, in the case of over-
the-counter securities or if there has been no sale that day, at the mean
between the closing bid and asked prices on that day. Securities traded in
the over-the-counter market, except (i) securities for which representative
exchange prices are available, and (ii) securities reported in the NASDAQ
National Market System, are valued at the mean between representative last
bid and asked prices obtained from an electronic quotation reporting system,
if such prices are available, or from established market makers. Short-term
investments with remaining maturities of up to and including 60 days are
valued at amortized cost which approximates market value. Short-term
securities that mature in more than 60 days are valued at current market
quotations. Restricted and other securities and assets of the Fund are
stated at fair value as determined in good faith by, or under the authority
of, the Board of Directors.
B. Securities Transactions, Investment Income and Distributions - Securities
transactions are accounted for on a trade date basis. Interest income is
recorded as earned from settlement date and is recorded on the accrual
basis. Dividend income and distributions to shareholders are recorded on the
ex-dividend date. Realized gains or losses from securities transactions are
recorded on the identified cost basis.
C. Federal Income Taxes - It is the Fund's policy to continue to comply with
the requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute all of its taxable income and capital
gains to its shareholders. Therefore, no provision for federal income taxes
is recorded in the financial statements. The Fund had capital loss
carryforwards (which may be carried forward to offset future taxable capital
gains, if any) of $2,158,232, which expires, if not previously utilized,
through the year 2003.
D. Expenses - Operating expenses directly attributable to a fund are charged to
that fund's operations. Expenses of the Company which are not directly
attributable to the operations of any fund of the Company are allocated to
the funds to which the expense relates based upon methods approved by the
Board of Directors of the Company.
E. Organizational Costs - Organizational costs of $14,461 are being amortized
over five years.
F. Stock Index Futures Contracts - The Fund may purchase or sell stock index
futures contracts as a hedge against changes in market conditions. Initial
margin deposits required upon entering into futures contracts are satisfied
by the segregation of specific securities as collateral for the account of
the broker (the Fund's agent in acquiring the futures position). During the
period the futures contracts are open, changes in the value of the contracts
are recognized as unrealized gains or losses by "marking to market" on a
daily basis to reflect the market value of the contracts at the end of each
day's trading. Variation margin payments are made or received depending upon
whether unrealized gains or losses are incurred. When the contracts are
closed, the Fund recognizes a realized gain or loss equal to the difference
between the proceeds from, or cost of, the closing transaction and the
Fund's basis in the contract. Risks include the possibility of an illiquid
market and the change in the value of the contracts may not correlate with
changes in the value of the securities being hedged.
G. Covered Call Options - The Fund may write call options, but only on a
covered basis; that is, the Fund will own the underlying security. Options
written by the Fund normally will have expiration dates between three and
nine months from the date written. The exercise price of a call option may
be below, equal to, or above the current market value of the underlying
security at the time the option is written.
</TABLE>
FS-46
<PAGE>
<TABLE>
<C> <S>
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
When the Fund writes a covered call option, an amount equal to the premium
received by the Fund is recorded 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 written. The current market value of a
written option is the last sale price, or in the absence of a sale, the mean
between the last bid and asked prices on that day. If a written call option
expires on the stipulated expiration date, or if the Fund enters into a
closing purchase transaction, the Fund realizes a gain (or a loss if the
closing purchase transaction exceeds the premium received when the option was
written) without regard to any unrealized gain or loss on the underlying
security, and the liability related to such option is extinguished. If a
written option is exercised, the Fund realizes a gain or a loss from the sale
of the underlying security and the proceeds of the sale are increased by the
premium originally received.
A call option gives the purchaser of such option the right to buy, and the
writer (the Fund) the obligation to sell, the underlying security at the
stated exercise price during the option period. The purchaser of a call
option has the right to acquire the security which is the subject of the call
option at any time during the option period. During the option period, in
return for the premium paid by the purchaser of the option, the Fund has
given up the opportunity for capital appreciation above the exercise price
should the market price of the underlying security increase, but has retained
the risk of loss should the price of the underlying security decline. During
the option period, the Fund may be required at any time to deliver the
underlying security against payment of the exercise price. This obligation is
terminated upon the expiration of the option period or at such earlier time
at which the Fund effects a closing purchase transaction by purchasing (at a
price which may be higher than that received when the call option was
written) a call option identical to the one originally written. The Fund will
not write a covered call option if, immediately thereafter, the aggregate
value of the securities underlying all such options, determined as of the
dates such options were written, would exceed 5% of the net assets of the
Fund.
NOTE 2 - INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at an annual rate of 0.65% of
the first $250 million of the Fund's average daily net assets, plus 0.60% of
the Fund's average daily net assets in excess of $250 million.
Pursuant to a master administrative services agreement between the Company and
AIM, with respect to the Fund, the Company has agreed to reimburse certain
administrative costs incurred in providing accounting services to the Fund.
During the year ended January 31, 1995, AIM was reimbursed $23,537 for such
services.
The Company has entered into a master distribution agreement with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Fund.
Certain officers and directors of the Company are officers of AIM and AIM
Distributors.
The Fund incurred legal fees of $3,250 for services rendered by Reid & Priest
as counsel to the Company's directors. Effective September 1994, the firm of
Kramer, Levin, Naftalis, Nessen, Kamin & Frankel was appointed as counsel to
the Board of Directors. The Fund paid legal fees of $421 for services rendered
by that firm as counsel. A member of that firm is a director of the Company
and, prior to September 1994 was a member of Reid & Priest.
NOTE 3 - DIRECTORS' FEES
Directors' fees represent remuneration paid or accrued to each director who is
not an "interested person" of the Company. The Company may invest directors'
fees, if so elected by a director, in mutual fund shares in accordance with a
deferred compensation plan.
</TABLE>
FS-47
<PAGE>
<TABLE>
<C> <S>
NOTE 4 - INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term
securities) purchased and sold by the Fund during the year ended January 31,
1995 was $67,483,468 and $53,728,294, respectively.
The amount of unrealized appreciation (depreciation) of investment securities
on a tax basis as of January 31, 1995 is as follows:
</TABLE>
<TABLE>
<C> <S> <C>
Aggregate unrealized appreciation of investment securities.......... $2,572,414
Aggregate unrealized (depreciation) of investment securities........ (873,642)
----------
Net unrealized appreciation of investment securities................ $1,698,772
==========
</TABLE>
<TABLE>
<C> <S>
Cost of investments for tax purposes is $44,790,014.
NOTE 5 - CAPITAL STOCK
Changes in capital stock outstanding during the year ended January 31, 1995
and the period May 5, 1993 (date operations commenced) through January 31, 1994
were as follows:
</TABLE>
<TABLE>
<CAPTION>
1995 1994
---------------------- ----------------------
Shares Amount Shares Amount
--------- ----------- --------- -----------
<C> <S> <C> <C> <C> <C>
Sold........................... 2,275,155 $24,585,827 2,169,494 $23,523,159
Issued as reinvestment of
distributions................. 21,037 221,516 2,603 28,168
Reacquired..................... (215,349) (2,337,807) (4,313) (46,335)
--------- ----------- --------- -----------
2,080,843 $22,469,536 2,167,784 $23,504,992
========= =========== ========= ===========
</TABLE>
<TABLE>
<C> <S>
NOTE 6 - OPEN FUTURES CONTRACTS
On January 31, 1995, $301,000 principal amount of U.S. Treasury Bills were
pledged as collateral to cover margin requirements for open futures contracts.
Open futures contracts at January 31, 1995 were as follows:
</TABLE>
<TABLE>
<CAPTION>
Unrealized
Contract No. of Contracts/Month/Commitment Appreciation
-------- --------------------------------- ------------
<C> <S> <C> <C>
S&P 500 index.................... 27 contracts/March/Buy $172,469
</TABLE>
<TABLE>
<C> <S>
NOTE 7 - OPEN COVERED CALL OPTIONS CONTRACTS WRITTEN
Open covered call option contracts written at January 31, 1995 were as
follows:
</TABLE>
<TABLE>
<CAPTION>
Market
Value
Number of Premium January 31, Unrealized
Issuer Contract Contracts Received 1995 Appreciation
------ ------------- --------- -------- ----------- ------------
<C> <S> <C> <C> <C> <C> <C>
Applied Materials, Inc.. Apr. 50 Calls 13 $2,368 $ 894 $1,474
Cabletron Systems, Inc.. Apr. 55 Calls 4 788 37 751
Coca-Cola Co. (The)..... May 55 Calls 20 2,711 2,250 461
Home Depot, Inc......... Feb. 50 Calls 29 3,253 544 2,709
--- ------ ------ ------
66 9,120 3,725 5,395
--- ------ ------ ------
</TABLE>
FS-48
<PAGE>
<TABLE>
<C> <S>
NOTE 8 - FINANCIAL HIGHLIGHTS
Shown below are the condensed financial highlights for a share outstanding of
the Fund during the year ended January 31, 1995 and the period May 5, 1993
(date operations commenced) through January 31, 1994.
</TABLE>
<TABLE>
<CAPTION>
1995 1994
------- -------
<C> <S> <C> <C>
Net asset value, beginning of period................... $ 11.59 $ 10.00
Income from investment operations:
Net investment income................................ 0.06 0.02
Net gains (losses) on securities (both realized and
unrealized)......................................... (0.88) 1.59
------- -------
Total from investment operations.................... (0.82) 1.61
------- -------
Less distributions:
Dividends from net investment income................. (0.06) (0.02)
------- -------
Net asset value, end of period......................... $ 10.71 $ 11.59
======= =======
Total return........................................... (7.11)% 16.07%(a)
======= =======
Ratios/supplemental data:
Net assets, end of period (000s omitted)............... $45,497 $25,115
======= =======
Ratio of expenses to average net assets................ 0.95%(b) 0.85%(c)
======= =======
Ratio of net investment income to average net assets... 0.71%(b) 0.51%(c)
======= =======
Portfolio turnover rate................................ 179% 99%
======= =======
------
(a) Total return is not annualized.
(b) Ratios are based on average net assets of $35,561,827.
(c) Ratios are annualized and based on average net assets of $9,997,693.
Annualized ratios of expenses and net investment income (loss) to average
net assets prior to waiver of advisory fees are 1.50% and (0.14)%,
respectively.
</TABLE>
FS-49
<PAGE>
REPORT OF To the Shareholders and Board of Directors
INDEPENDENT AIM Variable Insurance Funds, Inc.
CERTIFIED PUBLIC
ACCOUNTANTS We have audited the accompanying statement of
assets and liabilities of AIM V.I. Growth and
Income Fund, a series of shares of common stock
of AIM Variable Insurance Funds, Inc. including
the schedule of investments as of January 31,
1995, the related statement of operations and
the statement of changes in net assets and
financial highlights for the period May 2, 1994
(commencement of operations) through January
31, 1995. These financial statements and
financial highlights are the responsibility of
the Fund's management. Our responsibility is to
express an opinion on these financial
statements and financial highlights based on
our audit.
We conducted our audit in accordance with
generally accepted auditing standards. Those
standards require that we plan and perform the
audit to obtain reasonable assurance about
whether the financial statements and financial
highlights are free of material misstatement.
An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures
in the financial statements. Our procedures
included confirmation of securities owned as of
January 31, 1995, by correspondence with the
custodian and brokers. Where brokers did not
reply to our confirmation requests, we carried
out other appropriate auditing procedures. An
audit also includes assessing the accounting
principles used and significant estimates made
by management, as well as evaluating the
overall financial statement presentation. We
believe that our audit provides a reasonable
basis for our opinion.
In our opinion, the financial statements and
financial highlights referred to above present
fairly, in all material respects, the financial
position of AIM V.I. Growth and Income Fund, as
of January 31, 1995, the results of its
operations and the changes in its net assets
and the financial highlights for the period May
2, 1994 through January 31, 1995, in conformity
with generally accepted accounting principles.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
February 24, 1995
FS-50
<PAGE>
<TABLE>
<CAPTION>
<C> <C> <S> <C>
AIM V.I. GROWTH AND MARKET
INCOME FUND SHARES VALUE
SCHEDULE OF INVESTMENTS ------ ------
January 31, 1995
COMMON STOCKS - 86.26%
APPLIANCES - 0.28%
500 Premark International Inc............................. $ 20,563
-----------
AUTOMOBILE-MANUFACTURERS - 0.49%
800 Chrysler Corp......................................... 36,000
-----------
AUTOMOBILE/TRUCKS PARTS & TIRES - 0.59%
1,200 Dana Corp............................................. 26,700
500 Echlin Inc............................................ 16,500
-----------
43,200
-----------
BANKING - 1.71%
1,200 Bank of Boston Corp................................... 33,600
800 Bank of New York Co., Inc............................. 24,000
600 First Interstate Bancorp.............................. 44,400
700 Mellon Bank Corp...................................... 24,500
-----------
126,500
-----------
BANKING (MONEY CENTER) - 1.19%
1,000 Chemical Banking Corp................................. 38,875
1,200 Citicorp.............................................. 48,750
-----------
87,625
-----------
BEVERAGES - 1.85%
1,200 Coca-Cola Co. (The)................................... 63,000
2,000 PepsiCo Inc........................................... 73,750
-----------
136,750
-----------
BIOTECHNOLOGY - 0.34%
400 Amgen Inc.(a)......................................... 25,450
-----------
BUILDING MATERIALS - 0.39%
1,200 Black & Decker Corp. (The)............................ 28,800
-----------
BUSINESS SERVICES - 3.30%
1,000 Block (H&R), Inc...................................... 35,750
1,000 Diebold, Inc.......................................... 34,375
2,400 Equifax Inc........................................... 68,100
1,000 Manpower Inc.......................................... 25,500
800 Olsten Corp........................................... 26,500
1,200 Sensormatic Electronics Corp. ........................ 34,950
500 Value Health, Inc.(a)................................. 18,312
-----------
243,487
-----------
CHEMICALS - 1.90%
500 Dow Chemical Co....................................... 31,187
1,200 Hanna (M.A.) Co....................................... 28,950
1,000 PPG Industries, Inc................................... 35,125
600 Rohm & Haas Co........................................ 32,550
500 Union Carbide Corp.................................... 12,750
-----------
140,562
-----------
CHEMICALS (SPECIALTY) - 0.37%
400 Air Products & Chemicals, Inc......................... 17,850
300 Georgia Gulf Corp..................................... 9,300
-----------
27,150
-----------
</TABLE>
FS-51
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
---------- ------
<C> <C> <S> <C>
COMPUTER MAINFRAMES - 2.35%
2,400 International Business Machines Corp.................. $ 173,100
-----------
COMPUTER MINI/PC - 0.91%
1,000 Apple Computer, Inc................................... 40,375
800 Digital Equipment Corp.(a)............................ 27,100
-----------
67,475
-----------
COMPUTER NETWORKING - 1.83%
700 Bay Networks, Inc.(a)................................. 20,562
800 Cabletron Systems, Inc.(a)............................ 30,200
400 Cisco Systems, Inc.(a)................................ 13,350
2,600 General Instrument Corp............................... 70,850
-----------
134,962
-----------
COMPUTER PERIPHERALS - 1.06%
1,500 Adaptec, Inc.(a)...................................... 41,062
400 EMC Corp.(a).......................................... 7,450
700 Oracle Systems Corp.(a)............................... 29,837
-----------
78,349
-----------
COMPUTER SOFTWARE/SERVICES - 4.50%
2,000 Acclaim Entertainment, Inc.(a)........................ 28,125
500 Adobe Systems, Inc.................................... 14,468
1,000 Autodesk Inc.......................................... 33,125
700 Computer Associates International, Inc................ 34,912
2,000 General Motors Corp. - Class E........................ 77,500
600 Lotus Development Corp.(a)............................ 26,775
600 Microsoft Corp.(a).................................... 35,625
1,000 Silicon Graphics, Inc.(a)............................. 31,250
1,400 Sterling Software, Inc.(a)............................ 50,050
-----------
331,830
-----------
CONGLOMERATES - 2.20%
800 Allied Signal Inc..................................... 28,600
800 Du Pont (E.I.) de Nemours & Co........................ 42,600
400 ITT Corp.............................................. 35,800
600 Olin Corp............................................. 29,850
400 TRW Inc............................................... 25,650
-----------
162,500
-----------
CONTAINERS - 0.29%
700 Ball Corp............................................. 21,350
-----------
COSMETICS & TOILETRIES - 4.49%
1,000 Avon Products, Inc.................................... 57,125
500 Clorox Co............................................. 29,312
700 Colgate-Palmolive Co.................................. 44,012
1,000 Gillette Co. (The).................................... 76,875
1,500 Procter & Gamble Co................................... 97,875
600 Tambrands Inc......................................... 26,025
-----------
331,224
-----------
ELECTRIC SERVICES - 0.27%
500 Houston Industries Inc................................ 19,937
-----------
</TABLE>
FS-52
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
---------- ------
<C> <C> <S> <C>
ELECTRONIC COMPONENTS - 4.06%
600 Emerson Electric Corp.................................. $ 37,800
2,000 General Electric Co.................................... 103,000
1,200 General Signal Corp.................................... 41,700
400 Parker - Hannifin Corp................................. 18,850
1,200 Philips Electronics N.V. - New York Shares - ADR....... 37,800
400 Symbol Technologies, Inc............................... 10,400
1,000 Tektronix, Inc......................................... 33,375
1,200 Westinghouse Electric Corp............................. 16,800
----------
299,725
----------
ELECTRONIC/DEFENSE - 0.42%
800 Loral Corp............................................. 31,100
----------
ELECTRONIC/PC DISTRIBUTORS - 0.60%
1,200 Avnet, Inc............................................. 44,400
----------
FINANCE (ASSET MANAGEMENT) - 0.77%
400 First Financial Management Corp........................ 24,700
400 Marsh & McLennan Companies, Inc........................ 31,900
----------
56,600
----------
FINANCE (CONSUMER CREDIT) - 3.27%
1,000 American Express Co.................................... 31,500
600 Beneficial Corp........................................ 24,075
600 Federal Home Loan Mortgage Corp........................ 33,600
500 Federal National Mortgage Association.................. 35,750
800 Household International Inc............................ 32,500
1,200 MBNA Corp.............................................. 30,600
1,000 Student Loan Marketing Association..................... 37,375
400 SunAmerica, Inc........................................ 15,800
----------
241,200
----------
FOOD/PROCESSING - 0.90%
400 IBP, Inc............................................... 11,950
800 Nabisco Holdings Corp.(a).............................. 22,600
1,200 Sara Lee Corp.......................................... 31,650
----------
66,200
----------
FUNERAL SERVICES - 0.54%
1,400 Service Corp. International............................ 40,075
----------
INSURANCE (LIFE & HEALTH) - 0.47%
600 Bankers Life Holding Corp.............................. 12,375
600 Lincoln National Corp.................................. 21,900
----------
34,275
----------
INSURANCE (MULTI-LINE PROPERTY) - 0.93%
600 Aetna Life & Casualty Co............................... 29,700
1,600 Allstate Corp. (The)................................... 38,600
----------
68,300
----------
</TABLE>
FS-53
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
---------- ------
<C> <C> <S> <C>
LEISURE & RECREATION - 2.24%
1,200 Brunswick Corp........................................ $ 23,550
1,000 Carnival Cruise Lines, Inc............................ 21,000
800 Eastman Kodak Co...................................... 39,200
1,500 Mattel, Inc........................................... 30,937
1,000 Walt Disney Co. (The)................................. 50,875
-----------
165,562
-----------
MACHINERY TOOLS - 0.44%
1,400 Cincinnati Milacron, Inc.............................. 32,200
-----------
MACHINERY (HEAVY) - 1.80%
1,200 Case Corp............................................. 27,150
600 Caterpillar, Inc...................................... 30,900
600 Clark Equipment Co.(a)................................ 32,175
400 Deere & Co............................................ 28,500
600 Trinova Corp.......................................... 14,175
-----------
132,900
-----------
MACHINERY (MISCELLANEOUS) - 0.60%
1,000 Thermo Electron Corp.(a).............................. 44,625
-----------
MEDICAL (DRUGS) - 6.86%
2,800 Abbott Laboratories................................... 99,050
600 Elan Corp. PLC - ADR(a)............................... 21,150
2,000 Glaxo Holdings PLC - ADR.............................. 39,250
800 Ivax Corp............................................. 16,800
2,000 Johnson & Johnson..................................... 116,250
1,500 Pfizer Inc............................................ 122,625
800 Schering - Plough Corp................................ 62,800
1,100 Teva Pharmaceuticals Industries Ltd. - ADR............ 28,325
-----------
506,250
-----------
MEDICAL SERVICES - 5.34%
800 American Home Products Corp........................... 56,100
300 Baxter International Inc.............................. 8,850
1,000 Columbia Healthcare Corp.............................. 40,125
800 Horizon Healthcare Corp.(a)........................... 21,200
1,500 Humana Inc.(a)........................................ 34,312
800 Integrated Health Services, Inc....................... 30,000
1,600 Mid Atlantic Medical Services, Inc.(a)................ 38,000
1,000 Quantum Health Resources, Inc.(a)..................... 30,375
800 St. Jude Medical Inc.................................. 30,400
600 Vencor, Inc........................................... 18,300
1,000 Ventritex, Inc.(a).................................... 27,000
1,300 U.S. Healthcare, Inc.................................. 59,475
-----------
394,137
-----------
METALS - 0.97%
500 Aluminum Company of America........................... 39,312
800 Illinois Tool Works, Inc.............................. 32,200
-----------
71,512
-----------
OFFICE AUTOMATION - 1.48%
1,000 Xerox Corp............................................ 109,375
-----------
</TABLE>
FS-54
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
---------- ------
<C> <C> <S> <C>
OIL & GAS - 3.20%
400 Atlantic Richfield Co................................. $ 42,600
1,000 Exxon Corp............................................ 62,500
1,000 Mobil Corp............................................ 86,375
400 Royal Dutch Petroleum Co. - ADR....................... 44,750
-----------
236,225
-----------
OIL EQUIPMENT & SUPPLIES - 0.85%
1,300 Halliburton Co........................................ 47,125
600 McDermott International, Inc.......................... 15,450
-----------
62,575
-----------
PAPER & FOREST PRODUCTS - 0.50%
400 Albany International Corp............................. 7,150
600 Mead Corp. (The)...................................... 29,925
-----------
37,075
-----------
POLLUTION CONTROL - 1.05%
1,400 Browning-Ferris Industries, Inc....................... 43,400
1,200 WMX Technologies Inc.................................. 34,050
-----------
77,450
-----------
RETAIL (FOOD & DRUGS) - 0.34%
1,000 Rite Aid Corp. ....................................... 25,125
-----------
RETAIL STORES - 2.17%
1,200 Circuit City Stores, Inc. ............................ 27,000
1,600 Home Depot, Inc. ..................................... 74,800
800 Lowe's Companies, Inc. ............................... 29,400
1,000 Toys "R' Us Inc.(a)................................... 29,250
-----------
160,450
-----------
SCIENTIFIC INSTRUMENTS - 0.55%
1,100 Varian Associates, Inc. .............................. 40,562
-----------
SEMICONDUCTORS - 6.73%
1,200 Applied Materials, Inc.(a)............................ 46,200
500 Atmel Corp............................................ 15,687
1,400 Intel Corp. .......................................... 97,125
800 LAM Research Corp.(a)................................. 30,000
1,000 LSI Logic Corp.(a).................................... 42,500
1,000 Micron Technology, Inc. .............................. 44,125
1,400 Motorola, Inc. ....................................... 82,775
600 Solectron Corp.(a).................................... 14,325
1,800 Texas Instruments Inc. ............................... 124,200
-----------
496,937
-----------
TELECOMMUNICATIONS - 3.87%
600 Airtouch Communications(a)............................ 16,500
1,000 ALC Communications Corp.(a)........................... 29,000
1,200 American Telephone and Telegraph Co................... 59,850
1,000 DSC Communications Corp.(a)........................... 32,125
1,600 ECI Telecom Ltd....................................... 22,500
1,000 Northern Telecom Ltd.................................. 34,125
1,700 Telefonaktiebolaget L.M. Ericsson - ADR............... 91,587
-----------
285,687
-----------
</TABLE>
FS-55
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
---------- ------
<C> <C> <S> <C>
TELEPHONE - 2.28%
600 ALLTEL Corp. .......................................... $ 17,025
1,200 Ameritech Corp......................................... 52,650
1,400 GTE Corp............................................... 47,425
1,200 Southwestern Bell Corp................................. 51,158
----------
168,258
----------
TEXTILES - 0.33%
500 VF Corp. .............................................. 24,062
----------
TOBACCO - 2.22%
2,000 Philip Morris Companies, Inc. ......................... 119,250
1,500 UST, Inc............................................... 44,250
----------
163,500
----------
TRUCKING - 0.17%
600 Consolidated Freightways, Inc. ........................ 12,525
----------
Total Common Stocks.................................... 6,365,681
----------
PREFERRED STOCKS - 5.25%
AUTOMOBILE - MANUFACTURERS - 1.29%
600 Ford Motor Co. - Series A, $4.20 Conv. Pfd............. 49,275
800 General Motors Corp. - Series C, $3.25 Conv. Pfd....... 45,900
----------
95,175
----------
BANKING - 0.50%
700 Bankamerica Corp. - Series G, $3.25 Conv. Pfd.......... 37,012
----------
COMPUTER SOFTWARE/SERVICES - 0.56%
600 Ceridian Corp. - $2.75 Conv. Pfd...................... 41,325
----------
CONGLOMERATES - 0.26%
400 Corning Delaware LP - $3.00 Conv. Pfd.................. 19,550
----------
FINANCE (CONSUMER CREDIT) - 0.48%
600 First USA - $1.99 Conv. Pfd............................ 19,800
400 SunAmerica, Inc. - Series D, $2.78 Conv. Pfd........... 15,801
----------
35,601
----------
MACHINERY (HEAVY) - 0.32%
400 Agco Corp. - $1.625 Conv. Pfd......................... 23,300
----------
MEDICAL SERVICES - 0.44%
400 Beverly Enterprises, Inc. - $2.75 Conv. Pfd............ 22,800
400 FHP International Corp. - Series A, $1.25 Conv. Pfd.... 9,650
----------
32,450
----------
OIL & GAS - 0.38%
600 Atlantic Richfield Co. - $2.2275 Conv. Pfd............. 14,100
300 USX Corp. - $3.25 Conv. Pfd............................ 13,837
----------
27,937
----------
SEMICONDUCTORS - 0.46%
500 National Semiconductor Corp. - $3.25 Conv. Pfd......... 34,250
----------
STEEL - 0.22%
600 AK Steel Holding Corp. - $2.1525 Conv. Pfd. SAILS...... 16,350
----------
</TABLE>
FS-56
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
---------- ------
<C> <C> <S> <C>
TELECOMMUNICATIONS - 0.34%
800 LCI International Inc. - $1.25 Conv. Pfd.............. $ 24,700
-----------
Total Preferred Stocks................................ 387,650
-----------
<CAPTION>
PRINCIPAL
AMOUNT
---------
<C> <C> <S> <C>
REPURCHASE AGREEMENT(b) - 8.01%
$ 591,404 Goldman, Sachs & Co. Inc.
5.80%, 02/01/95(c)................................... 591,404
-----------
Total Repurchase Agreement............................ 591,404
-----------
TOTAL INVESTMENTS - 99.52%............................ 7,344,735
OTHER ASSETS LESS LIABILITIES - 0.48%................. 35,411
-----------
NET ASSETS - 100.00%.................................. $ 7,380,146
===========
Abbreviations:
Conv. - Convertible
DECS - Debt Exchangeable for Common Stock
Pfd. - Preferred Stock
PRIDES - Preferred Redeemable Increased Dividend Equity Securities
SAILS - Stock Appreciation Income Linked Securities
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Non-income producing security.
(b) Collateral on repurchase agreements, including the Fund's pro-rata interest
in joint repurchase agreements, is taken into possession by the Fund upon
entering into the repurchase agreement. The collateral is marked to market
daily to ensure its market value as being 102 percent of the sales price of
the repurchase agreement.
(c) Joint repurchase agreement entered into 01/31/95 with a maturing value of
$550,371,439. Collateralized by $546,482,000 U.S. Treasury obligations,
4.25% to 10.375% due 02/15/95 to 05/15/21. The aggregate market value of
the collateral at 01/31/95 was $561,314,868. The Fund's pro-rata interest
in the collateral at 01/31/95 was $603,261.
See Notes to Financial Statements.
</TABLE>
FS-57
<PAGE>
<TABLE>
<C> <S> <C>
AIM V.I. GROWTH AND ASSETS:
INCOME FUND Investments, at value (cost $7,270,539)............................ $ 7,344,735
STATEMENT OF ASSETS Receivables for:
AND LIABILITIES Investments sold................................................. 380,510
January 31, 1995 Dividends and interest........................................... 11,345
Investment for deferred compensation plan.......................... 1,279
-----------
Total assets................................................... 7,737,869
-----------
LIABILITIES:
Payables for:
Investments purchased............................................ 349,848
Capital stock reacquired......................................... 236
Deferred compensation plan....................................... 1,279
Accrued directors' fees............................................ 1,407
Accrued administrative service fees................................ 2,053
Accrued operating expenses......................................... 2,900
-----------
Total liabilities.............................................. 357,723
-----------
Net assets applicable to shares outstanding........................ $ 7,380,146
===========
Capital shares, $.001 par value per share:
Authorized....................................................... 250,000,000
===========
Outstanding...................................................... 739,467
===========
Net asset value, offering and redemption price per share........... $9.98
=====
See Notes to Financial Statements.
</TABLE>
FS-58
<PAGE>
<TABLE>
<C> <S> <C>
AIM V.I. GROWTH AND INVESTMENT INCOME:
INCOME FUND Dividends.......................................................... $ 73,452
STATEMENT OF OPERATIONS Interest........................................................... 23,280
For the period May 2, 1994 ---------
(date operations commenced) Total investment income........................................... 96,732
through January 31, 1995 ---------
EXPENSES:
Advisory fees...................................................... 20,806
Custodian fees..................................................... 9,633
Administrative service fees........................................ 13,596
Directors' fees and expenses....................................... 3,666
Professional fees.................................................. 6,841
Other.............................................................. 505
---------
Total expenses.................................................... 55,047
Less expenses assumed by advisor..................................... (20,806)
---------
Net expenses...................................................... 34,241
---------
Net investment income................................................ 62,491
---------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT SECURITIES:
Net realized gain (loss) on sales of investment securities......... (106,189)
Unrealized appreciation of investment securities................... 74,196
---------
Net gain (loss) on investment securities............................. (31,993)
---------
Net increase in net assets resulting from operations................. $ 30,498
=========
See Notes to Financial Statements.
</TABLE>
FS-59
<PAGE>
<TABLE>
<CAPTION>
<C> <S> <C>
AIM V.I. GROWTH AND 1995
INCOME FUND ----------
STATEMENT OF CHANGES OPERATIONS:
IN NET ASSETS Net investment income............................................ $ 62,491
For the period May 2, 1994 Net realized gain (loss) on sales of investment securities....... (106,189)
(date operations commenced) Net unrealized appreciation of investment securities............. 74,196
through January 31, 1995 ----------
Net increase in net assets resulting from operations............ 30,498
Net increase from capital stock transactions..................... 7,412,315
Distributions to shareholders from net investment income......... (62,491)
Distributions in excess of net investment income................. (176)
----------
Net increase in net assets...................................... 7,380,146
NET ASSETS:
Beginning of period.............................................. --
----------
End of period.................................................... $7,380,146
==========
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in)....................... $7,412,315
Undistributed net investment income.............................. (176)
Undistributed net realized gain (loss) on sales of investment
securities ..................................................... (106,189)
Unrealized appreciation of investment securities................. 74,196
----------
$7,380,146
==========
See Notes to Financial Statements.
</TABLE>
FS-60
<PAGE>
<TABLE>
<C> <S>
AIM V.I. GROWTH AND NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
INCOME FUND AIM Variable Insurance Funds, Inc. (the "Company"), is a Maryland corporation
NOTES TO FINANCIAL organized on January 22, 1993, and is registered under the Investment Company
STATEMENTS Act of 1940 (the "1940 Act"), as amended, as an open-end, series, management
January 31, 1995 investment company consisting of nine portfolios: AIM V.I. Growth and Income
Fund, AIM V.I. Capital Appreciation Fund, AIM V.I. Diversified Income Fund, AIM
V.I. Government Securities Fund, AIM V.I. Growth Fund, AIM V.I. International
Equity Fund, AIM V.I. Money Market Fund, AIM V.I. Utilities Fund and AIM V.I.
Value Fund. Matters affecting each portfolio are voted on exclusively by the
shareholders of such portfolio. The assets, liabilities and operations of each
portfolio are accounted for separately. Information presented in these
financial statements pertains only to the V.I. Growth and Income Fund (the
"Fund"). Shares of the Fund are sold only to insurance company separate
accounts to fund the benefits of variable annuity contracts.
The following is a summary of the significant accounting policies followed by
the Fund in the presentation of its financial statements.
A. Security Valuations - Equity securities, including warrants, that are listed
on a national securities exchange or part of the NASDAQ National Market
System are valued at the last reported sales price or, in the case of over-
the-counter securities or if there has been no sale that day, at the mean
between the closing bid and asked prices on that day. Securities traded in
the over-the-counter market, except (i) securities for which representative
exchange prices are available, and (ii) securities reported in the NASDAQ
National Market System, are valued at the mean between representative last
bid and asked prices obtained from an electronic quotation reporting system,
if such prices are available, or from established market makers. Short-term
investments with remaining maturities of up to and including 60 days are
valued at amortized cost which approximates market value. Short-term
securities that mature in more than 60 days are valued at current market
quotations. Restricted and other securities and assets of the Fund are
stated at fair value as determined in good faith by, or under the authority
of, the Board of Directors.
B. Securities Transactions, Investment Income and Distributions - Securities
transactions are accounted for on a trade date basis. Interest income is
recorded as earned from settlement date and is recorded on the accrual
basis. Dividend income and distributions to shareholders are recorded on the
ex-dividend date. Realized gains or losses from securities transactions are
recorded on the identified cost basis.
C. Federal Income Taxes - It is the Fund's policy to continue to comply with
the requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute all of its taxable income and capital
gains to its shareholders. Therefore, no provision for federal income taxes
is recorded in the financial statements. The Fund had capital loss
carryforwards (which may be carried forward to offset future taxable capital
gains, if any) of $32,760, which expires, if not previously utilized, in the
year 2003.
D. Expenses - Operating expenses directly attributable to a fund are charged to
that fund's operations. Expenses of the Company which are not directly
attributable to the operations of any fund of the Company are allocated to
the funds to which the expense relates based upon methods approved by the
Board of Directors of the Company.
NOTE 2 - INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at an annual rate of 0.65% of
the first $250 million of the Fund's average daily net assets, plus 0.60% of
the Fund's average daily net assets in excess of $250 million. During the
period May 2, 1994 (date operations commenced) through January 31, 1995, AIM
waived advisory fees of $20,806 with respect to the Fund.
Pursuant to a master administrative services agreement between the Company and
AIM, with respect to the Fund, the Company has agreed to reimburse certain
administrative costs incurred in providing accounting services to the Fund.
During the period May 2, 1994 (date operations commenced) through January 31,
1995, AIM was reimbursed $13,596 for such services.
</TABLE>
FS-61
<PAGE>
<TABLE>
<C> <S>
The Company has entered into a master distribution agreement with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Fund.
Certain officers and directors of the Company are officers of AIM and AIM
Distributors.
The Fund incurred legal fees of $895 for services rendered by Reid & Priest as
counsel to the Company's directors. Effective September 1994, the firm of
Kramer, Levin, Naftalis, Nessen, Kamin & Frankel was appointed as counsel to
the Board of Directors. The Fund paid legal fees of $403 for services rendered
by that firm as counsel. A member of that firm is a director of the Company
and, prior to September 1994, was a member of Reid & Priest.
NOTE 3 - DIRECTORS' FEES
Directors' fees represent remuneration paid or accrued to each director who is
not an "interested person" of the Company. The Company may invest directors'
fees, if so elected by a director, in mutual fund shares in accordance with a
deferred compensation plan.
NOTE 4 - INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term
securities) purchased and sold by the Fund during the period May 2, 1994 (date
operations commenced) through January 31, 1995 was $10,678,550 and $3,893,226,
respectively.
The amount of unrealized appreciation (depreciation) of investment securities
on a tax basis as of January 31, 1995 is as follows:
</TABLE>
<TABLE>
<C> <S> <C>
Aggregate unrealized appreciation of investment securities........... $ 260,419
Aggregate unrealized (depreciation) of investment securities......... (201,971)
---------
Net unrealized appreciation of investment securities................. $ 58,448
=========
Cost of investments for tax purposes is $7,286,287.
NOTE 5 - CAPITAL STOCK
Changes in capital stock outstanding during the period May 2, 1994 (date
operations commenced) through January 31, 1995 were as follows:
</TABLE>
<TABLE>
<CAPTION>
1995
-------------------
Shares Amount
------- ----------
<S> <C> <C>
Sold....................................................... 777,143 $7,797,618
Issued as reinvestment of distributions.................... 6,308 62,667
Reacquired................................................. (43,984) (447,970)
------- ----------
739,467 $7,412,315
======= ==========
</TABLE>
FS-62
<PAGE>
<TABLE>
<C> <S>
NOTE 6 - FINANCIAL HIGHLIGHTS
Shown below are the condensed financial highlights for a share outstanding of
the Fund during the period May 2, 1994 (date operations commenced) through
January 31, 1995.
</TABLE>
<TABLE>
<CAPTION>
1995
------
<C> <S> <C>
Net asset value, beginning of period................................ $10.00
Income from investment operations:
Net investment income............................................. 0.11
Net gains (losses) on securities (both realized and unrealized)... (0.02)
------
Total from investment operations................................. 0.09
------
Less distributions:
Dividends from net investment income.............................. (0.11)
------
Net asset value, end of period...................................... $ 9.98
======
Total return(a)..................................................... 0.90%
======
Ratios/supplemental data:
Net assets, end of period (000s omitted)............................ $7,380
======
Ratio of expenses to average net assets............................. 1.07%(b)
======
Ratio of net investment income to average net assets................ 1.95%(b)
======
Portfolio turnover rate............................................. 96%
======
------
(a) Total return is not annualized.
(b) Ratios are annualized and based on average net assets of $4,248,532.
Annualized ratios of expenses and net investment income to average net
assets prior to waiver of advisory fees are 1.72% and 1.30%, respectively.
</TABLE>
FS-63
<PAGE>
REPORT OF To the Shareholders and Board of Directors
INDEPENDENT AIM Variable Insurance Funds, Inc.
CERTIFIED PUBLIC
ACCOUNTANTS We have audited the accompanying statement of
assets and liabilities of AIM V.I.
International Equity Fund, a series of shares
of common stock of AIM Variable Insurance
Funds, Inc. including the schedule of
investments as of January 31, 1995, the related
statement of operations for the year then ended
and the statement of changes in net assets and
the financial highlights for the year then
ended and the period May 5, 1993 (commencement
of operations) through January 31, 1994. These
financial statements and financial highlights
are the responsibility of the Fund's
management. Our responsibility is to express an
opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with
generally accepted auditing standards. Those
standards require that we plan and perform the
audit to obtain reasonable assurance about
whether the financial statements and financial
highlights are free of material misstatement.
An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures
in the financial statements. Our procedures
included confirmation of securities owned as of
January 31, 1995, by correspondence with the
custodian and brokers. Where brokers did not
reply to our confirmation requests, we carried
out other appropriate auditing procedures. An
audit also includes assessing the accounting
principles used and significant estimates made
by management, as well as evaluating the
overall financial statement presentation. We
believe that our audits provide a reasonable
basis for our opinion.
In our opinion, the financial statements and
financial highlights referred to above present
fairly, in all material respects, the financial
position of AIM V.I. International Equity Fund,
as of January 31, 1995, the results of its
operations for the year then ended, and the
changes in its net assets and the financial
highlights for the year then ended and the
period May 5, 1993 through January 31, 1994, in
conformity with generally accepted accounting
principles.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
February 24, 1995
FS-64
<PAGE>
<TABLE>
<C> <C> <S> <C>
AIM V.I. INTERNATIONAL MARKET
EQUITY FUND SHARES VALUE
SCHEDULE OF INVESTMENTS ----------- ------
January 31, 1995 COMMON STOCKS & OTHER EQUITY INTERESTS - 84.65%
ARGENTINA - 0.51%
60,000 Telecom Argentina S.A.-Class B (Utilities)........... $ 280,772
-----------
AUSTRALIA - 5.11%
32,336 Broken Hill Proprietary Co. Ltd. (Conglomerate)...... 451,485
47,768 Coca-Cola Amatil Ltd. (Beverages).................... 307,434
69,887 Email Ltd. (Appliances).............................. 198,437
35,800 ICI Australia Ltd. (Chemicals)....................... 264,292
53,223 National Australia Bank Ltd. (Banking)............... 419,110
62,247 Pacific BBA Ltd. (Electronic Components/Misc.)....... 120,186
201,000 Pioneer International Ltd. (Building Materials)...... 480,927
70,734 QBE Insurance Group Ltd. (Insurance)................. 249,045
22,759 Simsmetal Ltd. (Metals-Misc.)........................ 99,949
104,914 Woolworths Ltd. (Food Stores)........................ 222,427
-----------
2,813,292
-----------
CANADA - 2.05%
10,600 Alcan Aluminum Ltd. (Metals-Misc.)................... 255,730
11,700 Bombadier Inc.-Class B (Aerospace/Defense)........... 188,870
GEAC Computer Corp. Ltd.(a) (Computer Software &
8,000 Services)........................................... 87,987
7,000 Northern Telecom Ltd.-ADR (Telecommunications)....... 238,875
Rogers Cantel Mobile Communications, Inc.-Class B-ADR
8,900 (Telecommunications)................................ 239,188
23,800 Stelco Inc.(a) (Steel)............................... 118,215
-----------
1,128,865
-----------
CHILE - 0.41%
1,700 Compania de Telefonos de Chile S.A.-ADR (Utilities).. 124,737
6,000 Cristalerias de Chile-ADR(a) (Containers)............ 104,250
-----------
228,987
-----------
DENMARK - 0.30%
1,900 Danske Tralastkompagni (Building Materials).......... 165,149
-----------
FINLAND - 0.70%
2,650 Nokia Corp. (Telecommunications)..................... 385,234
-----------
FRANCE - 6.96%
2,825 Club Mediterranee S.A. (Leisure & Recreation)........ 219,693
2,250 Docks de France, S.A. (Retail-Food & Drugs).......... 292,904
2,480 ECCO Travail Temporaire (Business Services).......... 274,982
Essilor International-Compagnie Generale d'Optique
2,275 (Medical Services).................................. 302,185
258 Legrand (Electronic Components/Misc.)................ 306,085
1,540 L'Oreal S.A. (Cosmetics & Toiletries)................ 313,245
1,790 LVMH Moet Hennesey Louis Vuitton (Beverages)......... 283,487
2,080 Peugeot S.A.(a) (Automobile-Manufacturers)........... 271,167
2,100 Pinault-Printemps, S.A. (Retail-Food & Drugs)........ 383,444
1,025 Promodes S.A. (Retail-Food & Drugs).................. 172,611
11,000 Rhone-Poulenc-Class A (Chemicals).................... 264,125
3,390 Roussel Uclaf (Medical-Drugs)........................ 407,313
1,565 Sidel S.A. (Machinery-Heavy)......................... 340,243
-----------
3,831,484
-----------
</TABLE>
FS-65
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
---------- ------
<C> <C> <S> <C>
GERMANY - 3.19%
450 Buderus A.G. (Manufacturing-Misc.)................... $ 202,167
600 Gehe A.G. (Medical-Drugs)............................ 208,867
200 Kampa Haus A.G. (Home Building)...................... 111,396
1,340 Mannesmann A.G. (Machinery-Misc.).................... 359,358
500 Sap A.G. (Computer Software & Services).............. 313,300
1,005 Veba A.G. (Utilities)................................ 338,367
380 Wella A.G. (Cosmetics & Toiletries).................. 220,887
-----------
1,754,342
-----------
HONG KONG - 5.88%
58,000 Cheung Kong Holdings Ltd. (Real Estate).............. 204,706
94,000 Consolidated Electric Power of Asia (Utilities)...... 183,504
3,100 Consolidated Electric Power of Asia-ADR(b)
(Utilities) (Acquired 11/29/93;
Cost $50,230)....................................... 60,450
491,043 First Pacific Co. (Conglomerate)..................... 303,133
103,000 Guoco Group Ltd. (Financial-Asset Management)........ 382,172
118,000 Hutchison Whampoa Ltd. (Conglomerate)................ 418,759
31,200 Jardine Matheson Holdings Ltd. (Conglomerate)........ 221,526
750,000 Shanghai Petrochemical Co., Ltd. (Chemicals)......... 185,197
2,600 Shanghai Petrochemical Co., Ltd.-ADR (Chemicals)..... 63,700
201,000 Shangri-La Asia Ltd. (Hotels/Motels)................. 222,178
52,600 Sun Hung Kai Properties Ltd. (Real Estate)........... 289,011
75,000 Television Broadcast Ltd. (Advertising/Broadcasting). 268,584
125,000 Vatronix International (Semiconductors).............. 173,723
820,000 Yizheng Chemical Fibre Company Ltd. (Textiles)....... 257,078
-----------
3,233,721
-----------
INDIA - 0.23%
3,000 Arvind Mills Ltd.-GDR(b) (Paper & Forest Products)
(Acquired 02/03/94;
Cost $29,340)....................................... 11,250
7,000 Reliance Industries GDS(b) (Machinery-Heavy)
(Acquired 10/11/94;
Cost $201,503)...................................... 115,500
-----------
126,750
-----------
INDONESIA - 1.57%
90,000 PT Bank International Indonesia(a) (Banking)......... 235,453
107,500 PT Hanjaya Mandala Sampoerna (Tobacco)............... 516,407
3,500 PT Indostat-ADR (Telecommunications)................. 109,813
-----------
861,673
-----------
IRELAND - 0.40%
6,200 Elan Corp. PLC-ADR(a) (Medical-Drugs)................ 218,550
-----------
ISRAEL - 0.36%
Teva Pharmaceutical Industries Ltd.-ADR (Medical-
7,600 Drugs).............................................. 195,700
-----------
ITALY - 1.59%
85,000 Fiat S.p.A. (Automobile Manufacturers)............... 347,337
5,200 Industrie Natuzzi S.p.A.-ADR(a) (Furniture).......... 167,700
129,500 Telecom Italia S.p.A. (Utilities).................... 358,683
-----------
873,720
-----------
</TABLE>
FS-66
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
---------- ------
<C> <C> <S> <C>
JAPAN - 17.38%
Aisin Seiki Co., Ltd. (Automobile/Trucks-Parts &
18,000 Tires).............................................. $ 237,164
9,000 Aiwa Co., Ltd. (Electronic Components/Misc.)......... 200,955
15,000 Alpine Electronics (Electronic Components/Misc.)..... 227,810
32,000 Asahi Tec Corp. (Automobile/Trucks-Parts & Tires).... 280,654
3,900 Autobacs Seven (Retail-Stores)....................... 381,665
3,000 Bandai (Leisure & Recreation)........................ 113,151
21,000 Bridgestone Corp. (Automobile/Trucks-Parts & Tires).. 293,588
28,000 Canon, Inc. (Office Products)........................ 413,980
Daikin Manufacturing Co. (Automobile/Trucks-Parts &
12,000 Tires).............................................. 240,181
9,000 Fanuc Ltd. (Machine Tools)........................... 371,134
15,000 Hino Motors Ltd. (Automobile-Manufacturers).......... 138,044
27,000 Hitachi Ltd. (Electronic Components/Misc.)........... 231,914
15,000 Honda Motor Co., Ltd. (Automobile-Manufacturers)..... 233,845
9,000 Hoya Corp. (Medical Instruments/Products)............ 209,102
Kayaba Industry Co., Ltd. (Automobile/Trucks-Parts &
20,000 Tires).............................................. 120,694
18,000 Koa Corp. (Electronic Components/Misc.).............. 237,164
4,000 Kyocera Corp. (Electronic Components/Misc.).......... 257,883
2,000 Mabuchi Motor (Machinery-Misc.)...................... 128,539
15,000 Minebea Co., Ltd. (Electronic Components/Misc.)...... 102,590
2,200 Nemic-Lambda K.K. (Business Services)................ 110,193
NGK Spark Plug Co., Ltd. (Electronic
20,000 Components/Misc.)................................... 231,330
4,000 Nichiei Co., Ltd. (Business Services)................ 202,364
1,100 Nippon Television Network (Advertising/Broadcasting). 240,080
9,200 Nissen (Retail-Stores)............................... 249,836
26,000 NOK Corp. (Automobile/Trucks-Parts & Tires).......... 235,353
14,300 Noritz Corp. (Appliances)............................ 280,463
Oki Electric Industry Co. Ltd.(a)
25,000 (Telecommunications)................................ 143,576
8,000 Omron Corp. (Electronic Components/Misc.)............ 136,787
25,000 Onward Kashiyama Co., Ltd. (Textiles)................ 321,850
4,000 Plenus Co., Ltd. (Restaurants)....................... 277,596
42,000 Ricoh Co., Ltd. (Office Products).................... 341,745
7,000 Rohm Co., Ltd. (Electronic Components/Misc.)......... 253,457
5,000 Secom Co., Ltd. (Business Services).................. 294,191
27,000 Sharp Corp. (Electronic Components/Misc.)............ 396,480
3,000 Shimamura Co., Ltd. (Retail-Stores).................. 138,796
17,000 Takuma Co., Ltd. (Machinery-Misc.)................... 282,122
13,000 Tokyo Electron Ltd. (Electronic Components/Misc.).... 345,185
35,000 Toshiba Corp. (Semiconductors)....................... 216,143
17,000 Toyota Motor Corp. (Automobile-Manufacturers)........ 324,869
26,000 Tsugami Corp. (Machine Tools)........................ 118,724
-----------
9,561,197
-----------
</TABLE>
FS-67
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
---------- ------
<C> <C> <S> <C>
MALAYSIA 4.49%
47,400 Aokam Perdana Berhad (Paper & Forest Products)....... $ 233,434
Edaran Otomobil Nasional Berhad (Automobile/Trucks-
16,000 Parts & Tires)...................................... 103,185
52,500 Genting Berhad(a) (Gaming)........................... 420,657
52,000 Hong Leong Credit Berhad (Business Services)......... 192,066
35,000 Leader Universal Holdings (Telecommunications)....... 110,807
Leader Universal Holdings-Class A
23,333 (Telecommunications)................................ 69,310
40,000 Malayan Banking Berhad (Banking)..................... 231,386
22,800 Malaysian Helicopter Services (Transportation-Misc.). 35,646
Technology Resources Industries Berhad(a)
122,000 (Telecommunications)................................ 343,326
23,000 Telecom Malaysia Berhad (Telecommunications)......... 153,723
78,000 United Engineers (Engineering & Construction)........ 356,693
56,000 Westmont Berhad(a) (Business Services)............... 221,067
-----------
2,471,300
-----------
MEXICO - 0.90%
190,400 Cifra S.A. de C.V.-Series C(a) (Retail-Stores)....... 247,357
Kimberly-Clark de Mexico S.A. (Paper & Forest
26,100 Products)........................................... 247,616
-----------
494,973
-----------
NETHERLANDS - 6.75%
2,140 Akzo N.V. (Chemicals)................................ 242,108
1,650 DSM N.V. (Chemicals)................................. 131,501
47,000 Elsevier N.V. (Publishing)........................... 451,367
3,210 Hagemeyer N.V. (Business Services)................... 273,311
950 Heineken N.V. (Beverages)............................ 141,134
7,550 Hoogovens & Staalfabriken N.V.(a) (Steel)............ 337,776
4,300 Hunter Douglass N.V.(a) (Building Materials)......... 191,369
Koninklijke Boskalis Westminster N.V. (Building
6,800 Materials).......................................... 127,025
2,600 Oce Van Der Grinten N.V. (Office Products)........... 126,369
14,250 Philips Electronics N.V.(a) (Appliances)............. 448,937
9,800 Polygram N.V. (Leisure & Recreation)................. 472,296
3,850 Ver Ned Utigevuer Bezit (Publishing)................. 393,184
5,090 Wolters Kluwer N.V. (Publishing)..................... 376,154
-----------
3,712,531
-----------
NEW ZEALAND - 1.75%
101,800 Carter Holt Harvey Ltd. (Paper & Forest Products).... 215,876
178,000 Fletcher Challenge Ltd. (Paper & Forest Products).... 426,354
Telecom Corp. of New Zealand Ltd.
93,600 (Telecommunications)................................ 319,852
-----------
962,082
-----------
SINGAPORE - 3.79%
70,000 Cerebos Pacific Ltd. (Food/Processing)............... 409,216
38,000 City Developments Ltd. (Real Estate)................. 177,717
64,000 DBS Land Ltd. (Real Estate).......................... 153,177
18,750 Development Bank of Singapore Ltd. (Banking)......... 167,641
44,500 Jurong Engineering Ltd. (Engineering & Construction). 289,219
61,000 Keppel Corp. Ltd. (Conglomerate)..................... 457,290
45,000 United OverSeas Bank Ltd. (Banking).................. 430,193
-----------
2,084,453
-----------
</TABLE>
FS-68
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
---------- ------
<C> <S> <C>
SPAIN - 1.47%
3,450 Acerinox, S.A. (Steel)............................... $ 356,686
4,900 Empresa Nacional de Electricidad, S.A. (Utilities)... 199,456
3,100 Gas Natural SDG S.A. (Utilities)..................... 254,012
-----------
810,154
-----------
SWEDEN - 4.17%
15,370 Astra AB (Medical-Drugs)............................. 380,222
11,000 Autoliv AB (Automobile/Trucks-Parts & Tires)......... 397,541
39,250 Avesta Sheffield-Free (Steel)........................ 431,831
4,310 Electrolux AB (Appliances)........................... 216,115
6,000 Hennes and Mauritz AB (Retail-Stores)................ 333,662
20,200 Sandvik AB (Steel)................................... 336,729
Telefonaktiebolaget L.M. Ericsson-ADR
3,700 (Telecommunications)................................ 199,338
-----------
2,295,438
-----------
SWITZERLAND - 2.05%
2,100 ADIA SA (Business Services).......................... 333,645
460 BBC Brown Boveri Ltd. (Engineering & Construction)... 400,171
405 Ciba-Geigy Ltd. (Chemicals).......................... 242,243
600 Merkur Holdings A.G. (Retail-Stores)................. 153,739
-----------
1,129,798
-----------
THAILAND - 3.56%
17,100 Advanced Information Service (Telecommunications).... 193,521
14,800 Finance One Public Co., Ltd. (Business Services)..... 76,669
75,000 Krung Thai Bank (Banking)............................ 224,149
26,000 Land & House Company Ltd. PLC (Home Building)........ 362,622
Phatra Thanakit Company Ltd. (Finance-Asset
36,500 Management)......................................... 235,625
6,000 Siam City Cement Co., Ltd. (Building Materials)...... 310,819
30,000 Thai Farmer's Bank (Banking)......................... 246,264
24,400 United Communication Industry (Telecommunications)... 309,193
-----------
1,958,862
-----------
UNITED KINGDOM - 9.08%
52,200 BPB Industries (Building Materials).................. 252,621
21,150 BOC Group PLC (Chemicals)............................ 235,483
44,300 British Petroleum (Oil & Gas)........................ 287,253
British Sky Broadcasting-ADR
11,900 (Advertising/Broadcasting).......................... 287,087
296,200 Burton Group PLC (Retail-Stores)..................... 325,572
16,700 De La Rue PLC (Publishing)........................... 265,040
33,750 Farnell Electronics PLC (Semiconductors)............. 286,632
48,500 Granada Group PLC (Advertising/Broadcasting)......... 370,864
Kwik-Fit Holdings PLC (Automobile/Trucks-Parts &
36,000 Tires).............................................. 87,111
111,000 Morrison (Wm.) Supermarkets PLC (Retail-Stores)...... 254,547
29,100 Pearson PLC (Publishing)............................. 260,947
Peninsular & Oriental Steam Navitgation Co. (The)
28,000 (Transportation-Misc.).............................. 250,862
29,900 Provident Financial PLC (Finance-Consumer Credit).... 244,477
47,500 Rank Organisation PLC (Leisure & Recreation)......... 277,202
65,500 Rentokil Group PLC (Business Services)............... 229,970
Smith (David S.) Holdings PLC (Paper & Forest
36,000 Products)........................................... 281,828
16,900 Thorn EMI PLC (Leisure & Recreation)................. 272,223
91,050 Vodafone Group PLC (Telecommunications).............. 270,716
21,700 Wolseley PLC (Building Materials).................... 256,535
-----------
4,996,970
-----------
Total Common Stocks & Other Equity Interests......... 46,575,997
-----------
</TABLE>
FS-69
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
---------- ------
<C> <C> <S> <C>
RIGHTS & WARRANTS - 0.18%
THAILAND - 0.18%
29,600 Finance One Public Co., Ltd. (Business Services)(a)... $ 100,259
-----------
Total Rights & Warrants............................... 100,259
-----------
Total Investments, excluding Repurchase Agreements.... 46,676,256
-----------
<CAPTION>
PRINCIPAL
AMOUNT
---------
<C> <C> <S> <C>
REPURCHASE AGREEMENTS - 10.24%(c)
$5,000,000 Daiwa Securities America Inc.,
5.70%, 02/01/95(d)................................... 5,000,000
634,529 Goldman Sachs & Co., Inc.,
5.80%, 02/01/95(e)................................... 634,529
-----------
Total Repurchase Agreements........................... 5,634,529
-----------
TOTAL INVESTMENTS - 95.07%............................ 52,310,785
OTHER ASSETS LESS LIABILITIES - 4.93%................. 2,708,294
-----------
NET ASSETS - 100.00%.................................. $55,019,079
===========
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Non-income producing security.
(b) Restricted securities. May be resold to qualified institutional buyers in accordance
with the provisions of Rule 144A under the Securities Act of 1933, as amended. The
valuation of these securities has been determined in accordance with procedures
established by the Board of Trustees. The aggregate market value of these securities at
January 31, 1995 was $187,200, which represented 0.34% of net assets.
(c) Collateral on repurchase agreements, including the Fund's pro-rata interest in
joint repurchase agreements, is taken into possession by the Fund upon entering into
the repurchase agreement. The collateral is marked to market daily to ensure its market
value as being 102 percent of the sales price of the repurchase agreement.
(d) Joint repurchase agreement entered into on 01/31/95 with a maturing value of
$200,031,667. Collateralized by $174,795,000 U.S. Treasury obligations,
4.25% to 13.25% due 07/31/95 to 11/15/21. The aggregate market value of the
collateral at 01/31/95 was $204,065,933. The Fund's pro-rata interest in the
collateral at 01/31/95 was $5,101,648.
(e) Joint repurchase agreement entered into on 01/31/95 with a maturing value of
$550,371,439. Collateralized by $546,482,000 U.S. Treasury obligations,
4.25% to 10.375% due 02/15/95 to 05/15/21. The aggregate market value of the
collateral at 01/31/95 was $561,314,868. The Fund's pro-rata interest in the
collateral at 01/31/95 was $647,250.
See Notes to Financial Statements.
</TABLE>
FS-70
<PAGE>
<TABLE>
<C> <S> <C>
AIM V.I. ASSETS:
INTERNATIONAL Investments, at value (cost $48,891,827)........................... $46,676,256
EQUITY FUND Repurchase agreements (cost $5,634,529)............................ 5,634,529
STATEMENT OF Foreign currencies, at value (cost $2,872,711)..................... 2,869,083
ASSETS AND Receivables for:
LIABILITIES Investments sold................................................. 124,478
January 31, 1995 Dividends and interest........................................... 69,585
Organizational costs, net.......................................... 9,400
Investment for deferred compensation plan.......................... 1,318
Other assets....................................................... 345
-----------
Total assets................................................... 55,384,994
-----------
LIABILITIES:
Payables for:
Investments purchased............................................ 225,185
Capital stock repurchased ....................................... 44,795
Deferred compensation plan....................................... 1,318
Accrued advisory fees.............................................. 35,722
Accrued directors' fees............................................ 1,485
Accrued custodian fees............................................. 31,646
Accrued administrative service fees................................ 1,000
Accrued operating expenses......................................... 24,764
-----------
Total liabilities.............................................. 365,915
-----------
Net assets applicable to shares outstanding........................ $55,019,079
===========
Capital shares, $.001 par value per share:
Authorized....................................................... 250,000,000
===========
Outstanding...................................................... 4,989,995
===========
Net asset value, offering and redemption price per share........... $11.03
======
See Notes to Financial Statements.
</TABLE>
FS-71
<PAGE>
<TABLE>
<C> <S> <C>
AIM V.I. INVESTMENT INCOME:
INTERNATIONAL Dividends (net of $74,885 foreign withholding tax)............. $ 589,501
EQUITY FUND Interest....................................................... 215,057
STATEMENT OF -----------
OPERATIONS Total investment income...................................... 804,558
For the year ended -----------
January 31, 1995 EXPENSES:
Advisory fees.................................................. 322,757
Custodian fees................................................. 169,792
Administrative service fees.................................... 12,000
Directors' fees and expenses................................... 4,769
Organizational costs........................................... 2,892
Other.......................................................... 40,609
-----------
Total expenses................................................ 552,819
Less expenses assumed by advisor................................. (5,010)
-----------
Net expenses.................................................. 547,809
-----------
Net investment income............................................ 256,749
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT SECURITIES AND
FOREIGN CURRENCIES:
Net realized gain (loss) on:
Investment securities.......................................... (995,429)
Foreign currency transactions.................................. 12,010
-----------
(983,419)
-----------
Unrealized appreciation (depreciation) of:
Investment securities.......................................... (4,817,372)
Foreign currencies............................................. (3,661)
-----------
(4,821,033)
-----------
Net gain (loss) on investment securities and foreign currencies.. (5,804,452)
-----------
Net increase (decrease) in net assets resulting from operations.. $(5,547,703)
===========
See Notes to Financial Statements.
</TABLE>
FS-72
<PAGE>
<TABLE>
<S> <C> <C>
AIM V.I. 1995 1994
INTERNATIONAL ----------- -----------
EQUITY FUND OPERATIONS:
STATEMENT Net investment income (loss)....................... $ 256,749 $ (7,714)
OF CHANGES Net realized gain (loss) on sales of investment
IN NET ASSETS securities and foreign currency transactions...... (983,419) (107,582)
For the year ended Unrealized appreciation (depreciation) of
January 31, 1995 investment securities and foreign currencies...... (4,821,033) 2,602,257
and the period ----------- -----------
May 5, 1993 (date operations Net increase (decrease) in net assets resulting
commenced) through from operations.................................. (5,547,703) 2,486,961
January 31, 1994 Net increase from capital stock transactions....... 37,165,081 21,046,258
Distributions to shareholders from net investment
income............................................ (131,518) --
----------- -----------
Net increase in net assets........................ 31,485,860 23,533,219
NET ASSETS:
Beginning of period................................ 23,533,219 --
----------- -----------
End of period...................................... $55,019,079 $23,533,219
=========== ===========
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in)......... $58,203,064 $21,046,258
Undistributed net investment income................ 127,710 (7,714)
Undistributed net realized gain (loss) on sales of
investment securities............................. (1,092,919) (107,582)
Unrealized appreciation (depreciation) of
investment securities and foreign currencies...... (2,218,776) 2,602,257
----------- -----------
$55,019,079 $23,533,219
=========== ===========
See Notes to Financial Statements.
</TABLE>
FS-73
<PAGE>
<TABLE>
<C> <C>
AIM V.I. NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
INTERNATIONAL AIM Variable Insurance Funds, Inc. (the "Company"), is a Maryland corporation
EQUITY FUND organized on January 22, 1993, and is registered under the Investment Company
NOTES TO Act of 1940 (the "1940 Act"), as amended, as an open-end, series, management
FINANCIAL investment company consisting of nine portfolios: AIM V.I. International Equity
STATEMENTS Fund, AIM V.I. Capital Appreciation Fund, AIM V.I. Diversified Income Fund, AIM
January 31, 1995 V.I. Government Securities Fund, AIM V.I. Growth Fund, AIM V.I. Growth and
Income Fund, AIM V.I. Money Market Fund, AIM V.I. Utilities Fund and AIM V.I.
Value Fund. Matters affecting each portfolio are voted on exclusively by the
shareholders of such portfolio. The assets, liabilities and operations of each
portfolio are accounted for separately. Information presented in these
financial statements pertains only to the V.I. International Equity Fund (the
"Fund"). Shares of the Fund are sold only to insurance company separate
accounts to fund the benefits of variable annuity contracts.
The following is a summary of the significant accounting policies followed by
the Fund in the presentation of its financial statements.
A. Security Valuations - Investment securities are stated at the last sales
price on the exchange on which the securities are traded or, lacking any
sales, at the mean between the closing bid and asked prices on the day of
valuation. Securities traded in the over-the-counter market are valued at
the mean between the closing bid and asked prices on valuation date.
Securities for which market quotations are not readily available are valued
at fair value as determined in good faith by or under the supervision of the
Company's officers in a manner specifically authorized by the Board of
Directors. Investments with maturities of 60 days or less are valued on the
basis of amortized cost which approximates market value. Generally, trading
in foreign securities is substantially completed each day at various times
prior to the close of the New York Stock Exchange. The values of such
securities used in computing the net asset value of the Fund's shares are
determined as of such times. Foreign currency exchange rates are also
generally determined prior to the close of the New York Stock Exchange.
Occasionally, events affecting the values of such securities and such
exchange rates may occur between the times at which they are determined and
the close of the New York Stock Exchange which will not be reflected in the
computation of the Fund's net asset value. If events materially affecting
the value of such securities occur during such period, then these securities
will be valued at their fair value as determined in good faith by or under
the supervision of the Board of Directors.
B. Foreign Currency Translations - Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S.
dollar amounts at date of valuation. Purchases and sales of portfolio
securities and income items denominated in foreign currencies are translated
into U.S. dollar amounts on the respective dates of such transactions.
C. Foreign Currency Contracts - A forward currency contract is an obligation to
purchase or sell a specific currency for an agreed-upon price at a future
date. The Fund may enter into a forward contract to attempt to minimize the
risk to the Fund from adverse changes in the relationship between
currencies. The Fund may also enter into a forward contract for the amount
of a purchase or sale of a security denominated in a foreign currency in
order to "lock in" the U.S. dollar price of that security. The Fund could be
exposed to risk if counterparties to the contracts are unable to meet the
terms of their contracts or if the value of the foreign currency changes
unfavorably.
D. Securities Transactions, Investment Income and Distributions - Securities
transactions are accounted for on a trade date basis. Realized gains or
losses are computed on the basis of specific identification of the
securities sold. Interest income is recorded as earned from settlement date
and is recorded on an accrual basis. Dividend income and distributions to
shareholders are recorded on the ex-dividend date. On January 31, 1995,
$1,918 was reclassified from undistributed net realized gain (loss) on sales
of investment securities to undistributed net investment income as a result
of differing book/tax treatments on foreign currency transactions. In
addition, paid-in capital was reduced by $8,275 with an equivalent offset to
undistributed net investment income as a result of permanent book/tax
differences. Net assets of the Fund were unaffected by the reclassifications
discussed above.
E. Federal Income Taxes - The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income
taxes is recorded in the financial statements. The Fund has capital loss
carryforwards (which may be carried forward to offset future taxable gains,
if any) of $538,078, which expires, if not previously utilized, through the
year 2003.
</TABLE>
FS-74
<PAGE>
<TABLE>
<C> <S>
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
F. Expenses - Operating expenses directly attributable to a fund are charged to
that fund's operations. Expenses of the Company which are not directly
attributable to the operation of any fund of the Company are allocated to
the funds to which the expense relates based upon methods approved by the
Board of Directors of the Company.
G. Organizational Costs - Organizational costs of $14,461 are being amortized
over five years.
NOTE 2 - INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into master investment advisory agreements with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at an annual rate of 0.75% of
the first $250 million of the Fund's average daily net assets, plus 0.70% of
the Fund's average daily net assets in excess of $250 million. This agreement
requires AIM to reduce its fees or, if necessary, make payments to the Fund to
the extent required to satisfy any expense limitations imposed by the
securities laws or regulations thereunder of any state in which the Fund's
shares are qualified for sale.
Pursuant to a master administrative services agreement between the Company and
AIM, with respect to the Fund, the Company has agreed to reimburse certain
administrative costs incurred in providing accounting services to the Fund.
During the year ended January 31, 1995, AIM was reimbursed $12,000 for such
services.
The Company has entered into a master distribution agreement with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Fund.
Certain officers and directors of the Company are officers of AIM and AIM
Distributors.
The Fund incurred legal fees of $3,276 for services rendered by Reid & Priest
as counsel to the Company's directors. Effective September 1994, the firm of
Kramer, Levin, Naftalis, Nessen, Kamin & Frankel was appointed as counsel to
the Board of Directors. The Fund paid legal fees of $432 for services rendered
by that firm as counsel. A member of that firm is a director of the Company
and, prior to September 1994, was a member of Reid & Priest.
NOTE 3 - DIRECTORS' FEES
Directors' fees represent remuneration paid or accrued to each director who is
not an "interested person" of the Company. The Company may invest directors
fees, if so elected by a director, in mutual fund shares in accordance with a
deferred compensation plan.
NOTE 4 - INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term
securities) purchased and sold by the Fund during the year ended January 31,
1995 was $53,922,877 and $24,040,896, respectively.
The amount of unrealized appreciation (depreciation) of investment securities
on a tax basis as of January 31, 1995 is as follows:
</TABLE>
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities........ $ 2,158,523
Aggregate unrealized (depreciation) of investment securities...... (4,408,149)
-----------
Net unrealized appreciation (depreciation) of investment
securities....................................................... $(2,249,626)
===========
</TABLE>
<TABLE>
<C> <S>
Cost of investments for tax purposes is $48,925,882.
NOTE 5 - CAPITAL STOCK
Changes in capital stock outstanding during the year ended January 31, 1995
and the period May 5, 1993 (date operations commenced) through January 31, 1994
were as follows:
</TABLE>
<TABLE>
<CAPTION>
1995 1994
----------------------- ----------------------
Shares Amount Shares Amount
--------- ------------ --------- -----------
<S> <C> <C> <C> <C>
Sold.......................... 3,273,461 $ 39,114,516 1,884,787 $21,048,641
Issued as reinvestment of
distributions................ 11,496 131,518 -- --
Reacquired.................... (179,533) (2,080,953) (216) (2,383)
--------- ------------ --------- -----------
3,105,424 $ 37,165,081 1,884,571 $21,046,258
========= ============ ========= ===========
</TABLE>
FS-75
<PAGE>
<TABLE>
<C> <S>
NOTE 6 - FINANCIAL HIGHLIGHTS
Shown below are the condensed financial highlights for a share outstanding
during the year ended January 31, 1995 and the period May 5, 1993 (date
operations commenced) through January 31, 1994.
</TABLE>
<TABLE>
<CAPTION>
1995 1994
------- -------
<S> <C> <C>
Net asset value, beginning of period.................. $ 12.49 $ 10.00
Income from investment operations:
Net investment income............................... 0.06 --
Net gains (losses) on securities (both realized and
unrealized)........................................ (1.49) 2.49
------- -------
Total from investment operations................... (1.43) 2.49
------- -------
Less distributions:
Dividends from net investment income................ (0.03) --
------- -------
Net asset value, end of period........................ $ 11.03 $ 12.49
======= =======
Total return.......................................... (11.48)% 24.90%(a)
======= =======
Ratios/supplemental data:
Net assets, end of period (000s omitted).............. $55,019 $23,533
======= =======
Ratio of expenses to average net assets............... 1.27%(b) 1.98%(c)
======= =======
Ratio of net investment income to average net assets.. 0.60%(b) (0.15)%(c)
======= =======
Portfolio turnover rate............................... 64% 26%
======= =======
------
(a) Total return is not annualized.
(b) Ratios are based on average net assets of
$43,034,277. Ratios of expenses and net
investment income to average net assets
prior to waiver of advisory fees are 1.28%
and 0.59%, respectively.
(c) Ratios are annualized and based on average
net assets of $7,074,079. Annualized ratios
of expenses and net investment income
(loss) to average net assets prior to
waiver of advisory fees are 3.06% and
(1.23)%, respectively.
</TABLE>
FS-76
<PAGE>
REPORT OF To the Shareholders and Board of Directors
INDEPENDENT AIM Variable Insurance Funds, Inc.
CERTIFIED PUBLIC
ACCOUNTANTS We have audited the accompanying statement of
assets and liabilities of AIM V.I. Money Market
Fund, a series of shares of common stock of AIM
Variable Insurance Funds, Inc. including the
schedule of investments as of January 31, 1995,
the related statement of operations for the
year then ended and the statement of changes in
net assets and financial highlights for the
year then ended and the period May 5, 1993
(commencement of operations) through January
31, 1994. These financial statements and
financial highlights are the responsibility of
the Fund's management. Our responsibility is to
express an opinion on these financial
statements and financial highlights based on
our audits.
We conducted our audits in accordance with
generally accepted auditing standards. Those
standards require that we plan and perform the
audit to obtain reasonable assurance about
whether the financial statements and financial
highlights are free of material misstatement.
An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures
in the financial statements. Our procedures
included confirmation of securities owned as of
January 31, 1995, by correspondence with the
custodian. An audit also includes assessing the
accounting principles used and significant
estimates made by management, as well as
evaluating the overall financial statement
presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements and
financial highlights referred to above present
fairly, in all material respects, the financial
position of AIM V.I. Money Market Fund, as of
January 31, 1995, the results of its operations
for the year then ended, and the changes in its
net assets and the financial highlights for the
year then ended and the period May 5, 1993
through January 31, 1994, in conformity with
generally accepted accounting principles.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
February 24, 1995
FS-77
<PAGE>
<TABLE>
<CAPTION>
<C> <C> <S> <C>
AIM V.I. MONEY PRINCIPAL MARKET
MARKET FUND AMOUNT VALUE
SCHEDULE OF --------- ------
INVESTMENTS COMMERCIAL PAPER - 35.42%(a)
January 31, 1995
AEROSPACE/DEFENSE - 5.42%
International Lease Finance Corp., 6.20%, 04/07/95
$1,700,000 ................................................. $ 1,680,969
-----------
BEVERAGES - 5.42%
1,700,000 Seagram (Joseph E.) & Sons, Inc., 6.20%, 04/07/95. 1,680,969
-----------
FINANCE (BUSINESS CREDIT) - 4.76%
1,500,000 General Electric Capital Corp., 6.43%, 05/04/95... 1,475,352
-----------
FINANCE (CONSUMER CREDIT) - 5.41%
1,700,000 Ciesco L.P., 6.20%, 04/17/95...................... 1,678,042
-----------
INSURANCE (LIFE & HEALTH) - 4.83%
1,500,000 Lincoln National Corp., 5.77%, 02/14/95........... 1,496,875
-----------
OFFICE PRODUCTS - 4.79%
1,500,000 Xerox Credit Corp., 6.05%, 03/30/95............... 1,485,631
-----------
PAPER & FOREST PRODUCTS - 4.79%
1,500,000 Weyerhaeuser Co., 6.05%, 03/23/95................. 1,487,396
-----------
Total Commercial Paper............................ 10,985,234
-----------
U.S. GOVERNMENT AGENCY SECURITIES - 17.73%
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 6.45%
2,000,000 6.40%, 06/02/99(b)................................ 2,000,000
-----------
STUDENT LOAN MARKETING ASSOCIATION - 11.28%
500,000 6.15%, 08/20/98(b)................................ 499,877
1,000,000 6.17%, 01/13/99(b)................................ 1,000,000
2,000,000 6.16%, 02/22/99(b)................................ 2,000,681
-----------
3,500,558
-----------
Total U.S. Government Agency Securities........... 5,500,558
-----------
MASTER NOTE AGREEMENT - 4.80%
1,490,000 J.P. Morgan Securities Inc., 6.05%, 10/16/95(c)... 1,490,000
-----------
Total Investments, excluding Repurchase
Agreements....................................... 17,975,792
-----------
REPURCHASE AGREEMENTS - 41.94%(d)
Barclays de Zoete Wedd Government Securities,
7,000,000 Inc., 5.80%, 02/01/95(e)......................... 7,000,000
7,426 Goldman, Sachs & Co., Inc., 5.80%, 02/01/95(f).... 7,426
Swiss Bank Government Securities, Inc., 5.80%,
6,000,000 02/01/95(g)...................................... 6,000,000
-----------
Total Repurchase Agreements....................... 13,007,426
-----------
TOTAL INVESTMENTS - 99.89%........................ 30,983,218(h)
OTHER ASSETS LESS LIABILITIES - 0.11%............. 33,634
-----------
NET ASSETS - 100.00%.............................. $31,016,852
===========
</TABLE>
FS-78
<PAGE>
<TABLE>
<C> <S>
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Some commercial paper is traded on a discount basis. In such cases, the
interest rate shown represents the rate of discount paid or received at the
time of purchase by the Fund.
(b) Interest rates are redetermined weekly. Rates shown are in effect for the
period ending January 31, 1995.
(c) The Fund may demand prepayment of notes purchased under the Master Note
Purchase Agreement upon seven calendar days' notice. Interest rates are
redetermined periodically. Rate shown is the rate in effect on January 31,
1995.
(d) Collateral on repurchase agreements, including the Fund's pro-rata interest
in joint repurchase agreements, is taken into possession by the Fund upon
entering into the repurchase agreement. The collateral is marked to market
daily to ensure its market value as being 102 percent of the sales price of
the repurchase agreement.
(e) Joint repurchase agreement entered into 01/31/95 with a maturing value of
$160,025,778. Collateralized by $151,985,000 U.S. Treasury obligations,
0.00% to 13.375% due 02/15/95 to 11/15/24. The aggregate market value of
the collateral at 01/31/95 was $163,248,737. The Fund's pro-rata interest
in the collateral at 01/31/95 was $7,142,132.
(f) Joint repurchase agreement entered into 01/31/95 with a maturing value of
$550,371,439. Collateralized by $546,482,000 U.S. Treasury obligations,
4.25% to 10.375% due 02/15/95 to 05/15/21. The aggregate market value of
the collateral at 01/31/95 was $561,314,868. The Fund's pro-rata interest
in the collateral at 01/31/95 was $7,575.
(g) Joint repurchase agreement entered into 01/31/95 with a maturing value of
$160,025,778. Collateralized by $166,659,000 U.S. Treasury bills due
02/16/95 to 01/11/96. The aggregate market value of the collateral at
01/31/95 was $163,218,410. The Fund's pro-rata interest in the collateral
at 01/31/95 was $6,120,690.
(h) Also represents cost for federal income tax purposes.
See Notes to Financial Statements.
</TABLE>
FS-79
<PAGE>
<TABLE>
<C> <S> <C>
AIM V.I. MONEY ASSETS:
MARKET FUND Investments, excluding repurchase agreements, at value (amortized
STATEMENT OF cost)............................................................. $17,975,792
ASSETS AND Repurchase agreements.............................................. 13,007,426
LIABILITIES Interest receivable................................................ 64,344
January 31, 1995 Organizational costs, net.......................................... 9,400
Investment for deferred compensation plan.......................... 3,467
Other assets....................................................... 305
-----------
Total assets................................................... 31,060,734
-----------
LIABILITIES:
Payables for:
Capital stock purchased.......................................... 2,813
Deferred compensation plan....................................... 3,467
Accrued advisory fees.............................................. 11,202
Accrued directors' fees............................................ 1,414
Accrued administrative service fees................................ 1,919
Accrued operating expenses......................................... 23,067
-----------
Total liabilities.............................................. 43,882
-----------
Net assets applicable to shares outstanding........................ $31,016,852
===========
Capital shares, $.001 par value per share:
Authorized....................................................... 250,000,000
===========
Outstanding...................................................... 31,015,948
===========
Net asset value, offering and redemption price per share........... $1.00
=====
See Notes to Financial Statements.
</TABLE>
FS-80
<PAGE>
<TABLE>
<C> <S> <C>
AIM V.I. MONEY INVESTMENT INCOME:
MARKET FUND Interest.......................................................... $1,245,882
STATEMENT OF ----------
OPERATIONS EXPENSES:
For the year ended Advisory fees..................................................... 104,498
January 31, 1995 Custodian fees.................................................... 14,194
Administrative service fees....................................... 21,019
Directors' fees and expenses...................................... 4,647
Professional fees................................................. 16,933
Printing expenses................................................. 10,992
Organizational costs.............................................. 2,892
Other............................................................. 7,107
----------
Total expenses................................................... 182,282
Less expenses assumed by advisor.................................... (18,531)
----------
Net expenses..................................................... 163,751
----------
Net investment income............................................... 1,082,131
----------
Net realized gain on sales of investment securities................. 904
----------
Net increase in net assets resulting from operations................ $1,083,035
==========
See Notes to Financial Statements.
</TABLE>
FS-81
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
AIM V.I. MONEY 1995 1994
MARKET FUND ----------- -----------
STATEMENT OPERATIONS:
OF CHANGES Net investment income.............................. $ 1,082,131 $ 111,268
IN NET ASSETS Net realized gain on sales of investment
For the year ended securities........................................ 904 --
January 31, 1995 ----------- -----------
and the period Net increase in net assets resulting from
May 5, 1993 (date operations operations....................................... 1,083,035 111,268
commenced) through January Net increase from capital stock transactions....... 17,124,934 13,791,014
31, 1994 Distributions to shareholders from net investment
income............................................ (1,082,131) (111,268)
----------- -----------
Net increase in net assets........................ 17,125,838 13,791,014
NET ASSETS:
Beginning of period................................ 13,891,014 100,000
----------- -----------
End of period...................................... $31,016,852 $13,891,014
=========== ===========
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in)......... $31,015,948 $13,891,014
Undistributed net realized gain on sales of
investment securities............................. 904 --
----------- -----------
$31,016,852 $13,891,014
=========== ===========
See Notes to Financial Statements.
</TABLE>
FS-82
<PAGE>
<TABLE>
<C> <S>
AIM V.I. MONEY NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
MARKET FUND
NOTES TO AIM Variable Insurance Funds, Inc. (the "Company"), is a Maryland corporation
FINANCIAL organized on January 22, 1993, and is registered under the Investment Company
STATEMENTS Act of 1940 (the "1940 Act"), as amended, as an open-end, series, management
January 31, 1995 investment company consisting of nine portfolios: AIM V.I. Money Market Fund,
AIM V.I. Capital Appreciation Fund, AIM V.I. Diversified Income Fund, AIM V.I.
Government Securities Fund, AIM V.I. Growth Fund, AIM V.I. Growth and Income
Fund, AIM V.I. International Equity Fund, AIM V.I. Utilities Fund and AIM V.I.
Value Fund. Matters affecting each portfolio are voted on exclusively by the
shareholders of such portfolio. The assets, liabilities and operations of each
portfolio are accounted for separately. Information presented in these
financial statements pertains only to the V.I. Money Market Fund (the "Fund").
Shares of the Fund are sold only to insurance company separate accounts to fund
the benefits of variable annuity contracts.
The following is a summary of the significant accounting policies followed by
the Fund in the presentation of its financial statements.
A. Security Valuations - The Fund invests only in securities which have
maturities of 397 days or less from the date of purchase. The securities are
valued on the basis of amortized cost which approximates market value. This
method values a security at its cost on the date of purchase and thereafter,
assumes a constant amortization to maturity of any discount or premiums.
B. Securities Transactions, Investment Income and Distributions - Securities
transactions are accounted for on a trade date basis. Interest income,
adjusted for amortization of premiums and discounts on investments, is
recorded as earned from settlement date and is recorded on the accrual
basis. Distributions to shareholders are declared and paid daily. Realized
gains or losses from securities transactions are recorded on the identified
cost basis.
C. Federal Income Taxes - It is the Fund's policy to continue to comply with
the requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute all of its taxable income and capital
gains to its shareholders. Therefore, no provision for federal income taxes
is recorded in the financial statements.
D. Expenses - Operating expenses directly attributable to a fund are charged to
that fund's operations. Expenses of the Company which are not directly
attributable to the operations of any fund of the Company are allocated to
the funds to which the expense relates based upon methods approved by the
Board of Directors of the Company.
E. Organizational Costs - Organizational costs of $14,461 are being amortized
over five years.
NOTE 2 - INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at an annual rate of 0.40% of
the first $250 million of the Fund's average daily net assets, plus 0.35% of
the Fund's average daily net assets in excess of $250 million. During the year
ended January 31, 1995, AIM waived advisory fees of $18,531 with respect to the
Fund.
Pursuant to a master administrative services agreement between the Company and
AIM, with respect to the Fund, the Company has agreed to reimburse certain
administrative costs incurred in providing accounting services to the Fund.
During the year ended January 31, 1995, AIM was reimbursed $21,019 for such
services.
The Company has entered into a master distribution agreement with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Fund.
Certain officers and directors of the Company are officers of AIM and AIM
Distributors.
The Fund incurred legal fees of $3,190 for services rendered by Reid & Priest
as counsel to the Company's directors. Effective September 1994, the firm of
Kramer, Levin, Naftalis, Nessen, Kamin & Frankel was appointed as counsel to
the Board of Directors. The Fund paid legal fees of $417 for services rendered
by that firm as counsel. A member of that firm is a director of the Company
and, prior to September 1994, was a member of Reid & Priest.
NOTE 3 - DIRECTORS' FEES
Directors' fees represent remuneration paid or accrued to each director who is
not an "interested person" of the Company. The Company may invest directors
fees, if so elected by a director, in mutual fund shares in accordance with a
deferred compensation plan.
</TABLE>
FS-83
<PAGE>
<TABLE>
<C> <S>
NOTE 4 - CAPITAL STOCK
Changes in capital stock outstanding during the year ended January 31, 1995
and the period May 5, 1993 (date operations commenced) through January 31, 1994
were as follows:
</TABLE>
<TABLE>
<CAPTION>
1995 1994
------------------------- -----------------------
Shares Amount Shares Amount
----------- ------------ ---------- -----------
<S> <C> <C> <C> <C>
Sold....................... 53,878,101 $ 53,878,101 22,665,189 $22,665,189
Issued as reinvestment of
distributions............. 1,082,131 1,082,131 111,268 111,268
Reacquired................. (37,835,278) (37,835,278) (8,985,443) (8,985,443)
----------- ------------ ---------- -----------
17,124,934 $ 17,124,934 13,791,014 $13,791,014
=========== ============ ========== ===========
</TABLE>
<TABLE>
<C> <S>
NOTE 5 - FINANCIAL HIGHLIGHTS
Shown below are the condensed financial highlights for a share outstanding of
the Fund during the year ended January 31, 1995 and the period May 5, 1993
(date operations commenced) through January 31, 1994.
</TABLE>
<TABLE>
<CAPTION>
1995 1994
------- -------
<S> <C> <C>
Net asset value, beginning of period................... $ 1.00 $ 1.00
Income from investment operations:
Net investment income................................ 0.04 0.02
------- -------
Less distributions:
Dividends from net investment income................. (0.04) (0.02)
------- -------
Net asset value, end of period......................... $ 1.00 $ 1.00
======= =======
Total return........................................... 3.98% 2.27%
======= =======
Ratios/supplemental data:
Net assets, end of period (000s omitted)............... $31,017 $13,891
======= =======
Ratio of expenses to average net assets................ 0.63%(a) 0.95%(b)
======= =======
Ratio of net investment income to average net assets... 4.14%(a) 2.29%(b)
======= =======
------
(a) Ratios are based on average net assets of
$26,124,493. Ratios of expenses and net
investment income to average net assets
prior to waiver of advisory fees are 0.70%
and 4.07%, respectively.
(b) Ratios are annualized and based on average
net assets of $6,533,606. Annualized ratios
of expenses and net investment income to
average net assets prior to waiver of
advisory fees are 1.53% and 1.70%,
respectively.
</TABLE>
FS-84
<PAGE>
REPORT OF To the Shareholders and Board of Directors
INDEPENDENT AIM Variable Insurance Funds, Inc.
CERTIFIED PUBLIC
ACCOUNTANTS We have audited the accompanying statement of
assets and liabilities of AIM V.I. Utilities
Fund, a series of shares of common stock of AIM
Variable Insurance Funds, Inc. including the
schedule of investments as of January 31, 1995,
the related statement of operations and the
statement of changes in net assets and
financial highlights for the period May 2, 1994
(commencement of operations) through January
31, 1995. These financial statements and
financial highlights are the responsibility of
the Fund's management. Our responsibility is to
express an opinion on these financial
statements and financial highlights based on
our audit.
We conducted our audit in accordance with
generally accepted auditing standards. Those
standards require that we plan and perform the
audit to obtain reasonable assurance about
whether the financial statements and financial
highlights are free of material misstatement.
An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures
in the financial statements. Our procedures
included confirmation of securities owned as of
January 31, 1995, by correspondence with the
custodian and brokers. Where brokers did not
reply to our confirmation requests, we carried
out other appropriate auditing procedures. An
audit also includes assessing the accounting
principles used and significant estimates made
by management, as well as evaluating the
overall financial statement presentation. We
believe that our audit provides a reasonable
basis for our opinion.
In our opinion, the financial statements and
financial highlights referred to above present
fairly, in all material respects, the financial
position of AIM V.I. Utilities Fund, as of
January 31, 1995, the results of its operations
and the changes in its net assets and the
financial highlights for the period May 2, 1994
through January 31, 1995, in conformity with
generally accepted accounting principles.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
February 24, 1995
FS-85
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <S> <C>
AIM V.I. UTILITIES MARKET
FUND SHARES VALUE
SCHEDULE OF ------ ------
INVESTMENTS COMMON STOCKS - 78.21%
January 31, 1995
ADVERTISING/BROADCASTING - 0.49%
600 British Sky Broadcasting - ADR(a)......................... $ 14,475
----------
CONGLOMERATES - 0.60%
400 Tenneco Inc. ............................................. 17,600
----------
ELECTRIC SERVICES - 44.17%
700 Baltimore Gas & Electric Co. ............................. 16,975
3,200 Boston Edison Co. ........................................ 80,000
300 Chilgener S.A. - ADR...................................... 6,750
2,200 Consolidated Edison Co. of New York, Inc. ................ 62,150
2,100 DPL, Inc. ................................................ 45,150
500 DQE, Inc. ................................................ 15,875
500 Detroit Edison Co. ....................................... 14,000
1,800 Duke Power Co. ........................................... 72,675
350 Eastern Group PLC......................................... 3,930
1,500 Eastern Utilities Associates.............................. 34,313
700 Empresa Nacional de Electricidad S.A. - ADR............... 28,525
500 Enersis S.A. - ADR........................................ 12,000
2,000 FPL Group, Inc. .......................................... 73,250
500 Florida Progress Corp..................................... 15,875
2,000 General Public Utilities Corp. ........................... 56,500
2,200 Houston Industries, Inc. ................................. 87,725
1,100 Illinova Corp. ........................................... 24,613
2,200 Kansas City Power & Light Co. ............................ 52,250
700 Korea Electric Power Corp. - ADR.......................... 13,300
350 Midlands Electricity PLC.................................. 4,179
2,225 National Power PLC........................................ 16,715
500 New England Electric System............................... 16,625
300 New Jersey Resources Corp. ............................... 6,713
2,600 NIPSCO Industries, Inc. .................................. 79,300
1,200 Northeast Utilities....................................... 28,650
2,000 Northern States Power Co. ................................ 92,500
300 Ohio Edison Co. .......................................... 6,337
2,400 Oklahoma Gas & Electric Co. .............................. 84,600
300 Pacific Gas & Electric Co. ............................... 7,575
1,100 Peco Energy Co. .......................................... 29,425
1,500 Pinnacle West Capital Corp. .............................. 31,125
2,200 PowerGen PLC.............................................. 18,197
500 Shandong Huaneng Power Co. Ltd. - ADR(a).................. 4,313
3,500 Southern Co. (The)........................................ 73,063
900 SCE Corp. ................................................ 14,738
200 Texas Utilities Co. ...................................... 6,950
700 Unicom Corp. ............................................. 18,200
66 VEBA A.G. ................................................ 22,221
300 Western Resources, Inc. .................................. 9,563
500 Wisconsin Energy Corp. ................................... 14,000
440 Yorkshire Electricity PLC................................. 5,449
----------
1,306,294
----------
</TABLE>
FS-86
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <C> <S> <C>
NATURAL GAS PIPELINE - 7.14%
500 Columbia Gas System, Inc.(a)............................. $ 12,313
1,000 Enron Corp. ............................................. 29,125
1,500 MCN Corp. ............................................... 26,438
3,300 Panhandle Eastern Corp. ................................. 69,300
700 Sonat Inc. .............................................. 18,813
1,624 Transco Energy Co. ...................................... 28,116
1,300 Westcoast Energy, Inc. .................................. 19,013
300 Williams Companies Inc. (The)............................ 8,100
----------
211,218
----------
REAL ESTATE INVESTMENT TRUSTS - 2.90%
400 Avalon Properties, Inc. ................................. 7,650
1,000 Bay Apartment Communities................................ 19,875
200 Felcor Suite Hotels Inc. ................................ 3,950
1,000 Innkeepers USA Trust..................................... 7,625
200 Meditrust................................................ 6,125
100 National Health Investors, Inc. ......................... 2,513
900 Oasis Residential Inc. .................................. 19,913
800 RFS Hotel Investors Inc. ................................ 10,800
600 South West Property Trust................................ 7,425
----------
85,876
----------
TELECOMMUNICATIONS - 3.28%
600 ALC Communications Corp.(a).............................. 17,400
500 Nokia Corp. - ADR........................................ 36,563
70 Telefonaktiebolaget LM Ericsson.......................... 3,771
730 Telefonaktiebolaget LM Ericsson - ADR.................... 39,329
----------
97,063
----------
TELEPHONE - 18.52%
100 ALLTEL Corp. ............................................ 2,835
700 American Telephone and Telegraph Co. .................... 34,913
2,100 Ameritech Corp. ......................................... 92,138
1,200 BellSouth Corp. ......................................... 71,100
1,300 Century Telephone Enterprise, Inc. ...................... 40,950
1,400 Cincinnati Bell, Inc. ................................... 27,123
1,000 Frontier Corp. .......................................... 21,000
400 GTE Corp. ............................................... 13,550
200 Grupo Iusacell S.A. de C.V. - ADR Series L(a)............ 2,923
700 Hong Kong Telecom Ltd. - ADR............................. 12,425
200 PT Indosat - ADR(a)...................................... 6,275
510 Royal PTT Nederland N.V. ADS............................. 16,724
Royal PTT Nederland N.V. ADS - ADR(b)(Acquired 06/13/94;
500 cost $13,374)........................................... 16,438
900 Southern New England Telecommunications Corp. ........... 29,923
1,900 Southwestern Bell Corp. ................................. 80,986
400 Tele Danmark A/S - ADR(a)................................ 10,000
800 Telecom Corp. of New Zealand Ltd. - ADR.................. 44,200
5,075 Telecom Italia S.p.A. ................................... 14,057
200 Telefonica de Argentina - ADR............................ 10,200
----------
547,760
----------
</TABLE>
FS-87
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
--------- ------
<C> <S> <C>
WATER SUPPLY - 1.11%
2,850 North West Water PLC.................................. $ 22,041
1,400 Yorkshire Water PLC................................... 10,584
----------
32,625
----------
Total Common Stocks................................... 2,312,911
----------
<CAPTION>
PRINCIPAL
AMOUNT
---------
<C> <S> <C>
BONDS & NOTES - 6.49%
COMPUTER SOFTWARE/SERVICES - 0.28%
$ 9,000 Network Equipment Technologies, Convertible
Subordinated Debentures,
7.25%, 05/15/14...................................... 8,305
----------
ELECTRIC SERVICES - 2.21%
75,000 Arizona Public Service, Debentures, 8.00%, 12/30/15... 65,453
----------
FINANCE - CONSUMER CREDIT - 2.54%
75,000 GMAC, Step Up Notes, 5.50%, 10/15/02(c)............... 75,106
----------
NATURAL GAS PIPELINE - 1.46%
Panhandle Eastern Pipeline, Debentures, 7.875%,
45,000 08/15/04............................................. 43,143
----------
Total Bonds & Notes................................... 192,007
----------
U.S. TREASURY NOTES - 3.30%
100,000 U.S. Treasury Notes, 7.25%, 05/15/04.................. 97,719
----------
Total U.S. Treasury Notes............................. 97,719
----------
Total Investments, excluding Repurchase Agreements.... 2,602,637
----------
REPURCHASE AGREEMENT -17.14%(d)
507,067 Goldman, Sachs & Co. Inc., 5.80%, 02/01/95(e)......... 507,067
----------
Total Repurchase Agreement............................ 507,067
----------
TOTAL INVESTMENTS - 105.14%........................... 3,109,704
LIABILITIES IN EXCESS OF OTHER ASSETS - (5.14)%....... (152,037)
----------
NET ASSETS - 100.00%.................................. $2,957,667
==========
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Non-income producing security.
(b) Restricted security. May be resold to
qualified institutional buyers in
accordance with the provisions of Rule 144A
under the Securities Act of 1933, as
amended. The valuation of this security has
been determined in accordance with
procedures established by the Board of
Directors. The market value of this
security at January 31, 1995 was $16,438,
which represented 0.56% of net assets.
(c) Rate shown is the rate in effect on
January 31, 1995. Interest rate steps up to
9.00% effective October 15, 1995.
(d) Collateral on repurchase agreements,
including the Fund's pro-rata interest in
joint repurchase agreements, is taken into
possession by the Fund upon entering into
the repurchase agreement. The collateral is
marked to market daily to ensure its market
value as being 102 percent of the sales
price of the repurchase agreement.
(e) Joint repurchase agreement entered into
01/31/95 with a maturing value of
$550,371,439. Collateralized by
$546,482,000 U.S. Treasury obligations,
4.25% to 10.375% due 02/15/95 to 05/15/21.
The aggregate market value of the
collateral at 01/31/95 was $561,314,868.
The Fund's pro-rata interest in the
collateral at 01/31/95 was $517,233.
See Notes to Financial Statements.
</TABLE>
FS-88
<PAGE>
<TABLE>
<C> <S> <C>
AIM V.I. UTILITIES ASSETS:
FUND Investments, excluding repurchase agreements, at value (cost
STATEMENT OF $2,568,100)....................................................... $ 2,602,637
ASSETS AND Repurchase agreements (cost $507,067).............................. 507,067
LIABILITIES Foreign currencies, at value (cost $49,263)........................ 48,774
January 31, 1995 Receivables for:
Investments sold................................................. 54,329
Capital stock sold............................................... 46,149
Dividends and interest........................................... 17,415
Reimbursement from advisor....................................... 7,000
Investment for deferred compensation plan.......................... 1,265
-----------
Total assets................................................... 3,284,636
-----------
LIABILITIES:
Payables for:
Investments purchased............................................ 318,843
Deferred compensation plan....................................... 1,265
Accrued directors' fees............................................ 1,503
Accrued administrative service fees................................ 2,050
Accrued operating expenses......................................... 3,308
-----------
Total liabilities.............................................. 326,969
-----------
Net assets applicable to shares outstanding........................ $ 2,957,667
===========
Capital shares, $.001 par value per share:
Authorized....................................................... 250,000,000
===========
Outstanding...................................................... 305,237
===========
Net asset value, offering and redemption price per share........... $9.69
=====
See Notes to Financial Statements.
</TABLE>
FS-89
<PAGE>
<TABLE>
<C> <S> <C>
AIM V.I. UTILITIES INVESTMENT INCOME:
FUND Dividends (net of $234 foreign withholding tax)................... $ 56,793
STATEMENT OF Interest.......................................................... 24,430
OPERATIONS --------
For the period Total investment income......................................... 81,223
May 2, 1994 (date operations --------
commenced) through EXPENSES:
January 31, 1995 Advisory fees..................................................... 9,264
Custodian fees.................................................... 5,193
Administrative service fees....................................... 13,577
Directors' fees and expenses...................................... 3,760
Professional fees................................................. 6,722
Other............................................................. 1,371
--------
Total expenses................................................... 39,887
Less expenses assumed by advisor.................................... (21,264)
--------
Net expenses..................................................... 18,623
--------
Net investment income............................................... 62,600
--------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT SECURITIES AND
FOREIGN CURRENCIES:
Net realized gain (loss) on:
Investment securities............................................. (64,319)
Foreign currencies................................................ 400
--------
(63,919)
--------
Unrealized appreciation (depreciation) of:
Investment securities............................................. 34,537
Foreign currencies................................................ (631)
--------
33,906
--------
Net gain (loss) on sales of investment securities and foreign
currencies......................................................... (30,013)
--------
Net increase in net assets resulting from operations................ $ 32,587
========
See Notes to Financial Statements.
</TABLE>
FS-90
<PAGE>
<TABLE>
<CAPTION>
<C> <S> <C>
AIM V.I. UTILITIES 1995
FUND -----------
STATEMENT OPERATIONS:
OF CHANGES Net investment income........................................... $ 62,600
IN NET ASSETS Net realized gain (loss) on sales of investment securities and
For the period May 2, 1994 foreign currencies............................................. (63,919)
(date operations commenced) Unrealized appreciation of investment securities and foreign
through January 31, 1995 currencies..................................................... 33,906
-----------
Net increase in net assets resulting from operations........... 32,587
Net increase from capital stock transactions.................... 2,981,631
Distributions to shareholders from net investment income........ (56,551)
-----------
Net increase in net assets..................................... 2,957,667
NET ASSETS:
Beginning of period............................................. --
-----------
End of period................................................... $ 2,957,667
===========
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in)...................... $ 2,981,631
Undistributed net investment income............................. 6,049
Undistributed net realized gain (loss) on sales of investment
securities and foreign currencies.............................. (63,919)
Unrealized appreciation of investment securities and foreign
currencies..................................................... 33,906
-----------
$ 2,957,667
===========
See Notes to Financial Statements.
</TABLE>
FS-91
<PAGE>
<TABLE>
<C> <S>
AIM V.I. UTILITIES NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
FUND AIM Variable Insurance Funds, Inc. (the "Company"), is a Maryland corporation
NOTES TO organized on January 22, 1993, and is registered under the Investment Company
FINANCIAL Act of 1940 (the "1940 Act"), as amended, as an open-end, series, management
STATEMENTS investment company consisting of nine portfolios: AIM V.I. Utilities Fund, AIM
January 31, 1995 V.I. Capital Appreciation Fund, AIM V.I. Diversified Income Fund, AIM V.I.
Government Securities Fund, AIM V.I. Growth Fund, AIM V.I. Growth and Income
Fund, AIM V.I. International Equity Fund, AIM V.I. Money Market Fund, and AIM
V.I. Value Fund. Matters affecting each portfolio are voted on exclusively by
the shareholders of such portfolio. The assets, liabilities and operations of
each portfolio are accounted for separately. Information presented in these
financial statements pertains only to the V.I. Utilities Fund (the "Fund").
Shares of the Fund are sold only to insurance company separate accounts to fund
the benefits of variable annuity contracts.
The following is a summary of the significant accounting policies followed by
the Fund in the presentation of its financial statements.
A. Security Valuations - Equity securities, including warrants, that are listed
on a national securities exchange or part of the NASDAQ National Market
System are valued at the last reported sales price or, in the case of over-
the-counter securities or if there has been no sale that day, at the mean
between the closing bid and asked prices on that day. Debt securities are
valued on the basis of valuations furnished by a pricing service, which
determines valuations for normal, institutional-size trading units of such
securities using market information, transactions for comparable securities
and various relationships between securities which are generally recognized
by institutional traders. Securities traded in the over-the-counter market,
except (i) securities priced by the pricing service, (ii) securities for
which representative exchange prices are available, and (iii) securities
reported in the NASDAQ National Market System, are valued at the mean
between representative last bid and asked prices obtained from an electronic
quotation reporting system, if such prices are available, or from
established market makers. Short-term investments with remaining maturities
of up to and including 60 days are valued at amortized cost which
approximates market value. Short-term securities that mature in more than 60
days are valued at current market quotations. Restricted and other
securities and assets of the Fund are stated at fair value as determined in
good faith by, or under the authority of, the Board of Directors.
B. Securities Transactions, Investment Income and Distributions - Securities
transactions are accounted for on a trade date basis. Interest income is
recorded as earned from settlement date and is recorded on the accrual
basis. Dividend income and distributions to shareholders are recorded on the
ex-dividend date. Realized gains or losses from securities transactions are
recorded on the identified cost basis.
C. Federal Income Taxes - It is the Fund's policy to continue to comply with
the requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute all of its taxable income and capital
gains to its shareholders. Therefore, no provision for federal income taxes
is recorded in the financial statements. The Fund had capital loss
carryforwards (which may be carried forward to offset future taxable capital
gains, if any) of $29,404, which expires, if not previously utilized, in the
year 2003.
D. Expenses - Operating expenses directly attributable to a Fund are charged to
that Fund's operations. Expenses of the Company which are not directly
attributable to the operations of any fund of the Company are allocated to
the funds to which the expense relates based upon methods approved by the
Board of Directors of the Company.
E. Foreign Currency Translation - Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S.
dollars at date of valuation. Purchases and sales of portfolio securities
and income items denominated in foreign currencies are translated into U.S.
dollar amounts on the respective dates of such transactions.
F. Forward Currency Contracts - A forward currency contract is an obligation to
purchase or sell a specific currency for an agreed-upon price at a future
date. The Fund may enter into a forward contract to attempt to minimize the
risk to the Fund from adverse changes in the relationship between
currencies. The Fund may also enter into a currency contract for the amount
of a purchase or sale of a security denominated in a foreign currency in
order to "lock-in" the U.S. dollar price of that security. The Fund could be
exposed to risk if counterparties to the contracts are unable to meet the
terms of their contracts or if the value of the foreign currency changes
unfavorably.
</TABLE>
FS-92
<PAGE>
<TABLE>
<C> <S>
NOTE 2 - INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at an annual rate of 0.65% of
the first $250 million of the Fund's average daily net assets, plus 0.60% of
the Fund's average daily net assets in excess of $250 million. During the
period May 2, 1994 (date operations commenced) through January 31, 1995, AIM
waived advisory fees of $9,264 and reimbursed expenses of $12,000 with respect
to the Fund.
Pursuant to a master administrative services agreement between the Company and
AIM, with respect to the Fund, the Company has agreed to reimburse certain
administrative costs incurred in providing accounting services to the Fund.
During the period May 2, 1994 (date operations commenced) through January 31,
1995, AIM was reimbursed $13,577 for such services.
The Company has entered into a master distribution agreement with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Fund.
Certain officers and directors of the Company are officers of AIM and AIM
Distributors.
The Fund incurred legal fees of $886 for services rendered by Reid & Priest as
counsel to the Company's directors. Effective September 1994, the firm of
Kramer, Levin, Naftalis, Nessen, Kamin & Frankel was appointed as counsel to
the Board of Directors. The Fund paid legal fees of $403 for services rendered
by that firm as counsel. A member of that firm is a director of the Company
and, prior to September 1994, was a member of Reid & Priest.
NOTE 3 - DIRECTORS' FEES
Directors' fees represent remuneration paid or accrued to each director who is
not an "interested person" of the Company. The Company may invest directors'
fees, if so elected by a director, in mutual fund shares in accordance with a
deferred compensation plan.
NOTE 4 - INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term
securities) purchased and sold by the Fund during the period May 2, 1994 (date
operations commenced) through January 31, 1995 was $3,789,890 and $1,157,471,
respectively.
The amount of unrealized appreciation (depreciation) of investment securities
on a tax basis as of January 31, 1995 is as follows:
</TABLE>
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities............ $ 94,946
Aggregate unrealized (depreciation) of investment securities.......... (69,092)
--------
Net unrealized appreciation of investment securities.................. $ 25,854
========
</TABLE>
<TABLE>
<C> <S>
Cost of investments for tax purposes is $2,576,783.
NOTE 5 - CAPITAL STOCK
Changes in capital stock outstanding during the period May 2, 1994 (date
operations commenced) through January 31, 1995 were as follows:
</TABLE>
<TABLE>
<CAPTION>
1995
-------------------
Shares Amount
------- ----------
<S> <C> <C>
Sold....................................................... 303,347 $2,952,131
Issued as reinvestment of distributions.................... 5,893 56,551
Reacquired................................................. (4,003) (27,051)
------- ----------
305,237 $2,981,631
======= ==========
</TABLE>
FS-93
<PAGE>
<TABLE>
<C> <S>
NOTE 6 - FINANCIAL HIGHLIGHTS
Shown below are the condensed financial highlights for a share outstanding of
the Fund during the period May 2, 1994 (date operations commenced) through
January 31, 1995.
</TABLE>
<TABLE>
<CAPTION>
1995
------
<S> <C>
Net asset value, beginning of period................................ $10.00
Income from investment operations:
Net investment income............................................. 0.27
Net gains (losses) on securities (both realized and unrealized)... (0.33)
------
Total from investment operations................................. (0.06)
------
Less distributions:
Dividends from net investment income.............................. (0.25)
------
Net asset value, end of period...................................... $ 9.69
======
Total return(a)..................................................... (0.56)%
======
Ratios/supplemental data:
Net assets, end of period (000s omitted)............................ $2,958
======
Ratio of expenses to average net assets............................. 1.31%(b)
======
Ratio of net investment income to average net assets................ 4.39%(b)
======
Portfolio turnover rate............................................. 69%
======
------
(a) Total return is not annualized.
(b) Ratios are annualized and based on average
net assets of $1,891,665. Annualized ratios
of expenses and net investment income to
average net assets prior to waiver of
advisory fees and expense reimbursements
are 2.80% and 2.90%, respectively.
</TABLE>
FS-94
<PAGE>
REPORT OF To the Shareholders and Board of Directors
INDEPENDENT AIM Variable Insurance Funds, Inc.
CERTIFIED PUBLIC
ACCOUNTANTS We have audited the accompanying statement of
assets and liabilities of AIM V.I. Value Fund,
a series of shares of common stock of AIM
Variable Insurance Funds, Inc. including the
schedule of investments as of January 31, 1995,
the related statement of operations for the
year then ended and the statement of changes in
net assets and the financial highlights for the
year then ended and the period May 5, 1993
(commencement of operations) through January
31, 1994. These financial statements and
financial highlights are the responsibility of
the Fund's management. Our responsibility is to
express an opinion on these financial
statements and financial highlights based on
our audits.
We conducted our audits in accordance with
generally accepted auditing standards. Those
standards require that we plan and perform the
audit to obtain reasonable assurance about
whether the financial statements and financial
highlights are free of material misstatement.
An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures
in the financial statements. Our procedures
included confirmation of securities owned as of
January 31, 1995, by correspondence with the
custodian and brokers. Where brokers did not
reply to our confirmation requests, we carried
out other appropriate auditing procedures. An
audit also includes assessing the accounting
principles used and significant estimates made
by management, as well as evaluating the
overall financial statement presentation. We
believe that our audits provide a reasonable
basis for our opinion.
In our opinion, the financial statements and
financial highlights referred to above present
fairly, in all material respects, the financial
position of AIM V.I. Value Fund, as of January
31, 1995, the results of its operations for the
year then ended, and the changes in its net
assets and the financial highlights for the
year then ended and the period May 5, 1993
through January 31, 1994, in conformity with
generally accepted accounting principles.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
February 24, 1995
FS-95
<PAGE>
<TABLE>
<CAPTION>
<C> <C> <S> <C>
AIM V.I. VALUE MARKET
FUND SHARES VALUE
SCHEDULE OF ---------- ------
INVESTMENTS COMMON STOCKS - 76.61%
January 31, 1995
ADVERTISING/BROADCASTING - 0.24%
10,000 Heritage Media Corp.(a).............................. $ 257,500
------------
APPLIANCES - 1.12%
20,000 Premark International Inc............................ 822,500
16,500 Singer Company N.V. (The)............................ 404,250
------------
1,226,750
------------
AUTOMOBILE/TRUCKS PARTS & TIRES - 0.91%
30,000 Borg-Warner Automotive............................... 678,750
6,800 Eaton Corp........................................... 313,650
------------
992,400
------------
AUTOMOBILE MANUFACTURERS - 2.08%
89,800 Ford Motor Co........................................ 2,267,450
------------
BANKING - 1.13%
12,000 Bank of Boston Corp.................................. 336,000
30,000 Bank of New York Co., Inc............................ 900,000
------------
1,236,000
------------
BEVERAGES - 1.09%
53,100 Coca-Cola Enterprises Inc............................ 1,108,463
6,600 Robert Mondavi Corp. - Class A(a).................... 84,562
------------
1,193,025
------------
CHEMICALS - 1.94%
6,200 Dow Chemical Co...................................... 386,725
12,000 Geon Co.............................................. 318,000
12,000 Imperial Chemical Industries PLC..................... 559,500
1,800 Shanghai Petrochemical Co., Ltd...................... 44,100
14,200 Sterling Chemicals, Inc.(a).......................... 161,525
12,000 Terra Industries, Inc................................ 136,500
20,000 Union Carbide Corp................................... 510,000
------------
2,116,350
------------
CHEMICALS-SPECIALTY - 2.29%
6,000 Arco Chemical Co..................................... 253,500
9,000 Cytec Industries Inc.(a)............................. 342,000
16,800 IMC Global, Inc...................................... 766,500
15,000 Morton International, Inc............................ 420,000
16,000 OM Group Inc......................................... 360,000
18,000 Praxair, Inc......................................... 362,250
------------
2,504,250
------------
COMPUTER MAINFRAMES - 2.37%
24,000 Amdahl Corp.(a)...................................... 246,000
30,000 International Business Machines Corp................. 2,163,750
11,400 Sequent Computer Systems, Inc.(a).................... 183,825
------------
2,593,575
------------
COMPUTER MINIS/PCS - 2.55%
15,000 Apple Computer, Inc.................................. 605,625
12,000 Dell Computer Corp.(a)............................... 511,500
11,600 Gateway 2000, Inc.(a)................................ 242,150
6,000 Hewlett-Packard Co................................... 603,000
25,000 Sun Microsystems, Inc.(a)............................ 818,750
------------
2,781,025
------------
</TABLE>
FS-96
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
---------- ------
<C> <S> <C>
COMPUTER NETWORKING - 1.69%
24,000 Belden Inc........................................... $ 528,000
19,200 Cisco Systems, Inc.(a)............................... 640,800
17,200 Comverse Technology, Inc............................. 212,850
25,000 Madge N.V.(a)........................................ 328,125
5,000 Standard Microsystems Corp.(a)....................... 140,000
------------
1,849,775
------------
COMPUTER PERIPHERALS - 2.55%
30,000 Adaptec, Inc.(a)..................................... 821,250
18,000 EMC Corp.(a)......................................... 335,250
3,600 Komag, Inc.(a)....................................... 84,150
8,900 Read-Rite Corp. - Class A(a)......................... 134,613
21,000 Seagate Technology(a)................................ 532,875
18,000 U.S. Robotics, Inc.(a)............................... 873,000
------------
2,781,138
------------
COMPUTER SOFTWARE & SERVICES - 3.51%
12,400 Ameridata Technologies, Inc.(a)...................... 114,700
9,900 Bay Networks, Inc.(a)................................ 290,812
7,000 Ceridian Corp.(a).................................... 206,500
12,000 Computer Associates International, Inc............... 598,500
15,000 Electronics for Imaging, Inc.(a)..................... 498,750
30,000 Intergraph Corp.(a).................................. 303,750
10,300 National Data Corp................................... 267,800
22,200 Network General Corp.(a)............................. 527,250
5,000 Silicon Graphics Inc.(a)............................. 156,250
12,000 Sterling Software, Inc.(a)........................... 429,000
19,300 S3, Inc.(a).......................................... 320,863
8,700 Wang Laboratories, Inc.(a)........................... 120,712
------------
3,834,887
------------
CONGLOMERATES - 1.49%
10,000 Allied Products Corp.(a)............................. 162,500
30,000 Corning, Inc......................................... 937,500
11,000 Tyco Laboratories, Inc............................... 532,125
------------
1,632,125
------------
CONTAINERS - 1.09%
15,000 Ball Corp............................................ 457,500
11,000 Crown Cork & Seal Co., Inc.(a)....................... 444,125
11,300 Stone Container Corp.(a)............................. 192,100
5,000 U.S. Can Corp.(a).................................... 98,125
------------
1,191,850
------------
COSMETICS AND TOILETRIES - 0.41%
2,000 Alberto-Culver Co. - Class A......................... 48,000
1,300 Alberto-Culver Co. - Class B......................... 35,425
12,000 Helene Curtis Industries, Inc........................ 367,500
------------
450,925
------------
</TABLE>
FS-97
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
---------- ------
<C> <S> <C>
ELECTRONIC COMPONENTS - 6.81%
12,000 Elsag Bailey Process Automation N.V.(a).............. $ 312,000
18,000 Harman International Industries, Inc................. 657,000
30,000 Itel Corp.(a)........................................ 1,053,750
11,000 Oak Industries, Inc.(a).............................. 257,125
110,000 Philips N.V. ADR(a).................................. 3,465,000
24,000 Raychem Corp......................................... 915,000
3,000 Tektronix, Inc....................................... 100,125
21,000 Teradyne Inc.(a)..................................... 682,500
------------
7,442,500
------------
ELECTRONIC/PC DISTRIBUTORS - 1.66%
30,000 Arrow Electronics, Inc.(a)........................... 1,106,250
17,000 Avnet, Inc........................................... 629,000
4,000 Wyle Laboratories.................................... 82,000
------------
1,817,250
------------
FINANCE - ASSET MANAGEMENT - 0.18%
4,000 XTRA Corp............................................ 198,500
------------
FINANCE - CONSUMER CREDIT - 3.28%
18,000 ADVANTA Corp. - Class B.............................. 522,000
10,000 CMAC Investment Corp................................. 316,250
24,000 First USA, Inc....................................... 828,000
10,000 Green Tree Acceptance Corp........................... 316,250
13,000 Household International, Inc......................... 528,125
42,000 MBNA Corp............................................ 1,071,000
------------
3,581,625
------------
FOOD/PROCESSING - 1.84%
42,000 Archer Daniels Midland Co............................ 845,250
24,000 Hudson Foods, Inc. - Class A......................... 633,000
12,000 Pioneer Hi-Bred International, Inc................... 438,000
4,200 Ralcorp Holdings, Inc.(a)............................ 99,225
------------
2,015,475
------------
GAMING - 0.45%
22,000 Mirage Resort, Inc.(a)............................... 492,250
------------
HOMEBUILDING - 0.02%
1,800 Beazer Homes USA Inc.(a)............................. 25,200
------------
HOTELS/MOTELS - 0.31%
11,300 Marriott International, Inc.......................... 341,825
------------
INSURANCE - MULTI-LINE PROPERTY - 1.20%
11,000 Aetna Life & Casualty Co............................. 544,500
5,000 CIGNA Corp........................................... 338,125
9,000 St. Paul Companies, Inc.............................. 429,750
------------
1,312,375
------------
MACHINE TOOLS - 0.22%
10,000 Applied Power Inc.................................... 243,750
------------
MACHINERY - HEAVY - 1.04%
7,800 Briggs and Stratton Corp............................. 276,900
36,000 Case Corp............................................ 814,500
2,100 Commercial Intertech Corp............................ 39,900
------------
1,131,300
------------
</TABLE>
FS-98
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
---------- ------
<C> <S> <C>
MEDICAL SERVICES - 5.44%
12,000 Abbey Healthcare Group, Inc.(a)...................... $ 306,000
25,000 Beverly Enterprises, Inc.(a)......................... 353,125
6,000 Charter Medical Corp.(a)............................. 93,000
12,000 Columbia Healthcare Corp............................. 481,500
7,000 Foundation Health Corp.(a)........................... 206,500
20,000 Health Care and Retirement Corp.(a).................. 585,000
8,000 Healthcare Compare Corp.(a).......................... 278,000
21,000 Healthtrust, Inc.--The Hospital Co.(a)............... 735,000
10,000 Humana Inc.(a)....................................... 228,750
14,400 Integrated Health Services, Inc...................... 540,000
8,000 Living Centers of America(a)......................... 288,000
9,300 Manor Care, Inc...................................... 281,325
6,600 Mid-Atlantic Medical Services, Inc................... 156,750
10,000 Orthofix International N.V.(a)....................... 138,750
5,000 Sierra Health Services, Inc.(a)...................... 151,875
16,000 U.S. Healthcare, Inc................................. 732,000
12,000 United Wisconsin Services, Inc....................... 390,000
------------
5,945,575
------------
MEDICAL - DRUGS - 0.66%
31,500 Bergen Brunswig Corp................................. 720,563
------------
MEDICAL INSTRUMENTS/PRODUCTS - 0.22%
17,300 Amsco International, Inc.(a)......................... 237,875
------------
METALS - 1.52%
18,000 Alumax, Inc.(a)...................................... 456,750
6,900 Mueller Industries, Inc.(a).......................... 205,275
20,000 Olympic Steel, Inc.(a)............................... 220,000
24,000 Timken Co. (The)..................................... 783,000
------------
1,665,025
------------
MINING - 0.12%
12,000 Zeigler Coal Holdings Co............................. 126,000
------------
OFFICE AUTOMATION - 0.90%
9,000 Xerox Corp........................................... 984,375
------------
OFFICE PRODUCTS - 0.13%
6,000 Reynolds & Reynolds Co............................... 142,500
------------
OIL AND GAS - 2.08%
5,000 Atlantic Richfield Company........................... 532,500
7,000 Mobil Corp........................................... 604,625
5,000 Royal Dutch Petroleum Co............................. 559,375
22,000 Unocal Corp.......................................... 574,750
------------
2,271,250
------------
OIL EQUIPMENT AND SUPPLIES - 0.31%
13,000 McDermott International, Inc......................... 334,750
------------
PAPER AND FOREST PRODUCTS - 2.38%
14,000 Boise Cascade Corp................................... 378,000
15,000 Champion International Corp.......................... 573,750
12,000 Federal Paper Board Co., Inc......................... 336,000
10,000 Georgia-Pacific Corp................................. 720,000
12,000 Mead Corp. (The)..................................... 598,500
------------
2,606,250
------------
</TABLE>
FS-99
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
---------- ------
<C> <S> <C>
POLLUTION CONTROL - 0.08%
16,300 Allwaste, Inc.(a).................................... $ 85,575
------------
PUBLISHING - 0.90%
15,000 American Publishing Co............................... 180,000
5,200 Banta Corp........................................... 156,000
6,000 Central Newspapers, Inc.............................. 156,750
18,000 Scripps (E.W.) Co.................................... 495,000
------------
987,750
------------
REAL ESTATE - 0.63%
1,800 Del Webb Corp........................................ 33,300
25,000 Hillhaven Corp. (The)(a)............................. 650,000
------------
683,300
------------
RETAIL - FOOD AND DRUG - 0.94%
15,000 Eckerd Corp.(a)...................................... 393,750
14,000 Revco D.S., Inc.(a).................................. 311,500
10,000 Safeway Inc.(a)...................................... 321,250
------------
1,026,500
------------
RETAIL - STORES - 1.32%
12,000 Carson Pirie Scott & Co.(a).......................... 214,500
11,000 Dayton-Hudson Corp................................... 754,875
2,000 Maxim Group, Inc.(a)................................. 27,750
25,400 Waban Inc.(a)........................................ 441,325
------------
1,438,450
------------
SEMICONDUCTORS - 8.80%
36,000 Analog Devices, Inc.(a).............................. 774,000
9,000 Applied Materials, Inc.(a)........................... 346,500
18,000 Cypress Semiconductor Corp.(a)....................... 423,000
15,000 Exar Corp.(a)........................................ 307,500
12,000 Intel Corp........................................... 832,500
12,400 Kemet Corp.(a)....................................... 353,400
13,500 Lam Research Corp.(a)................................ 506,250
9,000 LSI Logic Corp.(a)................................... 382,500
18,000 Micron Technology, Inc............................... 794,250
10,000 Motorola, Inc........................................ 591,250
30,000 National Semiconductor Corp.(a)...................... 547,500
11,800 SGS-Thomson Microelectronics N.V.(a)................. 293,525
50,200 Texas Instruments Inc................................ 3,463,800
------------
9,615,975
------------
SHOES AND RELATED APPAREL - 0.21%
5,900 Reebok International, Ltd............................ 224,200
------------
STEEL - 0.41%
32,000 LTV Corp.(a)......................................... 448,000
------------
TELECOMMUNICATIONS - 3.38%
6,000 Airtouch Communications, Inc.(a)..................... 165,000
24,000 Century Telephone Enterprises, Inc. ................. 756,000
14,000 DSC Communications Corp.(a).......................... 449,750
11,000 Nokia Corp. ADR(a)................................... 804,375
12,000 Northern Telecom Ltd. ............................... 409,500
24,000 Telephone & Data Systems, Inc. ...................... 1,050,000
1,800 US Cellular Corp.(a)................................. 53,550
------------
3,688,175
------------
</TABLE>
FS-100
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
---------- ------
<C> <S> <C>
TEXTILES - 0.27%
8,000 Fieldcrest Cannon, Inc.(a)........................ $ 181,000
10,000 Quaker Fabric Corp.(a)............................ 111,250
------------
292,250
------------
TOBACCO - 2.44%
30,000 Philip Morris Companies, Inc. .................... 1,788,750
150,000 RJR Nabisco Holdings, Inc.(a)..................... 881,250
------------
2,670,000
------------
Total Common Stocks............................... 83,705,413
------------
PREFERRED STOCKS - 0.24%
OIL AND GAS - 0.24%
11,000 Atlantic Richfield Co. - $.2275 Conv. Pfd. DECS... 258,500
------------
<CAPTION>
PRINCIPAL
AMOUNT
----------
<C> <S> <C>
U.S. TREASURY SECURITIES - 20.84%
U.S. Treasury Bills - 20.84%(b)
$4,000,000 5.40%, 02/23/95................................... 3,987,640
2,620,000 5.05%, 03/23/95................................... 2,600,245
16,350,000(c) 5.78%, 04/06/95................................... 16,184,538
------------
Total U.S. Treasury Bills......................... 22,772,423
------------
REPURCHASE AGREEMENTS - 1.81%(d)
976,313 Goldman, Sachs & Co.
5.80%, 02/01/95(e)............................... 976,313
1,000,000 Swiss Bank Government Securities, Inc.
5.80%, 02/01/95(f)............................... 1,000,000
------------
Total Repurchase Agreements....................... 1,976,313
------------
TOTAL INVESTMENTS - 99.50%........................ 108,712,649
OTHER ASSETS LESS LIABILITIES - 0.50%............. 544,819
------------
NET ASSETS - 100.00%.............................. $109,257,467
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Non-income producing security.
(b) U.S. Treasury Bills are traded on a
discount basis. In such cases the interest
rate shown represents the rate of discount
paid or received at the time of purchase by
the Fund.
(c) A portion of the principal amount was
pledged as collateral for open futures
contracts at 01/31/95. See Note 6.
(d) Collateral on repurchase agreements,
including the Fund's pro-rata interest in
joint repurchase agreements, is taken into
possession by the Fund upon entering into
the repurchase agreement. The collateral is
marked to market daily to ensure its market
value as being 102% of the sales price of
the repurchase agreement.
(e) Joint repurchase agreement entered into
01/31/95 with a maturing value of
$550,371,439. Collateralized by
$546,482,000 U.S. Treasury obligations,
4.25% to 10.375% due 02/15/95 to 05/15/21.
The aggregate market value of collateral at
01/31/95 was $561,314,868. The Fund's pro-
rata interest in the collateral was
$995,887.
(f) Joint repurchase agreement entered into
01/31/95 with a maturing value of
$160,025,778. Collateralized by
$166,659,000 U.S. Treasury Bills, due
02/16/95 to 01/11/96. The aggregate market
value of collateral at 01/31/95 was
$163,218,410. The Fund's pro-rata interest
in the collateral was $1,020,115.
See Notes to Financial Statements.
</TABLE>
FS-101
<PAGE>
<TABLE>
<S> <C>
AIM V.I. VALUE
FUND
STATEMENT OF
ASSETS AND
LIABILITIES
January 31, 1995
ASSETS:
Investments, at value (cost $105,003,408)......................... $108,712,649
Receivables for:
Investments sold................................................ 6,305,674
Capital stock sold.............................................. 99,132
Dividends and interest.......................................... 75,369
Variation margin................................................ 112,500
Investment for deferred compensation plan......................... 2,139
Organizational costs, net......................................... 9,389
Other assets...................................................... 1,940
------------
Total assets.................................................. 115,318,792
------------
LIABILITIES:
Payables for:
Deferred compensation........................................... 2,139
Investments purchased........................................... 5,965,480
Accrued advisory fees............................................. 59,596
Accrued directors' fees........................................... 1,174
Accrued administrative service fees............................... 432
Accrued operating expenses........................................ 32,504
------------
Total liabilities............................................. 6,061,325
------------
Net assets applicable to shares outstanding....................... $109,257,467
============
Capital shares, $.001 par value per share:
Authorized...................................................... 250,000,000
============
Outstanding..................................................... 9,234,449
============
Net asset value, offering and redemption price per share.......... $ 11.83
============
See Notes to Financial Statements.
</TABLE>
FS-102
<PAGE>
<TABLE>
<C> <S> <C>
AIM V.I. VALUE INVESTMENT INCOME:
FUND Interest....................................................... $ 844,956
STATEMENT OF Dividends...................................................... 651,108
OPERATIONS -----------
For the year ended Total investment income....................................... 1,496,064
January 31, 1995 -----------
EXPENSES:
Advisory fees.................................................. 489,030
Custodian fees................................................. 38,796
Administrative service fees.................................... 21,568
Directors' fees and expenses................................... 4,603
Professional fees.............................................. 18,683
Printing expenses.............................................. 12,071
Filing fees.................................................... 24,225
Organizational costs........................................... 2,903
Other.......................................................... 1,781
-----------
Total expenses................................................ 613,660
-----------
Net investment income............................................ 882,404
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT SECURITIES AND
FUTURES CONTRACTS:
Net realized gain (loss) on:
Investment securities.......................................... (1,755,088)
Futures contracts.............................................. (398,345)
-----------
(2,153,433)
-----------
Unrealized appreciation of:
Investment securities.......................................... 253,253
Futures contracts.............................................. 642,239
-----------
895,492
-----------
Net gain (loss) on investment securities and futures contracts... (1,257,941)
-----------
Net increase (decrease) in net assets resulting from operations.. $ (375,537)
===========
See Notes to Financial Statements.
</TABLE>
FS-103
<PAGE>
<TABLE>
<CAPTION>
<C> <S> <C> <C>
AIM V.I. VALUE 1995 1994
FUND ------------ -----------
STATEMENT OPERATIONS:
OF CHANGES Net investment income............................. $ 882,404 $ 46,200
IN NET ASSETS Net realized gain (loss) on sales of investment
For the year ended securities and futures contracts ................ (2,153,433) (217,496)
January 31, 1995 Unrealized appreciation of investment securities
and the period and futures contracts............................ 895,492 3,455,988
May 5, 1993 (date operations ------------ -----------
commenced) through Net increase (decrease) in net assets resulting
January 31, 1994 from operations................................. (375,537) 3,284,692
Net increase from capital stock transactions...... 72,151,126 35,017,967
Distributions to shareholders from net investment
income........................................... (772,749) (48,032)
------------ -----------
Net increase in net assets....................... 71,002,840 38,254,627
NET ASSETS:
Beginning of period............................... 38,254,627 --
------------ -----------
End of period..................................... $109,257,467 $38,254,627
============ ===========
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in)........ $107,169,093 $35,017,967
Undistributed net investment income............... 107,823 (1,832)
Undistributed net realized gain (loss) on sales of
investment securities and futures contracts ..... (2,370,929) (217,496)
Unrealized appreciation of investment securities
and futures contracts............................ 4,351,480 3,455,988
------------ -----------
$109,257,467 $38,254,627
============ ===========
See Notes to Financial Statements.
</TABLE>
FS-104
<PAGE>
<TABLE>
<C> <S>
AIM V.I. VALUE NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
FUND AIM Variable Insurance Funds, Inc. (the "Company"), is a Maryland corporation
NOTES TO organized on January 22, 1993, and is registered under the Investment Company
FINANCIAL Act of 1940 (the "1940 Act"), as amended, as an open-end, series, management
STATEMENTS investment company consisting of nine portfolios: AIM V.I. Capital Appreciation
January 31, 1995 Fund, AIM V.I. Diversified Income Fund, AIM V.I. Government Securities Fund,
AIM V.I. Growth Fund, AIM V.I. Growth and Income Fund, AIM V.I. International
Equity Fund, AIM V.I. Money Market Fund, AIM V.I. Utilities Fund and AIM V.I.
Value Fund (the "Value Fund") (each, a "Fund", collectively, the "Funds").
Matters affecting each Fund are voted on exclusively by the shareholders of
such Fund. The assets, liabilities and operations of each Fund are accounted
for separately. Information presented in these financial statements pertains
only to the Value Fund. Shares of the Funds are sold only to insurance company
separate accounts to fund the benefits of variable annuity contracts.
The following is a summary of the significant accounting policies followed by
the Value Fund in the presentation of its financial statements.
A. Security Valuations - A security listed or traded on an exchange is valued
at its last sales price on the exchange where the security is principally
traded, or lacking any sales on a particular day, the security is valued at
the mean between the closing bid and asked prices on that day. Each security
traded in the over-the-counter market (but not including securities reported
on the NASDAQ National Market System) is valued at the mean between the last
bid and asked prices based upon quotes furnished by market makers for such
securities. Each security reported on the NASDAQ National Market System is
valued at the last sales price on the valuation date. Securities for which
market quotations are not readily available are valued at fair value as
determined in good faith by or under the supervision of the Fund's officers
in a manner specifically authorized by the Board of Directors. Short-term
obligations having 60 days or less to maturity are valued at amortized cost
which approximates market value.
B. Securities Transactions, Investment Income and Distributions - Securities
transactions are accounted for on a trade date basis. Interest income is
recorded as earned from settlement date and is recorded on the accrual
basis. Dividend income and distributions to shareholders are recorded on the
ex-dividend date. It is the policy of the Value Fund not to amortize market
discounts and premiums on bonds for financial reporting purposes. Realized
gains or losses from securities transactions are recorded on the identified
cost basis.
C. Federal Income Taxes - For federal income tax purposes, each Fund in the
Company is taxed as a separate entity. It is the Value Fund's policy to
continue to comply with the requirements of the Internal Revenue Code
applicable to regulated investment companies and to distribute all of its
taxable income and capital gains to its shareholders. Therefore, no
provision for federal income taxes is recorded in the financial statements.
Value Fund had capital loss carryforwards (which may be carried forward to
offset future taxable capital gains, if any) of $1,615,057, which expires,
if not previously utilized, in the year 2003.
D. Expenses - Operating expenses directly attributable to a Fund are charged to
that Fund's operations. Expenses of the Company which are not directly
attributable to the operations of any Fund of the Company are allocated to
the Funds to which the expense relates based upon methods approved by the
Board of Directors of the Company.
E. Organization Costs - Organizational costs for the Value Fund of $14,461, are
being amortized over five years.
F. Stock Index Futures Contracts - The Value Fund may purchase or sell stock
index futures contracts as a hedge against changes in market conditions.
Initial margin deposits required upon entering into futures contracts are
satisfied by the segregation of specific securities or cash, and/or by
securing a standby letter of credit from a major commercial bank, as
collateral, for the account of the broker (the Value Fund's agent in
acquiring the futures position). During the period the futures contract is
open, changes in the value of the contract are recognized as unrealized
gains or losses by "marking to market" on a daily basis to reflect the
market value of the contract at the end of each day's trading. Variation
margin payments are made or received depending upon whether unrealized gains
or losses are incurred. When the contract is closed, the Value Fund records
a realized gain or loss equal to the difference between the proceeds from
(or cost of) the closing transaction and the Value Fund's basis in the
contract. Risks include the possibility of an illiquid market and the change
in the value of the contract may not correlate with changes in the
securities being hedged.
</TABLE>
FS-105
<PAGE>
<TABLE>
<C> <S>
NOTE 2 - INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Value Fund pays an advisory fee to AIM at an annual rate of
0.65% of the first $250 million of the Value Fund's average daily net assets,
plus 0.60% of the Value Fund's average daily net assets in excess of $250
million.
Pursuant to a master administrative services agreement between the Company and
AIM, with respect to the Value Fund, the Company has agreed to reimburse
certain administrative costs incurred in providing accounting services to the
Fund. During the year ended January 31, 1995, AIM was reimbursed $21,568 for
such services.
The Company has entered into a master distribution agreement with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Value Fund.
Certain officers and directors of the Company are officers of AIM and AIM
Distributors.
The Value Fund incurred legal fees of $2,867 for services rendered by Reid &
Priest as counsel to the Company's directors. In September 1994, the firm of
Kramer, Levin, Naftalis, Nessen, Kamin & Frankel was appointed counsel to the
Directors. A member of that firm is a director of the Company and, prior to
September 1994, was a member of Reid & Priest.
NOTE 3 - DIRECTORS' FEES
Directors' fees represent remuneration paid or accrued to each director who is
not an "interested person" of the Company. The Company may invest a directors'
fees, if so elected by such director, in mutual fund shares in accordance with
a deferred compensation plan.
NOTE 4 - INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term
securities) purchased and sold during the year ended January 31, 1995 was
$135,337,086 and $82,108,876, respectively.
The amount of unrealized appreciation (depreciation) of investment securities
on a tax basis as of January 31, 1995 is as follows:
</TABLE>
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities......... $ 6,007,393
Aggregate unrealized (depreciation) of investment securities....... (2,298,151)
-----------
Net unrealized appreciation of investment securities............... $ 3,709,242
===========
</TABLE>
<TABLE>
<C> <S>
Cost of investments for tax purposes is $105,003,407.
NOTE 5 - CAPITAL STOCK
Changes in capital stock outstanding during the years ended January 31, 1995
and 1994 were as follows:
</TABLE>
<TABLE>
<CAPTION>
1995 1994
---------------------- ----------------------
Shares Amount Shares Amount
--------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Sold........................... 6,208,374 $73,589,964 3,149,054 $35,092,490
Issued as reinvestment of
distributions................. 67,137 772,749 4,382 48,032
Reacquired..................... (183,633) (2,211,587) (10,865) (122,555)
--------- ----------- --------- -----------
6,091,878 $72,151,126 3,142,571 $35,017,967
========= =========== ========= ===========
</TABLE>
<TABLE>
<C> <S>
NOTE 6 - OPEN FUTURES CONTRACTS
On January 31, 1995, $1,114,000 principal amount of U. S. Treasury Bills were
pledged as collateral to cover margin requirements for open futures contracts:
Open futures contracts at January 31, 1995 were as follows:
</TABLE>
<TABLE>
<CAPTION>
UNREALIZED
CONTRACT NO. OF CONTRACTS/MONTH/COMMITMENT APPRECIATION
<S> <C> <C>
S&P 500 Index 100 contracts/March/Buy $642,239
-------------------------------------------------------------
</TABLE>
FS-106
<PAGE>
<TABLE>
<C> <S>
NOTE 7 - FINANCIAL HIGHLIGHTS
Shown below are the condensed financial highlights for a share outstanding of
the Value Fund during the year ended January 31, 1995, and the period May 5,
1993 (date operations commenced) through January 31, 1994.
</TABLE>
<TABLE>
<CAPTION>
1995 1994
-------- -------
<S> <C> <C>
Net asset value, beginning of period.................. $ 12.17 $ 10.00
-------- -------
Income from investment operations:
Net investment income............................... 0.10 0.02
Net gains (losses) on securities (both realized and
unrealized)........................................ (0.35) 2.17
-------- -------
Total from investment operations................... (0.25) 2.19
-------- -------
Less distributions:
Dividends from net investment income................ (0.09) (0.02)
-------- -------
Net asset value, end of period........................ $ 11.83 $ 12.17
======== =======
Total return(a)....................................... (2.03)% 21.94%
======== =======
Ratios/supplemental data:
Net assets, end of period (000s omitted).............. $109,257 $38,255
======== =======
Ratio of expenses to average net assets............... 0.82%(b) 1.00%(c)
======== =======
Ratio of net investment income to average net assets.. 1.17%(b) 0.51%(c)
======== =======
Portfolio turnover rate............................... 143% 87%
======== =======
------
(a) Total returns for periods less than one
year are not annualized.
(b) Ratios are based on average net assets of
$75,235,391.
(c) After waiver of advisory fee and/or expense
reimbursement. Annualized ratios of
expenses and net investment income (loss)
to average net assets prior to waiver of
advisory fees and/or expense reimbursements
were 1.35% and 0.16%, respectively for
1994. Ratios are based on average net
assets of $12,119,783.
</TABLE>
FS-107
