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Previous: CORPORATE INCOME FUND MON PYMT SER 316 DEFINED ASSET FDS, 485BPOS, 1996-03-06 |
Next: MICROCAP FUND INC, N-23C-1, 1996-03-06 |
<PAGE>
AIM V.I. CAPITAL As stocks posted record gains, AIM V.I. Capital
APPRECIATION FUND Appreciation Fund gained 37.38% during the 11 months
MANAGEMENT'S ended December 31, 1995. Because the Fund changed its
DISCUSSION fiscal year-end from January 31 to December 31, all
AND ANALYSIS performance figures in this report represent the 11-month
period 1/31/95-12/31/95.
Healthy corporate profits, mild inflation, and moderate
growth in the economy mixed the powerful recipe that
launched the strongest rally in stocks in two decades.
The popular Dow Jones Industrial Average (DJIA) breached
two milestones--sailing past 4000 in February and 5000 in
November--shattering 69 record levels in its wake by
year-end. The DJIA measures the performance of 30 large
capitalization companies.
Small-capitalization company stocks thrived as corporate
profits soared, particularly for technology companies,
which posted their strongest year in recent memory. The
National Association of Securities Dealers Automated
Quotations (NASDAQ) Index, which tracks the performance
of small- and medium-size company stocks, posted record
performance during the year with a gain of 39.92%.
The Fund was dynamic and broadly diversified during the
reporting period, with 251 holdings as of December 31,
1995. The Fund primarily emphasized technology, medical
services, and retail sectors, with the most significant
weighting in semiconductor producers, computer software
publishers, and medical service providers. The Fund's top
five equity holdings included:
. Cisco Systems, Inc.
. 3Com Corp.
. Healthsouth Corp.
. MBNA Corp.
. Oracle Systems Corp.
Of course, the Fund's composition is subject to change
and there is no guarantee the Fund will continue to hold
any particular security.
<TABLE>
<CAPTION>
---------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
1995* Inception**
AIM V.I. Capital Appreciation Fund 37.38% 21.04%
*1/31/95--12/31/95 (not annualized) **Since Inception 5/5/93
---------------------------------------------------------------------------
AIM V.I. Capital Lipper Capital
Appreciation Fund S&P 500 Appreciation Fund Index
------------------ -------- -------------------------
<S> <C> <C> <C>
GROWTH OF A 5/5/93 $10,000 $10,000 $10,000
HYPOTHETICAL 10,320 10,128 10,494
$10,000 INVESTMENT 10,990 10,504 11,029
11,370 10,472 11,244
12/93 11,949 10,714 11,533
11,819 10,311 11,125
11,099 10,355 10,648
12,239 10,650 11,413
12/94 12,248 10,859 11,249
13,342 11,913 12,034
15,099 13,047 13,164
17,257 14,081 14,462
12/95 16,618 14,926 14,712
Past performance cannot guarantee comparable future results.
---------------------------------------------------------------------------
</TABLE>
The performance figures shown represent the AIM V.I.
Capital Appreciation Fund and are not intended to reflect
actual annuity values, and do not reflect charges at the
separate account level which, if applied, would lower the
performance results. The Fund's performance figures are
historical and refect reinvestment of all distributions,
and changes in the net asset value. The Fund's investment
return and principal value will fluctuate so that Fund
shares, when redeemed, may be worth more or less than
their original cost. Source: Towers Data Systems HYPO(R).
The Standard & Poor's Composite Index of 500 Stocks (S&P
500) is a group of unmanaged securities widely regarded
by investors to be representative of the stock market in
general. The unmanaged Lipper Capital Appreciation Fund
Index represents an average of the performance of the 30
largest capital appreciation mutual funds. Source: Towers
Data Systems HYPO(R). Results for the Lipper Index are
for the period 4/30/93 through 12/31/95.
An investment cannot be made in the indexes listed.
Index results include reinvested dividends.
AIM V.I. CAPITAL APPRECIATION FUND
14
<PAGE>
<TABLE>
<CAPTION>
<C> <C> <S> <C>
AIM V.I. CAPITAL MARKET
APPRECIATION FUND SHARES VALUE
SCHEDULE OF ------ ------
INVESTMENTS COMMON STOCKS - 85.08%
December 31, 1995
ADVERTISING/BROADCASTING - 0.31%
17,500 Infinity Broadcasting Corp. - Class A(a)................. $ 651,875
-----------
AUTOMOBILE/TRUCK PARTS & TIRES - 0.34%
11,400 Echlin Inc. ............................................. 416,100
15,400 Mark IV Industries, Inc. ................................ 304,150
-----------
720,250
-----------
BEVERAGES - 0.13%
8,600 Canandaigua Wine Co., Inc. - Class A(a).................. 280,575
-----------
BUSINESS SERVICES - 1.10%
6,800 Equifax, Inc. ........................................... 145,350
18,400 Healthcare COMPARE Corp.(a).............................. 800,400
2,000 Interim Services Inc.(a)................................. 69,500
10,000 Manpower Inc. ........................................... 281,250
18,700 Olsten Corp. ............................................ 738,650
11,126 Value Health, Inc(a)..................................... 305,965
-----------
2,341,115
-----------
CHEMICALS (SPECIALTY) - 0.40%
25,200 Airgas Inc.(a)........................................... 837,900
-----------
COMPUTER MINI/PCS - 2.68%
12,500 CDW Computer Centers Inc.(a)............................. 506,250
28,300 COMPAQ Computer Corp.(a)................................. 1,358,400
57,600 Dell Computer Corp.(a)................................... 1,994,400
40,000 Sun Microsystems, Inc.(a)................................ 1,825,000
-----------
5,684,050
-----------
COMPUTER NETWORKING - 7.31%
13,000 ALANTEC Corp.(a)......................................... 757,250
14,700 Ascend Communications, Inc.(a)........................... 1,192,538
43,800 Bay Networks, Inc.(a).................................... 1,801,275
14,000 Cabletron Systems, Inc.(a)............................... 1,134,000
14,500 Cascade Communications Corp.(a).......................... 1,236,125
23,400 Cheyenne Software, Inc.(a)............................... 611,325
15,000 Cidco, Inc.(a)........................................... 382,500
31,900 Cisco Systems, Inc.(a)................................... 2,380,538
22,300 Fore Systems, Inc.(a).................................... 1,326,850
13,637 Madge N.V. .............................................. 610,256
16,600 Network Equipment Technologies, Inc.(a).................. 454,425
13,000 Newbridge Networks Corp.(a).............................. 537,875
13,900 Optical Data Systems, Inc.(a) ........................... 350,975
10,500 Sync Research, Inc.(a)................................... 475,125
48,400 3Com Corp.(a)............................................ 2,256,650
-----------
15,507,707
-----------
COMPUTER PERIPHERALS - 3.28%
20,000 Adaptec, Inc.(a)......................................... 820,000
17,850 Alliance Semiconductor Corp.(a).......................... 207,506
21,200 Cerner Corp.(a).......................................... 434,600
11,100 Digi International, Inc.(a).............................. 210,900
55,000 EMC Corp.(a)............................................. 845,625
6,900 Filenet Corp.(a)......................................... 324,300
6,500 Komag Inc.(a)............................................ 299,812
27,500 Microchip Technology, Inc.(a)............................ 1,003,750
</TABLE>
15
AIM V.I. CAPITAL APPRECIATION FUND
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMPUTER PERIPHERALS - (CONTINUED)
8,400 Oak Technology, Inc.(a).................................. $ 354,900
17,100 Read-Rite Corp.(a)....................................... 397,575
15,900 Seagate Technology, Inc.(a).............................. 755,250
14,800 U.S. Robotics Corp.(a)................................... 1,298,700
-----------
6,952,918
-----------
COMPUTER SOFTWARE & SERVICES - 11.97%
12,700 Adobe Systems, Inc....................................... 787,400
25,800 BMC Software, Inc.(a).................................... 1,102,950
20,800 Broderbund Software Inc.(a).............................. 1,263,600
33,700 Cadence Design Systems, Inc.(a).......................... 1,415,400
19,400 Ceridian Corp.(a)........................................ 800,250
27,000 Computer Associates International, Inc. ................. 1,535,625
55,200 Computervision Corp.(a).................................. 848,700
21,200 Corel Corp.(a)........................................... 275,600
5,400 Cycare Systems, Inc.(a).................................. 138,375
27,800 DST Systems, Inc.(a)..................................... 792,300
14,900 Electronic Arts, Inc.(a)................................. 389,262
11,100 Fiserv, Inc.(a).......................................... 333,000
17,900 FTP Software, Inc.(a).................................... 519,100
16,000 HBO & Co. ............................................... 1,226,000
9,800 Hyperion Software Corp.(a)............................... 208,250
5,500 IDX Systems Corp.(a)..................................... 191,125
32,400 Informix Corp.(a)........................................ 972,000
17,300 Microsoft Corp.(a)....................................... 1,518,075
15,200 Network General Corp.(a)................................. 507,300
48,850 Oracle Systems Corp.(a).................................. 2,070,019
19,500 Pairgain Technologies Inc.(a)............................ 1,067,625
27,900 Parametric Technology Corp.(a)........................... 1,855,350
6,200 Platinum Technology, Inc.(a)............................. 113,925
15,000 Policy Management Systems Corp.(a)....................... 714,375
12,300 Rational Software Corp.(a)............................... 275,212
24,300 SoftKey International Inc.(a)............................ 561,938
11,800 Sterling Software, Inc.(a)............................... 736,025
15,000 Sybase Inc.(a)........................................... 540,000
34,600 Symantec Corp.(a)........................................ 804,450
42,000 Synopsys, Inc.(a)........................................ 1,596,000
14,000 S3 Incorporated(a)....................................... 246,750
-----------
25,405,981
-----------
CONGLOMERATES - 0.24%
13,968 Tyco Laboratories, Inc. ................................. 497,610
-----------
CONSUMER NONDURABLES - 0.12%
6,400 Department 56, Inc.(a)................................... 245,600
-----------
COSMETICS & TOILETRIES - 0.44%
40,800 General Nutrition Co.(a)................................. 938,400
-----------
</TABLE>
16
AIM V.I. CAPITAL APPRECIATION FUND
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
ELECTRONIC COMPONENTS - 2.15%
4,000 Ametek Inc. ............................................. $ 75,000
16,000 Amphenol Corp.(a)........................................ 388,000
23,200 Anixter International Inc.(a)............................ 432,100
3,700 AVX Corp. ............................................... 98,050
9,150 Methode Electronics, Inc. ............................... 130,388
1,562 Molex Inc. .............................................. 49,594
3,906 Molex Inc. - Class A..................................... 119,621
3,750 Parker-Hannifin Corp. ................................... 128,437
4,800 Recoton Corp.(a)......................................... 90,000
20,000 Symbol Technologies, Inc.(a)............................. 790,000
12,500 Tektronix Inc. .......................................... 614,062
66,100 Teradyne Inc.(a)......................................... 1,652,500
-----------
4,567,752
-----------
ELECTRONIC/PC DISTRIBUTORS - 0.81%
17,000 Arrow Electronics, Inc.(a)............................... 733,125
22,200 Avnet, Inc. ............................................. 993,450
-----------
1,726,575
-----------
FINANCE (CONSUMER CREDIT) - 4.64%
12,900 ADVANTA Corp. - Class A.................................. 469,238
13,300 ADVANTA Corp. - Class B.................................. 508,725
36,200 Credit Acceptance Corp.(a) .............................. 751,150
17,300 First USA, Inc. ......................................... 767,687
43,500 Green Tree Financial Corp. .............................. 1,147,313
16,600 Household International, Inc. ........................... 981,475
56,700 MBNA Corp. .............................................. 2,090,812
32,500 Medaphis Corp.(a)........................................ 1,202,500
111,800 Mercury Finance Co. ..................................... 1,481,350
16,900 United Companies Financial Corp. ........................ 445,737
-----------
9,845,987
-----------
FUNERAL SERVICES - 1.39%
27,300 Loewen Group, Inc. ...................................... 691,031
40,200 Service Corp. International.............................. 1,768,800
13,500 Stewart Enterprises Inc. - Class A....................... 499,500
-----------
2,959,331
-----------
GAMING - 0.61%
26,000 Mirage Resorts, Inc.(a).................................. 897,000
14,100 Players International, Inc.(a)........................... 150,694
11,900 Trump Hotels & Casino Resort(a).......................... 255,850
-----------
1,303,544
-----------
HOMEBUILDING - 0.26%
21,875 Clayton Homes, Inc....................................... 467,578
2,000 Oakwood Homes Corp....................................... 76,750
-----------
544,328
-----------
HOTEL/MOTELS - 0.84%
3,500 Doubletree Corp.(a)...................................... 91,875
13,000 Hospitality Franchise System, Inc.(a).................... 1,062,750
20,000 La Quinta Motor Inns, Inc. .............................. 547,500
3,750 Promus Hotel Corp.(a).................................... 83,437
-----------
1,785,562
-----------
INSURANCE (LIFE & HEALTH) - 0.09%
6,000 Equitable of Iowa Companies.............................. 192,750
-----------
</TABLE>
17
AIM V.I. CAPITAL APPRECIATION FUND
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
LEISURE & RECREATION - 0.20%
13,500 Mattel, Inc. ............................................ $ 415,125
-----------
MACHINE TOOLS - 0.12%
8,000 Kennametal Inc. ......................................... 254,000
-----------
MACHINERY (HEAVY) - 0.07%
2,800 AGCO Corp. .............................................. 142,800
-----------
MACHINERY (MISCELLANEOUS) - 0.38%
15,600 Thermo Electron Corp.(a)................................. 811,200
-----------
MEDICAL (DRUGS) - 1.59%
34,850 Cardinal Health, Inc. ................................... 1,908,038
4,500 Elan Corp. PLC-ADR(a).................................... 218,812
25,700 Mylan Laboratories, Inc. ................................ 603,950
5,300 Teva Pharmaceutical Industries Ltd.-ADR.................. 245,788
8,000 Watson Pharmaceuticals Inc.(a)........................... 392,000
-----------
3,368,588
-----------
MEDICAL INSTRUMENTS/PRODUCTS - 2.72%
26,300 Biomet, Inc.(a).......................................... 470,113
26,800 Boston Scientific Corp.(a)............................... 1,313,200
9,600 Heart Technology, Inc.(a)................................ 315,600
13,100 Idexx Laboratories Inc.(a)............................... 615,700
16,200 Invacare Corp. .......................................... 409,050
10,900 Medtronic, Inc. ......................................... 609,037
12,000 Nellcor Inc.(a).......................................... 696,000
27,600 St. Jude Medical, Inc.(a)................................ 1,186,800
2,800 Stryker Corp. ........................................... 147,000
-----------
5,762,500
-----------
MEDICAL SERVICES -10.92%
10,800 American Medical Response(a)............................. 351,000
43,900 Apria Healthcare Group Inc.(a)........................... 1,240,175
29,880 Columbia\HCA Healthcare Corp. ........................... 1,516,410
24,400 Community Health Systems Inc.(a)......................... 869,250
27,500 Foundation Health Corp.(a)............................... 1,182,500
17,200 Genesis Health Ventures, Inc.(a)......................... 627,800
44,600 Health Care & Retirement Corp.(a)........................ 1,561,000
45,675 Health Management Associates, Inc.(a).................... 1,193,259
39,800 Healthsource, Inc.(a).................................... 1,432,800
73,100 Healthsouth Corp.(a)..................................... 2,129,038
32,700 Horizon Healthcare Corp.(a).............................. 825,675
25,200 Integrated Health Services, Inc. ........................ 630,000
33,900 Lincare Holdings, Inc.(a)................................ 847,500
14,800 Living Centers of America Inc.(a)........................ 518,000
37,300 Manor Care, Inc. ........................................ 1,305,500
16,000 Omnicare, Inc. .......................................... 716,000
40,000 OrNda HealthCorp(a)...................................... 930,000
18,000 Oxford Health Plans, Inc.(a)............................. 1,329,750
3,000 Pacificare Health Systems, Inc. - Class A(a)............. 261,000
3,100 Pacificare Health Systems, Inc. - Class B(a)............. 269,700
9,000 Phycor Inc.(a)........................................... 455,062
13,000 Quorum Health Group, Inc.(a)............................. 286,000
47,200 Sybron International Corp.(a)............................ 1,121,000
10,000 Theratx, Inc.(a)......................................... 120,000
44,700 Vencor, Inc.(a).......................................... 1,452,750
-----------
23,171,169
-----------
</TABLE>
18
AIM V.I. CAPITAL APPRECIATION FUND
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
OFFICE AUTOMATION - 0.83%
18,800 Corporate Express Inc.(a)................................ $ 566,350
32,400 Danka Business Systems PLC-ADR........................... 1,198,800
-----------
1,765,150
-----------
OFFICE PRODUCTS - 0.45%
7,100 Avery Dennison Corp. .................................... 355,888
15,400 Reynolds & Reynolds Co. - Class A........................ 598,675
-----------
954,563
-----------
OIL EQUIPMENT & SUPPLIES - 0.10%
9,300 Smith International, Inc.(a)............................. 218,550
-----------
POLLUTION CONTROL - 0.27%
5,900 Asyst Technologies, Inc.(a).............................. 207,975
19,400 USA Waste Services, Inc.(a).............................. 366,175
-----------
574,150
-----------
RESTAURANTS - 0.72%
11,900 Applebee's International, Inc. .......................... 270,725
14,500 Lone Star Steakhouse & Saloon(a)......................... 556,437
19,600 Outback Steakhouse, Inc.(a).............................. 703,150
-----------
1,530,312
-----------
RETAIL (FOOD & DRUG) - 1.46%
6,400 Casey's General Stores, Inc.............................. 140,000
19,300 Eckerd (Jack) Corp.(a)................................... 861,263
27,400 Kroger Co. (The)(a)...................................... 1,027,500
20,800 Safeway, Inc.(a)......................................... 1,071,200
-----------
3,099,963
-----------
RETAIL STORES - 7.23%
17,500 AutoZone, Inc.(a)........................................ 505,313
10,900 Baby Superstore, Inc.(a)................................. 621,300
25,500 Bed Bath & Beyond, Inc.(a)............................... 989,719
5,600 Boise Cascade Office Products Corp.(a)................... 239,400
6,700 Circuit City Stores, Inc................................. 185,088
26,200 Consolidated Stores Corp.(a)............................. 569,850
41,950 Dollar General Corp...................................... 870,462
10,900 Gap Inc. (The)........................................... 457,800
24,200 Gymboree Corp(a)......................................... 499,125
17,300 Kohls' Corp.(a).......................................... 908,250
8,500 Mac Frugal's Bargains Close-Outs Inc.(a)................. 119,000
24,600 Micro Warehouse, Inc.(a)................................. 1,063,950
7,100 Oakley, Inc.(a).......................................... 241,400
41,200 Office Depot, Inc.(a).................................... 813,700
7,400 Petco Animal Supplies, Inc.(a)........................... 216,450
16,600 PetSmart Inc.(a)......................................... 514,600
55,050 Staples, Inc.(a)......................................... 1,341,844
46,800 Sunglass Hut International, Inc.(a)...................... 1,111,500
21,400 Talbots, Inc............................................. 615,250
6,800 Tandy Corp............................................... 282,200
14,200 Tech Data Corp.(a)....................................... 213,000
22,650 Men's Wearhouse (The) Inc.(a)............................ 583,238
33,500 Sports Authority (The) Inc.(a)........................... 682,562
36,600 Viking Office Products Inc.(a)........................... 1,701,900
-----------
15,346,901
-----------
</TABLE>
19
AIM V.I. CAPITAL APPRECIATION FUND
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
SCIENTIFIC INSTRUMENTS - 0.73%
20,000 Millipore Corp.......................................... $ 822,500
15,000 Varian Associates, Inc.................................. 716,250
-----------
1,538,750
-----------
SEMICONDUCTORS - 12.33%
32,000 Altera Corp.(a)......................................... 1,592,000
42,150 Analog Devices, Inc.(a)................................. 1,491,056
51,800 Applied Materials, Inc.(a).............................. 2,039,625
9,400 ASM Lithography Holding N.V.(a)......................... 312,550
67,200 Atmel Corp.(a).......................................... 1,503,600
12,450 Credence Systems Corp.(a)............................... 284,794
54,900 Cypress Semiconductor Corp.(a).......................... 699,975
14,000 Electroglas, Inc.(a).................................... 343,000
6,300 Gasonics International Corp.(a)......................... 85,050
56,200 Integrated Device Technology, Inc.(a)................... 723,576
15,500 Intel Corp.............................................. 879,625
51,600 International Rectifier Corp.(a)........................ 1,290,000
21,700 KLA Instruments Corp.(a)................................ 565,556
25,300 LAM Research Corp.(a)................................... 1,157,475
25,300 Lattice Semiconductor Corp.(a).......................... 825,412
34,100 Linear Technology Corp.................................. 1,338,425
55,500 LSI Logic Corp.(a)...................................... 1,817,625
25,400 Maxim Integrated Products, Inc.(a)...................... 977,900
26,100 MEMC Electronic Materials, Inc.(a)...................... 851,512
17,000 Novellus Systems, Inc.(a)............................... 918,000
14,000 SCI Systems, Inc.(a).................................... 434,000
35,200 Sierra Semiconductor Corp.(a)........................... 488,400
10,900 Silicon Valley Group, Inc.(a)........................... 275,225
30,000 Solectron Corp.(a)...................................... 1,323,750
7,800 Tencor Instruments(a)................................... 190,125
6,600 Texas Instruments Inc................................... 341,550
17,100 Ultratech Stepper, Inc.(a).............................. 440,325
13,700 Vishay Intertechnology, Inc.(a)......................... 431,550
43,800 VLSI Technology Inc.(a)................................. 793,875
41,500 Xilinx, Inc.(a)......................................... 1,265,750
13,200 Zilog Inc.(a)........................................... 483,450
-----------
26,164,756
-----------
SHOES & RELATED APPAREL - 0.31%
12,500 Nine West Group, Inc.(a)................................ 468,750
6,000 Wolverine World Wide, Inc............................... 189,000
-----------
657,750
-----------
TELECOMMUNICATIONS - 4.89%
9,800 ADC Telecommunications, Inc.(a)......................... 357,700
22,400 Allen Group, Inc. ...................................... 501,200
26,875 Andrew Corp.(a)......................................... 1,027,969
18,600 Aspect Telecommunications Corp.(a)...................... 623,100
15,550 Glenayre Technologies, Inc.(a).......................... 967,987
8,200 Nokia Corp.-ADR......................................... 318,775
13,600 Octel Communications Corp.(a)........................... 438,600
29,200 Premisys Communications, Inc.(a)........................ 1,635,200
14,300 Scientific-Atlanta, Inc................................. 214,500
16,300 Stratacom, Inc.(a)...................................... 1,198,050
</TABLE>
20
AIM V.I. CAPITAL APPRECIATION FUND
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
TELECOMMUNICATIONS - (CONTINUED)
500 Tekelec(a)...................................... $ 5,250
73,320 Telefonaktiebolaget L.M. Ericsson-ADR........... 1,429,740
18,300 Tellabs, Inc.(a)................................ 677,100
2,600 Transpro, Inc................................... 27,625
9,300 U.S. Long Distance Corp.(a)..................... 130,200
23,400 Worldcom, Inc.(a)............................... 824,850
------------
10,377,846
------------
TELEPHONE - 0.02%
1,000 Century Telephone Enterprises, Inc.............. 31,750
------------
TEXTILES - 0.55%
13,950 Nautica Enterprises, Inc.(a).................... 610,312
12,900 Tommy Hilfiger Corp.(a)......................... 546,638
------------
1,156,950
------------
TRUCKING - 0.08%
8,400 TNT Freightways Corp............................ 169,050
------------
Total Common Stocks............................. 180,501,633
------------
<CAPTION>
PRINCIPAL
AMOUNT
---------
<C> <S> <C>
U.S. TREASURY SECURITIES - 5.58%
U.S. TREASURY BILL(b)
$12,000,000(c) 5.32%, 04/11/96................................. 11,838,360
------------
REPURCHASE AGREEMENT - 9.17%(d)
Daiwa Securities America, Inc., 5.92%,
19,442,968 01/02/96(e).................................... 19,442,968
------------
TOTAL INVESTMENT SECURITIES - 99.83%............ 211,782,961
OTHER ASSETS LESS LIABILITIES - 0.17%........... 369,462
------------
NET ASSETS - 100.00%............................ $212,152,423
============
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 12/31/95. See Note 6 to Financial Statements.
(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. The investments in some repurchase agreements are
through participation in joint accounts with other mutual funds managed by
the investment advisor.
(e) Joint repurchase agreement entered into 12/29/95 with a maturing value of
$646,679,181. Collateralized by $537,995,000 U.S. Treasury obligations,
7.875% to 11.25% due 11/15/07 to 02/15/15.
Abbreviations:
ADR - American Depositary Receipt
See Notes to Financial Statements.
</TABLE>
21
AIM V.I. CAPITAL APPRECIATION FUND
<PAGE>
<TABLE>
<C> <S> <C>
AIM V.I. CAPITAL ASSETS:
APPRECIATION FUND
STATEMENT OF ASSETS Investments, at market value (cost $172,435,151).................. $211,782,961
AND LIABILITIES Receivables for:
December 31, 1995 Investments sold................................................ 289,100
Capital stock sold.............................................. 274,270
Dividends and interest.......................................... 47,007
Variation margin................................................ 13,300
Investment for deferred compensation plan......................... 8,220
Organizational costs, net......................................... 6,749
Other assets...................................................... 788
------------
Total assets.................................................. 212,422,395
------------
LIABILITIES:
Payables for:
Investments purchased........................................... 126,516
Deferred compensation plan...................................... 8,220
Accrued advisory fees............................................. 114,542
Accrued directors' fees........................................... 1,790
Accrued administrative services fees.............................. 2,997
Accrued operating expenses........................................ 15,907
------------
Total liabilities............................................. 269,972
------------
Net assets applicable to shares outstanding....................... $212,152,423
============
Capital shares, $.001 par value per share:
Authorized...................................................... 250,000,000
============
Outstanding..................................................... 12,822,408
============
Net asset value, offering and redemption price per share.......... $ 16.55
============
</TABLE>
See Notes to Financial Statements.
22
AIM V.I. CAPITAL APPRECIATION FUND
<PAGE>
<TABLE>
<CAPTION>
<C> <S> <C>
AIM V.I. CAPITAL INVESTMENT INCOME:
APPRECIATION FUND
STATEMENT OF Dividends (net of $1,304 foreign withholding tax).............. $ 286,021
OPERATIONS Interest....................................................... 1,270,163
For the eleven -----------
months ended Total investment income....................................... 1,556,184
December 31, 1995 -----------
EXPENSES:
Advisory fees.................................................. 882,870
Custodian fees................................................. 50,526
Administrative services fees................................... 33,560
Directors' fees and expenses................................... 6,477
Organizational costs........................................... 2,651
Other.......................................................... 47,497
-----------
Total expenses................................................ 1,023,581
-----------
Net investment income............................................ 532,603
-----------
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT SECURITIES
AND FUTURES CONTRACTS:
Net realized gain from:
Investment securities.......................................... 926,418
Futures contracts.............................................. 2,594,825
-----------
3,521,243
-----------
Unrealized appreciation (depreciation) of:
Investment securities.......................................... 33,768,471
Futures contracts.............................................. (564,483)
-----------
33,203,988
-----------
Net gain on investment securities and futures contracts.......... 36,725,231
-----------
Net increase in net assets resulting from operations............. $37,257,834
===========
DECEMBER 31, JANUARY 31,
AIM V.I. CAPITAL 1995 1995
APPRECIATION FUND ------------ -----------
STATEMENT OF CHANGES <S> <C> <C>
IN NET ASSETS OPERATIONS:
For the eleven
months ended Net investment income............................. $ 532,603 $ 285,894
December 31, 1995 Net realized gain (loss) from investment
and the year ended securities and futures contracts................. 3,521,243 (3,834,141)
January 31, 1995 Net unrealized appreciation of investment
securities and futures contracts................. 33,203,988 2,142,566
------------ -----------
Net increase (decrease) in net assets resulting
from operations................................. 37,257,834 (1,405,681)
Net increase from capital stock transactions........ 86,762,686 54,473,386
Distributions to shareholders from net investment
income............................................. (45,369) (244,886)
------------ -----------
Net increase in net assets....................... 123,975,151 52,822,819
NET ASSETS:
Beginning of period............................... 88,177,272 35,354,453
------------ -----------
End of period..................................... $212,152,423 $88,177,272
============ ===========
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in)........ $172,910,083 $86,147,397
Undistributed net investment income............... 516,011 28,777
Undistributed net realized gain (loss) from
investment securities and futures contracts ..... (491,023) (4,012,266)
Unrealized appreciation of investment securities
and futures contracts............................ 39,217,352 6,013,364
------------ -----------
$212,152,423 $88,177,272
============ ===========
</TABLE>
See Notes to Financial Statements.
23
AIM V.I. CAPITAL APPRECIATION FUND
<PAGE>
AIM V.I. CAPITAL NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
APPRECIATION FUND AIM Variable Insurance Funds, Inc. (the "Company"), is a
NOTES TO FINANCIAL Maryland corporation organized on January 22, 1993, and is
STATEMENTS registered under the Investment Company Act of 1940 (the
December 31, 1995 "1940 Act"), as amended, as an open-end, series, management
investment company consisting of nine portfolios. 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.
Effective December 31, 1995, the Company's fiscal year was
changed from January 31 to December 31. Information
presented in these financial statements pertains only to
the AIM V.I. Capital Appreciation Fund (the "Fund"). The
Fund's investment objective is to seek capital appreciation
through investments in common stocks, with emphasis on
medium-sized and smaller emerging growth companies.
Currently, shares of the Fund are sold only to insurance
company separate accounts to fund the benefits of variable
annuity contracts.
The preparation of financial statements in conformity with
generally accepted accounting principles requires
management to make estimates and assumptions that affect
the reported amounts of assets and liabilities at the date
of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual
results could differ from those estimates.
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 traded on a national securities
exchange or 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. Securities for which market quotations are
either not readily available or are questionable are
valued 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 $232,410, which
expires, if not previously utilized, through the year
2003.
D. 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.
E. Organizational Costs - Organizational costs for the 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 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. This agreement requires AIM to
reduce its fees or, if
24
AIM V.I. CAPITAL APPRECIATION FUND
<PAGE>
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 eleven months ended December 31, 1995, AIM
was reimbursed $33,560 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.
During the eleven months ended December 31, 1995, the Fund
incurred legal fees of $2,703 for services rendered by
Kramer, Levin, Naftalis, Nessen, Kamin & Frankel as counsel
to the Board of Directors. A member of that firm is a
director of the Company.
NOTE 3 - DIRECTORS' FEES
Directors' fees represent remuneration paid or accrued to
each director who is not an "interested person" of AIM. 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 eleven months ended December 31, 1995 was
$125,715,589 and $46,151,022, respectively.
The amount of unrealized appreciation (depreciation) of
investment securities, on a tax basis, as of December 31,
1995 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation
of investment securities......... $44,147,361
Aggregate unrealized (depreciation)
of investment securities......... (5,188,622)
-----------
Net unrealized appreciation of
investment securities............ $38,958,739
===========
</TABLE>
Cost of investments for tax purposes is $172,824,222.
NOTE 5 - CAPITAL STOCK
Changes in capital stock outstanding during the eleven
months ended December 31, 1995 and the year ended January
31, 1995 were as follows:
<TABLE>
<CAPTION>
December 31, 1995 January 31, 1995
---------------------- ----------------------
Shares Amount Shares Amount
--------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Sold........................... 6,155,688 $96,675,587 4,817,657 $58,178,417
Issued as reinvestment of
distributions................. 2,823 45,369 20,683 244,886
Reacquired..................... (654,458) (9,958,270) (330,372) (3,949,917)
--------- ----------- --------- -----------
5,504,053 $86,762,686 4,507,968 $54,473,386
========= =========== ========= ===========
</TABLE>
NOTE 6 - OPEN FUTURES CONTRACTS
On December 31, 1995 $417,036 principal amount of U.S.
Treasury Bills were pledged as collateral to cover margin
requirements for open futures contracts:
Open futures contracts at December 31, 1995 were as
follows:
<TABLE>
<CAPTION>
UNREALIZED
NO. OF APPRECIATION
CONTRACT CONTRACTS/MONTH/COMMITMENT (DEPRECIATION)
<S> <C> <C>
S&P 500 Index 38 contracts/March 96/Buy $(130,458)
</TABLE>
25
AIM V.I. CAPITAL APPRECIATION FUND
<PAGE>
NOTE 7 - FINANCIAL HIGHLIGHTS
Shown below are the condensed financial highlights for a
share outstanding of the Fund during the eleven months
ended December 31, 1995, the year ended January 31, 1995,
and the period May 5, 1993 (date operations commenced)
through January 31, 1994.
<TABLE>
<CAPTION>
January 31,
-----------------
December 31,
1995 1995 1994
------------ ------- -------
<S> <C> <C> <C>
Net asset value, beginning of period...... $ 12.05 $ 12.58 $ 10.00
-------- ------- -------
Income from investment operations:
Net investment income................... 0.04 0.05 --
Net gains (losses) on securities (both
realized and unrealized)............... 4.46 (0.54) 2.59
-------- ------- -------
Total from investment operations....... 4.50 (0.49) 2.59
-------- ------- -------
Less distributions:
Dividends from net investment income.... -- (0.04) (0.01)
-------- ------- -------
Net asset value, end of period............ $16.55 $12.05 $12.58
======== ======= =======
Total return(a)........................... 37.38% (3.91)% 25.90%
======== ======= =======
Ratios/supplemental data:
Net assets, end of period (000s omitted).. $212,152 $88,177 $35,354
======== ======= =======
Ratio of expenses to average net assets... 0.75%(b) 0.84% 1.06%(c)
======== ======= =======
Ratio of net investment income to average
net assets............................... 0.39%(b) 0.46% 0.07%(c)
======== ======= =======
Portfolio turnover rate................... 37% 81% 34%
======== ======= =======
</TABLE>
------
(a) Total returns are not annualized for periods less than
one year.
(b) Ratios are annualized and based on average net assets
of $148,432,750.
(c) Annualized.
26
AIM V.I. CAPITAL APPRECIATION FUND
<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 December 31, 1995, the related statement of
operations for the eleven month period then ended, the
statement of changes in net assets for the eleven month
period then ended and the year ended January 31, 1995 and
the financial highlights for the eleven month period then
ended, the year ended January 31, 1995, 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 December 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 December 31, 1995, the
results of its operations for the eleven month period then
ended, the changes in its net assets for the eleven month
period then ended and the year ended January 31, 1995 and
the financial highlights for the eleven month period then
ended, the year ended January 31, 1995, and the period May
5, 1993 (commencement of operations) through January 31,
1994, in conformity with generally accepted accounting
principles.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
January 26, 1996
27
AIM V.I. CAPITAL APPRECIATION FUND
<PAGE>
AIM V.I. DIVERSIFIED Declining interest rates, modest inflation, moderating
INCOME FUND economic growth and strong corporate earnings converged
MANAGEMENT'S to make 1995 ripe for a strong bond market rally. AIM
DISCUSSION V.I. Diversified Income Fund gained 18.11% during the 11
AND ANALYSIS months ended December 31, 1995. Because the Fund changed
its fiscal year-end from January 31 to December 31, all
performance figures in this report represent the 11-month
period 1/31/95-12/31/95.
In July and December, the Federal Reserve lowered the
federal funds rate--the interest rate banks use to lend
overnight reserves to each other. On each occasion,
commercial banks responded by reducing loan interest
rates to their largest and most creditworthy customers.
Falling short and longer term interest rates are good
news for bonds, whose prices move inversely to interest
rates. Investment returns across the maturity spectrum--
short to long--posted significant gains as yield levels
moved lower throughout 1995. For example, the yield on
the 10-year U.S. Treasury note, a benchmark for longer
term rates, fell 2.26% over the year to 5.57% on December
29, 1995.
AIM V.I. Diversified Income Fund is a diversified
portfolio of investment grade, U.S. and international
corporate and government securities, and lower quality
high yield issues. For the 11 months ending December 31,
1995, all sectors of the Fund posted good results. At
year-end, investment grade securities constituted 30% of
the Fund, foreign securities made up 41%, and high yield
securities, 24%. The Fund's composition is subject to
change and there is no guarantee the Fund will continue
to hold any one particular security. In most years,
investment grade and high yield bonds serve as
counterweights to each other because they respond to
different stimuli. Investment grade bonds respond best to
falling interest rates, and high yield securities respond
best to a healthy growing economy. Foreign bonds provide
an additional source of diversification. With interest
rates falling worldwide and the U.S. economy showing
reasonable growth, each sector performed well in 1995.
The outlook for 1996 appears favorable. A continuation
of low inflation, moderately expanding economic activity
and a less restrictive monetary policy should provide
positive underpinnings for bond markets. AIM V.I.
Diversified Income Fund will continue to provide
investors with the advantages of a broadly diversified
investment strategy.
<TABLE>
<CAPTION>
-------------------------------------------------------------
Average Annual Total Return
1995* Inception**
AIM V.I. Diversified Income Fund 18.11% 7.04%
*1/31/95-12/31/95 (not annualized) **Since Inception 5/5/93
-------------------------------------------------------------
AIM V.I. Diversified Lehman Bros.
Income Fund Aggregate Bond Index
--------------------- ---------------------
GROWTH OF A <S> <C> <C>
HYPOTHETICAL 5/5/93 $10,000 $10,000
$10,000 INVESTMENT 9,980 10,013
10,160 10,194
10,510 10,459
12/93 10,605 10,465
10,270 10,164
10,122 10,060
10,176 10,121
12/94 10,068 10,160
10,602 10,762
11,190 11,322
11,563 11,545
12/95 11,982 12,038
Past performance cannot guarantee comparable future results.
-------------------------------------------------------------
</TABLE>
The performance figures shown represent the AIM V.I.
Diversified Income Fund and are not intended to reflect
actual annuity values and do not reflect charges at the
separate account level which, if applied, would lower the
performance results. The Fund's performance figures are
historical and reflect reinvestment of all distributions
and changes in the net asset value. The Fund's investment
return and principal value will fluctuate so that Fund
shares, when redeemed, may be worth more or less than
their original cost. Source: Towers Data Systems HYPO(R).
The Lehman Brothers Aggregate Bond Index is an unmanaged
index generally representative of treasury, agency,
corporate, and mortgage-backed debt securities. Results
for the Lehman Brothers Index are for the period 4/30/93
through 12/31/95. Source: Lehman Brothers.
An investment cannot be made in the index listed. Index
results include reinvested dividends.
28
AIM V.I. DIVERSIFIED INCOME FUND
<PAGE>
<TABLE>
<C> <S> <C>
AIM V.I. DIVERSIFIED PRINCIPAL MARKET
INCOME FUND AMOUNT(a) VALUE
SCHEDULE OF --------- ------
INVESTMENTS U.S. DOLLAR DENOMINATED NON-CONVERTIBLE
December 31, 1995 BONDS & NOTES - 46.56%
AUTOMOBILE/TRUCK PARTS & TIRES - 0.23%
$ 100,000 Harvard Industries, Sr. Notes, 11.125%, 08/01/05..... $ 100,000
-----------
AUTOMOBILE (MANUFACTURERS) - 1.11%
400,000 General Motors Corp., Deb., 8.80%, 03/01/21 ......... 493,012
-----------
BANKING - 0.68%
300,000 Mercantile Bank, Sub. Notes, 6.375%, 01/15/04 ....... 300,936
-----------
CABLE TELEVISION - 3.85%
160,000 CAI Wireless Systems Inc., Sr. Notes, 12.25%,
09/15/02............................................ 170,800
700,000 Marcus Cable Operating Co., Sr. Disc. Notes, 13.50%,
08/01/04(b)......................................... 526,750
500,000 Viacom Inc., Sr. Notes, 7.75%, 06/01/05.............. 530,985
490,000 Videotron Ltd., Sr. Disc. Notes, 11.125%,
07/01/04(b)......................................... 341,775
140,000 Wireless One Inc., Units, 13.00%, 10/15/03(c)........ 147,700
-----------
1,718,010
-----------
CHEMICALS - 0.74%
180,000 Crain Industries, Sr. Sub. Notes, 13.50%, 08/15/05
(acquired 08/22/95; cost $180,000)(d)............... 182,700
150,000 RBX Corp., Sr. Sub. Notes, 11.25%, 10/15/05
(acquired 01/06/95-10/12/95; cost $151,113)(d)...... 147,375
-----------
330,075
-----------
CONGLOMERATES - 1.74%
750,000 ITT Corp., Gtd. Deb., 7.375%, 11/15/15............... 774,845
-----------
CONTAINERS - 1.17%
Ivex Packaging Corp., Sr. Sub. Notes, 12.50%,
390,000 12/15/02............................................ 413,400
100,000 Owens-Illinois Inc., Sr. Sub. Notes, 10.50%,
06/15/02............................................ 106,250
-----------
519,650
-----------
CONSUMER NON-DURABLES - 0.33%
140,000 Hines Horticulture, Sr. Sub. Notes, 11.75%, 10/15/05
(acquired 10/16/95-10/20/95; cost $141,425)(d)...... 146,300
-----------
FINANCE (CONSUMER CREDIT) - 6.57%
750,000 Associates Corp., Deb., 7.95%, 02/15/10.............. 853,553
750,000 GMAC, Notes, 9.00%, 10/15/02......................... 867,397
370,000 GPA Delaware Inc., Deb., 8.75%, 12/15/98............. 347,800
300,000 Loehmann's Holdings, Inc., Sr. Sub. Notes, 13.75%,
02/15/99............................................ 282,000
150,000 Olympic Financial Ltd., Deb., 13.00%, 05/01/00....... 163,875
400,000 Sea Containers, Sr. Sub. Deb., 12.50%, 12/01/04...... 418,000
-----------
2,932,625
-----------
FOOD PROCESSING - 0.91%
300,000 American Rice Inc., Sec. Notes, 13.00%, 07/31/02..... 283,500
120,000 Curtice-Burns Foods Inc., Sr. Sub. Notes, 12.25%,
02/01/05............................................ 123,600
-----------
407,100
-----------
FOREIGN GOVERNMENT - 2.77%
700,000 Province of Manitoba, Yankee Bond, 7.75%, 07/17/16... 777,329
450,000 United Mexican States, Deb., 11.187%, 07/21/97
(acquired 07/12/95; cost $450,000)(d)............... 460,971
-----------
1,238,300
-----------
GAMING - 0.90%
110,000 Aztar Corp., Sr. Sub. Notes, 11.00%, 10/01/02........ 110,000
260,000 Showboat, Inc., Sr. Sub. Notes, 13.00%, 08/01/09..... 292,500
-----------
402,500
-----------
</TABLE>
29
AIM V.I. DIVERSIFIED INCOME FUND
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(a) VALUE
--------- ------
<C> <S> <C>
HOTELS/MOTELS - 1.24%
$ 550,000 John Q. Hammons Hotels Inc., Gtd. First Mortgage
Notes, 9.75%, 10/01/05 (acquired 10/06/95-11/16/95;
cost $550,938)(d)................................... $ 554,125
-----------
INSURANCE (LIFE & HEALTH) - 0.63%
200,000 American Life Holdings Co., Sr. Sub. Notes, 11.25%,
09/15/04............................................ 210,000
75,000 Americo Life Inc., Sr. Sub. Notes, 9.25%, 06/01/05... 71,438
-----------
281,438
-----------
LEISURE & RECREATION - 0.36%
150,000 Icon Health & Fitness Inc., Sr. Sub. Notes, 13.00%,
07/15/02............................................ 162,375
-----------
MACHINERY (HEAVY) - 0.33%
100,000 Fairfield Manufacturing, Sr. Sub. Notes, 11.375%,
07/01/01............................................ 97,500
50,000 Primeco Inc., Sr. Sub. Notes, 12.75%, 03/01/05....... 51,500
-----------
149,000
-----------
MACHINERY (MISCELLANEOUS) - 1.35%
210,000 AM General Corp., Sr. Notes, 12.875%, 05/01/02....... 210,525
200,000 Interlake Corp., Sr. Notes, 12.00%, 11/15/01......... 202,000
190,000 MVE Inc., Sr. Sec. Notes, 12.50%, 02/15/02........... 190,475
-----------
603,000
-----------
MEDICAL INSTRUMENTS/PRODUCTS - 0.21%
90,000 Graphic Controls Corp., Sr. Sub. Notes, 12.00%,
09/15/05 (acquired 09/21/95; cost $90,000)(d)....... 93,600
-----------
MEDICAL (PATIENT SERVICES) - 1.26%
500,000 OrNda Healthcorp., Sr. Sub. Notes, 11.375%, 08/15/04. 562,500
-----------
METALS (MISCELLANEOUS) - 0.84%
370,000 Rio Algom Ltd., Yankee Deb., 7.05%, 11/01/05......... 376,549
-----------
NATURAL GAS PIPELINE - 2.21%
450,000 Enron Corp., Sr. Sub. Deb., 6.75%, 07/01/05.......... 459,886
500,000 Talisman Energy Inc., Yankee Deb., 7.125%, 06/01/07.. 524,680
-----------
984,566
-----------
OIL & GAS - 0.69%
190,000 HS Resources Inc., Sr. Sub. Notes, 9.875%, 12/01/03.. 187,625
40,000 United Meridian Corp., Gtd. Sr. Sub. Notes, 10.375%,
10/15/05............................................ 42,300
80,000 Wainoco Oil Corp., Sr. Notes, 12.00%, 08/01/02....... 77,200
-----------
307,125
-----------
OIL EQUIPMENT & SUPPLIES - 0.14%
60,000 Falcon Drilling Co. Inc., Sr. Notes, 9.75%, 01/15/01. 61,650
-----------
PAPER & FOREST PRODUCTS - 0.52%
90,000 Pacific Lumber Co., Sr. Notes, 10.50%, 03/01/03...... 85,275
150,000 Rapp International Finance, Gtd. Yankee Sec. Notes,
11.50%, 12/15/00.................................... 149,437
-----------
234,712
-----------
PUBLISHING - 3.78%
750,000 News America Holdings, Gtd. Sr. Deb., 9.25%,
02/01/13............................................ 883,380
750,000 Time Warner Inc., Notes, 8.18%, 08/15/07............. 805,598
-----------
1,688,978
-----------
RAILROADS - 0.37%
180,000 Johnstown America Industries Inc., Sr. Sub. Notes,
11.75%, 08/15/05.................................... 163,800
-----------
</TABLE>
30
AIM V.I. DIVERSIFIED INCOME FUND
<PAGE>
<TABLE>
<C> <C> <S> <C>
PRINCIPAL MARKET
AMOUNT(a) VALUE
--------- ------
RETAIL (FOOD & DRUG) - 2.80%
$ 200,000 Grand Union Co., Sr. Notes, 12.00%, 09/01/04......... $ 173,000
500,000 Great Atlantic & Pacific, Yankee Notes, 7.78%,
11/01/00 (acquired 10/18/95; cost $500,000)(d)...... 507,005
390,000 Penn Traffic Co., Sr. Notes, 10.65%, 11/01/04........ 372,450
200,000 Ralph's Grocery Co., Sr. Notes, 11.00%, 06/15/05..... 198,000
-----------
1,250,455
-----------
RETAIL (STORES) - 2.67%
400,000 Apparel Retailer Inc., Sr. Disc. Deb., 12.75%,
08/15/05(b)......................................... 244,000
200,000 County Seat Stores, Sr. Sub. Notes, 12.00%, 10/01/02. 150,000
175,000 Fleming Companies Inc., Sr. Notes, 10.625%, 12/15/01. 169,750
150,000 Pamida Inc., Sr. Sub. Notes, 11.75%, 03/15/03........ 115,500
150,000 Samsonite Corp., Sr. Sub. Notes, 11.125%, 07/15/05... 144,000
275,000 Specialty Retailers, Inc., Sr. Sub. Notes, 11.00%,
08/15/03............................................ 250,250
110,000 United Stationer Supply, Sr. Sub. Notes, 12.75%,
05/01/05............................................ 120,175
-----------
1,193,675
-----------
SCHOOLS - 0.12%
50,000 Herff Jones Inc., Sr. Sub. Notes, 11.00%, 08/15/05... 53,625
-----------
STEEL - 0.79%
185,000 GS Technologies Inc., Sr. Notes, 12.00%, 09/01/04.... 183,613
190,000 Gulf States Steel Corp., First Mortgage Notes,
13.50%, 04/15/03.................................... 171,000
-----------
354,613
-----------
TELECOMMUNICATIONS - 3.27%
140,000 A+ Network Inc., Sr., Sub. Notes, 11.875%, 11/01/05.. 141,750
70,000 Cellular Inc., Sr. Sub. Notes, 11.75%, 09/01/03(b)... 55,650
110,000 Clearnet Communications, Yankee Units, 14.75%,
12/15/05(b)(e)...................................... 57,200
100,000 Dictaphone Corp., Gtd. Sr. Sub. Notes, 11.75%,
08/01/05............................................ 99,000
100,000 Northern Telecom, Notes, 6.00%, 09/01/03............. 99,540
850,000 TCI Communications Inc., Sr. Notes, 8.00%, 08/01/05.. 902,266
170,000 Telewest PLC, Yankee Sr. Disc. Deb., 11.00%,
10/01/07(b)......................................... 102,638
-----------
1,458,044
-----------
TEXTILES - 0.71%
350,000 Consoltex Group, Sr. Sub. Notes, 11.00%, 10/01/03.... 315,875
-----------
TRANSPORTATION (MISCELLANEOUS) - 1.27%
230,000 Stena AB, Yankee Sr. Notes, 10.50%, 12/15/05......... 235,462
320,000 Trans Ocean Container, Sr. Sub. Notes, 12.25%,
07/01/04............................................ 332,800
-----------
568,262
-----------
Total U.S. Dollar Denominated Non-Convertible Bonds
& Notes............................................. 20,781,320
-----------
U.S. DOLLAR DENOMINATED CONVERTIBLE BONDS & NOTES -
0.69%
FINANCE (CONSUMER CREDIT) - 0.69%
300,000 Henderson Capital, Conv. Bonds, 4.50%, 10/27/96...... 308,250
-----------
Total U.S. Dollar Denominated Convertible Bonds &
Notes............................................... 308,250
-----------
NON-U.S. DOLLAR DENOMINATED NON-CONVERTIBLE BONDS &
NOTES(f) - 6.86%
CANADA - 2.62%
CAD 735,000 Bell Canada (Telecommunications), Deb., 13.875%,
05/01/00............................................. 562,486
300,000 Canadian Oil Debco Inc. (Oil & Gas), Deb., 11.00%,
10/31/00............................................. 251,161
250,000 IPL Energy Inc. (Oil Equipment & Supplies), Series A
Deb., 9.67%, 02/23/00................................ 200,247
250,000 Rogers Cablesystem, Inc. (Cable Television), Sr. Sec.
2nd Priority Deb., 9.65%, 01/15/14................... 154,705
---------
1,168,599
---------
</TABLE>
31
AIM V.I. DIVERSIFIED INCOME FUND
<PAGE>
<TABLE>
<C> <C> <S> <C>
PRINCIPAL MARKET
AMOUNT(a) VALUE
--------- ------
GERMANY - 2.77%
International Bank for Reconstruction &
Development (Supranational Organization),
DEM 1,000,000 Unsub. Global Bonds, 5.875%, 11/10/03........ $ 700,279
725,000 Unsub. Global Bonds, 7.125%, 04/12/05........ 538,380
-----------
1,238,659
-----------
ITALY - 1.47%
ITL 1,000,000,000 KFW International Finance Inc. (Finance-
Consumer Credit) Gtd. Notes, 11.625%,
11/27/98..................................... 654,703
-----------
Total Non-U.S. Dollar Denominated Non-
Convertible Bonds & Notes.................... 3,061,961
-----------
NON-U.S. DOLLAR DENOMINATED CONVERTIBLE BONDS
& NOTES(f) - 3.90%
CANADA - 1.14%
CAD 700,000 Repap Enterprises, Inc. (Paper & Forest
Products), Conv. Deb., 9.00%, 06/30/98....... 510,070
-----------
FRANCE - 0.71%
FRF 1,419,000 Societe Generale (Banking), Conv. Deb., 3.50%,
01/01/00..................................... 314,484
-----------
UNITED KINGDOM - 2.05%
BPS 320,000 ELF Enterprise Finance PLC (Finance-Consumer
Credit), Gtd. Conv. Bonds, 8.75%, 06/27/06... 494,487
300,000 Lasmo PLC (Oil Equipment & Supplies), Conv.
Deb., 7.75%, 10/04/05........................ 421,067
-----------
915,554
-----------
Total Non-U.S. Dollar Denominated Convertible
Bonds & Notes................................ 1,740,108
-----------
NON-U.S. DOLLAR DENOMINATED GOVERNMENT BONDS &
NOTES(f) - 20.99%
AUSTRALIA - 7.12%
AUD 1,600,000 Australian Government, Gtd. Deb., 9.00%,
09/15/04..................................... 1,252,671
Queensland Treasury Corp.,
820,000 Gtd. Notes, 8.875%, 11/08/96................. 616,889
1,000,000 Gtd. Notes, 6.50%, 06/14/05.................. 652,542
850,000 Western Australia Treasury Corp., Gtd. Notes,
9.00%, 04/15/99.............................. 657,654
-----------
3,179,756
-----------
CANADA - 2.48%
CAD 500,000 British Columbia Municipal Finance Authority,
Deb., 7.75%, 12/01/05........................ 377,517
850,000 New Brunswick (Province of), Deb., 8.94%,
01/15/05..................................... 646,604
100,000 Quebec (Province of), Sr. Deb., 9.375%,
01/16/23..................................... 81,490
-----------
1,105,611
-----------
DENMARK - 2.70%
DKK 6,250,000 Kingdom of Denmark, Deb., 8.00%, 11/15/01..... 1,206,551
-----------
GERMANY - 4.12%
Bundesrepublik Deutschland,
DEM 1,500,000 Deb., 6.75%, 07/15/04........................ 1,098,989
1,000,000 Deb., 6.875%, 05/12/05....................... 738,341
-----------
1,837,330
-----------
FRANCE - 3.01%
FRF 6,500,000 French Treasury Bill, Notes, 5.75%, 11/12/98.. 1,341,015
-----------
</TABLE>
32
AIM V.I. DIVERSIFIED INCOME FUND
<PAGE>
<TABLE>
<C> <C> <S> <C>
PRINCIPAL MARKET
AMOUNT(a) VALUE
--------- ------
UNITED KINGDOM - 1.56%
BPS 465,000 Ontario Province, Sr. Unsub. Notes, 6.875%,
09/15/00........................................ 694,756
-----------
Total Non-U.S. Dollar Denominated Government
Bonds & Notes................................... 9,365,019
-----------
SHARES
------
WARRANTS - 0.01%
LEISURE & RECREATION - 0.01%
150 Boomtown Inc., - Wt., expiring 11/01/98(g)
(acquired 11/03/93; cost $150)(d)............... 225
150 IHF Holdings, - Wt., expiring 11/14/99(g)........ 3,750
-----------
3,975
-----------
RETAIL (STORES) - 0.00%
200 County Seat, Inc. - Wt., expiring 10/01/01(g).... 1,000
-----------
STEEL - 0.00%
190 Gulf States Steel Corp. - Wt., expiring
04/15/03(g)..................................... 950
-----------
Total Warrants................................. 5,925
-----------
PRINCIPAL
AMOUNT
---------
U.S. TREASURY SECURITIES - 15.76%
$2,300,000 Notes, 7.50%, 02/15/05........................... 2,610,201
3,000,000 Notes, 6.50%, 08/15/05........................... 3,199,440
1,000,000 Bonds, 7.625%, 02/15/25.......................... 1,222,300
-----------
Total U.S. Treasury Securities................. 7,031,941
-----------
REPURCHASE AGREEMENT(h) - 3.02%
1,348,008 Daiwa Securities America, Inc.
5.92%, 01/02/96(i).............................. 1,348,008
-----------
TOTAL INVESTMENTS - 97.79%....................... 43,642,532
OTHER ASSETS LESS LIABILITIES - 2.21%............ 987,613
-----------
NET ASSETS - 100.00%............................. $44,630,145
===========
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Principal amount is in U.S. Dollars, except as indicated by note (f).
(b) Discounted bond at purchase. Interest rate represents coupon rate at which
the bond will accrue at a specified future date.
(c) Issued as a unit. This unit consists of $1,000,000 Sr. Notes plus 3
warrants to purchase one share of common stock at $11.55 per share per
warrant.
(d) 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 December 31, 1995 was
$2,092,301 which represented 4.69% of the Fund's net assets.
(e) Issued as a unit. This unit consists of ten $1,000,000 Sr. Disc. Notes plus
33 warrants to purchase shares of common stock.
(f) Foreign denominated security. Par value and coupon are denominated in
currency of country indicated.
(g) Non-income producing security acquired as part of a unit with or in
exchange for other securities.
(h) 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. The investments in some repurchase agreements are
through participation in joint accounts with other mutual funds managed by
the investment advisor.
(i) Joint repurchase agreement entered into 12/29/95 with a maturing value of
$646,679,181. Collateralized by $537,995,000 U.S. Treasury obligations,
7.875% to 11.25% due 11/15/07 to 02/15/15.
Abbreviations:
AUD - Australian Dollar Disc. -Discounted Sr. - Senior
BPS - British Pound Sterling DKK - Danish Krone Sub. - Subordinated
CAD - Canadian Dollar FRF - French Franc Unsub. - Unsubordinated
Conv.- Convertible Gtd. - Guaranteed Wt. - Warrant
Deb. - Debentures ITL - Italian Lire
DEM - German Deutschemark Sec. - Secured
See Notes to Financial Statements.
</TABLE>
33
AIM V.I. DIVERSIFIED INCOME FUND
<PAGE>
<TABLE>
<C> <S> <C>
AIM V.I. DIVERSIFIED ASSETS:
INCOME FUND
STATEMENT OF Investments, at market value (cost $42,232,557).................... $43,642,532
ASSETS AND Foreign currencies, at value (cost $22,000)........................ 21,896
LIABILITIES Receivables for:
December 31, 1995 Forward contracts................................................ 25,045
Interest......................................................... 985,728
Investment for deferred compensation plan.......................... 7,721
Organizational costs, net.......................................... 6,749
Other assets....................................................... 578
-----------
Total assets................................................... 44,690,249
-----------
LIABILITIES:
Payables for:
Capital stock redeemed........................................... 17,298
Deferred compensation plan....................................... 7,721
Accrued advisory fees.............................................. 22,049
Accrued administrative service fees................................ 2,031
Accrued directors' fees............................................ 1,054
Accrued operating expenses......................................... 9,951
-----------
Total liabilities.............................................. 60,104
-----------
Net assets applicable to shares outstanding........................ $44,630,145
===========
Capital shares, $.001 par value per share:
Authorized....................................................... 250,000,000
===========
Outstanding...................................................... 4,461,727
===========
Net asset value, offering and redemption price per share........... $ 10.00
===========
</TABLE>
See Notes to Financial Statements.
34
AIM V.I. DIVERSIFIED INCOME FUND
<PAGE>
<TABLE>
<C> <S> <C>
AIM V.I. DIVERSIFIED INVESTMENT INCOME:
INCOME FUND
STATEMENT OF Interest........................................................ $2,745,013
OPERATIONS ----------
For the eleven months EXPENSES:
ended December 31, 1995
Advisory fees................................................... 193,008
Custodian fees.................................................. 16,422
Administrative service fees..................................... 36,406
Directors' fees and expenses.................................... 4,800
Organizational costs............................................ 2,651
Other........................................................... 31,317
----------
Total expenses................................................. 284,604
----------
Net investment income............................................. 2,460,409
----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT SECURITIES,
FOREIGN CURRENCIES AND FORWARD CONTRACTS TRANSACTIONS:
Net realized gain (loss) from:
Investment securities........................................... 407,035
Foreign currencies.............................................. 302,188
Forward contracts............................................... (33,329)
----------
675,894
----------
Unrealized appreciation (depreciation) of:
Investment securities........................................... 2,405,295
Foreign currencies.............................................. 44,280
Forward contracts............................................... (8,795)
----------
2,440,780
----------
Net gain on investment securities, foreign currencies and forward
contract transactions............................................ 3,116,674
----------
Net increase in net assets resulting from operations.............. $5,577,083
==========
AIM V.I. DIVERSIFIED DECEMBER 31, JANUARY 31,
INCOME FUND 1995 1995
STATEMENT OF ------------ -----------
CHANGES IN NET ASSETS OPERATIONS:
For the eleven months
ended December 31, 1995 Net investment income.............................. $ 2,460,409 $ 1,655,141
and the year ended Net realized gain (loss) from investment
January 31, 1995 securities, foreign currencies, and forward
contracts......................................... 675,894 (1,542,084)
Net unrealized appreciation (depreciation) of
investment securities, foreign currencies, and
forward contracts................................. 2,440,780 (1,156,094)
----------- -----------
Net increase (decrease) in net assets resulting
from operations.................................. 5,577,083 (1,043,037)
Net equalization credits............................. 653,844 286,609
Net increase from capital stock transactions......... 16,007,644 12,953,629
Distributions to shareholders from net investment
income.............................................. (2,879,611) (1,455,969)
----------- -----------
Net increase in net assets........................ 19,358,960 10,741,232
NET ASSETS:
Beginning of period................................ 25,271,185 14,529,953
----------- -----------
End of period...................................... $44,630,145 $25,271,185
=========== ===========
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in)......... $43,080,526 $27,072,882
Undistributed net investment income................ 987,410 752,768
Undistributed net realized gain (loss) on
investment securities, foreign currencies and
forward contract transactions..................... (871,395) (1,547,289)
Unrealized appreciation (depreciation) of
investment securities, foreign currencies and
forward contracts................................. 1,433,604 (1,007,176)
----------- -----------
$44,630,145 $25,271,185
=========== ===========
</TABLE>
See Notes to Financial Statements.
35
AIM V.I. DIVERSIFIED INCOME FUND
<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 organized on January 22, 1993, and is registered under the Investment Company
FINANCIAL STATEMENTS Act of 1940 (the "1940 Act"), as amended, as an open-end, series, management
December 31, 1995 investment company consisting of nine portfolios. 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. Effective December 31, 1995, the Company's fiscal year was changed
from January 31 to December 31. Information presented in these financial
statements pertains only to the AIM V.I. Diversified Income Fund (the "Fund").
The Fund's investment objective is to seek to achieve a high level of current
income. The Fund will seek to achieve its objective by investing primarily in a
diversified portfolio of foreign and U.S. government and corporate debt
securities, including lower rated high yield debt securities (commonly known as
"junk bonds"). These high yield bonds may involve special risks in addition to
the risks associated with investment in higher rated debt securities. High
yield bonds may be more susceptible to real or perceived adverse economic and
competitive industry conditions than higher grade bonds. Also, the secondary
market in which high yield bonds are traded may be less liquid than the market
for higher grade bonds. Currently, shares of the Fund are sold only to
insurance company separate accounts to fund the benefits of variable annuity
contracts.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates. The
following is a summary of significant accounting policies followed by the Fund
in the preparation 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. Convertible bonds are
valued at the mean between the closing bid and asked prices obtained from a
broker-dealer. 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 either not readily available or
are questionable 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. 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 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 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
</TABLE>
36
AIM V.I. DIVERSIFIED INCOME FUND
<PAGE>
<TABLE>
<C> <S>
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
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.
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 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 portfolio in
the Company is taxed as a separate entity. 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 $1,025,093, which expires,
if not previously utilized, through the year 2003.
F. Equalization - The 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.
G. Organizational Costs - Organizational costs of the 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 Fund pays an advisory fee to AIM at an annual rate of 0.60% of
the first $250 million of the Fund's average daily net assets, plus 0.55% of
such 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 eleven months ended December 31, 1995, AIM was reimbursed $36,406
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.
During the eleven months ended December 31, 1995, the Fund incurred legal fees
of $2,435 for services rendered by Kramer, Levin, Naftalis, Nessen, Kamin &
Frankel as counsel to the Board of Directors. A member of that firm is a
director of the Company.
NOTE 3 - DIRECTORS' FEES
Directors' fees represent remuneration paid or accrued to each director who is
not an "interested person" of AIM. 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 eleven months ended
December 31, 1995 was $39,826,472 and $24,192,267, respectively.
The amount of unrealized appreciation (depreciation) of investment securities
on a tax basis as of December 31, 1995 is as follows:
</TABLE>
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities.......... $1,783,025
Aggregate unrealized (depreciation) of investment securities........ (373,050)
----------
Net unrealized appreciation of investment securities................ $1,409,975
==========
Investments have the same cost for tax and financial statement purposes.
</TABLE>
37
AIM V.I. DIVERSIFIED INCOME FUND
<PAGE>
<TABLE>
<C> <S>
NOTE 5 - OPEN FORWARD CURRENCY CONTRACTS
Outstanding contracts at December 31, 1995 were as follows:
</TABLE>
<TABLE>
<CAPTION>
Contract to Unrealized
Settlement Date Deliver Receive Value Appreciation
--------------- ------------- ---------- ---------- ------------
<S> <C> <C> <C> <C>
01/25/96........ DEM 1,860,000 $1,297,951 $1,322,996 $25,045
========== ========== =======
</TABLE>
NOTE 6 - CAPITAL STOCK
Changes in capital stock outstanding during the eleven months
ended December 31, 1995 and the year ended January 31, 1995
were as follows:
<TABLE>
<CAPTION>
December 31, 1995 January 31, 1995
---------------------- ----------------------
Shares Amount Shares Amount
--------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Sold........................... 1,807,566 $17,087,317 1,633,696 $15,317,067
Issued as reinvestment of
distributions................. 293,522 2,823,374 155,537 1,431,155
Reacquired..................... (409,796) (3,903,047) (408,146) (3,794,593)
--------- ----------- --------- -----------
1,691,292 $16,007,644 1,381,087 $12,953,629
========= =========== ========= ===========
</TABLE>
NOTE 7 - FINANCIAL HIGHLIGHTS
Shown below are the condensed financial highlights for a
share outstanding of the Fund during the eleven months ended
December 31, 1995, the year ended January 31, 1995, and the
period May 5, 1993 (date operations commenced) through January
31, 1994.
<TABLE>
<CAPTION>
January 31,
December 31, -----------------
1995 1995 1994
------------ ------- -------
<S> <C> <C> <C>
Net asset value, beginning of period....... $ 9.12 $ 10.46 $ 10.00
------- ------- -------
Income from investment operations:
Net investment income.................... 0.69 0.76 0.54
Net gains (losses) on securities (both
realized and unrealized)................ 0.94 (1.42) 0.29
------- ------- -------
Total from investment operations........ 1.63 (0.66) 0.83
------- ------- -------
Less distributions:
Dividends from net investment income..... (0.75) (0.68) (0.35)
Distributions from net realized capital
gains................................... -- -- (0.02)
------- ------- -------
Total distributions..................... (0.75) (0.68) (0.37)
------- ------- -------
Net asset value, end of period............. $ 10.00 $ 9.12 $ 10.46
======= ======= =======
Total return(a)............................ 18.11% (6.35)% 8.33%
======= ======= =======
Ratios/supplemental data:
Net assets, end of period (000s omitted)... $44,630 $25,271 $14,530
======= ======= =======
Ratio of expenses to average net assets(c). 0.88%(b) 0.91% 1.05%(e)
======= ======= =======
Ratio of net investment income to average
net assets(d)............................. 7.65%(b) 8.07% 6.78%(e)
======= ======= =======
Portfolio turnover rate.................... 72% 100% 57%
======= ======= =======
------
(a) Total returns for periods less than one year are not annualized.
(b) Ratios are annualized and based on average net assets of $35,153,645.
(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 January 31, 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 reimbursements are 7.95% and 6.14% (annualized) for January
31, 1995 and 1994, respectively.
(e) Annualized.
</TABLE>
38
AIM V.I. DIVERSIFIED INCOME FUND
<PAGE>
<TABLE>
<C> <S>
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
December 31, 1995, the related statement of operations for the eleven month
period then ended, the statement of changes in net assets for the eleven month
period then ended and the year ended January 31, 1995 and the financial
highlights for the eleven month period then ended, the year ended January 31,
1995, 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
December 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 December 31, 1995, the results of its
operations for the eleven month period then ended, the changes in its net
assets for the eleven month period then ended and the year ended January 31,
1995 and the financial highlights for the eleven month period then ended, the
year ended January 31, 1995, and the period May 5, 1993 (commencement of
operations) through January 31, 1994, in conformity with generally accepted
accounting principles.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
January 26, 1996
</TABLE>
39
AIM V.I. DIVERSIFIED INCOME FUND
<PAGE>
AIM V.I. GLOBAL A surging stock market and declining interest rates
UTILITIES FUND combined to produce a favorable environment for utilities
MANAGEMENT'S companies during 1995. AIM V.I. Global Utilities Fund
DISCUSSION capitalized on it, producing total return of 23.73%
AND ANALYSIS during the 11 months ended December 31, 1995. Because the
Fund changed its fiscal year-end from January 31 to
December 31, all performance figures in this report
represent the 11-month period 1/31/95-12/31/95.
Declining interest rates during 1995 were advantageous
to domestic electric utility firms, which tend to be
large borrowers. Electric services firms constituted
approximately 27% of the Fund at fiscal year-end. In
addition, many electric utilities have undertaken
restructurings designed to boost earnings as both
competition and regulatory resistance to raising electric
rates grow. The Fund continued to maintain large
positions in certain regional U.S. electric companies.
The telephone industry represents another major portion
of the Fund, approximately 16%. The so-called Baby Bells
have been thriving since the breakup of AT&T during the
1980s, and recent technological advances that improved
their ability to carry more data on existing phone lines
and to carry voice and data simultaneously are enhancing
their competitiveness.
Foreign securities constituted approximately 20% of the
Fund's holdings at the close of the fiscal year. After
building foreign positions through the third quarter of
1995, Fund management reduced foreign holdings in
response to earnings disappointments, especially in
European utilities. However, the days when a U.S. utility
company could be regarded as purely domestic may be
numbered. For example, the Fund includes stock of The
Southern Co., a southeastern-U.S. regional electric
company that recently purchased a British electric
utility. The Fund also includes BellSouth Corp., a
regional domestic phone company that has over half a
million wireless-communications customers overseas.
As of fiscal year-end, the Fund comprised 125 holdings
with the following characteristics:
Top 5 Domestic Holdings (excluding U.S. Treasury
issues)*: AT&T Corp., Ameritech Corp., Northern States
Power Co., BellSouth Corp., Houston Industries, Inc.
Top 5 Foreign Holdings*: Telefonaktiebolaget L.M.
Ericsson, Telecom Corp. of New Zealand Ltd. - ADR, CPT
Telefonica Del Peru - Class B, North West Water PLC, Veba
A.G.
Top 5 Industries: Electric Services, Telephone,
Telecommunications, Natural Gas Pipeline, Real Estate
Investment Trusts.
Of course, the Fund's composition is subject to change,
and there is no guarantee the Fund will continue to hold
these securities or remain invested in any particular
foreign country.
* May include equities, bonds, and convertible bonds.
<TABLE>
<CAPTION>
-------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
1995* Inception**
AIM V.I. Global Utilities Fund 23.73% 13.30%
*1/31/95-12/31/95 (not annualized) **Since Inception 5/2/94
-------------------------------------------------------------
-------------------------------------------------------------
AIM V.I. Global Lipper Utility
Utilities Fund Fund Index S&P 500
---------------- -------------- --------
<S> <C> <C> <C>
GROWTH OF A 5/2/93 $10,000 $10000 $10,000
HYPOTHETICAL 9,660 9,516 9,882
$10,000 INVESTMENT 9,809 9,696 10,365
12/94 9,708 9,614 10,363
10,001 10,027 11,369
10,829 10,679 12,451
11,564 11,414 13,437
12/95 12,303 12,197 14,244
Past performance cannot guarantee comparable future results.
-------------------------------------------------------------
</TABLE>
The performance figures shown represent the AIM V.I.
Global Utilities Fund and are not intended to reflect
actual annuity values and do not reflect charges at the
separate account level, which, if applied, would lower
the performance results. The Fund's performance figures
are historical and reflect reinvestment of all
distributions and changes in the net asset value. The
Fund's investment return and principal value will
fluctuate so that Fund shares, when redeemed, may be
worth more or less than their original cost. Source:
Towers Data Systems HYPO(R).
Lipper Analytical Services, Inc., is an independent
mutual fund performance monitor. The unmanaged Lipper
Utility Funds Index represents an average of the
performance of the 30 largest utilities funds. The
Standard & Poor's 500 (S&P 500) is a group of unmanaged
securities widely regarded by investors to be
representative of the stock market in general. Results
for the Lipper Index are for the period 4/30/94 through
12/31/95. Source: Lipper Analytical Services, Inc.
An investment cannot be made in the indexes listed.
Index results include reinvested dividends.
40
AIM V.I. GLOBAL UTILITIES FUND
<PAGE>
<TABLE>
<C> <C> <S> <C>
AIM V.I. GLOBAL MARKET
UTILITIES FUND SHARES VALUE
SCHEDULE OF ------ ------
INVESTMENTS
December 31, 1995 DOMESTIC COMMON STOCKS - 53.53%
COMPUTER NETWORKING - 0.64%
500 Ascend Communications, Inc.(a)........................... $ 40,563
476 Network Equipment Technologies, Inc.(a).................. 13,035
-----------
53,598
-----------
COMPUTER SOFTWARE/SERVICES - 0.46%
700 Objective Systems Integrators, Inc.(a)................... 38,325
-----------
CONGLOMERATES - 0.41%
700 Tenneco Inc. ............................................ 34,737
-----------
ELECTRIC SERVICES - 26.99%
1,500 Allegheny Power System, Inc. ............................ 42,938
1,900 Boston Edison Co. ....................................... 56,050
1,200 Carolina Power & Light Co. .............................. 41,400
500 CMS Energy Corp. ........................................ 14,938
1,200 Consolidated Edison Co. of New York, Inc. ............... 38,400
1,800 Detroit Edison Co. ...................................... 62,100
5,700 DPL, Inc. ............................................... 141,077
4,400 DQE, Inc. ............................................... 135,302
3,200 Duke Power Co. .......................................... 151,600
4,400 FPL Group, Inc. ......................................... 204,050
4,600 General Public Utilities Corp. .......................... 156,400
8,500 Houston Industries, Inc. ................................ 206,125
5,500 Illinova Corp. .......................................... 165,000
400 LG & E Energy Corp. ..................................... 16,900
3,200 NIPSCO Industries, Inc. ................................. 122,400
4,500 Northern States Power Co. ............................... 221,062
4,800 Pinnacle West Capital Corp. ............................. 138,000
6,000 Southern Co. (The)....................................... 147,750
3,200 Teco Energy, Inc. ....................................... 82,000
2,600 Unicom Corp. ............................................ 85,150
1,200 Wisconsin Energy Corp. .................................. 36,752
-----------
2,265,394
-----------
GAS DISTRIBUTION - 1.35%
3,200 Public Service Co. of Colorado........................... 113,200
-----------
NATURAL GAS PIPELINE - 5.87%
1,100 Columbia Gas System, Inc.(a)............................. 48,262
3,500 Enron Corp. ............................................. 133,437
1,000 KN Energy, Inc. ......................................... 29,125
600 Pacific Enterprises...................................... 16,950
3,100 Panhandle Eastern Corp. ................................. 86,414
1,200 Sonat Inc. .............................................. 42,750
3,100 Williams Companies Inc. (The)............................ 136,014
-----------
492,952
-----------
REAL ESTATE INVESTMENTS TRUSTS - 1.81%
1,500 Bay Apartment Communities................................ 36,375
600 Meditrust................................................ 20,925
500 National Health Investors, Inc. ......................... 16,562
200 Nationwide Health Properties, Inc. ...................... 8,400
900 Oasis Residential Inc. .................................. 20,475
1,000 Patriot American Hospitality, Inc. ...................... 25,750
900 Public Storage, Inc. .................................... 17,100
400 RFS Hotel Investors Inc. ................................ 6,150
-----------
151,737
-----------
</TABLE>
41
AIM V.I. GLOBAL UTILITIES FUND
<PAGE>
<TABLE>
<C> <C> <S> <C>
MARKET
SHARES VALUE
------ ------
TELECOMMUNICATIONS - 2.46%
1,800 A T & T Corp. .......................................... $ 116,550
2,900 Frontier Corp. ......................................... 87,000
200 Tel-Save Holdings, Inc.(a).............................. 2,775
-----------
206,325
-----------
TELEPHONE - 13.54%
4,600 Ameritech Corp. ........................................ 271,400
700 Bell Atlantic Corp. .................................... 46,812
4,900 BellSouth Corp. ........................................ 213,150
2,300 Century Telephone Enterprises, Inc. .................... 73,025
3,900 Cincinnati Bell, Inc. .................................. 135,525
800 GTE Corp. .............................................. 35,200
1,600 NYNEX Corp. ............................................ 86,402
3,100 SBC Communications, Inc. ............................... 178,250
1,000 Southern New England Telecommunications Corp. .......... 39,750
1,600 US West, Inc. .......................................... 57,200
-----------
1,136,714
-----------
Total Domestic Common Stocks.......................... 4,492,982
-----------
DOMESTIC CONVERTIBLE PREFERRED STOCKS - 1.17%
OIL & GAS-SERVICES - 0.71%
2,500 Enron Corp.-$1.36 Conv. Pfd. ........................... 60,000
-----------
TELECOMMUNICATIONS - 0.46%
800 MFS Communications Co., Inc.-$2.68 Conv. Pfd. .......... 38,950
-----------
Total Domestic Convertible Preferred Stocks........... 98,950
-----------
FOREIGN STOCKS & OTHER EQUITY INTERESTS - 16.70%
ARGENTINA - 0.74%
7,700 Central Costanera S.A. - Class B (Electric Services).... 23,711
2,200 Central Puerto S.A. - Class B (Electric Services)....... 8,358
1,100 Telefonica de Argentina-ADR (Telephone)................. 29,975
-----------
62,044
-----------
AUSTRIA - 0.19%
270 Oesterreichisch Elektrizitatswirtschafts-AG
(Verbundgesellschaft) Class A (Electric Services)...... 16,234
-----------
BRAZIL - 0.45%
800 Telecommunicacoes Brasileiras S/A Telebras-ADR
(Telecommunications)................................... 37,900
-----------
CANADA - 0.38%
2,200 Westcoast Energy, Inc. (Natural Gas Pipeline)........... 32,175
-----------
CHILE - 0.90%
500 Compania de Telecomunicaciones de Chile S.A.-ADR
(Telecommunications)................................... 41,437
1,200 Enersis S.A.-ADR (Electric Services).................... 34,200
-----------
75,637
-----------
DENMARK - 0.30%
900 Tele Danmark A/S-ADR (Telephone)........................ 24,862
-----------
GERMANY - 0.55%
1,060 Veba A.G. (Electric Services)........................... 45,001
-----------
</TABLE>
42
AIM V.I. GLOBAL UTILITIES FUND
<PAGE>
<TABLE>
<C> <C> <S> <C>
MARKET
SHARES VALUE
------ ------
HONG KONG - 0.13%
600 Hong Kong Telecom Ltd.-ADR (Telephone).................. $ 10,650
-----------
INDONESIA - 0.30%
700 PT Indostat-ADR(a) (Telephone).......................... 25,550
-----------
ISRAEL - 0.19%
700 ECI Telecom Ltd. (Telecommunications)................... 15,968
-----------
ITALY - 0.61%
15,325 Telecom Italia Mobile S.p.A. (Telephone)................ 26,922
15,825 Telecom Italia S.p.A. (Telephone)....................... 24,542
-----------
51,464
-----------
KOREA - 0.38%
1,200 Korea Electric Power Corp.-ADR (Electric Services)...... 32,100
-----------
NETHERLANDS - 0.98%
700 Elsag Baily Process Automation N.V.-ADR $2.75 Conv. Pfd.
TOPRS(b)
(Acquired 12/14/95; cost $35,000) (Electronic
Components - Miscellaneous)............................ 35,087
995 Royal PTT Nederland N.V.-ADR(b) (Acquired 06/13/94-
10/23/95; cost $32,569) (Telecommunications)........... 36,068
270 Royal PTT Nederland N.V. - Class B (Telecommunications). 9,809
-----------
80,964
-----------
NEW ZEALAND - 1.07%
1,300 Telecom Corp. of New Zealand Ltd.-ADR (Telephone)....... 90,187
-----------
NORWAY - 0.46%
1,200 Nera AS-ADR(a) (Telecommunications)..................... 39,000
-----------
PERU - 0.61%
24,000 CPT Telefonica Del Peru - Class B (Telephone)........... 51,406
-----------
PORTUGAL - 0.38%
1,700 Portugal Telecom S.A.-ADR(a) (Telecommunications)....... 32,300
-----------
SPAIN - 2.06%
2,175 Amper S.A. (Electrical Equipment)(a).................... 25,730
600 Empresa Nacional de Electricidad S.A. (Electric
Services).............................................. 34,350
700 Empresa Nacional de Electricidad S.A.-ADR (Electric
Services).............................................. 15,925
250 Gas Natural SDG-E S.A. (Natural Gas Pipeline)........... 38,953
3,600 Iberdrola S.A. ......................................... 32,943
600 Telefonica de Espana, S.A. (Telecommunications)......... 25,125
-----------
173,026
-----------
SWEDEN - 1.34%
28 Telefonaktiebolaget L.M. Ericsson (Telecommunications).. 548
5,720 Telefonaktiebolaget L.M. Ericsson-ADR
(Telecommunications)................................... 111,540
-----------
112,088
-----------
UNITED KINGDOM - 4.68%
5,700 British Gas PLC (National Gas Pipeline)................. 22,486
300 British Sky Broadcasting Group PLC-ADR
(Advertising/Broadcasting)............................. 11,287
1,400 London Electricity PLC (Electric Services).............. 12,469
2,350 Midlands Electricity PLC (Electric Services)............ 27,739
5,969 National Grid Group PLC (Electric Services)............. 18,496
5,950 National Power PLC (Electric Services).................. 41,536
900 National Power PLC-ADR (Electric Services).............. 8,325
4,725 North West Water PLC(a) (Water Supply).................. 45,203
</TABLE>
43
AIM V.I. GLOBAL UTILITIES FUND
<PAGE>
<TABLE>
<C> <C> <S> <C>
MARKET
SHARES VALUE
------ ------
UNITED KINGDOM--(CONTINUED)
1,200 NYNEX CableComms Group(a) (Telecommunications)........ $ 20,850
2,850 PowerGen PLC (Electric Services)...................... 23,569
1,100 PowerGen PLC-ADR (Electric Services).................. 14,437
2,950 Scottish Power PLC (Electric Services)................ 16,951
1,150 Seeboard PLC (Electric Services)...................... 9,394
1,550 South Wales Electricity PLC (Electric Services)....... 22,459
1,200 Southern Electric PLC (Electric Services)............. 16,847
700 Vodafone Group PLC-ADR (Telecommunications)........... 24,675
1,750 Wessex Water PLC (Water Supply)....................... 9,485
2,100 Wessex Water PLC - Preference Shares (Water Supply)... 1,663
1,200 Yorkshire Electricity PLC (Electric Services)......... 12,449
3,500 Yorkshire Water PLC (Water Supply).................... 32,178
-----------
392,498
-----------
Total Foreign Stocks & Other Equity Interests....... 1,401,054
-----------
PRINCIPAL
AMOUNT
---------
DOMESTIC CONVERTIBLE BONDS - 2.37%
COMPUTER SOFTWARE/SERVICES - 0.17%
$14,000 Network Equipment Technologies, Conv. Sub. Deb.,
7.25%, 05/15/14...................................... 14,338
-----------
ELECTRIC SERVICES - 0.30%
25,000 California Energy Co., Inc., Conv. Sub. Deb., 5.00%,
07/31/00(b)
(Acquired 04/26/95; cost $22,745).................... 25,195
-----------
ELECTRONIC COMPONENTS/MISCELLANEOUS - 0.42%
30,000 Altera Corp., Conv. Sub. Notes, 5.75%, 06/15/02(b)
(Acquired 06/16/95-12/13/95; cost $31,700)........... 34,950
-----------
SEMICONDUCTORS - 0.70%
25,000 Analog Devices, Conv. Sub. Notes, 3.50%, 12/01/00..... 26,625
35,000 Xilinx Inc., Conv. Sub. Notes, 5.25%, 11/01/02(b)
(Acquired 11/07/95; cost $35,000).................... 31,850
-----------
58,475
-----------
TELECOMMUNICATIONS - 0.78%
80,000 United States Cellular Corp., Conv. Liquid Yield
Option Notes, 6.00%, 06/15/15(c)..................... 28,500
35,000 World Communications, Conv. Sub. Notes, 5.00%,
08/15/03............................................. 37,275
-----------
65,775
-----------
Total Domestic Convertible Bonds.................... 198,733
-----------
DOMESTIC NON-CONVERTIBLE BONDS - 5.52%
ADVERTISING/BROADCASTING - 0.96%
75,000 Time Warner Inc., Notes, 8.18%, 08/15/07.............. 80,559
-----------
ELECTRIC SERVICES - 0.93%
75,000 Arizona Public Service, Deb., 8.00%, 12/30/15......... 77,780
-----------
FINANCE (CONSUMER CREDIT) - 1.03%
75,000 General Motors Acceptance Corp., Putable Step Up
Notes, 9.00%, 10/15/02............................... 86,739
-----------
NATURAL GAS PIPELINE - 0.59%
45,000 Panhandle Eastern Pipeline, Deb., 7.875%, 08/15/04.... 49,631
-----------
</TABLE>
44
AIM V.I. GLOBAL UTILITIES FUND
<PAGE>
<TABLE>
<C> <C> <S> <C>
PRINCIPAL MARKET
AMOUNT VALUE
--------- ------
TELECOMMUNICATIONS - 2.01%
$150,000 A T & T Corp., Sr. Notes, 7.75%, 03/01/07............ $ 168,579
-----------
Total Domestic Non-Convertible Bonds............... 463,288
-----------
FOREIGN NON-CONVERTIBLE BONDS - 2.08%
CANADA - 1.47%
CAD 50,000 Bell Canada, Deb. (Telecommunications), 8.80%,
08/17/05............................................ 39,660
CAD 50,000 Bell Canada, Deb. (Telecommunications), 10.875%,
10/11/04............................................ 43,755
CAD 50,000 IPL Energy, Deb. (Oil & Gas-Services), 9.67%,
02/23/00............................................ 40,049
-----------
123,464
-----------
MEXICO - 0.61%
50,000 United Mexican States, Deb. (Foreign Government
Securities), 11.1875%, 07/21/97(b) (Acquired
07/12/95; cost $50,000)............................. 51,219
-----------
Total Foreign Non-Convertible Bonds................ 174,683
-----------
U.S. TREASURY SECURITIES - 10.15%
U.S. TREASURY BONDS - 1.89%
130,000 7.625%, 02/15/25..................................... 158,899
-----------
U.S. TREASURY NOTES - 8.26%
650,000 6.50%, 08/15/05...................................... 693,214
-----------
Total U.S. Treasury Securities..................... 852,113
-----------
REPURCHASE AGREEMENT - 7.47%(d)
627,267 Daiwa Securities America Inc., 5.92%, 01/02/96(e).... 627,267
-----------
TOTAL INVESTMENTS - 98.99%........................... 8,309,070
OTHER ASSETS LESS LIABILITIES - 1.01%................ 84,897
-----------
NET ASSETS - 100.00%................................. $ 8,393,967
===========
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 these securities has been determined in
accordance with procedures established by the Board of Directors. The aggregate
market value of these securities at December 31, 1995 was $214,369, which
represented 2.55% of net assets.
(c) Zero coupon bond. The interest rate shown represents the rate of the original
issue discount.
(d) Collateral on repurchase agreement, 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. The investments in some repurchase agreements are through participation
in joint accounts with other mutual funds managed by the investment advisor.
(e) Joint repurchase agreement entered into 12/29/95 with a maturing value of $646,679,181.
Collateralized by $537,995,000 U.S. Treasury obligations, 7.875% to 11.25% due
11/15/07 to 02/15/15.
Abbreviations:
ADR - American Depositary Receipt
CAD - Canadian dollars
Conv. - Convertible
Deb. - Debentures
Sr. - Senior
Sub. - Subordinated
TOPRS - Trust Originated Preferred Securities
See Notes to Financial Statements.
</TABLE>
45
AIM V.I. GLOBAL UTILITIES FUND
<PAGE>
<TABLE>
<C> <S> <C>
AIM V.I. GLOBAL ASSETS:
UTILITIES FUND
STATEMENT OF Investments, at value (cost $7,345,626)............................ $ 8,309,070
ASSETS AND Foreign currencies, at value (cost $20,237)........................ 20,328
LIABILITIES Receivables for:
December 31, 1995 Capital stock sold............................................... 31,966
Investments sold................................................. 650
Dividends and interest........................................... 61,034
Reimbursement from advisor....................................... 5,000
Investment for deferred compensation plan.......................... 5,158
Other assets....................................................... 23
-----------
Total assets................................................... 8,433,229
-----------
LIABILITIES:
Payables for:
Investments purchased............................................ 21,873
Deferred compensation plan....................................... 5,158
Accrued directors' fees............................................ 1,551
Accrued administrative services fees............................... 3,496
Accrued operating expenses......................................... 7,184
-----------
Total liabilities.............................................. 39,262
-----------
Net assets applicable to shares outstanding........................ $ 8,393,967
===========
Capital shares, $.001 par value per share:
Authorized....................................................... 250,000,000
===========
Outstanding...................................................... 721,345
===========
Net asset value, offering and redemption price per share........... $11.64
======
See Notes to Financial Statements.
</TABLE>
46
AIM V.I. GLOBAL UTILITIES FUND
<PAGE>
<TABLE>
<C> <S> <C>
AIM V.I. GLOBAL INVESTMENT INCOME:
UTILITIES FUND
STATEMENT OF Dividends (net of $3,639 foreign withholding tax)............... $ 170,888
OPERATIONS Interest........................................................ 80,845
For the eleven months ----------
ended December 31, 1995 Total investment income....................................... 251,733
----------
EXPENSES:
Advisory fees................................................... 32,703
Custodian fees.................................................. 21,094
Administrative services fees.................................... 33,582
Directors' fees and expenses.................................... 5,083
Professional fees............................................... 22,514
Other........................................................... 2,315
----------
Total expenses................................................. 117,291
Less expenses assumed by advisor................................ (46,503)
----------
Net expenses................................................... 70,788
----------
Net investment income............................................. 180,945
----------
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT SECURITIES AND
FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) from:
Investment securities........................................... 82,163
Foreign currency transactions................................... (2,067)
----------
80,096
----------
Unrealized appreciation of:
Investment securities........................................... 928,908
Foreign currencies.............................................. 475
----------
929,383
----------
Net gain on investment securities and foreign currencies.......... 1,009,479
----------
Net increase in net assets resulting from operations.............. $1,190,424
==========
AIM V.I. GLOBAL 1995 1995
UTILITIES FUND ------------ -----------
STATEMENT
OF CHANGES OPERATIONS:
IN NET ASSETS
For the eleven months ended Net investment income.............................. $ 180,945 $ 62,600
December 31, 1995 and the Net realized gain (loss) from investment securities
period May 2, 1994 and foreign currency transactions................. 80,096 (63,919)
(date operations commenced) Net unrealized appreciation of investment
through January 31, 1995 securities and foreign currencies................. 929,383 33,906
---------- -----------
Net increase in net assets resulting from
operations....................................... 1,190,424 32,587
Net increase from capital stock transactions....... 4,441,375 2,981,631
Distributions to shareholders from net investment
income............................................ (186,096) (56,551)
Distributions from net realized capital gains...... (9,403) --
---------- -----------
Net increase in net assets........................ 5,436,300 2,957,667
NET ASSETS:
Beginning of period................................ 2,957,667 --
---------- -----------
End of period...................................... $8,393,967 $ 2,957,667
========== ===========
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in)......... $7,423,006 $ 2,981,631
Undistributed net investment income................ (769) 6,049
Undistributed net realized gain (loss) from
investment securities and foreign currency
transactions...................................... 8,441 (63,919)
Unrealized appreciation of investment securities
and foreign currencies............................ 963,289 33,906
---------- -----------
$8,393,967 $ 2,957,667
========== ===========
See Notes to Financial Statements.
</TABLE>
47
AIM V.I. GLOBAL UTILITIES FUND
<PAGE>
<TABLE>
<C> <S>
AIM V.I. GLOBAL NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
UTILITIES 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. Matters affecting each
December 31, 1995 portfolio are voted on exclusively by the shareholders of such portfolio. The
assets, liabilities and operations of each portfolio are accounted for
separately. Effective December 31, 1995, the Company's fiscal year was changed
from January 31 to December 31. Information presented in these financial
statements pertains only to the AIM V.I. Global Utilities Fund (the "Fund").
The Fund's investment objective is to achieve a high level of current income,
and as a secondary objective the Fund seeks to achieve capital appreciation, by
investing primarily in the common and preferred stocks of public utility
companies (either domestic or foreign). Currently, 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. The preparation of
financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
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 if there has been no
sale that day, at the mean between the closing bid and asked prices on that
day. If a mean is not available, as is the case in some foreign markets, the
closing bid will be used absent a last sales price. Non-convertible 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. Exchange listed
convertible debt securities are valued at the mean between the closing bid
and asked prices obtained from a broker-dealer. 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. Securities for
which market quotations either are not readily available or are questionable
are valued at fair value as determined in good faith by, or under the
authority of, the Board of Directors. 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. 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. On December 31, 1995, undistributed
net realized gain (loss) was increased and undistributed net investment
income reduced by $1,667 in order to comply with the requirements of the
American Institute of Certified Public Accountants Statement of Position 93-
2. Net assets of the Fund were unaffected by the reclassification discussed
above.
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. Foreign Currency Translations - 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.
</TABLE>
48
AIM V.I. GLOBAL UTILITIES FUND
<PAGE>
<TABLE>
<C> <S>
E. 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.
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. 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. During the eleven months ended December 31,
1995, AIM waived advisory fees of $32,703 and reimbursed expenses of $13,800
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 eleven months ended December 31, 1995, AIM was reimbursed $33,582
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.
During the eleven months ended December 31, 1995, the Fund incurred legal fees
of $2,355 for services rendered by Kramer, Levin, Naftalis, Nessen, Kamin &
Frankel as counsel to the Board of Directors. A member of that firm is a
director of the Company.
NOTE 3 - DIRECTORS' FEES
Directors' fees represent remuneration paid or accrued to each director who is
not an "interested person" of AIM. 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 eleven months ended
December 31, 1995 was $6,844,524 and $2,777,535, respectively.
The amount of unrealized appreciation of investment securities, on a tax
basis, as of December 31, 1995 is as follows:
</TABLE>
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities.......... $1,001,165
Aggregate unrealized (depreciation) of investment securities........ (40,407)
----------
Net unrealized appreciation of investment securities................ $ 960,758
==========
Cost of investments for tax purposes is $7,348,312.
</TABLE>
49
AIM V.I. GLOBAL UTILITIES FUND
<PAGE>
<TABLE>
<C> <S>
NOTE 5 - CAPITAL STOCK
Changes in capital stock outstanding during the eleven months ended December
31, 1995 and the period May 2, 1994 (date operations commenced) through January
31, 1995 were as follows:
</TABLE>
<TABLE>
<CAPTION>
December 31, 1995 January 31, 1995
-------------------- -------------------
Shares Amount Shares Amount
-------- ---------- ------- ----------
<S> <C> <C> <C> <C>
Sold................................ 535,828 $5,682,400 303,347 $2,952,131
Issued as reinvestment of
distributions...................... 17,742 195,499 5,893 56,551
Reacquired.......................... (134,462) (1,436,524) (4,003) (27,051)
-------- ---------- ------- ----------
419,108 $4,441,375 305,237 $2,981,631
======== ========== ======= ==========
</TABLE>
<TABLE>
<C> <S>
NOTE 6 - FINANCIAL HIGHLIGHTS
Shown below are the condensed financial highlights for a share outstanding of
the Fund during the eleven months ended July 31, 1995 and the period May 2,
1994 (date operations commenced) through January 31, 1995.
</TABLE>
<TABLE>
<CAPTION>
December 31, January 31,
1995 1995
------------ -----------
<S> <C> <C>
Net asset value, beginning of period............ $9.69 $10.00
------ ------
Income from investment operations:
Net investment income......................... 0.29 0.27
Net gains (losses) on securities (both
realized and unrealized)..................... 1.98 (0.33)
------ ------
Total from investment operations............. 2.27 (0.06)
------ ------
Less distributions:
Dividends from net investment income.......... (0.31) (0.25)
Distributions from capital gain............... (0.01) --
------ ------
Total distributions........................... (0.32) (0.25)
------ ------
Net asset value, end of period.................. $11.64 $ 9.69
====== ======
Total return(a)................................. 23.73% (0.56)%
====== ======
Ratios/supplemental data:
Net assets, end of period (000s omitted)........ $8,394 $2,958
====== ======
Ratio of expenses to average net assets......... 1.47%(b) 1.31%(c)(d)
====== ======
Ratio of net investment income to average net
assets......................................... 3.76%(b) 4.39%(c)(d)
====== ======
Portfolio turnover rate......................... 58% 69%
====== ======
------------
(a) Total return is not annualized.
(b) Ratios are annualized and based on average net assets of $5,261,394.
Annualized ratios of expenses and net investment income to average net
assets prior to waiver of advisory fees and expense reimbursements
are 2.44% and 2.79%, respectively.
(c) Annualized.
(d) 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>
50
AIM V.I. GLOBAL UTILITIES FUND
<PAGE>
<TABLE>
<C> <S>
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. Global Utilities Fund, a series of shares of common stock of AIM Variable
Insurance Funds, Inc. including the schedule of investments as of December 31,
1995, the related statement of operations for the eleven month period then
ended and the statement of changes in net assets and financial highlights for
the eleven month period then ended and 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 audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1995, by correspondence with the custodian and brokers. 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. Global Utilities Fund, as of December 31, 1995, the results of operations
for the eleven month period then ended and the changes in its net assets and
the financial highlights for the eleven month period then ended and the period
May 2, 1994 through January 31, 1995, in conformity with generally accepted
accounting principles.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
January 26, 1996
</TABLE>
51
AIM V.I. GLOBAL UTILITIES FUND
<PAGE>
AIM V.I. GOVERNMENT AIM V.I. Government Securities Fund gained 13.84% during
SECURITIES FUND the 11 months ended December 31, 1995, as sharply
MANAGEMENT'S declining interest rates and mild inflation fueled one of
DISCUSSION the strongest rallies in bonds on record. Because the
AND ANALYSIS Fund changed its fiscal year-end from January 31 to
December 31, all performance figures in this report
represent the 11-month period 1/31/95-12/31/95.
The strength of the rally surprised many investors,
coming on the heels of the disappointing performance of
bonds in 1994. Falling interest rates were the most
visible catalyst driving bond markets during the year.
After boosting interest rates at a record clip in 1994,
the Federal Reserve Bank reversed its policy and eased
interest rates twice in 1995. It was the first time the
central bank had lowered rates since 1992.
Bonds also attracted increased demand from foreign
central banks during the year. The Federal Reserve Bank
reported that foreign custody holdings of U.S. Treasury
securities rose 21% to more than $500 billion by the end
of December.
The bond market's rally was paced by a sharp drop in
long-term yields, which saw the benchmark 30-year U.S.
Treasury fall to 5.95% as of December 31, 1995. Mortgage-
backed securities were a step behind U.S. Treasuries
during the year amid investor concerns that low interest
rates would prompt homeowners to refinance their
mortgages. Early repayment shortens the life of a
mortgage security and reduces its overall return.
As the year drew to a close, bond markets were
anticipating yet another interest rate cut by the central
bank and a credible budget compromise in Congress. In
December, the 30-year U.S. Treasury bond yield was pushed
below 6% for the first time since late 1993.
By December 31, 1995, the Fund had invested
approximately 60% of its assets in U.S. Treasury and
agency securities, with 33% allocated to mortgage-backed
securities. The Fund remained close to fully-invested
levels with investments in cash and cash-equivalent
securities held to approximately 7%. The Fund's average
maturity was 6.87 years and its duration was 4.30 years.
Of course, the Fund's portfolio composition is subject to
change and there is no guarantee the Fund will continue
to hold any particular security.
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
1995* Inception**
AIM V.I. Government Securities Fund 13.84% 5.46%
*1/31/95--12/31/95 (not annualized) **Since Inception 5/5/93
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Lehman Bros.
AIM V.I. Government Intermediate Government Lipper Intermediate
Securities Fund Bond Index U.S. Gov't Fund Index
--------------------- ----------------------- ---------------------
<S> <C> <C> <C>
GROWTH OF 5/5/93 $10,000 $10,000 $10,000
A HYPOTHETICAL 10,150 10,117 10,153
$10,000 INVESTMENT 10,363 10,331 10,393
12/93 10,355 10,346 10,387
10,063 10,155 10,117
9,922 10,098 9,983
9,968 10,175 10,021
12/94 9,969 10,164 10,005
10,367 10,587 10,441
10,935 11,083 10,894
11,077 11,255 11,057
12/95 11,520 11,631 11,468
Past performance cannot guarantee comparable future results.
-------------------------------------------------------------------------------
</TABLE>
The performance figures shown represent the AIM V.I.
Government Securities Fund and are not intended to
reflect actual annuity values, and do not reflect charges
at the separate account level which, if applied, would
lower the performance results. The Fund's performance
figures are historical and reflect reinvestment of all
distributions and changes in the net asset value. The
Fund's performance would have been lower had expenses not
been waived. The Fund's investment return and principal
value will fluctuate so that Fund shares, when redeemed,
may be worth more or less than their original cost.
Source: Towers Data Systems HYPO(R).
Lipper Analytical Services, Inc., is an independent
mutual fund performance monitor. The unmanaged Lipper
Intermediate U.S. Government Funds Index represents an
average of the performance of the 30 largest intermediate
government securities funds. Results for the Lipper Index
and the Lehman Index are for the period 4/30/93 through
12/31/95. Source: Lipper Analytical Services, Inc. The
Lehman Bros. Intermediate Government Bond Index is an
unmanaged composite generally considered representative
of intermediate U.S. Treasury and U.S. government agency
securities. Source: Lehman Brothers.
An investment cannot be made in the indexes listed.
Index results include reinvested dividends.
52
AIM V.I. GOVERNMENT SECURITIES FUND
<PAGE>
<TABLE>
<C> <C> <S> <C>
AIM V.I. GOVERNMENT PRINCIPAL MARKET
SECURITIES FUND AMOUNT VALUE
SCHEDULE OF --------- ------
INVESTMENTS U.S. GOVERNMENT AGENCIES - 72.04%
December 31, 1995
FEDERAL FARM CREDIT BANK - 1.03%
$ 200,000 Medium term notes
5.96%, 07/14/03....................................... $ 201,970
-----------
FEDERAL HOME LOAN BANK - 7.58%
Debentures
150,000 8.375%, 10/25/99...................................... 164,798
500,000 7.31%, 07/06/01....................................... 538,025
285,000 7.78%, 10/19/01....................................... 315,307
400,000 8.17%, 12/16/04....................................... 463,744
-----------
1,481,874
-----------
FEDERAL HOME LOAN MORTGAGE CORPORATION - 22.88%
Debentures
150,000 6.13%, 08/19/99....................................... 153,264
500,000 7.90%, 09/19/01....................................... 553,680
300,000 6.185%, 11/26/03...................................... 296,649
500,000 8.00%, 01/26/05....................................... 574,260
500,000 8.115%, 01/31/05...................................... 578,230
Pass through certificates
1,021,304 6.00%, 11/01/08 to 08/01/10........................... 1,011,397
559,598 6.50%, 12/01/08 to 07/01/23........................... 557,290
405,179 10.50%, 08/01/19...................................... 443,412
291,121 8.50%, 08/01/24....................................... 303,946
-----------
4,472,128
-----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 26.49%
Debentures
400,000 7.55%, 04/22/02....................................... 438,232
500,000 8.50%, 02/01/05....................................... 547,420
Medium term notes
400,000 7.68%, 12/01/97....................................... 416,480
500,000 5.42%, 06/02/99....................................... 497,640
300,000 7.375%, 03/28/05...................................... 331,758
Pass through certificates
580,790 7.50%, 11/01/09 to 06/01/25........................... 596,569
672,426 6.50%, 10/01/10 to 06/01/23........................... 673,716
677,662 8.25%, 04/01/22....................................... 704,653
448,199 8.50%, 09/01/24....................................... 467,799
498,729 7.00%, 09/01/25....................................... 503,082
-----------
5,177,349
-----------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 5.62%
Pass through certificates
111,258 9.50%, 08/15/03 to 09/15/16........................... 119,421
277,816 9.00%, 09/15/08 to 10/15/16........................... 297,346
52,159 11.00%, 10/15/15...................................... 58,564
87,599 10.50%, 09/15/17 to 11/15/19.......................... 97,233
530,467 6.50%, 12/15/23....................................... 526,647
-----------
1,099,211
-----------
PRIVATE EXPORT FUNDING COMPANY - 1.66%
300,000 Debentures
7.30%, 01/31/02....................................... 323,766
-----------
STUDENT LOAN MARKETING ASSOCIATION - 4.12%
Debentures
500,000 5.65%, 02/22/99....................................... 499,215
150,000 5.55%, 12/15/99....................................... 150,329
150,000 6.50%, 08/01/02....................................... 156,290
-----------
805,834
-----------
TENNESSEE VALLEY AUTHORITY - 2.66%
500,000 Debentures
6.375%, 06/15/05...................................... 518,985
-----------
Total U.S. Government Agencies..................... 14,081,117
-----------
</TABLE>
53
AIM V.I. GOVERNMENT SECURITIES FUND
<PAGE>
<TABLE>
<C> <C> <S> <C>
PRINCIPAL MARKET
AMOUNT VALUE
--------- ------
U.S. TREASURY SECURITIES - 20.54%
U.S. TREASURY NOTES & BONDS - 20.23%
$ 300,000 6.875%, 08/31/99..................................... $ 315,327
1,750,000 6.25%, 05/31/00 to 08/15/23.......................... 1,809,497
500,000 7.50%, 02/15/05...................................... 567,435
1,100,000 7.25%, 05/15/16 to 08/15/22.......................... 1,261,852
-----------
3,954,111
-----------
U.S. TREASURY STRIPS - 0.31%
250,000 6.80%(a), 11/15/18................................... 60,250
-----------
Total U.S. Treasury Securities.................... 4,014,361
-----------
REPURCHASE AGREEMENT - 6.30%(b)
1,231,821 Daiwa Securities America, Inc., 5.92%, 01/02/96(c).... 1,231,821
-----------
TOTAL INVESTMENTS - 98.88%............................ 19,327,299
OTHER ASSETS LESS LIABILITIES - 1.12%................. 218,092
-----------
NET ASSETS - 100.00%.................................. $19,545,391
===========
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. The investments in some repurchase agreements are
through participation in joint accounts with other mutual funds managed by
the investment advisor.
(c) Joint repurchase agreement entered into 12/29/95 with a maturing value of
$646,679,181. Collateralized by $537,995,000 U.S. Treasury obligations,
7.875% to 11.25% due 11/15/07 to 02/15/15.
See Notes to Financial Statements.
</TABLE>
54
AIM V.I. GOVERNMENT SECURITIES FUND
<PAGE>
<TABLE>
<C> <S> <C>
AIM V.I. GOVERNMENT ASSETS:
SECURITIES FUND
STATEMENT OF Investments, at market value (cost $18,692,275).................... $19,327,299
ASSETS AND Interest receivable................................................ 235,597
LIABILITIES Investment for deferred compensation plan.......................... 7,626
December 31, 1995 Organizational costs, net.......................................... 6,773
Other assets....................................................... 9,465
-----------
Total assets................................................... 19,586,760
-----------
LIABILITIES:
Payable for capital stock purchased................................ 8,670
Payable for deferred compensation.................................. 7,626
Accrued advisory fees.............................................. 8,040
Accrued directors' fees............................................ 1,398
Accrued administrative service fees................................ 1,831
Accrued operating expenses......................................... 13,804
-----------
Total liabilities.............................................. 41,369
-----------
Net assets applicable to shares outstanding........................ $19,545,391
===========
Capital shares, $.001 par value per share:
Authorized....................................................... 250,000,000
===========
Outstanding...................................................... 1,921,357
===========
Net asset value, offering and redemption price per share........... $10.17
===========
</TABLE>
See Notes to Financial Statements.
55
AIM V.I. GOVERNMENT SECURITIES FUND
<PAGE>
<TABLE>
<C> <S> <C>
AIM V.I. GOVERNMENT INVESTMENT INCOME:
SECURITIES FUND
STATEMENT OF Interest.......................................................... $ 990,824
OPERATIONS ----------
For the eleven months EXPENSES:
ended December 31, 1995
Advisory fees..................................................... 71,080
Custodian fees.................................................... 13,735
Administrative service fees....................................... 30,769
Directors' fees and expenses...................................... 5,567
Professional fees................................................. 27,942
Organizational costs.............................................. 2,541
Other............................................................. 17,950
----------
Total expenses.................................................. 169,584
----------
Net investment income............................................... 821,240
----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT SECURITIES:
Net realized gain (loss) on sales of investment securities.......... (148,986)
Unrealized appreciation of investment securities.................... 1,343,577
----------
Net gain on investment securities................................... 1,194,591
----------
Net increase in net assets resulting from operations................ $2,015,831
==========
AIM V.I. GOVERNMENT December 31, January 31,
SECURITIES FUND 1995 1995
STATEMENT ------------ -----------
OF CHANGES OPERATIONS:
IN NET ASSETS <S> <C> <C>
For the eleven months Net investment income.............................. $ 821,240 $ 675,548
ended December 31, 1995 Net realized gain (loss) on sales of investment
and the year ended securities........................................ (148,986) (282,363)
January 31, 1995 Net unrealized appreciation (depreciation) of
investment securities............................. 1,343,577 (760,122)
----------- -----------
Net increase (decrease) in net assets resulting
from operations................................. 2,015,831 (366,937)
Net equalization credits............................. 199,339 46,268
Net increase from capital stock transactions......... 5,295,385 3,196,439
Distributions to shareholders from net investment
income.............................................. (852,380) (631,778)
----------- -----------
Net increase in net assets....................... 6,658,175 2,243,992
NET ASSETS:
Beginning of period................................ 12,887,216 10,643,224
----------- -----------
End of period...................................... $19,545,391 $12,887,216
=========== ===========
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in)......... $18,951,306 $13,655,921
Undistributed net investment income................ 409,777 241,578
Undistributed net realized gain (loss) on sales of
investment securities............................. (450,716) (301,730)
Unrealized appreciation (depreciation) of
investment securities............................. 635,024 (708,553)
----------- -----------
$19,545,391 $12,887,216
=========== ===========
</TABLE>
See Notes to Financial Statements.
56
AIM V.I. GOVERNMENT SECURITIES FUND
<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 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. Matters affecting each
December 31, 1995 portfolio are voted on exclusively by the shareholders of such portfolio. The
assets, liabilities and operations of each portfolio are accounted for
separately. Effective December 31, 1995, the Company's fiscal year end was
changed from January 31 to December 31. Information presented in these
financial statements pertains only to the AIM V.I. Government Securities Fund
(the "Fund"). The Fund's investment objective is to achieve a high level of
current income consistent with reasonable concern for safety of principal by
investing in debt securities issued, guaranteed or otherwise backed by the U.S.
Government. Currently, shares of the Fund are sold only to insurance company
separate accounts to fund the benefits of variable annuity contracts.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates. The
following is a summary of the significant accounting policies followed by the
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 either not
readily available or are questionable 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.
Realized gains or losses from securities transactions are recorded on the
identified cost basis.
C. Federal Income Taxes - For federal income tax purposes, each portfolio in
the Company is taxed as a separate entity. 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 $399,008, which expires, if
not previously utilized, through the year 2003.
D. Equalization - The 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.
E. Organizational Costs - Organizational costs for the 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 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. 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 eleven months ended December 31, 1995, AIM was reimbursed $30,769
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 of the
Fund's shares.
Certain officers and directors of the Company are officers of AIM and AIM
Distributors.
</TABLE>
57
AIM V.I. GOVERNMENT SECURITIES FUND
<PAGE>
<TABLE>
<C> <S>
During the eleven months ended December 31, 1995, the Fund incurred legal fees
of $1,602 for services rendered by Kramer, Levin, Naftalis, Nessen, Kamin &
Frankel as counsel to the Board of Directors. A member of that firm is a
director of the Company.
NOTE 3 - DIRECTORS' FEES
Directors' fees represent remuneration paid or accrued to each director who is
not an "interested person" of AIM. The Company may invest a director's 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 Fund during the eleven months ended
December 31, 1995 was $10,613,846 and $5,500,354, respectively.
The amount of unrealized appreciation (depreciation) of investment securities
as of December 31, 1995 is as follows:
</TABLE>
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities............ $675,091
Aggregate unrealized (depreciation) of investment securities.......... (40,067)
--------
Net unrealized appreciation of investment securities.................. $635,024
========
Investments have the same cost for tax and financial statement purposes.
NOTE 5 - CAPITAL STOCK
Changes in capital stock outstanding during the eleven months ended December
31, 1995 and the year ended January 31, 1995 were as follows:
</TABLE>
<TABLE>
<CAPTION>
December 31, 1995 January 31, 1995
-------------------- ---------------------
Shares Amount Shares Amount
-------- ---------- -------- -----------
<S> <C> <C> <C> <C>
Sold.............................. 693,583 $6,660,171 500,188 $ 4,784,080
Issued as reinvestment of
distributions.................... 85,675 852,380 66,676 631,778
Reacquired........................ (229,935) (2,217,166) (234,604) (2,219,419)
-------- ---------- -------- -----------
549,323 $5,295,385 332,260 $ 3,196,439
======== ========== ======== ===========
</TABLE>
NOTE 6 - FINANCIAL HIGHLIGHTS
Shown below are the condensed financial highlights for a
share outstanding of the Fund during the eleven months
ended December 31, 1995, the year ended January 31, 1995,
and the period May 5, 1993 (date operations commenced)
through January 31, 1994.
<TABLE>
<CAPTION>
January 31,
December 31, -------------------
1995 1995 1994
------------ ------- -------
<S> <C> <C> <C>
Net asset value, beginning of period..... $ 9.39 $ 10.24 $ 10.00
------- ------- -------
Income from investment operations:
Net investment income.................. 0.54 0.53 0.38
Net gains (losses) on securities (both
realized and unrealized).............. 0.74 (0.88) 0.10
------- ------- -------
Total from investment operations.. 1.28 (0.35) 0.48
------- ------- -------
Less distributions:
Dividends from net investment income... (0.50) (0.50) (0.24)
------- ------- -------
Total distributions............... (0.50) (0.50) (0.24)
------- ------- -------
Net asset value, end of period........... $ 10.17 $ 9.39 $ 10.24
======= ======= =======
Total return(a).......................... 13.84% (3.42)% 4.78%
======= ======= =======
Ratios/supplemental data:
Net assets, end of period (000s omitted). $19,545 $12,887 $10,643
======= ======= =======
Ratio of expenses to average net assets.. 1.19%(b) 0.95%(c) 1.00%(c)
======= ======= =======
Ratio of net investment income to average
net assets.............................. 5.78%(b) 5.51%(d) 4.74%(d)
======= ======= =======
Portfolio turnover rate.................. 41% 29% 0%
======= ======= =======
------
(a) Total returns for periods less than one year are not annualized.
(b) Ratios are annualized and are based on average net assets of $15,535,425.
(c) 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 January,
1995 and 1994, respectively.
(d) Ratios of net investment income to average net assets prior to waiver of
advisory fees and/or expense reimbursements are 5.35% and 3.94%
(annualized) for January, 1995 and 1994, respectively.
</TABLE>
58
AIM V.I. GOVERNMENT SECURITIES FUND
<PAGE>
<TABLE>
<C> <S>
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
December 31, 1995, the related statement of operations for the eleven month
period then ended, the statement of changes in net assets for the eleven month
period then ended and the year ended January 31, 1995 and the financial
highlights for the eleven month period then ended, the year ended January 31,
1995, 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
December 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. Government Securities Fund, as of December 31, 1995, the results of its
operations for the eleven month period then ended, the changes in its net
assets for the eleven month period then ended and the year ended January 31,
1995 and the financial highlights for the eleven month period then ended, the
year ended January 31, 1995, and the period May 5, 1993 (commencement of
operations) through January 31, 1994, in conformity with generally accepted
accounting principles.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
January 26, 1996
</TABLE>
59
AIM V.I. GOVERNMENT SECURITIES FUND
<PAGE>
AIM V.I. GROWTH FUND During one of the strongest years for stocks on record,
MANAGEMENT'S AIM V.I. Growth Fund gained 34.89% for the 11 months
DISCUSSION ended December 31, 1995. Because the Fund changed its
AND ANALYSIS fiscal year-end from January 31 to December 31, all
performance figures in this report represent the 11-month
period 1/31/95-12/31/95.
The market's strength was broad-based, resuscitating
large-capitalization stocks that had been out of favor
for three years. The popular Dow Jones Industrial Average
(DJIA), which measures the performance of 30 large
capitalization companies, gained a stunning 36.83% during
the reporting period, topped by the Standard & Poor's
Composite Index of 500 Stocks (S&P 500), which gained
37.45%. The S&P 500 is widely regarded by investors as
representative of the stock market in general.
The record advance also netted only modest relative
volatility. The largest correction in the DJIA in 1995
was 3.3%--the first year since 1900 it had experienced
such a scant correction from peak to trough--thanks to
more frequent group rotations within the market. Evolving
market leadership carried various sectors into and out of
favor, yet left the major averages virtually unscathed.
Rising corporate earnings were the most visible catalyst
driving markets during the year. With fourth-quarter
earnings just coming in as of this writing, Barron's
estimated that corporate earnings were up 20% overall for
the year, thanks in particular to upside earnings
surprises.
The Fund was broadly diversified during the reporting
period, with 229 holdings as of December 31, 1995. The
Fund primarily emphasized medical products and services,
technology, and financial services sectors, with the most
significant weighting in pharmaceutical makers,
semiconductor producers, and consumer credit companies.
The Fund's top five equity holdings included:
. Philip Morris Companies, Inc.
. Abbott Laboratories
. Schering-Plough Corp.
. LAM Research Corp.
. Healthsouth Corp.
Of course, the Fund's composition is subject to change
and there is no guarantee the Fund will continue to hold
any particular security.
<TABLE>
<CAPTION>
--------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
1995* Inception**
AIM V.I. Growth Fund 34.89% 15.12%
*1/31/95--12/31/95 (not annualized) **Since Inception 5/5/93
--------------------------------------------------------------
--------------------------------------------------------------
AIM V.I. Lipper Growth
Growth Fund S&P 500 Fund Index
----------- ------- -------------
<S> <C> <C> <C>
GROWTH OF A 5/5/93 $10,000 $10,000 $10,000
HYPOTHETICAL 10,460 10,290 10,430
$10,000 INVESTMENT 11,170 10,472 10,930
12/93 11,066 10,714 11,177
10,686 10,311 10,843
10,155 10,355 10,606
10,876 10,650 11,126
12/94 10,792 10,859 11,001
11,768 11,913 11,797
13,208 13,047 13,059
14,758 14,081 14,245
12/95 14,544 14,926 14,465
Past performance cannot guarantee comparable future results.
--------------------------------------------------------------
</TABLE>
The performance figures shown represent the AIM V.I.
Growth Fund and are not intended to reflect actual
annuity values, and do not reflect charges at the
separate account level which, if applied, would lower the
performance results. The Fund's performance figures are
historical and reflect reinvestment of all distributions
and changes in the net asset value. The Fund's investment
return and principal value will fluctuate so that Fund
shares, when redeemed, may be worth more or less than
their original cost. Source: Towers Data Systems HYPO(R).
The Standard & Poor's Composite Index of 500 Stocks (S&P
500) is a group of unmanaged securities widely regarded
by investors to be representative of the stock market in
general. Source: Towers Data Systems HYPO(R).
Lipper Analytical Services, Inc., is an independent
mutual fund performance monitor. The unmanaged Lipper
Growth Fund Index represents an average of the
performance of the 30 largest growth mutual funds.
Source: Lipper Analytical Services, Inc. Results for the
Lipper Index are for the period 4/30/93 through 12/31/95.
An investment cannot be made in the indexes listed.
Index results include reinvested dividends.
60
AIM V.I. GROWTH FUND
<PAGE>
<TABLE>
<C> <C> <S> <C>
AIM V.I. GROWTH MARKET
FUND SHARES VALUE
SCHEDULE OF ------ ------
INVESTMENTS
December 31, 1995 COMMON STOCKS - 80.43%
AEROSPACE/DEFENSE - 1.06%
6,000 Boeing Co. .............................................. $ 470,258
2,200 Raytheon Co. ............................................ 103,950
5,000 Rockwell International Co. .............................. 264,375
2,600 United Technologies Corp. ............................... 246,675
-----------
1,085,258
-----------
APPLIANCES - 0.75%
20,000 Newell Co. .............................................. 517,500
5,000 Premark International Inc. .............................. 253,125
-----------
770,625
-----------
AUTOMOBILE/TRUCK PARTS & TIRES - 0.51%
14,400 Echlin Inc. ............................................. 525,600
-----------
AUTOMOBILE (MANUFACTURERS) - 0.24%
4,500 Chrysler Corp. .......................................... 249,187
-----------
BANKING - 0.83%
6,500 Corestates Financial Corp. .............................. 246,187
7,000 Norwest Bank Corp. ...................................... 231,000
14,200 Southern National Corp. ................................. 372,750
-----------
849,937
-----------
BANKING (MONEY CENTER) - 0.66%
4,000 BankAmerica Corp. ....................................... 259,000
6,900 Chase Manhattan Corp. ................................... 418,312
-----------
677,312
-----------
BEVERAGES (ALCOHOLIC) - 1.06%
97,800 Bass PLC-ADR............................................. 1,091,307
-----------
BEVERAGES - 0.71%
13,000 PepsiCo Inc. ............................................ 726,375
-----------
BIOTECHNOLOGY - 0.06%
1,400 Guidant Corp. ........................................... 59,150
-----------
BUSINESS SERVICES - 1.22%
10,800 Equifax Inc. ............................................ 230,850
5,500 Healthcare COMPARE Corp.(a).............................. 239,250
11,000 Olsten Corp. (The)....................................... 434,500
11,500 Servicemaster L.P. ...................................... 347,875
-----------
1,252,475
-----------
CHEMICALS (SPECIALTY) - 0.97%
13,000 Cabot Corp. ............................................. 700,375
5,000 W.R. Grace & Co. ........................................ 295,625
-----------
996,000
-----------
COMPUTER MINI/PCS - 3.23%
20,000 COMPAQ Computer Corp.(a)................................. 960,000
26,600 Dell Computer Corp.(a)................................... 921,025
9,000 Digital Equipment Corp.(a)............................... 577,125
6,500 Hewlett-Packard Co. ..................................... 544,375
6,800 Sun Microsystems, Inc.(a)................................ 310,250
-----------
3,312,775
-----------
</TABLE>
61
AIM V.I. GROWTH FUND
<PAGE>
<TABLE>
<C> <S> <C>
MARKET
SHARES VALUE
------ ------
COMPUTER NETWORKING - 3.77%
21,000 Bay Network, Inc.(a)..................................... $ 863,625
3,750 Cabletron Systems, Inc.(a)............................... 303,750
14,000 Cisco Systems, Inc.(a)................................... 1,044,750
23,700 ECI Telecommunications Limited Designs................... 540,656
9,700 Madge Networks N.V.(a)................................... 434,075
14,600 3Com Corp.(a)............................................ 680,725
-----------
3,867,581
-----------
COMPUTER PERIPHERALS - 1.58%
9,500 Adaptec, Inc.(a)......................................... 389,500
15,000 EMC Corp.(a)............................................. 230,625
16,500 Seagate Technology Inc.(a)............................... 783,750
2,500 U.S. Robotics Corp.(a)................................... 219,375
-----------
1,623,250
-----------
COMPUTER SOFTWARE & SERVICES - 4.44%
5,300 Adobe Systems, Inc. ..................................... 328,600
12,700 BMC Software, Inc.(a).................................... 542,925
15,000 Cadence Design Systems, Inc.(a).......................... 630,000
17,600 Computer Associates International, Inc. ................. 1,001,000
11,000 FTP Software, Inc.(a).................................... 319,000
10,000 Mentor Graphics Corp.(a)................................. 182,500
5,500 Microsoft Corp.(a)....................................... 482,625
11,900 SoftKey International Inc.(a)............................ 275,188
4,500 Sterling Software, Inc.(a)............................... 280,687
21,000 Symantec Corp.(a)........................................ 488,250
600 Synopsys, Inc.(a)........................................ 22,800
-----------
4,553,575
-----------
CONGLOMERATES - 1.57%
10,000 Dial Corp. (The)......................................... 296,250
13,000 Loews Corp. ............................................. 1,018,875
8,200 Tyco International Ltd. ................................. 292,125
-----------
1,607,250
-----------
CONTAINERS - 0.55%
10,300 Ball Corp. .............................................. 283,250
6,000 First Brands Corp. ...................................... 285,750
-----------
569,000
-----------
COSMETICS & TOILETRIES - 0.45%
3,800 Alberto-Culver Co. - Class A............................. 115,900
2,000 Gillette Co. (The)....................................... 104,250
3,000 Procter & Gamble Co. .................................... 249,000
-----------
469,150
-----------
ELECTRONIC COMPONENTS - 2.19%
13,000 Amphenol Corp.(a)........................................ 315,250
9,800 Anixter International Inc.(a)............................ 182,525
900 AVX Corp. ............................................... 23,850
10,000 Elsag Bailey Process Automation N.V.(a).................. 268,750
9,200 Tektronix, Inc. ......................................... 451,950
40,000 Teradyne, Inc.(a)........................................ 1,000,000
-----------
2,242,325
-----------
</TABLE>
62
AIM V.I. GROWTH FUND
<PAGE>
<TABLE>
<C> <C> <S> <C>
MARKET
SHARES VALUE
------ ------
ELECTRONIC/PC DISTRIBUTORS - 1.52%
17,000 Arrow Electronics, Inc.(a)............................... $ 733,125
18,500 Avnet, Inc. ............................................. 827,875
-----------
1,561,000
-----------
ELECTRONICS/DEFENSE - 0.21%
3,000 Sundstrand Corp. ........................................ 211,125
-----------
FINANCE (ASSET MANAGEMENT) - 1.52%
25,000 Bear Stearns Companies, Inc. (The)....................... 496,875
10,800 Finova Group, Inc. ...................................... 521,100
3,000 Morgan Stanley Group, Inc. .............................. 241,875
15,100 PaineWebber Group, Inc. ................................. 302,000
-----------
1,561,850
-----------
FINANCE (CONSUMER CREDIT) - 5.07%
28,000 Countrywide Credit Industries, Inc. ..................... 609,000
10,000 Dean Witter Discover & Co. .............................. 470,000
9,000 Federal Home Loan Mortgage Corp. ........................ 751,500
3,000 Federal National Mortgage Association.................... 372,375
9,500 First USA, Inc. ......................................... 421,562
17,000 Green Tree Acceptance, Inc. ............................. 448,375
4,500 Household International, Inc. ........................... 266,063
25,000 MBNA Corp. .............................................. 921,875
12,000 Mercury Finance Co. ..................................... 159,000
4,100 PMI Group, Inc. (The).................................... 185,525
5,900 Student Loan Marketing Association....................... 388,662
8,000 United Companies Financial Corp. ........................ 211,000
-----------
5,204,937
-----------
FINANCE (SAVINGS & LOAN) - 0.32%
12,100 Greenpoint Financial Corp. .............................. 323,675
-----------
FOOD PROCESSING - 0.59%
4,500 ConAgra, Inc. ........................................... 185,625
11,700 Hudson Foods, Inc. ...................................... 201,825
5,966 Lancaster Colony Corp. .................................. 222,233
-----------
609,683
-----------
FUNERAL SERVICES - 0.61%
14,200 Service Corp. International.............................. 624,800
-----------
HOTELS/MOTELS - 0.92%
4,600 Hospitality Franchise Systems, Inc.(a)................... 376,050
20,900 La Quinta Inns, Inc. .................................... 572,137
-----------
948,187
-----------
INSURANCE (LIFE & HEALTH) - 0.67%
2,200 Conseco, Inc. ........................................... 137,775
10,000 First Colony Corp. ...................................... 253,750
5,500 Lincoln National Corp. .................................. 295,625
-----------
687,150
-----------
</TABLE>
63
AIM V.I. GROWTH FUND
<PAGE>
<TABLE>
<C> <C> <S> <C>
MARKET
SHARES VALUE
------ ------
INSURANCE (MULTI-LINE PROPERTY) - 1.50%
13,000 Ace, Ltd. ............................................... $ 516,750
4,500 CIGNA Corp. ............................................. 464,625
1,100 General Re Corp. ........................................ 170,500
4,500 Mid Ocean Ltd. .......................................... 167,062
9,400 Prudential Reinsurance Holdings, Inc. ................... 219,725
-----------
1,538,662
-----------
LEISURE & RECREATION - 1.39%
24,000 Brunswick Corp. ......................................... 576,000
19,000 Carnival Cruise Lines, Inc. - Class A.................... 463,125
4,500 Coleman Company, Inc. (The)(a)........................... 158,063
7,400 Mattel, Inc. ............................................ 227,550
-----------
1,424,738
-----------
MACHINERY (HEAVY) - 0.27%
8,000 Deere & Co. ............................................. 282,000
-----------
MACHINERY (MISCELLANEOUS) - 1.45%
30,000 American Standard Companies(a)........................... 840,000
12,400 Thermo Electron Corp.(a)................................. 644,800
-----------
1,484,800
-----------
MEDICAL (DRUGS) - 8.96%
35,000 Abbott Laboratories...................................... 1,461,251
7,500 American Home Products Corp. ............................ 727,500
10,000 AmeriSource Health Corp.(a).............................. 330,000
9,000 Cardinal Health, Inc. ................................... 492,750
1,200 Ciba-Geigy AG-ADR........................................ 1,055,916
5,000 Johnson & Johnson........................................ 428,125
8,100 Merck & Co., Inc. ....................................... 532,575
12,800 Mylan Laboratories, Inc. ................................ 300,800
6,800 Pfizer Inc. ............................................. 428,400
26,000 Pharmacia & Upjohn, Inc. ................................ 1,007,500
1,600 Roussel Uclaf-ADR........................................ 271,186
24,700 Schering-Plough Corp. ................................... 1,352,325
12,000 Teva Pharmaceutical Industries Ltd.-ADR.................. 556,500
5,000 Watson Pharmaceuticals, Inc.(a).......................... 245,000
-----------
9,189,828
-----------
MEDICAL (INSTRUMENTS/PRODUCTS) - 2.27%
11,000 Baxter International Inc. ............................... 460,625
3,600 Becton, Dickinson & Co. ................................. 270,000
11,000 Biomet, Inc.(a).......................................... 196,625
5,400 Boston Scientific Corp.(a)............................... 264,600
8,400 Heart Technology, Inc.(a)................................ 276,150
4,000 Medtronic, Inc. ......................................... 223,500
13,000 St. Jude Medical, Inc.(a)................................ 559,000
1,500 Stryker Corp. ........................................... 78,750
-----------
2,329,250
-----------
</TABLE>
64
AIM V.I. GROWTH FUND
<PAGE>
<TABLE>
<C> <C> <S> <C>
MARKET
SHARES VALUE
------ ------
MEDICAL (PATIENT SERVICES) - 3.33%
12,000 Foundation Health Corp.(a)............................... $ 516,000
8,850 Health Management Associates, Inc.(a).................... 231,206
17,400 Healthsource, Inc.(a).................................... 626,400
38,300 Healthsouth Corp.(a)..................................... 1,115,487
3,400 Lincare Holdings, Inc.(a)................................ 85,000
15,000 Sybron International Corp.(a)............................ 356,250
14,900 Vencor, Inc.(a).......................................... 484,250
-----------
3,414,593
-----------
OFFICE AUTOMATION - 0.57%
2,800 Danka Business Systems PLC-ADR........................... 103,600
3,500 Xerox Corp. ............................................. 479,500
-----------
583,100
-----------
OFFICE PRODUCTS - 0.51%
5,000 Avery Dennison Corp. .................................... 250,625
7,000 Reynolds & Reynolds Co. - Class A........................ 272,125
-----------
522,750
-----------
OIL & GAS SERVICES - 0.44%
10,100 Sonat Offshore Drilling Inc. ............................ 451,975
-----------
OIL EQUIPMENT & SUPPLIES - 0.30%
6,000 Halliburton Co. ......................................... 303,750
-----------
RESTAURANTS -- 0.64%
12,000 Applebee's International, Inc. .......................... 273,000
8,000 Outback Steakhouse, Inc.(a).............................. 287,000
4,700 Wendy's International, Inc. ............................. 99,875
-----------
659,875
-----------
RETAIL (FOOD & DRUGS) - 1.53%
13,700 Hannaford Bros. Co. ..................................... 337,362
12,300 Kroger Co.(a)............................................ 461,250
14,900 Safeway Inc.(a).......................................... 767,350
-----------
1,565,962
-----------
RETAIL (STORES) - 3.81%
9,600 AutoZone, Inc. (a)....................................... 277,200
9,000 Circuit City Stores, Inc. ............................... 248,625
19,000 Consolidated Stores Corp.(a)............................. 413,250
3,000 Fila Holding S.p.A. ..................................... 136,500
6,000 Gap, Inc. (The).......................................... 252,000
30,000 Intimate Brands, Inc. ................................... 450,000
16,000 Office Depot, Inc.(a).................................... 316,000
30,000 Price/Costco, Inc.(a).................................... 457,500
6,500 Sears Roebuck & Co. ..................................... 253,500
5,850 Staples, Inc.(a)......................................... 142,593
4,700 Tandy Corp. ............................................. 195,050
11,900 Viking Office Products Inc.(a)........................... 553,350
11,600 Waban Inc.(a)............................................ 217,500
-----------
3,913,068
-----------
SCIENTIFIC INSTRUMENTS - 0.79%
17,000 Varian Associates, Inc. ................................. 811,750
-----------
</TABLE>
65
AIM V.I. GROWTH FUND
<PAGE>
<TABLE>
<C> <C> <S> <C>
MARKET
SHARES VALUE
------ ------
SEMICONDUCTORS - 8.24%
7,500 Altera Corp.(a)......................................... $ 373,125
18,800 Analog Devices, Inc.(a)................................. 665,050
25,000 Applied Materials, Inc.(a).............................. 984,375
30,000 Atmel Corp.(a).......................................... 671,250
19,900 Cypress Semiconductor Corp.(a).......................... 253,725
7,100 Integrated Device Technology, Inc.(a)................... 91,413
7,300 Intel Corp. ............................................ 414,275
18,000 KLA Instruments Corp.(a)................................ 469,125
25,000 LAM Research Corp.(a)................................... 1,143,750
12,000 Linear Technology Corp. ................................ 471,000
6,600 LSI Logic Corp.(a)...................................... 216,150
4,800 Novellus Systems, Inc.(a)............................... 259,200
15,500 SGS Thompson Microelectronics N.V.-New York Shares-
ADR(a)................................................. 623,875
10,500 Solectron Corp.(a)...................................... 463,312
7,000 Texas Instruments Inc. ................................. 362,250
26,470 Vishay Intertechnology, Inc.(a)......................... 833,805
9,000 VLSI Technology, Inc.(a)................................ 163,125
-----------
8,458,805
-----------
SHOES & RELATED APPAREL - 0.68%
10,000 Nike, Inc. - Class B.................................... 696,250
-----------
TELECOMMUNICATIONS - 4.34%
15,000 A T & T Corp............................................ 971,250
9,000 Glenayre Technologies, Inc.(a).......................... 560,250
13,900 Northern Telcom LTD..................................... 597,700
12,500 Sprint Corp............................................. 498,437
7,000 Telecomunicacoes Brasileiras S.A. - Telebras-ADR........ 331,625
52,000 Telefonaktiebolaget L.M. Ericsson-ADR................... 1,014,000
13,000 Tellabs, Inc.(a)........................................ 481,000
-----------
4,454,262
-----------
TOBACCO - 1.90%
21,500 Philip Morris Companies, Inc. .......................... 1,945,750
-----------
TRANSPORTATION (MISCELLANEOUS) - 0.23%
8,000 Stolt-Nielsen S.A....................................... 231,000
-----------
Total Common Stocks................................... 82,522,707
-----------
CONVERTIBLE CORPORATE BONDS - 0.60%
COMPUTER NETWORKING - 0.19%
125,000 3Com Corp., Sub. Notes, 10.25%, 11/01/01................ 200,625
-----------
OFFICE AUTOMATION - 0.41%
300,000 Danka Business Systems PLC-ADR, 6.75%, 04/01/02......... 419,250
-----------
Total Convertible Corporate Bonds .................... 619,875
-----------
CONVERTIBLE PREFERRED STOCK - 0.17%
FINANCE (CONSUMER CREDIT) - 0.17%
2,600 SunAmerica Inc. - Series E, $3.10 Conv. Pfd............. 170,300
-----------
</TABLE>
66
AIM V.I. GROWTH FUND
<PAGE>
<TABLE>
<C> <C> <S> <C>
PRINCIPAL
AMOUNT MARKET VALUE
--------- ------------
U.S. TREASURY SECURITIES - 16.50%
U.S. Treasury Bills - 16.01%(b)
$ 3,000,000(c) 5.27%, 03/28/96.................................. $ 2,966,377
6,000,000(c) 5.38%, 04/04/96.................................. 5,925,630
710,000(c) 5.32%, 04/11/96.................................. 700,641
7,000,000 5.22%, 06/27/96.................................. 6,833,615
------------
16,426,263
------------
U.S. Treasury Notes - 0.49%
500,000 4.625%, 02/29/96................................. 499,760
------------
Total U.S. Treasury Securities................... 16,926,023
------------
REPURCHASE AGREEMENT - 2.19%(d)
Daiwa Securities America, Inc.
2,245,485 5.92%, 01/02/96(e)............................... 2,245,485
------------
TOTAL INVESTMENTS - 99.89%....................... 102,484,390
OTHER ASSETS LESS LIABILITIES - 0.11%............ 115,722
------------
NET ASSETS -- 100.00%............................ $102,600,112
============
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 balance was pledged as
collateral to cover margin requirements for open
futures contracts. 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 agreements. The
collateral is marked to market daily to ensure its
market value as being 102 percent of the sales price
of the repurchase agreement. The investments in some
repurchase agreements are through participation in
joint accounts with other mutual funds managed by the
investment advisor.
(e) Joint repurchase agreement entered into on 12/29/95
with a maturing value of $646,679,181. Collateralized
by $537,995,000 U.S. Treasury obligations, 7.875% to
11.25% due 11/15/07 to 02/15/15.
INVESTMENT ABBREVIATIONS:
ADR-American Depositary Receipts
Conv.-Convertible
Pfd.-Preferred
Sub.-Subordinated
See Notes to Financial Statements.
</TABLE>
67
AIM V.I. GROWTH FUND
<PAGE>
<TABLE>
<C> <S> <C>
AIM V.I. GROWTH ASSETS:
FUND
STATEMENT OF Investments, at market value (cost $92,358,116)................... $102,484,390
ASSETS AND Foreign currencies, at market value (cost $641,265)............... 648,559
LIABILITIES Receivables for:
December 31, 1995 Capital stock sold.............................................. 88,795
Investments sold................................................ 683,945
Dividends and interest.......................................... 137,105
Variation margin................................................ 19,250
Organizational costs, net......................................... 6,749
Investment for deferred compensation plan......................... 7,898
Other assets...................................................... 525
------------
Total assets.................................................. 104,077,216
------------
LIABILITIES:
Payables for:
Investments purchased........................................... 1,387,014
Deferred compensation plan...................................... 7,898
Accrued advisory fees............................................. 55,433
Accrued directors' fees........................................... 1,660
Accrued administrative services fees.............................. 2,845
Accrued operating expenses........................................ 22,254
------------
Total liabilities............................................. 1,477,104
------------
Net assets applicable to shares outstanding....................... $102,600,112
============
Capital shares, $.001 par value per share:
Authorized...................................................... 250,000,000
============
Outstanding..................................................... 7,107,114
============
Net asset value, offering and redemption price per share.......... $14.44
======
See Notes to Financial Statements.
</TABLE>
68
AIM V.I. GROWTH FUND
<PAGE>
<TABLE>
<C> <S> <C>
AIM V.I. GROWTH INVESTMENT INCOME:
FUND
STATEMENT OF Dividends...................................................... $ 564,913
OPERATIONS Interest....................................................... 635,065
For the eleven months ended -----------
December 31, 1995 Total investment income....................................... 1,199,978
-----------
EXPENSES:
Advisory fees.................................................. 434,620
Custodian fees................................................. 49,398
Professional fees.............................................. 33,773
Administrative services fees................................... 32,425
Directors' fees and expenses................................... 5,595
Organizational costs........................................... 2,651
Other.......................................................... 4,081
-----------
Total expenses................................................ 562,543
-----------
Net investment income............................................ 637,435
-----------
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT SECURITIES,
FOREIGN CURRENCIES, FUTURES AND OPTIONS CONTRACTS:
Net realized gain (loss) from:
Investment securities.......................................... 7,894,383
Foreign currency transactions.................................. 3,644
Futures contracts.............................................. 1,622,546
Options contracts.............................................. (9,468)
-----------
9,511,105
-----------
Unrealized appreciation (depreciation) of:
Investment securities.......................................... 8,377,556
Foreign currencies............................................. 4,245
Futures contracts.............................................. (18,501)
Options contracts.............................................. (5,395)
-----------
8,357,905
-----------
Net gain on investment securities, foreign currencies, futures
and options contracts........................................... 17,869,010
-----------
Net increase in net assets resulting from operations............. $18,506,445
===========
</TABLE>
<TABLE>
DECEMBER 31, JANUARY 31,
1995 1995
AIM V.I. GROWTH ------------ -----------
FUND <S> <C> <C>
STATEMENT OPERATIONS:
OF CHANGES
IN NET ASSETS Net investment income............................. $ 637,435 $ 251,660
For the eleven months ended Net realized gain (loss) from investment
December 31, 1995 and for the securities, foreign currency transactions,
year ended January 31, 1995 futures and options contracts.................... 9,511,105 (1,983,553)
Net unrealized appreciation (depreciation) of
investment securities, futures and options
contracts........................................ 8,357,905 (134,010)
------------ -----------
Net increase (decrease) in net assets resulting
from operations................................. 18,506,445 (1,865,903)
Net increase from capital stock transactions...... 38,645,259 22,469,536
Distributions to shareholders from net investment
income........................................... (48,608) (221,516)
------------ -----------
Net increase in net assets....................... 57,103,096 20,382,117
NET ASSETS:
Beginning of period............................... 45,497,016 25,114,899
------------ -----------
End of period..................................... $102,600,112 $45,497,016
============ ===========
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in)........ $ 84,619,787 $45,974,528
Undistributed net investment income............... 628,628 39,801
Undistributed net realized gain (loss) from
investment securities, foreign currency
transactions, futures and options contracts ..... 7,067,210 (2,443,895)
Unrealized appreciation of investment securities,
futures and options contracts.................... 10,284,487 1,926,582
------------ -----------
$102,600,112 $45,497,016
============ ===========
See Notes to Financial Statements.
</TABLE>
69
AIM V.I. GROWTH FUND
<PAGE>
<TABLE>
<C> <S>
AIM V.I. GROWTH 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. Matters affecting each
December 31, 1995 portfolio are voted on exclusively by the shareholders of such portfolio. The
assets, liabilities and operations of each portfolio are accounted for
separately. Effective December 31, 1995, the Company's fiscal year end was
changed from January 31 to December 31. Information presented in these
financial statements pertains only to the AIM V.I. Growth Fund (the "Fund").
The Fund's investment objective is to seek growth of capital principally
through investment in common stocks of seasoned and better capitalized
companies considered by AIM to have strong earnings momentum. Currently, 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. The preparation of
financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
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. If no mean
is available, as is the case in some foreign market, the closing bid will be
used absent a last sales price. Exchange listed convertible debt is valued
at the mean between the closing bid and asked prices obtained from a broker-
dealer. 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. Securities for which market quotations either are
not readily available or are questionable 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.
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. 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. On December 31, 1995, undistributed
net investment income was increased and undistributed net realized gains
reduced by $3,644 in order to comply with the requirements of the American
Institute of Certified Public Accountants Statement of Position 93-2. Net
assets of the Fund were unaffected by the reclassification discussed above.
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. Organizational Costs - Organizational costs of $14,461 are being amortized
over five years.
E. 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,
</TABLE>
70
AIM V.I. GROWTH FUND
<PAGE>
<TABLE>
<C> <S>
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
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.
F. 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. 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.
G. 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.
H. 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 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.
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. This agreement
requires AIM to reduce its fee 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 eleven months ended December 31, 1995, AIM was reimbursed $32,425
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.
</TABLE>
71
AIM V.I. GROWTH FUND
<PAGE>
<TABLE>
<C> <S>
Certain officers and directors of the Company are officers of AIM and AIM
Distributors.
During the eleven months ended December 31, 1995, the Fund incurred legal fees
of $2,229 for services rendered by Kramer, Levin, Naftalis, Nessen, Kamin &
Frankel as counsel to the Board of Directors. A member of that firm is a
director of the Company.
NOTE 3 - DIRECTORS' FEES
Directors' fees represent remuneration paid or accrued to each director who is
not an "interested person" of AIM. 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 eleven months ended
December 31, 1995 was $108,571,363 and $77,394,812, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
on a tax basis, as of December 31, 1995 is as follows:
</TABLE>
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities......... $12,238,608
Aggregate unrealized (depreciation) of investment securities....... (2,339,385)
-----------
Net unrealized appreciation of investment securities............... $ 9,899,223
===========
</TABLE>
<TABLE>
<C> <S>
Cost of investments for tax purposes is $92,585,167.
NOTE 5 - CAPITAL STOCK
Changes in capital stock outstanding during the eleven months ended December
31, 1995 and the year ended January 31, 1995 were as follows:
</TABLE>
<TABLE>
<CAPTION>
December 31, 1995 January 31, 1995
---------------------- ----------------------
Shares Amount Shares Amount
--------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Sold........................... 3,110,541 $41,750,413 2,275,155 $24,585,827
Issued as reinvestment of
distributions................. 3,426 48,608 21,037 221,516
Reacquired..................... (255,480) (3,153,762) (215,349) (2,337,807)
--------- ----------- --------- -----------
2,858,487 $38,645,259 2,080,843 $22,469,536
========= =========== ========= ===========
</TABLE>
<TABLE>
<C> <S>
NOTE 6 - OPEN FUTURES CONTRACTS
On December 31, 1995, $612,000 principal amount of U.S. Treasury Bills were
pledged as collateral to cover margin requirements for open futures contracts.
Open futures contracts at December 31, 1995 were as follows:
</TABLE>
<TABLE>
<CAPTION>
Unrealized
Contract No. of Contracts/Month/Commitment Appreciation
-------- --------------------------------- ------------
<S> <C> <C>
S&P 500 index.................... 55 contracts/March 96/Buy $153,968
</TABLE>
<TABLE>
<C> <S>
NOTE 7 - OPEN COVERED CALL OPTIONS CONTRACTS WRITTEN
Transactions in call options written during the eleven months ended December
31, 1995 are summarized as follows:
</TABLE>
<TABLE>
<CAPTION>
Options Contracts
-------------------------
Number of Premiums
Contracts Received
---------- ------------
<S> <C> <C>
Beginning of period......................................... 66 $ 9,120
Written..................................................... 45 8,866
Exercised................................................... (33) (5,079)
Expired..................................................... (33) (4,041)
Closed...................................................... (45) (8,866)
--- -------
End of period............................................... 0 $ 0
=== =======
</TABLE>
72
AIM V.I. GROWTH FUND
<PAGE>
<TABLE>
<C> <S>
NOTE 8 - FINANCIAL HIGHLIGHTS
Shown below are the condensed financial highlights for a share outstanding of
the Fund during the eleven months ended December 31, 1995, the year ended
January 31, 1995 and the period May 5, 1993 (date operations commenced) through
January 31, 1994.
</TABLE>
<TABLE>
<CAPTION>
January 31,
December 31, -----------------
1995 1995 1994
------------ ------- -------
<S> <C> <C> <C>
Net asset value, beginning of period...... $ 10.71 $ 11.59 $ 10.00
-------- ------- -------
Income from investment operations:
Net investment income................... 0.09 0.06 0.02
Net gains (losses) on securities (both
realized and unrealized)............... 3.65 (0.88) 1.59
-------- ------- -------
Total from investment operations....... 3.74 (0.82) 1.61
-------- ------- -------
Less distributions:
Dividends from net investment income.... (0.01) (0.06) (0.02)
-------- ------- -------
Net asset value, end of period............ $ 14.44 $ 10.71 $ 11.59
======== ======= =======
Total return.............................. 34.89%(a) (7.11)% 16.07%(a)
======== ======= =======
Ratios/supplemental data:
Net assets, end of period (000s omitted).. $102,600 $45,497 $25,115
======== ======= =======
Ratio of expenses to average net assets... 0.84%(b) 0.95% 0.85%(c)
======== ======= =======
Ratio of net investment income to average
net assets............................... 0.95%(b) 0.71% 0.51%(c)
======== ======= =======
Portfolio turnover rate................... 125% 179% 99%
======== ======= =======
------
(a) Total return is not annualized.
(b) Ratios are annualized and based on average net assets
of $73,070,671.
(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>
73
AIM V.I. GROWTH FUND
<PAGE>
<TABLE>
<C> <S>
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 December 31, 1995, the
related statement of operations for the eleven month period then ended, the
statement of changes in net assets for the eleven month period then ended and
the year ended January 31, 1995 and the financial highlights for the eleven
month period then ended, the year ended January 31, 1995 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 amount and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1995, by correspondence with the custodian and brokers. 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 December 31, 1995, the results of its operations for
the eleven month period then ended, the changes in its net assets for the
eleven month period then ended and the year ended January 31, 1995 and the
financial highlights for the eleven month period then ended, the year ended
January 31, 1995 and the period May 5, 1993 through January 31, 1994, in
conformity with generally accepted accounting principles.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
January 26, 1996
</TABLE>
74
AIM V.I. GROWTH FUND
<PAGE>
AIM V.I. GROWTH AND AIM V.I. Growth and Income Fund posted a strong inaugural
INCOME FUND performance of 32.65% for the 11 months ended December
MANAGEMENT'S 31, 1995, as falling interest rates and healthy corporate
DISCUSSION profits fueled record-breaking rallies in stock and bond
AND ANALYSIS markets during 1995. Because the Fund changed its fiscal
year-end from January 31 to December 31, all performance
figures in this report represent the 11-month period
1/31/95-12/31/95.
After boosting interest rates at a record clip in 1994,
the Federal Reserve Bank reversed its policy and eased
interest rates twice in 1995. With interest rates on the
retreat, investors poured funds into equities and equity
funds. Earnings drive stock prices, and Barron's recently
reported that corporate earnings had risen by 20% for
1995.
As equity markets sprinted ahead, declining interest
rates and receding inflation helped bond markets thrive
as well. Investors were especially attracted to high
quality issues of intermediate term maturity.
As of December 31, 1995, the Fund was invested in 183
securities, with the largest concentrations in domestic
stocks (72%), domestic convertible bonds (14%), and
domestic convertible preferred stock (6%). The Fund
primarily emphasized medical, technology, and financial
services sectors. The Fund's top 5 holdings included
securities issued by:
. Philip Morris Companies, Inc.
. Texas Instruments Inc.
. Xerox Corp.
. AT&T Corp.
. Citicorp
Of course, the Fund's composition is subject to change
and there is no guarantee the Fund will continue to hold
any particular security.
<TABLE>
<CAPTION>
----------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
1995* Inception**
AIM V.I. Growth and Income Fund 32.65% 19.20%
*1/31/95--12/31/95 (not annualized) **Since Inception 5/2/94
----------------------------------------------------------------------
----------------------------------------------------------------------
AIM Growth Lipper Growth
& Income Fund S&P 500 & Income Fund Index
-------------- ---------- --------------------
<S> <C> <C> <C>
GROWTH OF A 5/2/94 $10,000 10,000 10,000
HYPOTHETICAL 9,770 9,882 9,918
$10,000 INVESTMENT 10,194 10,365 10,327
12/94 9,999 10,363 10,127
10,866 11,369 10,922
12,012 12,451 11,818
13,299 13,437 12,698
12/95 13,385 14,244 13,213
Past performance cannot guarantee comparable future results.
</TABLE>
The performance figures shown represent the AIM V.I.
Growth and Income Fund and are not intended to reflect
actual annuity values, and do not reflect charges at the
separate account level which, if applied, would lower the
performance results. The Fund's performance figures are
historical and reflect reinvestment of all distributions
and changes in the net asset value. The Fund's investment
return and principal value will fluctuate so that Fund
shares, when redeemed, may be worth more or less than
their original cost. Source: Towers Data Systems HYPO(R).
The Standard & Poor's Composite Index of 500 Stocks (S&P
500) is a group of unmanaged securities widely regarded
by investors to be representative of the stock market in
general. Source: Towers Data Systems HYPO(R).
Lipper Analytical Services, Inc., is an independent
mutual fund performance monitor. The Lipper Growth and
Income Fund Index represents an unmanaged average of the
performance of the 30 largest growth and income funds.
Source: Lipper Analytical Services, Inc. Results for the
Lipper Index are for the period 4/30/94 through 12/31/95.
An investment cannot be made in the indexes listed.
Index results include reinvested dividends.
75
AIM V.I. GROWTH AND INCOME FUND
<PAGE>
<TABLE>
<C> <S> <C>
AIM V.I. GROWTH AND MARKET
INCOME FUND SHARES VALUE
SCHEDULE OF ------ ------
INVESTMENTS
December 31, 1995 COMMON STOCKS - 72.42%
ADVERTISING/BROADCASTING - 0.50%
5,000 CKS Group, Inc.(a)....................................... $ 195,000
-----------
AEROSPACE/DEFENSE - 1.43%
2,000 Boeing Co. (The)......................................... 156,750
3,000 Rockwell International Corp. ............................ 158,625
2,500 United Technologies Corp. ............................... 237,187
-----------
552,562
-----------
AUTOMOBILE (MANUFACTURERS) - 0.69%
3,000 Chrysler Corp. .......................................... 166,125
3,400 Ford Motor Co. .......................................... 98,600
-----------
264,725
-----------
BANKING - 1.09%
4,000 Bank of Boston Corp. .................................... 185,000
3,000 Fleet Financial Group, Inc. ............................. 122,250
3,400 Norwest Bank Corp. ...................................... 112,200
-----------
419,450
-----------
BANKING (MONEY CENTER) - 2.18%
3,000 BankAmerica Corp. ....................................... 194,250
3,000 Chemical Banking Corp. .................................. 176,250
7,000 Citicorp................................................. 470,750
-----------
841,250
-----------
BEVERAGES - 0.87%
6,000 PepsiCo Inc. ............................................ 335,250
-----------
BUILDING MATERIALS - 0.74%
2,800 Black & Decker Corp. (The)............................... 98,700
6,000 Masco Corp. ............................................. 188,250
-----------
286,950
-----------
BUSINESS SERVICES - 0.92%
3,000 Diebold, Inc. ........................................... 166,125
8,800 Equifax, Inc. ........................................... 188,100
-----------
354,225
-----------
CHEMICALS (SPECIALTY) - 0.53%
5,000 IMC Global, Inc. ........................................ 204,375
-----------
COMPUTER MAINFRAMES - 0.47%
2,000 International Business Machines Corp. ................... 183,500
-----------
COMPUTER MINI/PCS - 2.60%
5,500 COMPAQ Computer Corp.(a)................................. 264,000
5,000 Dell Computer Corp.(a)................................... 173,125
4,600 Hewlett-Packard Co. ..................................... 385,250
4,000 Sun Microsystems, Inc.(a)................................ 182,500
-----------
1,004,875
-----------
COMPUTER NETWORKING - 2.32%
2,400 Cabletron Systems, Inc.(a)............................... 194,400
4,000 Cisco Systems, Inc.(a)................................... 298,500
8,000 ECI Telecommunications Ltd. ............................. 182,500
4,000 Harris Corp. ............................................ 218,500
-----------
893,900
-----------
</TABLE>
76
AIM V.I. GROWTH AND INCOME FUND
<PAGE>
<TABLE>
<C> <C> <S> <C>
MARKET
SHARES VALUE
------ ------
COMPUTER PERIPHERALS - 1.24%
2,000 Adaptec, Inc.(a)......................................... $ 82,000
5,000 Oracle Systems Corp.(a).................................. 211,875
2,000 Seagate Technology Inc.(a)............................... 95,000
1,000 U.S. Robotics Corp.(a)................................... 87,750
-----------
476,625
-----------
COMPUTER SOFTWARE/SERVICES - 2.52%
2,500 BMC Software, Inc.(a).................................... 106,875
6,900 Computer Associates International, Inc. ................. 392,437
2,000 Microsoft Corp.(a)....................................... 175,500
3,600 Shared Medical Systems Corp. ............................ 195,750
4,400 SoftKey International, Inc.(a)........................... 101,750
-----------
972,312
-----------
CONGLOMERATES - 1.10%
2,500 Allied-Signal Inc. ...................................... 118,750
3,500 Corning, Inc. ........................................... 112,000
6,500 Dial Corp. .............................................. 192,562
-----------
423,312
-----------
COSMETICS & TOILETRIES - 2.45%
3,400 Colgate-Palmolive Co. ................................... 238,850
3,000 Procter & Gamble Co. .................................... 249,000
3,500 Tambrands Inc. .......................................... 167,125
3,000 Warner-Lambert Co. ...................................... 291,375
-----------
946,350
-----------
ELECTRIC POWER - 2.59%
3,000 Baltimore Gas & Electric Co. ............................ 85,500
2,500 Carolina Power & Light Co. .............................. 86,250
2,000 Duke Power Co. .......................................... 94,750
2,200 FPL Group, Inc. ......................................... 102,025
3,500 General Public Utilities Corp. .......................... 119,000
4,000 Houston Industries, Inc. ................................ 97,000
2,000 Northern States Power Co. ............................... 98,250
4,000 NYNEX Corp. ............................................. 216,000
4,000 Southern Co. ............................................ 98,500
-----------
997,275
-----------
ELECTRONIC COMPONENTS/MISCELLANEOUS - 2.30%
3,000 AMP Inc. ................................................ 115,125
5,000 General Electric Co. .................................... 360,000
2,000 Honeywell, Inc. ......................................... 97,250
4,000 Parker-Hannifin Corp. ................................... 137,000
1,600 Tektronix, Inc. ......................................... 78,600
4,000 Teradyne, Inc.(a)........................................ 100,000
-----------
887,975
-----------
ELECTRONIC/DEFENSE - 0.79%
2,600 Loral Corp. ............................................. 91,975
3,000 Sundstrand Corp. ........................................ 211,125
-----------
303,100
-----------
ELECTRONIC/PC DISTRIBUTORS - 1.19%
3,000 Arrow Electronics, Inc.(a)............................... 129,375
5,000 Avnet, Inc. ............................................. 223,750
3,000 Wyle Electronics......................................... 105,375
-----------
458,500
-----------
</TABLE>
77
AIM V.I. GROWTH AND INCOME FUND
<PAGE>
<TABLE>
<C> <C> <S> <C>
MARKET
SHARES VALUE
------ ------
FINANCE (ASSET MANAGEMENT) - 0.95%
4,000 Merrill Lynch & Co., Inc. ............................... $ 204,000
2,000 Morgan Stanley Group, Inc. .............................. 161,250
-----------
365,250
-----------
FINANCE (CONSUMER CREDIT) - 4.21%
3,500 American Express Co. .................................... 144,812
8,000 Countrywide Credit Industries, Inc. ..................... 174,000
2,200 Federal Home Loan Mortgage Corp. ........................ 183,700
2,000 Federal National Mortgage Association.................... 248,250
2,400 Firstar Corp. ........................................... 95,100
5,000 Green Tree Financial Corp. .............................. 131,875
5,000 Household International, Inc. ........................... 295,625
4,500 MBNA Corp. .............................................. 165,938
14,000 Mercury Finance Co. ..................................... 185,500
-----------
1,624,800
-----------
FOOD PROCESSING - 0.74%
3,500 Nabisco Holdings Corp. .................................. 114,187
5,000 Quaker Oats Co. ......................................... 172,500
-----------
286,687
-----------
INSURANCE (MULTI-LINE PROPERTY) - 3.04%
6,000 Aetna Life & Casualty Co. ............................... 415,500
5,000 Allstate Financial Corp. ................................ 205,625
3,500 CIGNA Corp. ............................................. 361,375
3,000 Travelers Group, Inc. ................................... 188,625
-----------
1,171,125
-----------
LEISURE & RECREATION - 0.28%
4,500 Carnival Cruise Lines, Inc. - Class A.................... 109,687
-----------
MACHINERY (HEAVY) - 0.24%
2,000 Case Corp. .............................................. 91,500
-----------
MEDICAL (DRUGS) - 7.53%
3,000 American Home Products Corp. ............................ 291,000
3,500 Glaxo Wellcome PLC-ADR................................... 98,875
4,000 Johnson & Johnson........................................ 342,500
4,000 Lilly (Eli) & Co. ....................................... 225,000
3,500 Merck & Co., Inc. ....................................... 230,125
4,000 Pfizer Inc. ............................................. 252,000
10,000 Pharmacia & Upjohn, Inc. ................................ 387,500
4,500 Rhone-Poulenc Rorer, Inc. ............................... 239,625
6,000 Schering-Plough Corp. ................................... 328,500
5,000 SmithKline Beecham PLC-ADR............................... 277,500
5,000 Teva Pharmaceuticals Industries Ltd.-ADR................. 231,875
-----------
2,904,500
-----------
MEDICAL (INSTRUMENTS/PRODUCTS) - 1.53%
9,000 Baxter International Inc. ............................... 376,875
5,000 St. Jude Medical Inc.(a)................................. 215,000
-----------
591,875
-----------
MEDICAL (PATIENT SERVICES) - 1.48%
2,500 Horizon Healthcare Corp.(a).............................. 63,125
6,000 Integrated Health Services, Inc.(a)...................... 150,000
3,500 U.S. Healthcare Corp. ................................... 162,750
3,000 United Healthcare Corp. ................................. 196,500
-----------
572,375
-----------
NATURAL GAS PIPELINE - 0.57%
5,000 Williams Companies, Inc. ................................ 219,375
-----------
</TABLE>
78
AIM V.I. GROWTH AND INCOME FUND
<PAGE>
<TABLE>
<C> <C> <S> <C>
MARKET
SHARES VALUE
------ ------
OFFICE AUTOMATION - 1.42%
4,000 Xerox Corp. ............................................ $ 548,000
-----------
OFFICE PRODUCTS - 0.47%
4,000 Alco Standard Corp. .................................... 182,500
-----------
OIL & GAS SERVICES - 0.77%
1,500 Mapco, Inc. ............................................ 81,938
10,000 Occidental Petroleum Corp. ............................. 213,750
-----------
295,688
-----------
PAPER & FOREST PRODUCTS - 0.77%
5,000 Albany International Corp. - Class A.................... 90,625
2,500 Kimberly-Clark Corp. ................................... 206,876
-----------
297,501
-----------
REAL ESTATE INVESTMENT TRUSTS - 1.59%
6,000 Felcor Suite Hotels, Inc. .............................. 166,500
5,000 National Health Investors, Inc. ........................ 165,625
6,000 Patriot American Hospitality, Inc.(a)................... 154,500
5,000 Spieker Properties, Inc. ............................... 125,625
-----------
612,250
-----------
RESTAURANTS - 0.22%
4,000 Wendy's International, Inc. ............................ 85,000
-----------
RETAIL (FOOD & DRUGS) - 0.43%
3,200 Safeway Inc.(a)......................................... 164,800
-----------
RETAIL (STORES) - 1.88%
4,000 Dayton-Hudson Corp. .................................... 300,000
14,000 Intimate Brands, Inc.(a)................................ 210,000
5,500 Sears, Roebuck & Co. ................................... 214,500
-----------
724,500
-----------
SCIENTIFIC INSTRUMENTS - 0.56%
4,500 Varian Associates, Inc. ................................ 214,875
-----------
SEMICONDUCTORS - 3.95%
6,500 Applied Materials, Inc.(a).............................. 255,938
3,500 Intel Corp. ............................................ 198,626
4,000 Motorola Inc. .......................................... 228,000
4,000 SGS Thomson Microelectronics N.V.-New York Shares-
ADR(a)................................................. 161,000
11,000 Texas Instruments, Inc. ................................ 569,250
3,500 Vishay Intertechnology, Inc.(a)......................... 110,250
-----------
1,523,064
-----------
SHOES & RELATED APPAREL - 0.36%
2,000 NIKE, Inc. - Class B.................................... 139,250
-----------
TELECOMMUNICATIONS - 3.79%
8,000 A T & T Corp. .......................................... 518,000
4,000 Andrew Corp.(a)......................................... 153,000
18,000 Telefonaktiebolaget L.M. Ericsson-ADR................... 351,000
4,000 Tellabs, Inc.(a)........................................ 148,000
5,200 Westell Technologies, Inc.(a)........................... 130,650
4,600 Vodafone Group PLC-ADR.................................. 162,150
-----------
1,462,800
-----------
</TABLE>
79
AIM V.I. GROWTH AND INCOME FUND
<PAGE>
<TABLE>
<C> <C> <S> <C>
MARKET
SHARES VALUE
------ ------
TELEPHONE - 3.38%
2,800 Ameritech Corp. ...................................... $ 165,200
5,700 BellSouth Corp. ...................................... 247,950
7,000 Cincinnati Bell, Inc. ................................ 243,250
7,000 GTE Corp. ............................................ 308,000
4,000 SBC Communications, Inc. ............................. 230,000
3,000 U S West Communications Group......................... 107,250
-----------
1,301,650
-----------
TEXTILES - 0.22%
3,000 Liz Claiborne, Inc. .................................. 83,250
-----------
TOBACCO - 3.52%
15,000 Philip Morris Companies Inc. ......................... 1,357,500
-----------
Total Common Stocks................................. 27,931,313
-----------
PRINCIPAL
AMOUNT
---------
CONVERTIBLE CORPORATE BONDS - 13.70%
AUTOMOBILE/TRUCKS PARTS & TIRES - 0.37%
$200,000 Exide Corp., Sr. Sub. Notes, 2.90%, 12/15/05(b)(c)
(Acquired 12/11/95; cost $144,658)................... 144,000
-----------
BUSINESS SERVICES - 0.60%
100,000 Career Horizons Inc., Conv. Bonds, 7.00%, 11/01/02(b)
(Acquired 11/27/95; cost $104,000)................... 112,000
100,000 Olsten Corp., Conv. Sub. Deb., 4.875%, 05/15/03....... 118,970
-----------
230,970
-----------
COMPUTER SOFTWARE/SERVICES - 1.83%
200,000 Automatic Data Processing, Conv. Liquid Yield Option
Notes, 5.25%, 02/20/12(c)............................ 95,500
200,000 Network Equipment Technology, Conv. Deb., 7.25%,
05/15/14............................................. 204,840
325,000 Silicon Graphics Inc., Conv. Sub. Deb., 4.15%,
11/02/13(b)(c) (Acquired 10/23/95 - 11/30/95;
cost $191,282)....................................... 167,336
100,000 SoftKey International, Inc., Sr. Conv. Notes, 5.50%,
11/01/00(b)(c) (Acquired 12/11/95;
cost $82,500)........................................ 75,500
75,000 Sterling Software Inc., Conv. Sub. Deb., 5.75%,
02/01/03............................................. 162,558
-----------
705,734
-----------
COMPUTER NETWORKING - 1.19%
200,000 Bay Networks, Inc., Conv. Sub. Deb., 5.25%,
05/15/03(b) (Acquired 10/23/95 - 11/14/95;
cost $226,750)....................................... 217,000
150,000 3Com Corp., Conv. Sub. Notes, 10.25%, 11/01/01(b)
(Acquired 11/14/95; cost $243,938)................... 240,750
-----------
457,750
-----------
COMPUTER PERIPHERALS - 0.39%
150,000 EMC Corp., Conv. Sub. Notes, 4.25%, 01/01/01.......... 151,500
-----------
ELECTRONIC COMPONENTS/MISCELLANEOUS - 1.19%
350,000 ADT Operations Inc., Conv. Sub. Liquid Yield Option
Notes,6.50%, 07/06/10(c)............................. 166,687
150,000 Altera Corp., Conv. Sub. Notes, 5.75%, 06/15/02(b)
(Acquired 11/21/95; cost $178,260)................... 174,750
100,000 Checkpoint Systems, Inc., Conv. Sub. Deb., 5.25%,
11/01/05(b) (Acquired 10/27/95; cost $100,750)....... 117,000
-----------
458,437
-----------
FINANCE (ASSET MANAGEMENT) - 0.42%
100,000 First Financial Management, Conv. Deb., 5.00%,
12/15/99............................................. 162,000
-----------
</TABLE>
80
AIM V.I. GROWTH AND INCOME FUND
<PAGE>
<TABLE>
<C> <C> <S> <C>
PRINCIPAL MARKET
AMOUNT VALUE
--------- ------
MACHINERY (MISCELLANEOUS) - 1.17%
$300,000 Thermo Electron Corp., Conv. Deb., 4.25%, 01/01/03(b)
(Acquired 11/28/95 - 11/29/95; cost $304,875)....... $ 328,500
50,000 Thermo Electron Corp., Conv. Deb., 4.625%,
08/01/97(b) (Acquired 10/23/95; cost $102,500)...... 120,895
-----------
449,395
-----------
MEDICAL (DRUGS) - 0.36%
125,000 ICN Pharmaceuticals, Inc., Conv. Sub. Notes, 8.50%,
11/15/99............................................ 139,688
-----------
MEDICAL (PATIENT SERVICES) - 1.33%
100,000 Healthsouth Rehabilitation Corp., Conv. Sub. Deb.,
5.00%, 04/01/01..................................... 161,630
200,000 Multicare Co., Conv. Sub. Deb., 7.00%, 03/15/03(b)
(Acquired 11/30/95; cost $207,000).................. 220,360
125,000 Prime Hospitality Corp., Conv. Sub. Notes, 7.00%,
04/15/02............................................ 130,625
-----------
512,615
-----------
OFFICE AUTOMATION - 0.72%
200,000 Danka Business Systems, Conv. Sub. Deb., 6.75%,
04/01/02............................................ 279,500
-----------
PUBLISHING - 0.36%
300,000 News America Holdings Inc., Conv. Liquid Yield Option
Notes, 5.50%, 03/11/13(c)........................... 138,751
-----------
RETAIL (STORES) - 0.84%
150,000 Federated Department Stores, Conv. Notes, 5.00%,
10/01/03............................................ 150,750
300,000 Office Depot Inc., Conv. Liquid Yield Option Notes,
4.00%, 11/01/08(c).................................. 172,500
-----------
323,250
-----------
SEMICONDUCTORS - 1.67%
100,000 LAM Research Corp., Conv. Sub. Deb., 6.00%, 05/01/03. 185,500
100,000 LSI Logic Corp., Conv. Sub. Notes, 5.50%, 03/15/01(b)
(Acquired 11/15/95 - 12/04/95; cost $375,691)....... 275,500
200,000 Solectron Corp., Conv. Liquid Yield Option Notes,
7.00%, 05/05/12(c).................................. 185,000
-----------
646,000
-----------
TELECOMMUNICATIONS - 0.85%
200,000 General Instrument Corp., Jr. Conv. Sub. Notes,
5.00%, 06/15/00..................................... 219,500
100,000 World Communications Corp., Conv. Sub. Notes, 5.00%,
08/15/03............................................ 106,500
-----------
326,000
-----------
TRANSPORTATION/MISCELLANEOUS - 0.41%
150,000 Telxon Corp., Conv. Deb., 5.75%, 01/01/03(b)
(Acquired 12/07/95; cost $150,000).................. 159,000
-----------
Total Convertible Corporate Bonds.................. 5,284,590
-----------
SHARES
------
CONVERTIBLE PREFERRED STOCKS - 5.88%
AUTOMOBILE (MANUFACTURERS) - 0.42%
2,200 General Motors Corp. - Class C, $3.25 Dep. Conv.
Pfd. ............................................... 161,150
-----------
CONGLOMERATES - 0.39%
3,000 Corning Delaware LP, $3.00 Conv. MIPS................ 151,125
-----------
ELECTRONIC COMPONENTS/MISCELLANEOUS - 0.52%
4,000 Elsag Bailey Process Automation N.V.-ADR - $2.75
Conv. TOPRS(b) (Acquired 12/14/95 - 12/15/95,
cost $200,050)...................................... 200,500
-----------
FINANCE (ASSET MANAGEMENT) - 0.39%
3,000 United Companies Finance LP - $2.97 Conv. Pfd.
PRIDES.............................................. 151,500
-----------
FINANCE (CONSUMER CREDIT) - 0.79%
1,500 Penncorp Financial Group - $3.375 Conv. Pfd. ........ 107,062
3,000 SunAmerica Inc. - Series E, $3.10 Dep. Conv. Pfd. ... 196,500
-----------
303,562
-----------
</TABLE>
81
AIM V.I. GROWTH AND INCOME FUND
<PAGE>
<TABLE>
<C> <C> <S> <C>
MARKET
SHARES VALUE
------ ------
FUNERAL SERVICES - 0.69%
3,600 SCI Financial LLC - Series A, $3.125 Conv. Pfd. ..... $ 266,400
-----------
INSURANCE (MULTI-LINE PROPERTY) - 0.21%
2,000 Allstate Inc. - $2.30 Conv. Pfd. .................... 82,000
-----------
LEISURE & RECREATION - 0.21%
6,000 Bally Entertainment Corp. - $0.89 Conv. Pfd. PRIDES.. 81,750
-----------
MEDICAL (PATIENT SERVICES) - 0.28%
4,000 FHP International Corp. - Series A, $1.25 Conv.
Pfd. ............................................... 106,500
-----------
OIL & GAS SERVICES - 0.50%
8,000 Enron Corp. - $1.359 Conv. Pfd. ACES................. 192,000
-----------
PUBLISHING - 0.28%
3,500 Time Warner Financing - $1.24 Conv. Pfd. PERCS....... 109,375
-----------
TELECOMMUNICATIONS - 0.50%
1,800 LCI International, Inc. - $1.25 Exch. Conv. Pfd. .... 96,300
2,000 MFS Communications - $2.68 Conv. Pfd. DECS........... 97,375
-----------
193,675
-----------
TRANSPORTATION/MISCELLANEOUS - 0.70%
5,000 Continental Air Finance Trust - $4.25 Conv. Pfd.
TOPRS(b) (Acquired 11/21/95 - 11/22/95;
cost $250,150)..................................... 268,125
-----------
Total Convertible Preferred Stocks................. 2,267,662
-----------
PRINCIPAL
AMOUNT
---------
U.S. TREASURY SECURITIES - 1.30%
U.S. TREASURY BILLS - 1.30%(d)
$ 500,000 5.365%, 01/11/96..................................... 499,765
-----------
REPURCHASE AGREEMENT - 7.17%(e)
2,765,865 Daiwa Securities America, Inc.(f)
5.92%, 01/02/96..................................... 2,765,865
-----------
TOTAL INVESTMENTS - 100.47%.......................... 38,749,195
LIABILITIES LESS OTHER ASSETS - (0.47)%.............. (181,983)
-----------
NET ASSETS - 100.00%................................. $38,567,212
===========
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 these securities has been
determined in accordance with procedures established by the Board of Directors. The aggregate market
value of these securities at December 31, 1995 was $2,821,216, which represented 7.32% of the net assets.
(c) Zero coupon bond. The interest rate shown represents the rate of the original issue discount.
(d) 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.
(e) 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. The investments in some repurchase agreements are through participation in
joint accounts with other mutual funds managed by the investment advisor.
(f) Joint repurchase agreement entered into on 12/29/95 with a maturing value of $646,679,181. Collateralized
by $537,995,000 U.S. Treasury obligations, 7.875% to 11.25% due 11/15/07 to 02/15/15.
Abbreviations:
ACES - Automatic Common Exchangeable Securities MIPS - Monthly Income Preferred Securities
ADR - American Depositary Receipt Pfd. - Preferred
Conv. - Convertible PERCS - Preferred Equity Redemptive Cumulative Stock
Deb. - Debentures PRIDES - Preferred Redeemable Increased Dividend Equity
Securities
DECS - Dividend Enhanced Convertible Stock Sr. - Senior
Dep. - Depositary Sub. - Subordinated
Exch. - Exchangeable TOPRS - Trust Originated Preferred Securities
Jr. - Junior
See Notes to Financial Statements.
</TABLE>
82
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<PAGE>
<TABLE>
<C> <S> <C>
AIM V.I. GROWTH AND ASSETS:
INCOME FUND
STATEMENT OF Investments, at market value (cost $36,207,923).................... $38,749,195
ASSETS AND Receivables for:
LIABILITIES Investments sold................................................. 18,750
December 31, 1995 Capital stock sold............................................... 126,847
Dividends and interest........................................... 115,256
Investment for deferred compensation plan.......................... 5,206
Other assets....................................................... 46
-----------
Total assets................................................... 39,015,300
-----------
LIABILITIES:
Payables for:
Investments purchased............................................ 376,637
Deferred compensation plan....................................... 5,206
Accrued advisory fees.............................................. 46,017
Accrued administrative services fees............................... 2,762
Accrued directors' fees............................................ 1,569
Accrued operating expenses......................................... 15,897
-----------
Total liabilities.............................................. 448,088
-----------
Net assets applicable to shares outstanding........................ $38,567,212
===========
Capital shares, $.001 par value per share:
Authorized....................................................... 250,000,000
===========
Outstanding...................................................... 3,041,229
===========
Net asset value, offering and redemption price per share........... $12.68
======
See Notes to Financial Statements.
</TABLE>
83
AIM V.I. GROWTH AND INCOME FUND
<PAGE>
<TABLE>
<C> <S> <C>
AIM V.I. GROWTH AND INVESTMENT INCOME:
INCOME FUND
STATEMENT OF Dividends (net of $1,304 foreign withholding tax)............... $ 327,833
OPERATIONS Interest........................................................ 145,216
For the eleven months ended ----------
December 31, 1995 Total investment income........................................ 473,049
----------
EXPENSES:
Advisory fees................................................... 113,819
Custodian fees.................................................. 29,189
Administrative services fees.................................... 31,484
Directors' fees and expenses.................................... 5,245
Professional fees............................................... 21,265
Other........................................................... 3,478
----------
Total expenses................................................. 204,480
Less expenses assumed by advisor................................ (67,802)
----------
Net expenses................................................... 136,678
----------
Net investment income............................................. 336,371
----------
REALIZED AND UNREALIZED GAIN FROM INVESTMENT SECURITIES AND
FUTURES CONTRACTS:
Net realized gain from:
Investment securities........................................... 1,365,916
Futures contracts............................................... 75,848
----------
1,441,764
----------
Unrealized appreciation of:
Investment securities........................................... 2,467,076
----------
Net gain on investment securities and futures contracts........... 3,908,840
----------
Net increase in net assets resulting from operations.............. $4,245,211
==========
AIM V.I. GROWTH AND DECEMBER 31, JANUARY 31,
INCOME FUND 1995 1995
STATEMENT OF CHANGES ------------ -----------
IN NET ASSETS OPERATIONS:
For the eleven months
ended December 31, 1995 Net investment income............................... $ 336,371 $ 62,491
and the period May 2, 1994 Net realized gain (loss) from investment securities
(date operations commenced) and futures contracts.............................. 1,441,764 (106,189)
through January 31, 1995 Net unrealized appreciation of investment securities
and futures contracts.............................. 2,467,076 74,196
----------- ----------
Net increase in net assets resulting from
operations........................................ 4,245,211 30,498
Net increase from capital stock transactions........ 28,382,638 7,412,315
Distributions to shareholders from net investment
income............................................. (325,888) (62,491)
Distributions in excess of net investment income.... -- (176)
Distributions from capital gains.................... (1,114,895) --
----------- ----------
Net increase in net assets......................... 31,187,066 7,380,146
NET ASSETS:
Beginning of period................................. 7,380,146 --
----------- ----------
End of period....................................... $38,567,212 $7,380,146
=========== ==========
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in).......... $35,794,953 $7,412,315
Undistributed net investment income................. 10,307 (176)
Undistributed net realized gain (loss) from
investment securities and futures contracts ....... 220,680 (106,189)
Unrealized appreciation of investment securities and
futures contracts.................................. 2,541,272 74,196
----------- ----------
$38,567,212 $7,380,146
=========== ==========
See Notes to Financial Statements.
</TABLE>
84
AIM V.I. GROWTH AND INCOME FUND
<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 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. Matters affecting each
December 31, 1995 portfolio are voted on exclusively by the shareholders of such portfolio. The
assets, liabilities and operations of each portfolio are accounted for
separately. Effective December 31, 1995, the Company's fiscal year was changed
from January 31 to December 31. Information presented in these financial
statements pertains only to the AIM V.I. Growth and Income Fund (the "Fund").
The Fund's investment objective is to seek growth of capital, with current
income as a secondary objective. Currently, 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. The preparation of
financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
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 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. Exchange listed convertible bonds are valued at
the mean between the closing bid and asked prices obtained from a broker-
dealer. Debt obligations that are issued or guaranteed by the U.S. Treasury
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 and maturity date. Securities for which
market prices are not provided by any of the above methods are valued at the
mean between last bid and asked prices based upon quotes furnished by
independent sources. 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. Securities for which market quotations
are not readily available are valued 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.
D. 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.
</TABLE>
85
AIM V.I. GROWTH AND INCOME FUND
<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. 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. During the eleven months ended December 31,
1995, AIM waived advisory fees of $67,802 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 eleven months ended December 31, 1995, AIM was reimbursed $31,484
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.
During the eleven months ended December 31, 1995, the Fund incurred legal fees
of $2,379 for services rendered by Kramer, Levin, Naftalis, Nessen, Kamin &
Frankel as counsel to the Board of Directors. A member of that firm is a
director of the Company.
NOTE 3 - DIRECTORS' FEES
Directors' fees represent remuneration paid or accrued to each director who is
not an "interested person" of AIM. 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 eleven months ended
December 31, 1995 was $50,963,527 and $26,065,671, respectively.
The amount of unrealized appreciation (depreciation) of investment securities,
on a tax basis, as of December 31, 1995 is as follows:
</TABLE>
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities.......... $3,260,575
Aggregate unrealized (depreciation) of investment securities........ (886,285)
----------
Net unrealized appreciation of investment securities................ $2,374,290
==========
Cost of investments for tax purposes is $36,374,905.
</TABLE>
<TABLE>
<C> <S>
NOTE 5 - CAPITAL STOCK
Changes in capital stock outstanding during the eleven months ended December
31, 1995 and the period May 2, 1994 (date operations commenced) through January
31, 1995 were as follows:
</TABLE>
<TABLE>
<CAPTION>
December 31, 1995 January 31, 1995
---------------------- -------------------
Shares Amount Shares Amount
--------- ----------- ------- ----------
<S> <C> <C> <C> <C>
Sold.............................. 2,208,514 $27,189,904 777,143 $7,797,618
Issued as reinvestment of
distributions.................... 115,538 1,440,783 6,308 62,667
Reacquired........................ (22,290) (248,049) (43,984) (447,970)
--------- ----------- ------- ----------
2,301,762 $28,382,638 739,467 $7,412,315
========= =========== ======= ==========
</TABLE>
86
AIM V.I. GROWTH AND INCOME FUND
<PAGE>
<TABLE>
<C> <S>
NOTE 6 - FINANCIAL HIGHLIGHTS
Shown below are the condensed financial highlights for a share outstanding of
the Fund during the eleven months ended December 31, 1995 and the period May 2,
1994 (date operations commenced) through January 31, 1995.
</TABLE>
<TABLE>
<CAPTION>
December 31, January 31,
1995 1995
------------ -----------
<S> <C> <C>
Net asset value, beginning of period............ $ 9.98 $10.00
------- ------
Income from investment operations:
Net investment income......................... 0.14 0.11
Net gains (losses) on securities (both
realized and unrealized)..................... 3.11 (0.02)
------- ------
Total from investment operations............. 3.25 0.09
------- ------
Less distributions:
Dividends from net investment income.......... (0.14) (0.11)
Distributions from capital gains.............. (0.41) --
------- ------
Total distributions.......................... (0.55) (0.11)
------- ------
Net asset value, end of period.................. $ 12.68 $ 9.98
======= ======
Total return(a)................................. 32.65% 0.90%
======= ======
Ratios/supplemental data:
Net assets, end of period (000s omitted)........ $38,567 $7,380
======= ======
Ratio of expenses to average net assets......... 0.78%(b) 1.07%(c)(d)
======= ======
Ratio of net investment income to average net
assets......................................... 1.92%(b) 1.95%(c)(d)
======= ======
Portfolio turnover rate......................... 145% 96%
======= ======
</TABLE>
- ------
(a) Total return is not annualized.
(b) Ratios are annualized and based on average net assets of $19,135,889.
Annualized ratios of expenses and net investment income to average net
assets prior to waiver of advisory fees are 1.17% and 1.53%, respectively.
(c) Annualized.
(d) 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.
87
AIM V.I. GROWTH AND INCOME FUND
<PAGE>
<TABLE>
<C> <S>
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 December 31,
1995, the related statement of operations for the eleven month period then
ended and the statement of changes in net assets and financial highlights for
the eleven month period then ended and 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 audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1995, by correspondence with the custodian and brokers. 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 and Income Fund, as of December 31, 1995, the results of its
operations for the eleven month period then ended and the changes in its net
assets and the financial highlights for the eleven month period then ended and
the period May 2, 1994 through January 31, 1995, in conformity with generally
accepted accounting principles.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
January 26, 1996
</TABLE>
88
AIM V.I. GROWTH AND INCOME FUND
<PAGE>
AIM V.I. AIM V.I. International Equity Fund took full advantage of
INTERNATIONAL improving economic conditions overseas during the 11
EQUITY FUND months ended December 31, 1995, posting a gain of 24.04%.
MANAGEMENT'S Because the Fund changed its fiscal year-end from January
DISCUSSION 31 to December 31, all performance figures in this report
AND ANALYSIS represent the 11-month period 1/31/95-12/31/95.
Europe delivered the strongest foreign market
performance during the period covered by this report,
thanks to low interest rates, solid earnings growth, and
ongoing restructuring efforts. More conservative
investors were attracted to strong, defensive companies
and stable currencies in Switzerland and Germany. Growth
investors bid up equity prices in Finland, Ireland, and
the Netherlands.
Even with Europe's best efforts, foreign equity
performance during the reporting period was largely
influenced by Japan, which has the largest non-U.S. stock
market--some 40% of the Europe, Australia, and Far East
Index (EAFE). Rising U.S. interest rates, a weak
dollar/strong yen relationship, and a stubbornly
depressed real estate market flagged Japan's efforts at
economic recovery.
Meanwhile, other Asian markets, such as Hong Kong,
Malaysia, and Singapore, rebounded sharply from 1994
levels. New Zealand and Australia continued to deliver
strong performance in Pacific markets.
The Fund was broadly diversified during the reporting
period, with 155 holdings as of December 31, 1995. Europe
comprised the largest allocation in the Fund, followed by
Japan and selected Pacific Rim countries. The Fund's top
five holdings were securities issued by:
. PT Hanjaya Mandala Sampoerna (Indonesia)
. Telecom Italia Mobile S.P.A. (Italy)
. City Developments Ltd. (Singapore)
. Hutchison Whampoa Ltd. (Hong Kong)
. Yamaha Corp. (Japan)
Of course, the Fund's composition is subject to change
and there is no guarantee the Fund will continue to hold
any particular security in any specific country.
<TABLE>
<CAPTION>
----------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
1995* Inception**
AIM V.I. International Equity Fund 24.04% 12.61%
*1/31/95--12/31/95 (not annualized) **Since Inception 5/5/93
----------------------------------------------------------------------
----------------------------------------------------------------------
AIM V.I. Lipper
International International Europe-Australia-
Equity Fund Fund Index -Far East Index
------------- -------------- ------------------
<S> <C> <C> <C>
GROWTH OF A 5/5/93 $10,000 $10,000 $10,000
HYPOTHETICAL 9,880 10,029 10,026
$10,000 INVESTMENT 10,660 10,991 10,652
12/93 11,890 12,188 10,705
11,560 12,060 11,041
11,620 12,165 11,564
12,070 12,637 11,533
12/94 11,698 12,079 11,373
11,738 11,784 11,537
12,670 12,381 11,573
13,332 13,055 12,008
12/95 13,714 13,200 12,444
Past performance cannot guarantee comparable future results.
</TABLE>
The performance figures shown represent the AIM V.I.
International Equity Fund and are not intended to reflect
actual annuity values, and do not reflect charges at the
separate account level which, if applied, would lower the
performance results. The Fund's performance figures are
historical and reflect reinvestment of all distributions
and changes in the net asset value. The Fund's investment
return and principal value will fluctuate so that Fund
shares, when redeemed, may be worth more or less than
their original cost. Source: Towers Data Systems HYPO(R).
The Europe, Australia, and Far East Index (EAFE) is a
group of unmanaged foreign securities. Source: Towers
Data Systems HYPO(R). Lipper Analytical Services, Inc.,
is an independent mutual fund performance monitor. The
unmanaged Lipper International Equity Fund Index
represents an average of the performance of the 30
largest international mutual funds. Source: Lipper
Analytical Services, Inc. Results for the Lipper Index
and the EAFE Index are for the period 4/30/93 through
12/31/95.
An investment cannot be made in the indexes listed.
Index results include reinvested dividends.
89
AIM V.I. INTERNATIONAL EQUITY FUND
<PAGE>
<TABLE>
<CAPTION>
<C> <C> <S> <C>
AIM V.I. INTERNATIONAL MARKET
EQUITY FUND SCHEDULE SHARES VALUE
OF INVESTMENTS --------- -----------
December 31, 1995 FOREIGN STOCKS & OTHER EQUITY INTERESTS - 89.34%
ARGENTINA - 0.33%
13,200 Buenos Aires Embotellado S.A. - Class B - ADR(a)
(Beverages - Soft Drinks)............................. $ 272,250
-----------
AUSTRALIA - 5.06%
127,792 Australia & New Zealand Banking Group Ltd. (Banking).. 599,352
41,831 Broken Hill Proprietary Co. Ltd. (Conglomerates)...... 590,745
52,700 National Australia Bank Ltd. (Banking)................ 473,964
30,700 News Corp. Ltd. (The) - ADR (Publishing).............. 590,975
129,177 QBE Insurance Group Ltd. (Insurance - Broker)......... 597,205
278,300 QNI Ltd. (Metals - Miscellaneous)..................... 587,462
112,600 Western Mining Corp. Holding Ltd. (Metals -
Miscellaneous)....................................... 723,104
-----------
4,162,807
-----------
AUSTRIA - 1.16%
4,700 Oesterreichische Elektrizitaetswirtschafts AG
(Verbundgesellschaft) - Class A (Electric Services).. 282,601
6,100 OMV AG (Oil & Gas - Exploration & Production)......... 529,592
700 Wienerberger Baustoffindustrie AG (Building
Materials)............................................ 138,910
-----------
951,103
-----------
BRAZIL - 0.81%
14,000 Telecomunicacoes Brasileiras S/A - Telebras ADR
(Telecommunications).................................. 663,250
-----------
CANADA - 2.33%
54,600 Bombardier, Inc. - Class B (Transportation -
Miscellaneous)....................................... 719,736
26,600 Imasco, Ltd. (Tobacco)................................ 516,222
9,700 Newbridge Networks Corp. (Computer Networking)........ 401,338
6,500 Northern Telecom Ltd. (Telecommunications)............ 279,500
-----------
1,916,796
-----------
CHILE - 0.66%
6,600 Compania de Telefonos de Chile S.A. - ADR
(Telecommunications).................................. 546,975
-----------
DENMARK - 1.33%
7,800 Danisco A/S (Food Processing)......................... 376,480
1,900 Danske Traelastkompagni (Building Materials).......... 128,320
4,300 Novo Nordisk A/S - Class B (Medical - Drugs).......... 588,563
-----------
1,093,363
-----------
FRANCE - 7.55%
2,400 Accor S.A. (Hotels/Motels)............................ 310,720
1,000 Carrefour Supermarche (Retail - Stores)............... 606,698
2,150 Castorama Dubois (Retail - Stores).................... 352,115
2,000 Christian Dior S.A. (Consumer Non-Durables)........... 215,644
6,300 Compagnie Francaise de Petroleum Total S.A. - Class B
(Oil & Gas - Exploration & Production)............... 425,189
3,050 Docks de France, S.A. (Retail - Food & Drug).......... 463,385
2,275 Essilor International - Compagnie Generale d'Optique
(Medical Instruments/Products)....................... 434,838
1,900 LVMH Moet Hennessy Louis Vuitton (Beverages -
Alcoholic)........................................... 395,753
3,560 Pinault - Printemps, S.A. (Retail - Food & Drug)...... 710,255
2,050 Promodes S.A. (Retail - Food & Drug).................. 481,835
1,000 Rexel S.A. (Transportation - Miscellaneous)........... 168,879
3,390 Roussel - Uclaf (Medical - Drugs)..................... 574,577
8,100 SGS - Thomson Microelectronics N.V.(a) (Electronic
Components/Miscellaneous)............................. 326,025
1,721 Sidel S.A. (Machinery - Miscellaneous)................ 536,296
700 Sodexho S.A. (Business Services)...................... 205,840
-----------
6,208,049
-----------
</TABLE>
90
AIM V.I. INTERNATIONAL EQUITY FUND
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
--------- -----------
<C> <S> <C>
GERMANY - 3.12%
8,000 Adidas A.G.(a) (Shoes & Related Apparel).............. $ 423,283
650 Altana A.G. (Medical - Drugs)......................... 378,355
880 Gehe A.G. (Medical - Drugs)........................... 447,821
1,180 Mannesmann A.G. (Machinery - Miscellaneous)........... 375,675
370 Siemens A.G. (Electric Services)...................... 202,475
17,500 Veba A.G. (Electric Services)......................... 742,941
-----------
2,570,550
-----------
HONG KONG - 5.37%
90,000 Cheung Kong Holdings Ltd. (Real Estate)............... 548,205
653,368 First Pacific Co. (Conglomerates)..................... 726,670
54,000 Hang Seng Bank Ltd. (Banking)......................... 483,610
40,000 HSBC Holdings PLC (Banking)........................... 605,237
134,000 Hutchison Whampoa Ltd. (Conglomerates)................ 816,217
128,400 New World Infrastructure(a) (Conglomerates)........... 245,757
750,000 Shanghai Petrochemical Co., Ltd. (Chemicals).......... 215,810
66,600 Sun Hung Kai Properties Ltd. (Real Estate)............ 544,773
125,000 Vatronix International (Electronic
Components/Miscellaneous)............................. 231,975
-----------
4,418,254
-----------
INDIA - 0.12%
7,000 Reliance Industries Ltd.(a) (Conglomerates)........... 98,000
-----------
INDONESIA - 2.76%
259,000 PT Astra International (Automobile/Trucks Parts &
Tires)................................................ 538,050
165,000 PT Bank International Indonesia (Banking)............. 546,632
21,500 PT Gudang Garam (Tobacco)............................. 224,732
92,500 PT Hanjaya Mandala Sampoerna (Tobacco)................ 962,825
-----------
2,272,239
-----------
IRELAND - 0.47%
8,000 Elan Corp. PLC - ADR(a) (Medical - Drugs)............. 389,000
-----------
ISRAEL - 0.43%
7,600 Teva Pharmaceutical Industries Ltd. - ADR (Medical -
Drugs)............................................... 352,450
-----------
ITALY - 2.00%
525,000 Olivetti Group(a) (Computer Software/Services)........ 424,462
503,800 Telecom Italia Mobile S.p.A.(a) (Telecommunications).. 885,070
216,800 Telecom Italia S.p.A. (Telecommunications)............ 336,232
-----------
1,645,764
-----------
JAPAN - 17.84%
10,000 Advantest Corp. (Electronic Components/Miscellaneous). 513,318
14,000 Alpine Electronics (Electronic
Components/Miscellaneous)............................. 235,932
26,000 Bridgestone Corp. (Automobile/Trucks Parts & Tires)... 412,978
35,000 Canon, Inc. (Office Products)......................... 633,899
38 DDI Corp. (Telecommunications)........................ 294,430
9,900 Fanuc Ltd. (Machine Tools)............................ 428,600
46,000 Fujitsu Ltd. (Computer Mainframes).................... 512,348
63,000 Hitachi Ltd. (Electronic Components/Miscellaneous).... 634,576
17,000 Honda Motor Co. (Automobile Manufacturers)............ 350,702
20,000 Hoya Corp (Medical Instruments/Products).............. 687,652
37,000 Kajima Corp. (Engineering & Construction)............. 365,520
22,000 Koa Corp. (Electronic Components/Miscellaneous)....... 366,490
8,000 Kyocera Corp. (Electronic Components/Miscellaneous)... 594,285
16,000 Mitsumi Electric Co. Ltd. (Electronic
Components/Miscellaneous)............................. 385,860
</TABLE>
91
AIM V.I. INTERNATIONAL EQUITY FUND
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
--------- -----------
<C> <S> <C>
JAPAN - (CONTINUED)
51,000 NEC Corp. (Semiconductors)............................ $ 622,372
2,200 Nemic-Lambda K.K. (Electronic
Components/Miscellaneous)............................. 102,277
4,000 Nichiei Co., Ltd. (Business Services)................. 298,305
47,000 Nikon Corp. (Conglomerates)........................... 637,290
1,770 Nippon Television Network (Advertising/Broadcasting).. 473,142
22 NTT Data Communications Systems Co. (Computer
Software/Services).................................... 739,370
27,000 Omron Corp. (Electronic Components/Miscellaneous)..... 622,373
5,000 Plenus Co., Ltd. (Restaurants)........................ 242,130
62,000 Ricoh Co., Ltd. (Office Products)..................... 678,548
12,000 Rohm Co., Ltd. (Electronic Components/Miscellaneous).. 677,580
8,200 SMC (Machinery - Miscellaneous)....................... 593,260
5,800 Sony Corp. (Electronic Components/Miscellaneous)...... 347,720
18,000 Tokyo Electron Ltd. (Electronic
Components/Miscellaneous)............................. 697,337
91,000 Toshiba Corp. (Electronic Components/Miscellaneous)... 713,017
45,000 Yamaha Corp. (Leisure & Recreation)................... 810,654
-----------
14,671,965
-----------
MALAYSIA - 2.23%
135,000 Bandar Raya Developments Berhad (Real Estate)......... 192,425
43,000 Edaran Otomobil Nasional Berhad (Retail - Stores)..... 323,384
70,000 Malayan Banking Berhad (Banking)...................... 589,833
114,000 United Engineers (Building Materials)................. 727,172
-----------
1,832,814
-----------
MEXICO - 0.81%
44,000 Kimberly-Clark de Mexico S.A. (Retail - Stores)....... 663,850
-----------
NETHERLANDS - 5.78%
58,000 Elsevier N.V. (Publishing)............................ 773,478
4,187 Heineken N.V. (Beverages - Alcoholic)................. 742,843
19,000 Koninklijke Ahold N.V. (Retail - Food & Drug)......... 775,535
6,300 Oce-Van Der Grinten N.V. (Office Automation).......... 383,175
2,850 Royal Dutch Petroleum Co. (Oil & Gas - Services)...... 398,186
12,800 Vendex International N.V. (Retail - Stores)........... 380,482
4,950 Ver Ned Uitgevuer Bezit N.V. (Publishing)............. 679,556
6,590 Wolters Kluwer N.V. (Publishing)...................... 623,395
-----------
4,756,650
-----------
NEW ZEALAND - 0.65%
128,400 Telecom Corp. of New Zealand Ltd.
(Telecommunications).................................. 538,918
-----------
NORWAY - 0.95%
8,400 Norsk Hydro A.S. (Chemicals).......................... 352,758
77,000 UNI Storebrand A.S.(a) (Insurance - Life & Health).... 425,475
-----------
778,233
-----------
PHILIPPINES - 1.65%
582,000 C&P Homes, Inc.(a) (Homebuilding)..................... 427,125
3,568,000 Metro Pacific Corp. (Conglomerates)................... 659,733
14,090 Metropolitan Banks & Trust Co. (Banking).............. 273,957
-----------
1,360,815
-----------
PORTUGAL - 0.43%
18,600 Portugal Telecom S.A.(a) (Telecommunications)......... 349,817
-----------
</TABLE>
92
AIM V.I. INTERNATIONAL EQUITY FUND
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
--------- -----------
<C> <S> <C>
SINGAPORE - 2.33%
54,000 Cerebos Pacific Ltd. (Food/Processing)................ $ 374,125
117,000 City Developments Ltd. (Real Estate).................. 851,962
60,000 Overseas Union Bank Ltd. (Banking).................... 413,573
28,400 United OverSeas Bank Ltd. (Banking)................... 273,058
-----------
1,912,718
-----------
SPAIN - 3.15%
6,500 Corporacion Mapfre Compania Internacional de
Reaseguros S.A. (Insurance - Broker)................. 363,850
10,100 Empresa Nacional de Electricidad, S.A. (Telephone).... 572,028
4,750 Gas Natural SDG - E.S.A. (Natural Gas Pipeline)....... 740,108
12,000 Repsol S.A. (Oil & Gas - Services).................... 393,240
13,700 Tabacalera S.A. (Tobacco)............................. 519,538
-----------
2,588,764
-----------
SWEDEN - 2.82%
19,770 Astra AB (Medical - Drugs)............................ 783,094
6,000 Autoliv AB (Automobile/Trucks Parts & Tires).......... 350,618
9,300 Securitas AB - (Security & Safety Services)........... 441,210
15,700 Skandia Forsakrings AB (Insurance - Multi-Line
Property)............................................. 424,439
16,280 Telefonaktiebolaget L.M. Ericsson - ADR
(Telecommunications).................................. 317,460
-----------
2,316,821
-----------
SWITZERLAND - 3.23%
1,400 ADIA SA (Business Services)........................... 228,175
580 BBC Brown Boveri Ltd. (Engineering & Construction).... 673,775
590 Ciba-Geigy Ltd. (Chemicals)........................... 519,159
100 Roche Holdings A.G. (Medical - Drugs)................. 791,070
490 Sandoz A.G. (Chemicals)............................... 448,582
-----------
2,660,761
-----------
THAILAND - 2.32%
24,000 Advanced Information Service PLC (Telecommunications). 424,930
55,100 Bank of Ayudhya PLC (Banking)......................... 308,420
152,130 Krung Thai Bank PLC (Banking)......................... 622,048
15,300 Thai Farmers Bank (Banking)........................... 154,275
31,100 United Communication Industry (Telecommunications).... 397,547
-----------
1,907,220
-----------
UNITED KINGDOM - 11.65%
68,000 Argos PLC (Retail - Stores)........................... 628,887
51,500 Bank of Ireland (Banking)............................. 375,912
37,000 Bass PLC (Beverages - Alcoholic)...................... 412,867
43,000 B.A.T. Industries PLC (Tobacco)....................... 378,980
31,350 BOC Group PLC (Chemicals)............................. 438,677
56,900 British Petroleum PLC (Oil & Gas - Exploration &
Production)........................................... 475,860
367,200 Burton Group PLC (Retail - Stores).................... 767,020
53,000 Compass Group PLC (Food/Processing)................... 402,500
76,000 Cookson Group PLC (Conglomerates)..................... 361,175
73,000 Dixons Group PLC (Retail - Stores).................... 506,205
33,750 Farnell Electronics PLC (Electronic
Components/Miscellaneous)............................. 376,602
30,500 GKN PLC (Automobile/Trucks Parts & Tires)............. 368,993
35,400 Granada Group PLC (Leisure & Recreation).............. 354,605
147,000 Medeva PLC (Medical - Drugs).......................... 616,400
29,900 Provident Financial PLC (Finance - Consumer Credit)... 380,076
</TABLE>
93
AIM V.I. INTERNATIONAL EQUITY FUND
<PAGE>
<TABLE>
<C> <C> <S> <C>
AIM V.I. INTERNATIONAL MARKET
EQUITY FUND SCHEDULE SHARES VALUE
OF INVESTMENTS --------- -----------
December 31, 1995 UNITED KINGDOM - (CONTINUED)
65,500 Rentokil Group PLC (Business Services)................ $ 340,774
63,100 Standard Chartered PLC (Banking)...................... 537,021
72,000 Storehouse PLC (Retail - Stores)...................... 373,474
31,300 Thorn EMI PLC (Leisure & Recreation).................. 737,171
86,000 Vickers PLC (Automobile Manufacturers)................ 339,245
160,000 WPP Group (Advertising/Broadcasting).................. 412,486
-----------
9,584,930
-----------
Total Foreign Stocks & Other Equity Interests......... 73,485,126
-----------
<CAPTION>
PRINCIPAL
AMOUNT
---------
CONVERTIBLE BONDS - 0.69%
$ 490,000 MBL International Finance Bermuda, Convertible Bonds,
3.00%, 11/30/02....................................... 568,400
-----------
REPURCHASE AGREEMENT - 4.79%(b)
3,938,535 Daiwa Securities America Inc., 5.92%, 01/02/96(c)..... 3,938,535
-----------
TOTAL INVESTMENTS - 94.82%............................ 77,992,061
OTHER ASSETS LESS LIABILITIES - 5.18%................. 4,264,794
-----------
NET ASSETS - 100.00%.................................. $82,256,855
===========
</TABLE>
(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. The investments in some repurchase agreements are
through participation in joint accounts with other mutual funds managed by
the investment advisor.
(c) Joint repurchase agreement entered into 12/29/95 with a maturing value of
$646,679,181. Collateralized by $537,995,000 U.S. Treasury obligations,
7.875% to 11.25% due 11/15/07 to 02/15/15.
See Notes to Financial Statements.
94
AIM V.I. INTERNATIONAL EQUITY FUND
<PAGE>
<TABLE>
<C> <S> <C>
AIM V.I. INTERNATIONAL ASSETS:
EQUITY FUND
STATEMENT OF Investments, at market value (cost $66,760,505).................... $77,992,061
ASSETS AND Foreign currencies, at market value (cost $3,994,342).............. 3,986,961
LIABILITIES Receivables for:
December 31, 1995 Capital stock sold............................................... 136,070
Investments sold................................................. 1,452,460
Dividends and interest........................................... 116,534
Organizational costs, net.......................................... 6,748
Investment for deferred compensation plan.......................... 7,899
Other assets....................................................... 151
-----------
Total assets................................................... 83,698,884
-----------
LIABILITIES:
Payables for:
Investments purchased............................................ 1,280,092
Deferred compensation plan....................................... 7,899
Accrued advisory fees.............................................. 50,594
Accrued directors' fees............................................ 1,542
Accrued custodian fees............................................. 87,187
Accrued administrative services fees............................... 4,356
Accrued operating expenses......................................... 10,359
-----------
Total liabilities.............................................. 1,442,029
-----------
Net assets applicable to shares outstanding........................ $82,256,855
===========
Capital shares, $.001 par value per share:
Authorized....................................................... 250,000,000
===========
Outstanding...................................................... 6,020,540
===========
Net asset value, offering and redemption price per share........... $13.66
======
See Notes to Financial Statements.
</TABLE>
95
AIM V.I. INTERNATIONAL EQUITY FUND
<PAGE>
<TABLE>
<C> <S> <C>
AIM V.I. INVESTMENT INCOME:
INTERNATIONAL
EQUITY FUND Dividends (net of $142,149 foreign withholding tax)............ $ 972,190
STATEMENT OF Interest....................................................... 184,428
OPERATIONS -----------
For the eleven months ended Total investment income...................................... 1,156,618
December 31, 1995 -----------
EXPENSES:
Advisory fees.................................................. 457,559
Custodian fees................................................. 156,614
Administrative services fees................................... 21,068
Professional fees.............................................. 42,011
Directors' fees and expenses................................... 5,469
Organizational costs........................................... 2,651
Other.......................................................... 13,722
-----------
Total expenses............................................... 699,094
-----------
Net investment income.............................................. 457,524
-----------
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT SECURITIES
AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) from:
Investment securities............................................ (2,985)
Foreign currency transactions.................................... (104,674)
-----------
(107,659)
-----------
Unrealized appreciation of:
Investment securities............................................ 13,447,127
Foreign currencies............................................... 7,177
-----------
13,454,304
-----------
Net gain on investment securities and foreign currencies........... 13,346,645
-----------
Net increase in net assets resulting from operations............... $13,804,169
===========
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, JANUARY 31,
1995 1995
------------ -----------
<C> <S> <C> <C>
AIM V.I. OPERATIONS:
INTERNATIONAL
EQUITY FUND Net investment income.............................. $ 457,524 $ 256,749
STATEMENT OF Net realized gain (loss) on sales of investment
OPERATIONS securities and foreign currency transactions...... (107,659) (983,419)
For the eleven months ended Net unrealized appreciation (depreciation) of
December 31, 1995 and the investment securities and foreign currencies...... 13,454,304 (4,821,033)
year ended January 31, 1995 ----------- -----------
Net increase (decrease) in net assets resulting
from operations.................................. 13,804,169 (5,547,703)
Net increase from capital stock transactions....... 13,556,877 37,165,081
Distributions to shareholders from net investment
income............................................ (123,270) (131,518)
----------- -----------
Net increase in net assets........................ 27,237,776 31,485,860
NET ASSETS:
Beginning of period................................ 55,019,079 23,533,219
----------- -----------
End of period...................................... $82,256,855 $55,019,079
=========== ===========
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in)......... $71,752,671 $58,203,064
Undistributed net investment income................ 374,899 127,710
Undistributed net realized gain (loss) from
investment securities and foreign currency
transactions...................................... (1,106,243) (1,092,919)
Unrealized appreciation (depreciation) of
investment securities and foreign currencies...... 11,235,528 (2,218,776)
----------- -----------
$82,256,855 $55,019,079
=========== ===========
</TABLE>
See Notes to Financial Statements.
96
AIM V.I. INTERNATIONAL EQUITY FUND
<PAGE>
<TABLE>
<C> <S>
AIM V.I. NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
INTERNATIONAL AIM Variable Insurance Funds, Inc. (the "Company"), is a
EQUITY FUND Maryland corporation organized on January 22, 1993, and
NOTES TO is registered under the Investment Company Act of 1940
FINANCIAL (the "1940 Act"), as amended, as an open-end, series,
STATEMENTS management investment company consisting of nine
December 31, 1995 portfolios. 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. Effective December 31, 1995,
the Company's fiscal year was changed from January 31 to
December 31. Information presented in these financial
statements pertains only to AIM V.I. International Equity
Fund (the "Fund"). The Fund's investment objective is to
seek to provide long-term growth of capital by investing
in a diversified portfolio of international equity
securities the issuers of which are considered by AIM to
have strong earnings momentum. Currently, 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. The preparation of financial
statements in conformity with generally accepted
accounting principles requires management to make
estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results
could differ from those estimates.
A. Security Valuations - A security listed or traded on an
exchange is valued 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. If a mean is not
available, as is the case in some foreign markets, the
closing bid will be used absent a last sales prices.
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 either not readily available or are
questionable 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 December 31, 1995,
undistributed net realized gain (loss) was increased by
$94,335, undistributed net investment income reduced by
$87,065 and paid-in capital reduced by $7,270 in order to
comply with the requirements of the American Institute of
Certified Public Accountants Statement of Position 93-2.
Net assets of the Fund were unaffected by the
reclassification 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.
F. Organizational Costs - Organizational costs of $14,461
are being amortized over five years.
</TABLE>
97
AIM V.I. INTERNATIONAL EQUITY FUND
<PAGE>
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 0.75% 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 eleven months ended
December 31, 1995, AIM was reimbursed $21,068 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.
During the eleven months ended December 31, 1995, the
Fund incurred legal fees of $2,241 for services rendered
by Kramer, Levin, Naftalis, Nessen, Kamin & Frankel as
counsel to the Board of Directors. A member of that firm
is a director of the Company.
NOTE 3 - DIRECTORS' FEES
Directors' fees represent remuneration paid or accrued
to each director who is not an "interested person" of
AIM. 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 eleven months ended December 31, 1995 was
$54,598,136 and $40,670,084, respectively.
The amount of unrealized appreciation (depreciation) of
investment securities, on a tax basis, as of December 31,
1995 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation
of investment securities.................. $11,965,023
Aggregate unrealized (depreciation)
of investment securities.................. (734,166)
-----------
Net unrealized appreciation of
investment securities..................... $11,230,857
===========
</TABLE>
Cost of investments for tax purposes is $66,761,204.
NOTE 5 - CAPITAL STOCK
Changes in capital stock outstanding during the eleven
months ended December 31, 1995 and the year ended January
31, 1995 were as follows:
<TABLE>
<CAPTION>
December 31, 1995 January 31, 1995
---------------------- -----------------------
Shares Amount Shares Amount
--------- ----------- --------- ------------
<S> <C> <C> <C> <C>
Sold.......................... 1,612,585 $20,607,902 3,273,461 $ 39,114,516
Issued as reinvestment of
distributions................ 9,199 123,270 11,496 131,518
Reacquired.................... (591,239) (7,174,295) (179,533) (2,080,953)
--------- ----------- --------- ------------
1,030,545 $13,556,877 3,105,424 $ 37,165,081
========= =========== ========= ============
</TABLE>
98
AIM V.I. INTERNATIONAL EQUITY FUND
<PAGE>
NOTE 6 - FINANCIAL HIGHLIGHTS
Shown below are the condensed financial highlights for a
share outstanding of the Fund during the eleven months
ended December 31, 1995, the year ended January 31, 1995
and the period May 5, 1993 (date operations commenced)
through January 31, 1994.
<TABLE>
<CAPTION>
January 31,
December 31, -------------------
1995 1995 1994
------------ ------- -------
<S> <C> <C> <C>
Net asset value, beginning of period. $ 11.03 $ 12.49 $ 10.00
------- ------- -------
Income from investment operations:
Net investment income.............. 0.07 0.06 --
Net gains (losses) on securities
(both realized and unrealized).... 2.58 (1.49) 2.49
------- ------- -------
Total from investment operations.. 2.65 (1.43) 2.49
------- ------- -------
Less distributions:
Dividends from net investment
income............................ (0.02) (0.03) --
------- ------- -------
Net asset value, end of period....... $ 13.66 $ 11.03 $ 12.49
======= ======= =======
Total return......................... 24.04%(a) (11.48)% 24.90%(a)
======= ======= =======
Ratios/supplemental data:
Net assets, end of period (000s
omitted)............................ $82,257 $55,019 $23,533
======= ======= =======
Ratio of expenses to average net
assets.............................. 1.15%(b) 1.27%(c) 1.98%(d)(e)
======= ======= =======
Ratio of net investment income to
average net assets.................. 0.75%(b) 0.60%(c) (0.15)%(d)(e)
======= ======= =======
Portfolio turnover rate.............. 67% 64% 26%
======= ======= =======
</TABLE>
------
(a) Total return is not annualized.
(b) Ratios are annualized and based on average net
assets of $66,670,268.
(c) Ratios of expenses and net investment income to
average net assets prior to waiver of advisory fees
are 1.28% and 0.59%, respectively.
(d) Annualized.
(e) 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.
99
AIM V.I. INTERNATIONAL EQUITY FUND
<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 December 31, 1995, the related
statement of operations for the eleven month period then
ended, the statement of changes in net assets for the
eleven month period then ended and the year ended January
31, 1995 and the financial highlights for the eleven
month period then ended, the year ended January 31, 1995
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 amount and disclosures in the financial
statements. Our procedures included confirmation of
securities owned as of December 31, 1995, by
correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used
and significant estimates made by management, as well as
evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the financial statements and financial
highlights referred to above present fairly, in all
material respects, the financial position of AIM V.I.
International Equity Fund, as of December 31, 1995, the
results of its operations for the eleven month period
then ended, the changes in its net assets for the eleven
month period then ended and the year ended January 31,
1995 and the financial highlights for the eleven month
period then ended, the year ended January 31, 1995 and
the period May 5, 1993 through January 31, 1994, in
conformity with generally accepted accounting principles.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
January 26, 1996
100
AIM V.I. INTERNATIONAL EQUITY FUND
<PAGE>
<TABLE>
<CAPTION>
<C> <C> <S> <C>
AIM V.I. MONEY PRINCIPAL
MARKET FUND AMOUNT VALUE
SHCEDULE OF ---------- -----------
INVESTMENTS COMMERCIAL PAPER - 52.93%(a)
December 31, 1995
ASSET-BACKED SECURITIES - 18.20%
$3,000,000 Asset Securitization Cooperative Corp., 5.65%,
02/08/96.......................................... $ 2,982,108
3,000,000 Delaware Funding Corp., 5.71%, 02/07/96........... 2,982,394
3,000,000 Eiger Capital Corp., 5.83%, 01/30/96.............. 2,985,911
3,000,000 Preferred Receivables Funding Corp., 5.65%,
02/26/96.......................................... 2,973,633
-----------
11,924,046
-----------
BROKER/DEALER - 4.57%
3,000,000 Goldman Sachs Group (The), L.P., 6.05%, 01/11/96.. 2,994,958
-----------
COMPUTERS & OFFICE EQUIPMENT - 3.71%
2,500,000 Xerox Credit Corp., 5.25%, 07/18/96............... 2,427,448
-----------
FINANCE (BUSINESS CREDIT) - 3.79%
2,500,000 General Electric Capital Corp., 5.53%, 02/12/96... 2,483,871
-----------
FINANCE (MISCELLANEOUS) - 10.62%
3,000,000 Associates Corp. of North America, 5.59%,
03/18/96.......................................... 2,964,131
2,000,000 Cargill Financial Services Corp., 5.47%, 01/08/96. 1,997,873
2,000,000 Transamerica Finance Corp., 5.52%, 01/31/96....... 1,990,801
-----------
6,952,805
-----------
INSURANCE - 1.50%
1,000,000 Marsh & McLennan Companies, Inc., 5.62%, 04/25/96. 982,047
-----------
OIL & GAS (INTEGRATED) - 4.52%
3,000,000 ARCO Coal Australia Inc., 5.60%, 03/18/96......... 2,964,067
-----------
POLLUTION CONTROL - 1.49%
1,000,000 WMX Technologies Inc., 5.51%, 06/11/96............ 975,205
-----------
TELEPHONE - 4.53%
3,000,000 AT&T Corp., 5.60%, 03/12/96....................... 2,966,867
-----------
Total Commercial Paper.......................... 34,671,314
-----------
U.S. GOVERNMENT AGENCY SECURITIES - 3.81%
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 3.05%
2,000,000 5.26%, 06/02/99(b)................................ 2,000,000
-----------
STUDENT LOAN MARKETING ASSOCIATION - 0.76%
500,000 5.24%, 08/20/98(b)................................ 499,907
-----------
Total U.S. Government Agency Securities......... 2,499,907
-----------
U.S. TREASURY BILLS - 2.98%(c)
2,000,000 5.04%, 06/27/96................................... 1,950,160
-----------
MASTER NOTE AGREEMENT - 3.82%
2,500,000 Citicorp Securities, Inc., 6.25%, 03/11/96(d)..... 2,500,000
-----------
Total Investments, excluding Repurchase
Agreements...................................... 41,621,381
-----------
REPURCHASE AGREEMENTS - 35.90%(e)
8,519,331 Daiwa Securities America Inc., 5.92%, 01/02/96(f). 8,519,331
15,000,000 Goldman, Sachs & Co., 5.92%, 01/02/96(g).......... 15,000,000
-----------
Total Repurchase Agreements..................... 23,519,331
-----------
TOTAL INVESTMENTS - 99.44%........................ 65,140,712(h)
OTHER ASSETS LESS LIABILITIES - 0.56%............. 365,042
-----------
NET ASSETS - 100.00%.............................. $65,505,754
===========
</TABLE>
101
AIM V.I. MONEY MARKET FUND
<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 the rates in effect
on December 31, 1995.
(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) The Fund may demand prepayment of notes purchased under the Master Note
Purchase Agreement upon notice to the issuer. Interest rates are
redetermined periodically. Rate shown is the rate in effect on December 31,
1995.
(e) 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. The investments in some repurchase agreements are
through participation in joint accounts with other mutual funds managed by
the investment advisor.
(f) Joint repurchase agreement entered into 12/29/95 with a maturing value of
$646,679,181. Collateralized by $537,995,000 U.S. Treasury obligations,
7.875% to 11.25% due 11/15/07 to 02/15/15.
(g) Joint repurchase agreement entered into 12/29/95 with a maturing value of
$1,195,786,044. Collateralized by $1,106,121,000 U.S. Treasury obligations,
5.50% to 11.25% due 01/31/98 to 02/15/23.
(h) Also represents cost for federal income tax purposes.
See Notes to Financial Statements.
</TABLE>
102
AIM V.I. MONEY MARKET FUND
<PAGE>
<TABLE>
<C> <S> <C>
AIM V.I. MONEY ASSETS:
MARKET FUND
STATEMENT OF Investments, excluding repurchase agreements, at value (amortized
ASSETS AMD cost)............................................................. $41,621,381
LIABILITIES Repurchase agreements.............................................. 23,519,331
December 31, 1995 Receivables for:
Capital stock sold............................................... 347,290
Interest receivable.............................................. 36,602
Organizational costs, net.......................................... 6,748
Investment for deferred compensation plan.......................... 7,775
Other assets....................................................... 393
-----------
Total assets................................................... 65,539,520
-----------
LIABILITIES:
Payable for deferred compensation plan............................. 7,775
Accrued advisory fees.............................................. 21,647
Accrued administrative service fees................................ 2,222
Accrued directors' fees............................................ 296
Accrued operating expenses......................................... 1,826
-----------
Total liabilities.............................................. 33,766
-----------
Net assets applicable to shares outstanding........................ $65,505,754
===========
Capital shares, $.001 par value per share:
Authorized....................................................... 250,000,000
===========
Outstanding...................................................... 65,521,991
===========
Net asset value, offering and redemption price per share........... $1.00
=====
</TABLE>
<TABLE>
<C> <S> <C>
AIM V.I. MONEY INVESTMENT INCOME:
MARKET FUND
STATEMENT OF Interest.......................................................... $2,503,796
OPERATIONS ----------
For the eleven EXPENSES:
months ended
December 31, 1995 Advisory fees..................................................... 168,901
Custodian fees.................................................... 10,196
Administrative services fees...................................... 22,997
Directors' fees and expenses...................................... 4,709
Organizational costs.............................................. 2,651
Other............................................................. 16,100
----------
Total expenses................................................... 225,554
----------
Net investment income............................................... 2,278,242
----------
Net realized gain (loss) on sales of investment securities.......... (17,141)
----------
Net increase in net assets resulting from operations................ $2,261,101
==========
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, JANUARY 31,
1995 1995
------------ -----------
<C> <S> <C> <C>
AIM V.I. MONEY OPERATIONS:
MARKET FUND
STATEMENT Net investment income.............................. $ 2,278,242 $ 1,082,131
OF CHANGES Net realized gain (loss) on sales of investment
IN NET ASSETS securities........................................ (17,141) 904
For the eleven ----------- -----------
months ended Net increase in net assets resulting from
December 31, 1995 operations....................................... 2,261,101 1,083,035
and the year ended Net increase from capital stock transactions....... 34,506,043 17,124,934
January 31, 1995 Distributions to shareholders from net investment
income............................................ (2,278,242) (1,082,131)
----------- -----------
Net increase in net assets........................ 34,488,902 17,125,838
NET ASSETS:
Beginning of period................................ 31,016,852 13,891,014
----------- -----------
End of period...................................... $65,505,754 $31,016,852
=========== ===========
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in)......... $65,521,991 $31,015,948
Undistributed net realized gain (loss) on sales of
investment securities............................. (16,237) 904
----------- -----------
$65,505,754 $31,016,852
=========== ===========
</TABLE>
See Notes to Financial Statements.
103
AIM V.I. MONEY MARKET FUND
<PAGE>
<TABLE>
<C> <S>
AIM V.I. MONEY NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
MARKET FUND
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
December 31, 1995 Act of 1940 (the "1940 Act"), as amended, as an open-end, series, management
investment company consisting of nine portfolios. 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. Effective December 31, 1995, the Company's fiscal year was changed
from January 31 to December 31. Information presented in these financial
statements pertains only to the AIM V.I. Money Market Fund (the "Fund"). The
Fund's investment objective is to seek to provide as high a level of current
income as is consistent with the preservation of capital and liquidity.
Currently, 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. The preparation of
financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
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. The Fund has a capital loss
carryforward (which may be carried forward to offset future taxable gains,
if any) of $17,143 which expires, if not previously utilized, in the year
2003.
D. 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. 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 eleven months ended December 31, 1995, AIM was reimbursed $22,997
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.
During the eleven months ended December 31, 1995, the Fund incurred legal fees
of $2,457 for services rendered by Kramer, Levin, Naftalis, Nessen, Kamin &
Frankel as counsel to the Board of Directors. A member of that firm is a
director of the Company.
NOTE 3 - DIRECTORS' FEES
Directors' fees represent remuneration paid or accrued to each director who is
not an "interested person" of AIM. The Company may invest directors' fees, if
so elected by a director, in mutual fund shares in accordance with a deferred
compensation plan.
</TABLE>
104
AIM V.I. MONEY MARKET FUND
<PAGE>
<TABLE>
<C> <S>
NOTE 4 - CAPITAL STOCK
Changes in capital stock outstanding during the eleven months ended December
31, 1995 and the year ended January 31, 1995 were as follows:
</TABLE>
<TABLE>
<CAPTION>
December 31, 1995 January 31, 1995
------------------------- -------------------------
Shares Amount Shares Amount
----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Sold..................... 80,119,672 $ 80,119,672 53,878,101 $ 53,878,101
Issued as reinvestment of
distributions........... 2,278,242 2,278,242 1,082,131 1,082,131
Reacquired............... (47,891,871) (47,891,871) (37,835,298) (37,835,298)
----------- ------------ ----------- ------------
34,506,043 $ 34,506,043 17,124,934 $ 17,124,934
=========== ============ =========== ============
</TABLE>
<TABLE>
<C> <S>
NOTE 5 - FINANCIAL HIGHLIGHTS
Shown below are the condensed financial highlights for a share outstanding of
the Fund during the eleven months ended December 31, 1995, the year ended
January 31, 1995 and the period May 5, 1993 (date operations commenced) through
January 31, 1994.
</TABLE>
<TABLE>
<CAPTION>
JANUARY 31,
DECEMBER 31, -------------------
1995 1995 1994
------------ ------- -------
<S> <C> <C> <C>
Net asset value, beginning of period.. $ 1.00 $ 1.00 $ 1.00
------- ------- -------
Income from investment operations:
Net investment income............... 0.05 0.04 0.02
------- ------- -------
Less distributions:
Dividends from net investment
income............................. (0.05) (0.04) (0.02)
------- ------- -------
Net asset value, end of period........ $ 1.00 $ 1.00 $ 1.00
======= ======= =======
Total return.......................... 5.69%(a) 3.98% 2.27%(a)
======= ======= =======
Ratios/supplemental data:
Net assets, end of period (000s
omitted)............................. $65,506 $31,017 $13,891
======= ======= =======
Ratio of expenses to average net
assets............................... 0.53%(b) 0.63%(c) 0.95%(a)(d)
======= ======= =======
Ratio of net investment income to
average net assets................... 5.40%(b) 4.14%(c) 2.29%(a)(d)
======= ======= =======
------
(a) Annualized.
(b) Ratios are annualized and based on average net assets of $46,144,418.
(c) Ratios of expenses and net investment income to average net assets prior to
waiver of advisory fees are 0.70% and 4.07%, respectively.
(d) 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>
105
AIM V.I. MONEY MARKET FUND
<PAGE>
PAGE>
<TABLE>
<C> <S>
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 December 31,
1995, the related statement of operations for the eleven month period then
ended, the statement of changes in net assets for the eleven month period then
ended and the year ended January 31, 1995 and the financial highlights for the
eleven month period then ended, the year ended January 31, 1995 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 amount and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 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 December 31, 1995, the results of its operations
for the eleven month period then ended, the changes in its net assets for the
eleven month period then ended and the year ended January 31, 1995 and the
financial highlights for the eleven month period then ended, the year ended
January 31, 1995 and the period May 5, 1993 through January 31, 1994, in
conformity with generally accepted accounting principles.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
January 26, 1996
</TABLE>
106
AIM V.I. MONEY MARKET FUND
<PAGE>
AIM V.I. VALUE FUND As stocks posted record gains, AIM V.I. Value Fund gained
MANAGEMENT'S 36.25% during the 11 months ended December 31, 1995.
DISCUSSION Because the Fund changed its fiscal year-end from January
AND ANALYSIS 31 to December 31, all performance figures in this report
represent the 11-month period from 1/31/95-12/31/95.
Strong earnings, low interest rates, and a slowing
economy converged to make 1995 the year of the raging
bull. AIM V.I. Value Fund advanced with the market
because it remained fully invested during most of the
year.
Value fund managers target out-of-favor stocks with long-
term growth potential. The Fund is invested in large-,
mid-, and small-cap stocks, and each area enjoyed earnings
growth in 1995. Fund managers analyze stocks using a
number of financial criteria including a price-to earnings
ratio, which compares a company's stock price to its
earnings. The goal is to buy earnings growth at a
discount.
As of December 31, 1995, the Fund had invested in 184
securities, mainly in domestic common stocks. The Fund
was heavily weighted toward technology stocks for most of
the year, but decreased holdings in this sector in the
fourth-quarter when earnings projections weakened for
some semiconductor manufacturers. Other areas emphasized
by the Fund included the medical and financial
industries, where earnings projections remained strong.
At the end of the year, Fund managers increased holdings
in cash and U.S. Treasury notes to hedge against the
possibility of earnings disappointments in 1996. Of
course, Fund managers determine Fund composition based on
earnings momentum, not market timing. The Fund's top five
equity holdings included:
. Philip Morris Companies, Inc.
. Texas Instruments, Inc.
. Computer Associates International, Inc.
. Xerox Corp.
. Citicorp
The Fund's composition is subject to change and there is
no guarantee the Fund will continue to hold any one
particular security.
<TABLE>
<CAPTION>
GROWTH OF A
HYPOTHETICAL
$10,000 INVESTMENT
AVERAGE ANNUAL TOTAL RETURN
1995* Inception**
AIM V.I. Value Fund 36.25% 20.10%
*1/31/95--12/31/95 (not annualized) **Since Inception 5/5/93
AIM V.I. Lipper Growth
Value Fund S&P 500 Fund Index
------------ ------- --------------
<S> <C> <C> <C>
5/5/93 $10,000 $10,000 $10,000
10,690 10,290 10,430
11,230 10,472 10,930
12/93 11,482 10,714 11,177
11,803 10,311 10,843
11,312 10,355 10,606
12,043 10,650 11,126
12/94 11,945 10,859 11,001
13,127 11,913 11,797
14,803 13,047 13,059
16,520 14,081 14,245
12/95 16,275 14,926 14,465
Past performance cannot guarantee comparable future results.
</TABLE>
The performance figures shown represent the AIM V.I.
Value Fund and are not intended to reflect actual annuity
values and do not reflect charges at the separate account
level which, if applied, would lower the performance
results. The Fund's performance figures are historical
and reflect reinvestment of all distributions and changes
in the net asset value. The Fund's investment return and
principal value will fluctuate so that Fund shares, when
redeemed, may be worth more or less than their original
cost. Source: Towers Data Systems HYPO(R).
The Standard & Poor's Composite Index of 500 Stocks (S&P
500) is a group of unmanaged securities widely regarded
by investors to be representative of the stock market in
general. Source: Towers Data Systems HYPO(R).
Lipper Analytical Services, Inc., is an independent
mutual fund performance monitor. The unmanaged Lipper
Growth Fund Index represents an average of the
performance of the 30 largest growth mutual funds.
Results for the Lipper Index are for the period 4/30/93
through 12/31/95.
An investment cannot be made in the indexes listed.
Index results include reinvested dividends.
107
AIM V.I. VALUE FUND
<PAGE>
<TABLE>
<C> <C> <S> <C>
AIM V.I. VALUE MARKET
FUND SHARES VALUE
SCHEDULE OF ------ ------------
INVESTMENTS DOMESTIC COMMON STOCKS - 64.88%
December 31, 1995
ADVERTISING/BROADCASTING - 0.10%
10,000 Heritage Media Corp.(a)............................. $ 256,250
------------
AEROSPACE/DEFENSE - 1.70%
33,600 Boeing Co........................................... 2,633,400
12,000 General Dynamics Corp............................... 709,500
11,000 United Technologies Corp............................ 1,043,625
------------
4,386,525
------------
APPLIANCES - 0.13%
6,600 Premark International Inc........................... 334,125
------------
AUTOMOBILE/TRUCK PARTS & TIRES - 0.50%
40,000 Borg-Warner Automotive.............................. 1,280,000
------------
BANKING - 2.39%
17,000 BankAmerica Corp.................................... 1,100,750
75,000 Citicorp............................................ 5,043,750
------------
6,144,500
------------
BIOTECHNOLOGY - 0.34%
21,000 Guidant Corp........................................ 887,250
------------
BUILDING MATERIALS - 0.27%
15,200 Snap-On, Inc........................................ 687,800
------------
CHEMICALS - 0.22%
40,000 Terra Industries, Inc. ............................. 565,000
------------
CHEMICALS (SPECIALTY) - 1.54%
18,000 Cabot Corp.......................................... 969,750
33,000 IMC Global, Inc..................................... 1,348,875
16,000 OM Group Inc........................................ 530,000
33,400 Praxair, Inc........................................ 1,123,075
------------
3,971,700
------------
COMPUTER MINI/PCS - 3.50%
82,000 COMPAQ Computer Corp.(a)............................ 3,936,000
38,000 Dell Computer Corp.(a).............................. 1,315,750
20,000 Digital Equipment Corp.(a).......................... 1,282,500
21,000 Hewlett-Packard Co.................................. 1,758,750
42,000 Wang Laboratories, Inc.(a).......................... 698,250
------------
8,991,250
------------
COMPUTER NETWORKING - 2.53%
14,850 Bay Networks, Inc.(a)............................... 610,706
24,000 Belden Inc.......................................... 618,000
57,000 Cheyenne Software, Inc.(a).......................... 1,489,125
25,000 Cisco Systems, Inc.(a).............................. 1,865,625
18,000 Comverse Technology, Inc............................ 360,000
21,000 Network Equipment Technology, Inc.(a)............... 574,875
21,000 3Com Corp.(a)....................................... 979,125
------------
6,497,456
------------
COMPUTER PERIPHERALS - 3.24%
58,000 Adaptec, Inc.(a).................................... 2,378,000
7,800 Alliance Semiconductor Corp.(a)..................... 90,675
57,000 EMC Corp.(a)........................................ 876,375
12,000 Lexmark International Group, Inc.(a)................ 219,000
17,000 Read-Rite Corp. - Class A(a)........................ 395,250
</TABLE>
108
AIM V.I. VALUE FUND
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------------
<C> <S> <C>
COMPUTER PERIPHERALS - (CONTINUED)
67,000 Seagate Technology(a)............................... $ 3,182,500
8,000 U.S. Robotics, Inc.(a).............................. 702,000
28,000 Western Digital Corp.(a)............................ 500,500
------------
8,344,300
------------
COMPUTER SOFTWARE & SERVICES - 4.89%
9,000 Adobe Systems, Inc.................................. 558,000
17,000 BMC Software, Inc.(a)............................... 726,750
103,000 Computer Associates International, Inc.............. 5,858,125
21,000 Computervision Corp.(a)............................. 322,875
4,000 Electronics for Imaging, Inc.(a).................... 175,000
15,000 First Data Corp..................................... 1,003,125
15,500 FTP Software, Inc.(a)............................... 449,500
21,000 National Data Corp.................................. 519,750
21,000 NetManage, Inc.(a).................................. 488,250
17,000 Network General Corp.(a)............................ 567,375
28,000 SoftKey International, Inc.(a)...................... 647,500
6,000 Sterling Software, Inc.(a).......................... 374,250
50,000 S3, Inc.(a)......................................... 881,250
------------
12,571,750
------------
CONGLOMERATES - 0.58%
10,000 Allied Products Corp................................ 240,000
16,000 Loews Corp.......................................... 1,254,000
------------
1,494,000
------------
COSMETICS & TOILETRIES - 0.50%
12,200 McKesson Corp....................................... 617,625
8,000 Procter & Gamble Co................................. 664,000
------------
1,281,625
------------
ELECTRIC SERVICES - 1.43%
8,900 Allegheny Power System, Inc......................... 254,762
7,000 American Electric Power Co.......................... 283,500
8,900 Consolidated Edison Co. of New York, Inc............ 284,800
15,000 Dominion Resources, Inc............................. 618,750
11,300 DQE, Inc............................................ 347,475
20,000 Entergy Corp........................................ 585,000
6,800 FPL Group, Inc...................................... 315,350
19,100 Houston Industries, Inc............................. 463,175
17,500 Illinova Corp....................................... 525,000
------------
3,677,812
------------
ELECTRONIC COMPONENTS - 2.40%
17,000 Amphenol Corp.(a)................................... 412,250
102,000 Anixter International, Inc.(a)...................... 1,899,750
4,300 AVX Corp............................................ 113,950
27,300 Harman International Industries, Inc................ 1,095,413
21,000 Parker-Hannifin Corp................................ 719,250
2,700 Raychem Corp........................................ 153,562
13,000 Tektronix, Inc...................................... 638,625
46,000 Teradyne Inc.(a).................................... 1,150,000
------------
6,182,800
------------
ELECTRONIC/PC DISTRIBUTORS - 0.97%
30,000 Arrow Electronics, Inc.(a).......................... 1,293,750
11,000 Avnet, Inc.......................................... 492,250
20,000 Wyle Electronics.................................... 702,500
------------
2,488,500
------------
</TABLE>
109
AIM V.I. VALUE FUND
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------------
<C> <S> <C>
FINANCE (ASSET MANAGEMENT) - 0.23%
12,000 Finova Group, Inc................................... $ 579,000
------------
FINANCE (CONSUMER CREDIT) - 3.35%
8,000 ADVANTA Corp. - Class A............................. 306,000
9,000 ADVANTA Corp. - Class B............................. 327,375
10,000 A T & T Capital Corp................................ 382,500
12,000 CMAC Investment Corp................................ 528,000
12,000 Countrywide Credit Industries, Inc.................. 261,000
20,000 Federal Home Loan Mortgage Corp. ................... 1,670,000
12,500 Federal National Mortgage Association............... 1,551,563
17,000 Green Tree Financial Corp........................... 448,375
50,000 MBNA Corp........................................... 1,843,750
17,000 PMI Group Inc. (The)................................ 769,250
5,900 Student Loan Marketing Association.................. 388,662
3,150 SunAmerica, Inc..................................... 149,625
------------
8,626,100
------------
FINANCE (SAVINGS & LOAN) - 0.21%
20,000 Ahmanson (H.F.) & Co................................ 530,000
------------
FOOD PROCESSING - 1.26%
21,000 ConAgra, Inc........................................ 866,250
36,000 Hudson Foods, Inc. - Class A........................ 621,000
27,000 IBP, Inc............................................ 1,363,500
17,700 Interstate Bakeries Corp............................ 396,037
------------
3,246,787
------------
FUNERAL SERVICES - 0.96%
46,300 Service Corp. International......................... 2,037,200
12,000 Stewart Enterprises, Inc............................ 444,000
------------
2,481,200
------------
GAMING - 0.34%
25,000 Mirage Resorts, Inc.(a)............................. 862,500
------------
HOMEBUILDING - 0.18%
21,500 Clayton Homes, Inc.................................. 459,562
------------
INSURANCE (LIFE & HEALTH) - 0.10%
4,000 Conseco Inc......................................... 250,500
------------
INSURANCE (MULTI-LINE PROPERTY) - 1.79%
37,000 Allstate Corp....................................... 1,521,625
12,200 CIGNA Corp.......................................... 1,259,650
16,000 ITT Hartford Group, Inc.(a)......................... 774,000
37,000 TIG Holdings, Inc................................... 1,054,500
------------
4,609,775
------------
MACHINE TOOLS - 0.05%
4,000 Applied Power Inc. - Class A........................ 120,000
------------
MACHINERY (HEAVY) - 0.36%
20,000 Case Corp........................................... 915,000
------------
MEDICAL (DRUGS) - 4.31%
12,000 American Home Products Corp. ....................... 1,164,000
33,000 Bergen Brunswig Corp................................ 820,875
51,861 ICN Pharmaceuticals, Inc............................ 998,330
6,000 Johnson & Johnson................................... 513,750
29,000 Mylan Laboratories.................................. 681,500
21,000 Pfizer Inc.......................................... 1,323,000
21,000 R. P. Scherer Corp.(a).............................. 1,031,625
83,000 Schering-Plough Corp................................ 4,544,250
------------
11,077,330
------------
</TABLE>
110
AIM V.I. VALUE FUND
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------------
<C> <S> <C>
MEDICAL INSTRUMENTS/PRODUCTS - 1.54%
6,500 Bausch & Lomb, Inc.................................. $ 257,563
63,000 Baxter International, Inc........................... 2,638,125
10,600 Cordis Corp.(a)..................................... 1,065,300
------------
3,960,988
------------
MEDICAL (PATIENT SERVICES) - 2.47%
12,000 Genesis Health Ventures, Inc.(a).................... 438,000
25,000 Health Care and Retirement Corp.(a)................. 875,000
25,000 Integrated Health Services, Inc..................... 625,000
12,000 Living Centers of America, Inc.(a).................. 420,000
28,000 Manor Care, Inc..................................... 980,000
34,000 OrNda Healthcorp(a)................................. 790,500
24,000 Quorum Health Group, Inc.(a)........................ 528,000
30,000 Sybron International Corp.(a)....................... 712,500
21,000 U.S. Healthcare, Inc................................ 976,500
------------
6,345,500
------------
METALS - 0.09%
4,000 Harsco Corp......................................... 232,500
------------
OFFICE AUTOMATION - 2.24%
19,300 In Focus Systems, Inc.(a)........................... 697,213
37,000 Xerox Corp.......................................... 5,069,000
------------
5,766,213
------------
OFFICE PRODUCTS - 0.15%
10,000 Reynolds & Reynolds Co. - Class A................... 388,750
------------
OIL & GAS - 0.50%
60,000 Occidental Petroleum Corp........................... 1,282,500
------------
OIL EQUIPMENT & SUPPLIES - 0.99%
20,000 BJ Services Co.(a).................................. 580,000
12,000 Diamond Offshore Drilling, Inc.(a).................. 405,000
16,000 Halliburton Co...................................... 810,000
24,000 Tidewater, Inc...................................... 756,000
------------
2,551,000
------------
PAPER & FOREST PRODUCTS - 0.55%
4,000 Bowater, Inc........................................ 142,000
18,200 James River Corp. of Virginia....................... 439,075
16,000 Mead Corp........................................... 836,000
------------
1,417,075
------------
POLLUTION CONTROL - 0.37%
32,000 WMX Technologies, Inc............................... 956,000
------------
PUBLISHING - 0.28%
18,000 Scripps (E.W.) Co................................... 708,750
------------
RETAIL (FOOD & DRUG) - 0.28%
27,900 Circle K Corp.(a)................................... 707,963
------------
RETAIL (STORES) - 0.06%
11,000 Intimate Brands, Inc................................ 165,000
------------
SCIENTIFIC INSTRUMENTS - 0.91%
42,000 Millipore Corp...................................... 1,727,250
13,000 Varian Associates, Inc.............................. 620,750
------------
2,348,000
------------
SEMICONDUCTORS - 5.33%
29,000 Analog Devices, Inc.(a)............................. 1,025,875
74,000 Applied Materials, Inc.(a).......................... 2,913,750
57,000 Cypress Semiconductor Corp.(a)...................... 726,750
</TABLE>
111
AIM V.I. VALUE FUND
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------------
<C> <S> <C>
SEMICONDUCTORS - (CONTINUED)
19,400 Electroglas, Inc.(a)................................ $ 475,300
14,000 Kemet Corp.(a)...................................... 334,250
10,000 LAM Research Corp.(a)............................... 457,500
25,000 LSI Logic Corp.(a).................................. 818,750
15,000 Novellus Systems, Inc.(a)........................... 810,000
14,000 Sierra Semiconductor Corp.(a)....................... 194,250
115,000 Texas Instruments, Inc.............................. 5,951,250
------------
13,707,675
------------
SHOES & RELATED APPAREL - 0.05%
2,000 Nike, Inc. - Class B................................ 139,250
------------
STEEL - 0.09%
5,300 J&L Specialty Steel, Inc............................ 99,375
16,300 UNR Industries, Inc................................. 140,588
------------
239,963
------------
TELECOMMUNICATIONS - 2.89%
50,000 A T & T Corp........................................ 3,237,500
64,100 MFS Communications Co., Inc.(a)..................... 3,413,325
21,000 Tellabs, Inc.(a).................................... 777,000
------------
7,427,825
------------
TELEPHONE - 1.31%
42,000 Ameritech Corp. .................................... 2,478,000
20,900 BellSouth Corp. .................................... 909,150
------------
3,387,150
------------
TOBACCO - 3.94%
10,500 Dimon, Inc.......................................... 185,063
110,000 Philip Morris Companies, Inc........................ 9,955,000
------------
10,140,063
------------
TRANSPORTATION - 0.47%
26,400 CSX Corp............................................ 1,204,500
------------
Total Common Stocks............................. 166,877,062
------------
FOREIGN STOCKS & OTHER EQUITY INTERESTS - 5.09%
AUSTRALIA - 0.31%
42,000 News Corp. Ltd. - Preference Shares-ADR
(Publishing)........................................ 808,500
------------
CANADA - 0.38%
20,000 Corel Corp. (Computer Software & Services)(a)....... 260,000
16,900 Northern Telecom Ltd. (Telecommunications).......... 726,700
------------
986,700
------------
FINLAND - 0.06%
4,100 Nokia Corp. - Class A-ADR (Telecommunications)(a)... 159,389
------------
FRANCE - 0.78%
50,000 SGS - Thomson Microelectronics N.V.
(Semiconductors)(a)................................. 2,012,500
------------
ITALY - 0.12%
6,500 Fila Holding S.p.A.-ADR (Retail Stores)............. 295,750
------------
NETHERLANDS - 0.36%
20,400 Madge Networks N.V. (Computer Networking)(a)........ 912,900
------------
NEW ZEALAND - 0.43%
244,700 Telecom Corp. of New Zealand Ltd.
(Telecommunications)................................ 1,027,048
1,200 Telecom Corp. of New Zealand Ltd.-ADR
(Telecommunications)................................ 83,250
------------
1,110,298
------------
NORWAY - 0.34%
158,000 UNI Storebrand A/S - Class A (Insurance - Multi-Line
Property)(a)........................................ 873,052
------------
</TABLE>
112
AIM V.I. VALUE FUND
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------------
<C> <S> <C>
SWEDEN - 1.25%
27,500 Astra AB "A" (Medical - Drugs).................. $ 1,097,564
30,000 Skandia Forsakring AB (Insurance - Multi-Line
Property)....................................... 811,030
66,000 Telefonaktiebolaget L.M. Ericsson-ADR
(Telecommunications)............................ 1,287,000
------------
3,195,594
------------
UNITED KINGDOM - 1.06%
28,800 Invesco PLC (Finance - Asset Management)........ 113,384
2,200 Invesco PLC-ADR (Finance - Asset Management).... 85,250
6,600 Orthofix International N.V. (Medical
Services)(a).................................... 48,675
14,500 Smithkline Beecham-ADR (Medical - Drugs)........ 804,750
160,000 Standard Chartered PLC (Leisure & Recreation)... 1,361,703
29,900 Waste Management International PLC-ADR
(Pollution Control)(a).......................... 321,425
------------
2,735,187
------------
Total Foreign Stocks & Other Equity
Interests.................................. 13,089,870
------------
PREFERRED STOCK - 0.05%
PUBLISHING - 0.05%
4,500 Time Warner Financing - $1.24 Convertible Pfd... 140,625
------------
<CAPTION>
PRINCIPAL
AMOUNT
-----------
<C> <S> <C>
U.S. TREASURY SECURITIES - 13.06%
U.S. TREASURY BILLS - 10.22%(B)
$13,100,000(c) 5.41%, 01/11/96................................. 13,093,843
13,345,000(c) 5.38%, 04/04/96................................. 13,175,918
------------
Total U.S. Treasury Bills................... 26,269,761
------------
U.S. TREASURY NOTES - 2.84%
7,000,000 6.75%, 05/31/99................................. 7,311,718
------------
Total U.S. Treasury Securities.............. 33,581,479
------------
REPURCHASE AGREEMENT(d) - 16.76%
43,102,545 Daiwa Securities America Inc., 5.92%,
01/02/96(e).................................... 43,102,545
------------
TOTAL INVESTMENTS - 99.84%...................... 256,791,581
OTHER ASSETS LESS LIABILITIES - 0.16%........... 420,206
------------
NET ASSETS - 100.00%............................ $257,211,787
============
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 balance was pledged as collateral to cover
margin requirements for open futures contracts. 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. The investments in some repurchase agreements are
through participation in joint accounts with other mutual funds managed by
the investment advisor.
(e) Joint repurchase agreement entered into 12/29/95 with a maturing value of
$646,679,181. Collateralized by $537,995,000 U.S. Treasury obligations,
7.875% to 11.25% due 11/15/07 to 02/15/15.
Abbreviations:
ADR - American Depositary Receipt
Pfd. - Preferred
See Notes to Financial Statements.
</TABLE>
113
AIM V.I. VALUE FUND
<PAGE>
<TABLE>
<C> <S> <C>
AIM V.I. VALUE ASSETS:
FUND
STATEMENT OF Investments, at market value (cost $227,669,641).................. $256,791,581
ASSETS AND Receivables for:
LIABILITIES Investments sold................................................ 750,836
December 31, 1995 Capital stock sold.............................................. 160,371
Dividends and interest.......................................... 383,343
Variation margin................................................ 30,100
Investment for deferred compensation plan......................... 8,365
Organizational costs, net......................................... 6,728
Other assets...................................................... 61,297
------------
Total assets.................................................. 258,192,621
------------
LIABILITIES:
Payables for:
Investments purchased........................................... 795,777
Deferred compensation........................................... 8,365
Accrued advisory fees............................................. 139,022
Accrued directors' fees........................................... 1,646
Accrued administrative services fees.............................. 2,593
Accrued operating expenses........................................ 33,431
------------
Total liabilities............................................. 980,834
------------
Net assets applicable to shares outstanding....................... $257,211,787
============
Capital shares, $.001 par value per share:
Authorized...................................................... 250,000,000
============
Outstanding..................................................... 15,969,839
============
Net asset value, offering and redemption price per share.......... $ 16.11
============
See Notes to Financial Statements.
</TABLE>
114
AIM V.I. VALUE FUND
<PAGE>
<TABLE>
<C> <S> <C>
AIM V.I. VALUE INVESTMENT INCOME:
FUND
STATEMENT OF Interest....................................................... $ 1,353,855
OPERATIONS Dividends...................................................... 1,723,041
For the eleven -----------
months ended Total investment income...................................... 3,076,896
December 31, 1995 -----------
EXPENSES:
Advisory fees.................................................. 1,078,007
Custodian fees................................................. 68,394
Administrative service fees.................................... 35,540
Directors' fees and expenses................................... 6,369
Organizational costs........................................... 2,627
Other.......................................................... 49,714
-----------
Total expenses............................................... 1,240,651
-----------
Net investment income............................................ 1,836,245
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT SECURITIES,
FOREIGN CURRENCIES AND FUTURES CONTRACTS:
Net realized gain (loss) from:
Investment securities.......................................... 17,183,742
Foreign currencies............................................. (10,005)
Futures contracts.............................................. 2,138,567
-----------
19,312,304
-----------
Unrealized appreciation (depreciation) of:
Investment securities.......................................... 25,412,699
Foreign currencies............................................. (361)
Futures contracts.............................................. 131,340
-----------
25,543,678
-----------
Net gain on investment securities, foreign currencies and futures
contracts....................................................... 44,855,982
-----------
Net increase in net assets resulting from operations............. $46,692,227
===========
AIM V.I. VALUE DECEMBER 31, JANUARY 31,
FUND 1995 1995
STATEMENT OF ------------ ------------
CHANGES IN <S> <C> <C>
NET ASSETS OPERATIONS:
For the eleven
months ended Net investment income............................ $ 1,836,245 $ 882,404
December 31, 1995 Net realized gain (loss) on sales of investment
and the year ended securities, foreign currencies and futures
January 31, 1995 contracts ...................................... 19,312,304 (2,153,433)
Net unrealized appreciation of investment
securities, foreign currencies and futures
contracts....................................... 25,543,678 895,492
------------ ------------
Net increase (decrease) in net assets resulting
from operations................................ 46,692,227 (375,537)
Net increase from capital stock transactions....... 101,386,580 72,151,126
Distributions to shareholders from net investment
income............................................ (124,487) (772,749)
------------ ------------
Net increase in net assets...................... 147,954,320 71,002,840
NET ASSETS:
Beginning of period.............................. 109,257,467 38,254,627
------------ ------------
End of period.................................... $257,211,787 $109,257,467
============ ============
NET ASSETS CONSIST OF:
Capital (par value and additional paid-in)....... $208,555,673 $107,169,093
Undistributed net investment income.............. 1,819,581 107,823
Undistributed net realized gain (loss) from
investment securities, foreign currencies and
futures contracts .............................. 16,941,375 (2,370,929)
Unrealized appreciation of investment securities,
foreign currencies and futures contracts........ 29,895,158 4,351,480
------------ ------------
$257,211,787 $109,257,467
============ ============
See Notes to Financial Statements.
</TABLE>
115
AIM V.I. VALUE FUND
<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. Matters affecting each
December 31, 1995 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 AIM V.I. Value Fund (the "Fund"). The Fund's investment objective is to
achieve long-term growth of capital by investing primarily in equity securities
judged by AIM to be undervalued relative to the current or projected earnings
of the companies issuing the securities or relative to current market values of
assets owned by the companies issuing the securities or relative to the equity
market generally. Income is a secondary objective. Effective December 31, 1995,
the Company's fiscal year end was changed from January 31 to December 31.
Currently, shares of the Fund are sold only to insurance company separate
accounts to fund the benefits of variable annuity contracts.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates. The
following is a summary of the significant accounting policies followed by the
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, or absent a last sales
price, at the mean of the closing bid and asked prices. Securities for which
market quotations are either not readily available or are questionable 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. 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. 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 - For federal income tax purposes, each portfolio in
the Company is taxed as a separate entity. 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. Organizational Costs - Organizational costs for the Fund of $14,461 are
being amortized over five years.
E. 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 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.
F. 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.
</TABLE>
116
AIM V.I. VALUE FUND
<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. These agreements
require 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 eleven months ended December 31, 1995, AIM was reimbursed $35,540
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 of the
Fund's shares.
Certain officers and directors of the Company are officers of AIM and AIM
Distributors.
During the eleven months ended December 31, 1995, the Fund incurred legal fees
of $2,788 for services rendered by Kramer, Levin, Naftalis, Nessen, Kamin &
Frankel as counsel to the Board of Directors. A member of that firm is a
director of the Company.
NOTE 3 - DIRECTORS' FEES
Directors' fees represent remuneration paid or accrued to each director who is
not an "interested person" of AIM. The Company may invest a director's 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 eleven months ended December 31, 1995
was $287,069,501 and $226,176,603, respectively.
The amount of unrealized appreciation (depreciation) of investment securities
on a tax basis as of December 31, 1995 is as follows:
</TABLE>
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities......... $32,775,879
Aggregate unrealized (depreciation) of investment securities....... (3,911,608)
-----------
Net unrealized appreciation of investment securities............... $28,864,271
===========
</TABLE>
<TABLE>
<C> <S>
Cost of investments for tax purposes is $227,927,310.
NOTE 5 - CAPITAL STOCK
Changes in capital stock outstanding during the eleven months ended December
31, 1995 and the year ended January 31, 1995:
</TABLE>
<TABLE>
<CAPTION>
December 31, 1995 January 31, 1995
----------------------- ----------------------
Shares Amount Shares Amount
--------- ------------ --------- -----------
<S> <C> <C> <C> <C>
Sold.......................... 6,903,801 $103,653,052 6,208,374 $73,589,964
Issued as reinvestment of
distributions................ 7,829 124,487 67,137 772,749
Reacquired.................... (176,240) (2,390,959) (183,633) (2,211,587)
--------- ------------ --------- -----------
6,735,390 $101,386,580 6,091,878 $72,151,126
========= ============ ========= ===========
</TABLE>
<TABLE>
<C> <S>
NOTE 6 - OPEN FUTURES CONTRACTS
On December 31, 1995, $957,000 principal amount of U. S. Treasury Bills were
pledged as collateral to cover margin requirements for open futures contracts:
Open futures contracts at December 31, 1995 were as follows:
</TABLE>
<TABLE>
<CAPTION>
UNREALIZED
CONTRACT NO. OF CONTRACTS/MONTH/COMMITMENT APPRECIATION
<S> <C> <C>
S&P 500 Index.................... 86 Contracts/March 96/Buy $773,579
</TABLE>
117
AIM V.I. VALUE FUND
<PAGE>
<TABLE>
<C> <S>
NOTE 7 - FINANCIAL HIGHLIGHTS
Shown below are the condensed financial highlights for a share outstanding of
the Fund during the eleven months ended December 31, 1995, the year ended
January 31, 1995, and the period May 5, 1993 (date operations commenced)
through January 31, 1994.
</TABLE>
<TABLE>
<CAPTION>
January 31,
December ------------------
31, 1995 1995 1994
-------- -------- -------
<S> <C> <C> <C>
Net asset value, beginning of period....... $ 11.83 $ 12.17 $ 10.00
-------- -------- -------
Income from investment operations:
Net investment income.................... 0.11 0.10 0.02
Net gains (losses) on securities (both
realized and unrealized)................ 4.18 (0.35) 2.17
-------- -------- -------
Total from investment operations....... 4.29 (0.25) 2.19
-------- -------- -------
Less distributions:
Dividends from net investment income..... (0.01) (0.09) (0.02)
-------- -------- -------
Net asset value, end of period............. $ 16.11 $ 11.83 $ 12.17
======== ======== =======
Total return(a)............................ 36.25% (2.03)% 21.94%
======== ======== =======
Ratios/supplemental data:
Net assets, end of period (000s omitted)... $257,212 $109,257 $38,255
======== ======== =======
Ratio of expenses to average net assets.... 0.75%(b) 0.82% 1.00%(c)
======== ======== =======
Ratio of net investment income to average
net assets................................ 1.11%(b) 1.17% 0.51%(c)
======== ======== =======
Portfolio turnover rate.................... 145% 143% 87%
======== ======== =======
------
(a) Total returns for periods less than one year are not annualized.
(b) Ratios are annualized and based on average net assets of $181,240,121.
(c) Annualized ratios of expenses and net investment income to average net
assets prior to waiver of advisory fees and/or expense reimbursements were
1.35% and 0.16%, respectively, for 1994.
</TABLE>
118
AIM V.I. VALUE FUND
<PAGE>
<TABLE>
<C> <S>
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 December 31, 1995, the
related statement of operations for the eleven month period then ended, the
statement of changes in net assets for the eleven month period then ended and
the year ended January 31, 1995 and the financial highlights for the eleven
month period then ended, the year ended January 31, 1995, 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
December 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 December 31, 1995, the results of its operations for the
eleven month period then ended, the changes in its net assets for the eleven
month period then ended and the year ended January 31, 1995 and the financial
highlights for the eleven month period then ended, the year ended January 31,
1995, and the period May 5, 1993 (commencement of operations) through January
31, 1994, in conformity with generally accepted accounting principles.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
January 26, 1996
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DIRECTORS, OFFICERS, BOARD OF DIRECTORS OFFICERS OFFICE OF THE FUND
AND OTHER SERVICE
PROVIDERS OF AIM Charles T. Bauer Charles T. Bauer 11 Greenway Plaza
VARIABLE INSURANCE Chairman and Chief Executive Officer Chairman Suite 1919
FUNDS, INC. A I M Management Group Inc. Houston, TX 77046
Robert H. Graham (800) 347-1919
Bruce L. Crockett President
Director, President and Chief INVESTMENT ADVISOR
Executive Officer John J. Arthur
COMSAT Corporation Senior Vice President and A I M Advisors, Inc.
Treasurer 11 Greenway Plaza
Owen Daly II Suite 1919
Director Gary T. Crum Houston, TX 77046
Cortland Trust Inc. Senior Vice President
TRANSFER AGENT AND CUSTODIAN
Carl Frischling Carol F. Relihan
Partner Vice President and State Street Bank & Trust Co.
Kramer, Levin, Naftalis, Nessen, Kamin Secretary 225 Franklin Street
& Frankel Boston, MA 02110
Dana R. Sutton
Robert H. Graham Vice President and COUNSEL TO THE FUNDS
President Assistant Treasurer
A I M Management Group Inc. Freedman, Levy, Kroll &
Robert G. Alley Simonds
John F. Kroeger Vice President 1050 Conn. Avenue, N.W.
Formerly, Consultant Washington, D.C. 20036
Wendell & Stockel Associates, Inc. Stuart W. Coco
Vice President COUNSEL TO THE DIRECTORS
Lewis F. Pennock
Attorney Melville B. Cox Kramer, Levin, Naftalis, Nessen
Vice President Kamin & Frankel
Ian W. Robinson 919 Third Avenue
Consultant; Former Executive Vice Karen Dunn Kelley New York, NY 10022
President and Chief Financial Officer Vice President
Bell Atlantic Management Services, Inc. DISTRIBUTOR
Jonathan C. Schoolar
Louis S. Sklar Vice President A I M Distributors, Inc.
Executive Vice President 11 Greenway Plaza
Hines Interests P. Michelle Grace Suite 1919
Limited Partnership Assistant Secretary Houston, TX 77046
David L. Kite INDEPENDENT AUDITORS
Assistant Secretary
Tait, Weller & Baker
Nancy L. Martin Two Penn Center Plaza
Assistant Secretary Suite 700
Philadelphia, PA 19102
Ofelia M. Mayo
Assistant Secretary
Kathleen J. Pflueger
Assistant Secretary
Samuel D. Sirko
Assistant Secretary
Stephen I. Winer
Assistant Secretary
Mary J. Benson
Assistant Treasurer
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